Edward Conard

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  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
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  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
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Macro Roundup


Wednesday, April 19, 2017

AI Summary. The global savings glut is resurging with a shift toward Europe, as Western European surpluses rise and Germany's nominal current account surplus has nearly doubled since 2006 to top the global list, while surpluses of major oil exporters such as Saudi Arabia and Nigeria decline. East Asian economies still account for over 50% of the global surplus.

David Keohane Financial Times
Date Posted:
Is Database:
Database

The global savings glut is resurging, with a notable shift towards Europe. Western European surpluses, particularly Germany’s, have risen significantly, nearly doubling since 2006.

Is the global savings glut shifting from oil exporters to Europe?

Core argument: Germany's nominal current account surplus has nearly doubled since 2006, placing it atop the global surplus rankings as the savings glut that receded after the 2008 financial crisis resurges with a shift toward Europe.

The global savings glut, which had receded post-2008 GFC, is resurging with a notable shift towards Europe. Western European surpluses, particularly Germany's, have risen significantly, with Germany's nominal surplus nearly doubling since 2006, placing it at the top of the current account surplus list. This shift contrasts with the declining surpluses of major oil exporters like Saudi Arabia and Nigeria. Meanwhile, East Asian economies continue to contribute over 50% to the global surplus. The US, once dominant in current account deficits, has seen its share decrease. This evolving landscape suggests a reallocation of global savings, impacting bond yields and economic strategies. The euroglut thesis highlights Germany's role, despite challenges in boosting domestic spending and wages. As global savings patterns morph, policymakers must navigate these changes to address trade imbalances and economic growth.

Takeaways by Macro Roundup® AI

  1. Germany's nominal current account surplus has nearly doubled since 2006, placing it atop the global surplus rankings as the savings glut that receded after the 2008 financial crisis resurges with a shift toward Europe.
  2. East Asian economies continue to account for over 50% of the global current account surplus, while major oil exporters such as Saudi Arabia and Nigeria have seen their surpluses decline.
  3. The US share of global current account deficits has fallen from its former dominance, part of a reallocation of global savings with implications for bond yields and economic strategies.

"...The absolute level of East Asian current account surpluses in nominal US dollar terms has climbed beyond the previous high in 2006, while the rise of Western European surpluses has been striking...."

Finally, you’ll notice the Saudi (petrodollar) reversal, alongside the general presence of EMs hit by the commodity reversal, in the deficit chart. Hat tip to Russia for remaining at the bottom of the surplus chart above:

It’s also a reminder that China’s surplus is growing despite its domestic investment push, even if it’s not as big as its savings rate suggests it should be.

It’s a reminder, as Matt put it before, that the US shouldn’t blame Mexico for “losing” at trade — it should blame Germany. Of course, blame doesn’t help very much and solutions are hard to come by. Asking an ageing Germany to raise wages more quickly and to spend more on itself hasn’t worked so far but you never know…

You’ll notice the euroglut thesis in play, with Germany leading the way, in the SocGen charts:

"The global savings glut is reviving after a period of hibernation following the global financial crisis (GFC).The absolute level of East Asian current account surpluses in nominal US dollar terms has climbed beyond the previous high in 2006, while the rise of Western European surpluses has been striking… The global savings glut went into hibernation after the 2008 global financial crisis (GFC), but it is awakening. The phrase “global savings glut” was made famous by Ben Bernanke in 2005, when the yawning US current account imbalance drew widespread attention. The chief distinction between the pre-GFC glut and its current incarnation is that surpluses have become more concentrated in certain regions, while current account deficits have become relatively more diffused. In 2006, for example, the US accounted for the lion’s share of the world’s current account deficit in US dollar terms, but this dominance has receded markedly. The same three countries (China, Japan and Germany) headed the list of the Top 12 current account surplus countries in 2006 and 2016, but Germany climbed to the top spot in 2016 as its nominal surplus in dollar terms almost doubled. However, the contribution of the main East Asian surplus economies to the total global surplus has risen to over 50% currently (Chart 1). By contrast, major oil exporters such as Saudi Arabia, Kuwait, Norway and Nigeria that were on the 2006 list have dropped out of the 2016 list. Russia is the only major oil-producer that remains on the Top 12 surplus list (Table 1)."

From SocGen:

Bond yields be depressed for global savings appear to be re-glutted. If you’ve been paying attention you’ll probably have noticed.

Your morphing global savings glut

David Keohane, "Your morphing global savings glut,"Financial Times, April 19, 2017, https://ftalphaville.ft.com/2017/04/19/2187641/your-morphing-global-savings-glut/

Monday, April 24, 2017

AI Summary. U.S. health care spending rose 5.8% to $3.2tn, or $9,990 per person, with growth attributed to coverage expansion under the Affordable Care Act alongside stronger growth in private health insurance, hospital care, and physician and clinical services. Health care's share of the U.S. economy climbed to 17.8% from 17.4%.

Centers for Medicare & Medicaid Services Centers for Medicare and Medicaid Services
Date Posted:
Is Database:
Database

US health care spending rose 5.8% to $3.2tn in 2015, driven by the Affordable Care Act’s coverage expansion. Spending per person was $9,990. @CMSGov.

Is health care spending rising as a share of the economy?

Core argument: U.S. health care spending rose 5.8% in 2015 to $3.2tn, or $9,990 per person, driven by the Affordable Care Act's coverage expansion that began in 2014.

In 2015, U.S. health care spending rose by 5.8% to $3.2tn, equating to $9,990 per person, driven by the Affordable Care Act's coverage expansion initiated in 2014. This increase was fueled by stronger growth in private health insurance, hospital care, physician and clinical services, and continued robust growth in Medicaid and retail prescription drug spending. Consequently, the share of the U.S. economy devoted to health care spending climbed to 17.8% in 2015 from 17.4% in 2014. These figures underscore the significant impact of policy changes on national health expenditures and highlight the growing economic burden of health care on the U.S. economy.

Takeaways by Macro Roundup® AI

  1. U.S. health care spending rose 5.8% in 2015 to $3.2tn, or $9,990 per person, driven by the Affordable Care Act's coverage expansion that began in 2014.
  2. Health care spending climbed to 17.8% of the U.S. economy in 2015 from 17.4% in 2014.
  3. The 2015 increase in U.S. health spending was fueled by faster growth in private health insurance, hospital care, and physician and clinical services, alongside continued growth in Medicaid and retail prescription drug spending.

this is from the Centers for Medicare and Medicaid Services, it's how US health care spending is distributed, these numbers are gross (not just Medicare/Medicaid spending) last year available is 2015 (3 page summery is attached) though the embedded pie charts are a useful visualization"...In 2015, U.S. health care spending increased 5.8 percent to reach $3.2 trillion, or $9,990 per person. The coverage expansion that began in 2014 as a result of in the Affordable Care Act continued to have an impact on the growth of health care spending in 2015. Additionally, faster growth in total health care spending in 2015 was driven by stronger growth in spending for private health insurance, hospital care, physician and clinical services, and the continued strong growth in Medicaid and retail prescription drug spending. Lastly, the overall share of the U.S. economy devoted to health care spending was 17.8 percent in 2015, up from 17.4 percent in 2014...."National Health Expenditure Data, Centers for Medicare and Medicaid Services, Accessed April 24, 2017, https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/nationalhealthaccountshistorical.html

Historical National Health Expenditure Data: Extended Excerpt Image 1

Historical National Health Expenditure Data: Extended Excerpt Image 2