Meet the Experts is a new blog series featuring some of the brilliant minds of CoreLogic. In this edition, I spoke with Dr. Frank Nothaft, chief economist for CoreLogic, via video conference as we both adhered to social distancing measures due to the coronavirus (COVID-19). At CoreLogic, Dr. Nothaft leads the Office of the Chief Economist and is responsible for analyses, commentary and forecasting trends in the global real estate, insurance and mortgage markets.
SS: Hi, Frank! Great to have a chance to talk with you. This is the first time I am seeing you without a bow tie!
FN: The bow tie is indeed my trademark. But because of COVID, many of us at the office are working remotely, so I am not dressing as formal as I normally would. Check out my blue jeans!
SS: Nothing wrong with some casual attire. So, let’s start with your background. Where did you grow up?
FN: I’m originally from New Jersey. I grew up near exit 15E off the turnpike, which is Jersey City. It is in the northeastern part of the state and directly on the Hudson River. I lived there for 20 years and then moved to Manhattan for graduate school.
SS: What did you study as an undergraduate?
FN: I majored in mathematics and computer science with a minor in economics.
SS: I can imagine studying computer science must have been very different at the time.
FN: Yes. We would type each line of code into a key-punch machine—one line of code per card. The cards would then be given to the operator who would feed them through the card-reader machine to read the instructions on the card. There were no monitors like we have today. My friends used to say, “In ten years, we are going to have the power of an entire mainframe on your desktop.” It was hard for me to believe, but now we have more computing power in our pockets than astronauts had for the Apollo missions.
SS: What inspired you to switch from studying mathematics and computer science as an undergrad to pursuing a Ph.D. in economics?
FN: My favorite part of studying mathematics was using it to solve real world problems. After discovering that graduate mathematics was largely proof-based and highly abstract, I knew it was not the right fit for me. In college, I minored in economics, and I had seen first-hand how math can be applied in the field. At the time, the economy had fallen into a recession and oil prices were sky high. Unemployment was at the highest rate in decades. I wanted to better understand why this had happened and how we could use economics to prevent it from happening again.
SS: What was your area of focus in graduate school? And why was that a topic of interest to you?
FN: My graduate thesis examined the effects of cohort size on earnings and employment. At the time, there was an influx of baby boomers — just young workers then — entering the workforce. I wanted to first understand how this influx of younger workers was going to affect wages and earnings growth, and then compare and contrast the findings with the experience of a smaller cohort.
SS: Where did you go after completing graduate school?
FN: With my background in macroeconomics and monetary theory, I felt the best place to start my career as a newly minted economist was at the Federal Reserve Board. I worked in the research and statistics division for most of my tenure, and one year as assistant to Governor Henry Wallich. It was incredible. There were hundreds of Ph.D. economists all in one place, following each sector of the economy—I specifically focused on housing, mortgage markets and consumer credit. At first, I knew little about housing or mortgage markets, and I thought I wanted to eventually move towards labor markets. But I later discovered that there are many parallels between how you analyze labor markets and how you analyze housing markets. Housing turned out to be far more interesting than I ever could have imagined.
SS: How was your experience at the Fed shaped by the mid-1980s era?
FN: There were many regulatory changes going on at the time. During the Reagan administration, there was an emphasis on market deregulation. The economy was also coming out of the late 1970s with very high levels of inflation—as high as 13%. The Fed had changed its operating procedures and let the Fed funds rate reach over 20%. With high interest rates, mortgage rates were around 15-17%, and housing construction nationwide was depressed in the early ‘80s. My section chief had a two-by-four piece of lumber in his office that homebuilders had mailed to the Fed Chairman Paul Volcker in protest. They would attach messages saying, “I am sending this to you because I have no use for it. There is nothing I can build with mortgage rates this high.”
SS: How did you end up working at Freddie Mac after leaving the Fed?
FN: Prior to every Federal Open Market Committee meeting at the Fed, each economist that covered a market would prepare an update that would then be assembled together for the Greenbook, which discussed the latest economic trends and indicators for the U.S. economy. To prepare my draft for the housing sector and mortgage market, I would call economists at organizations like Freddie Mac, as well as other government agencies, to ask what they could tell the Fed about the housing market. One day, the chief economist at Freddie Mac called me and said they have an opening there. I worked at Freddie Mac for 28 years and was chief economist for half of my tenure—the latter 14 years I was there.
SS: What is unique about CoreLogic?
FN: We have information, data and technology that’s all focused on real estate. The fact that we can put all of it together means we can provide unique solutions to our clients that nobody else in the market can. I enjoy collaborating with experts in so many different fields. For example, I recently had the pleasure of working with the Insurance and Spatial team on the 2019 Natural Hazard Report to provide analysis on how home values and mortgage delinquency rates are impacted by disaster. It was exciting for me to engage with the seismologists, geologists and meteorologists to learn more about how we measure and monitor natural disasters.
After joining the team five years ago, I found the company had even more data assets than I was aware of. I love working with data, so I felt like a kid in a candy store. I’ve been here five years and I still feel like that kid—I have become very familiar with our data assets, but there is still much that I have yet to learn.
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