P&W Engine Shortage Hits Airbus
Last Thursday, Airbus announced that they will be delivering fewer aircraft than expected this year due to shortages of Pratt & Whitney (P&W) engines. Airbus has struggled to source everything from seats to toilets. The shortage has forced a slowdown in production of their bestselling A320. Apparently, P&W has been sending more engines to airlines to keep aircraft flying instead of supplying new deliveries. Persistent durability issues compounded by quality problems with some components seem to be the culprits.
Source: Wall Street Journal
Big Banks & Mortgages
The Federal Reserve is considering reducing the amount of money banks must hold to losses if a borrower puts down a larger down payment. Many big banks stopped focusing on mortgages after the 2008 financial crisis because new rules required them to set aside more capital to cover potential mortgage losses. In 2008, banks originated around 60% of mortgages and serviced about 95% of mortgage balances. As of 2023, banks originated 35% of mortgages and serviced 45% of mortgage balances. The proposed rules haven’t been finalized yet, so don’t expect any changes anytime soon.
Source: Wall Street Journal
AI & Real Estate Fees
As the number of AI applications continues to grow, one industry is getting particularly hit hard. Shares of commercial real estate firms have dropped significantly in the past few weeks amid concerns about falling fee revenue from the application of AI technology that could eat into lucrative broker fees and commissions. Some fear the virtual elimination of the appraisal business. The industry is trying to convince investors that you need humans to negotiate transactions. More fears over how AI may reshape many industries.
Source: Wall Street Journal
Hourly Wage Growth
The Federal Reserve Bank of Atlanta maintains a Wage Growth Tracker that measures year-over-year changes in the nominal wage growth of individuals. Growth edged down in January to 3.6 percent from 3.7 percent the prior month. For those not changing jobs, the Tracker held steady at 3.5 percent in January, while the Tracker for those changing jobs reached 4.7 percent in January. Wage growth is closely watched because it is so important to consumer spending expectations.
Source: Federal Reserve Bank of Atlanta
Aviation History This Week in 1921
From February 22-23, 1921, the U.S. Post Office staged a massive relay to prove that airmail could be delivered 24/7 without stopping for the night. En route, postal workers and farmers lit bonfires to help guide the pilots. The successful relay led President Harding to fund the installation of lighted airways, effectively birthing modern commercial aviation. On February 24, Lt. William Coney became the first person to fly across the continent in less than 24 hours of actual flying time.
Source: OnThisDay.com
Agentic Commerce
Once a tech buzzword, Agentic Commerce (AC) refers to a dominant shift in how we buy things. While traditional e-commerce requires you to “browse, click, and checkout,” AC allows an AI agent to handle the entire journey on your behalf. Tell the agent what you are looking for and when you want it. AC will then scan multiple retailers, read real-time reviews, check stock, and compare shipping speeds. It can also build a cart and apply the best available coupons or loyalty points. You can also allow it to complete the payment. Personal shopping has been taken to a whole new level.
Source: Stripe, Rye.com
AI Shopping Booming
Following up on the above note on agentic commerce, AI shopping is projected to surge from only a billion or so today to nearly $150 billion by the end of 2029. The most important factor that could impact the growth is the level of trust people have in giving over the buying process to a computer. It makes sense that younger consumers will have more trust and adopt sooner than older consumers, who will focus on AI to inform, not take control.
Source: Bloomberg, Emarketer
