For compiling React, first install the Babel React preset module as a development dependency:
npm install babel-preset-react --save-dev
Then, update .babelrc to include the module and also configure the react-hot-loader Babel plugin as required for the react-hot-loader module.
mern-skeleton/.babelrc:
{ "presets": [ "env", "stage-2", "react" ], "plugins": [ "react-hot-loader/babel" ]}