Five interesting things that Hodges Capital research analysts discovered this week...
#1 THE SEMIQUINCENTENNIAL: In July, the United States will celebrate its 250th anniversary. The country's last major milestone was 50 years ago, during its bicentennial celebration on July 4, 1976. According to the Pew Research Center, the U.S. population has grown by more than 120 million people over the past 50 years, reaching roughly 340 million. Americans are older, more educated, and more diverse than they were in 1976, with immigration contributing significantly to population growth. The share of adults with a bachelor's degree has risen from 11% to 37%, while the share of married adults has declined from 69% to 50%.
#2 LOAN DEMAND: Commercial and industrial (C&I) loan growth was a bright spot for many banks during the first quarter. According to American Banker, C&I loans at banks increased 12.7% quarter over quarter. Many banks have intensified efforts to grow their C&I portfolios as a way to diversify away from commercial real estate lending. There may be another factor at play as well. Some economists argue that the growth in C&I lending could be partially driven by disruptions in the private credit sector.
#3 PERSPECTIVE: A data center campus with peak power demand of one gigawatt is roughly equivalent to the average annual electricity consumption of about 700,000 homes, or a city of approximately 1.8 million people, according to a CNBC analysis using data from the Department of Energy and the Census Bureau.
#4 UNAFFORDABLE HOUSES: According to The Dallas Morning News, Dallas-Fort Worth may be known for better housing affordability than many other large U.S. metro areas, but rapidly rising home prices have changed that reality. Between 2010 and 2013, DFW outperformed most markets in housing construction. According to J.H. Cullum Clark, director of the Bush Institute–Southern Methodist University Economic Growth Initiative, the increased housing supply during that period helped keep home prices relatively affordable. As a result, the region attracted more migration than any other large U.S. metro area. Clark argues that the current housing affordability crisis took root in the aftermath of the 2008 financial crisis. A severe nationwide underproduction of homes led to a sharp rise in home prices relative to household incomes. Beyond rising home prices, the overall cost of homeownership—including mortgage payments—increased by an average of 20% to 25% nationwide, outpacing income growth. Even though DFW performed well in adding housing supply during that period, demand grew even faster, causing the gap between home prices and incomes to widen more than in the average U.S. metro area. Low mortgage rates initially softened the impact on consumers, but when the Federal Reserve began raising interest rates in 2022, the full effects of declining housing affordability became apparent across DFW.
#5 A GLUT OF CHOICES: Henry Ford famously said that customers "could have a Model T in any color they want—so long as it was black." Today's automotive market could not be more different. A recent J.D. Power Insurance Intelligence Report shows that the number of unique vehicle configurations available in the United States has surpassed 600,000, creating significant price variability even among vehicles with the same trim level and directly impacting the used-vehicle market. Vehicle configuration complexity has expanded dramatically over the past decade, driven largely by the industry's shift from mechanical systems to software-defined architectures. This growing complexity is creating challenges for dealer pricing, appraisals, merchandising, and insurance underwriting. Differences in optional equipment and technology packages can result in price gaps exceeding $10,000. The report also notes that traditional depreciation models are becoming less reliable, with direct implications for insurance costs and claims volatility. Auto insurance actuarial models built on incomplete vehicle-identification data could be off by as much as $15,000 per vehicle.
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