Edward Conard

Top Ten New York Times Bestselling Author

  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, January 3, 2023

AI Summary. Wage inequality is falling for the first time in four decades as pay rises at the bottom, with real wages increasing among young high school graduates and workers in the lowest quartile. The authors argue this reflects intensified employer competition for workers rather than simply a tight labor market, implying wages better reflect productivity and higher aggregate productivity.

David Autor Massachusetts Institute of Technology
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.@davidautor shows high school workers’ wage growth overtaking college wage growth in the aftermath of the pandemic and argues that higher wages better reflect rising productivity as companies compete more intensively for workers.

Is rising employer competition, not just tight labor markets, compressing wages?

Core argument: Wage inequality is falling for the first time in four decades, driven by rising wages at the lower tail of the distribution.

For first time in four decades, wage inequality falling, due to rising lower tail. Despite inflation, real wages rising among young HS grads, 1st quartile workers. It’s tempting to attribute this change to ‘tight’ labor markets—but what does this mean in practice? The simplest explanation is that labor markets are operating on a higher point on the labor demand curve. Evidence indicates this explanation too simple: Competition has intensified. Distinction is critical: Rising competition means higher wages that better reflect productivity and higher aggregate productivity — a double dividend.

Takeaways by Macro Roundup® AI

  1. Wage inequality is falling for the first time in four decades, driven by rising wages at the lower tail of the distribution.
  2. Real wages are rising among young high school graduates and first-quartile workers despite inflation.
  3. Evidence indicates that intensified competition, rather than labor markets simply operating at a higher point on the labor demand curve, explains the compression, yielding wages that better reflect productivity and higher aggregate productivity.

AI Summary. Wages of lower-paid, less-skilled hourly workers had steadily lost ground to those of skilled workers, college graduates, managers, and professionals for decades, but that trend has reversed. The labor force with a college education is 5% larger than before the pandemic, while the high-school-educated and dropout labor force is 4% smaller.

Greg Ip Wall Street Journal
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The American college workforce is 5% larger than in Feb 2022, whereas the high school workforce is 4% smaller. This has likely contributed to the decrease in earnings inequality in the post-pandemic period. @Greg_Ip

Is the decades-long rise in wage inequality reversing?

Core argument: The college-educated labor force was 5% larger than in February 2020, while the high school-educated and high school dropout labor force was 4% smaller, though data between the two periods is not strictly comparable.

In the decades before the pandemic, the wages of lower-paid, less skilled hourly employees steadily lost ground to those of skilled workers, college graduates, managers, and professionals. In the two years since, those trends have sharply reversed. We don’t know if this narrowing in inequality will last. Perhaps it is a function of labor shortages that, like semiconductor shortages, will disappear as the pandemic recedes. Maybe it is the result of a tight labor market whose days are numbered as the Federal Reserve seeks to cool the economy. Some of this was catalyzed by the pandemic, which shrank the supply of people willing to do traditionally low-paid work. Many dropped out of the labor force, retired, or died from Covid-19. The college-educated labor force was 5% larger last month than in February 2020; the high school-educated and high school dropout labor force is 4% smaller. (Data between the two periods isn’t strictly comparable.)

Takeaways by Macro Roundup® AI

  1. The college-educated labor force was 5% larger than in February 2020, while the high school-educated and high school dropout labor force was 4% smaller, though data between the two periods is not strictly comparable.
  2. Wages of lower-paid, less skilled hourly workers lost ground to skilled workers, college graduates, managers, and professionals for decades before the pandemic, and those trends have sharply reversed in the two years since.
  3. Whether the narrowing in wage inequality lasts is unknown, as it may stem from labor shortages that fade as the pandemic recedes or from a tight labor market that the Federal Reserve is seeking to cool.

AI Summary. Mexico is positioned to gain from shifting U.S.-China trade, with lower wages than China, an established manufacturing base anchored by autos, and proximity to the U.S. market. Bank of America analysts note U.S. imports of Mexican manufactured goods are roughly 60% above pre-pandemic levels, with Mexico gaining U.S. import share in plastics and textiles as China loses share.

Stephen Wilmot Wall Street Journal
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Bank of America notes evidence of reshoring to Mexico at the expense of China with imports of Mexican low-tech goods such as plastics and textiles up ~60% relative to pre-pandemic levels.

Is Mexico gaining U.S. import share as China loses it?

Core argument: U.S. imports of Mexican manufactured goods were roughly 60% higher as of October than before the pandemic, according to Bank of America analysts who see some evidence Mexico is gaining from the U.S.-China trade war.

Another big winner in the U.S.-China trade war could be Mexico. It has lower wages than China, an established manufacturing sector anchored by the automotive industry, and the perfect geographic position for serving the U.S. market—particularly since the rise of videoconferencing, which has increased the importance of being in the same time zone. Analysts at Bank of America already see some evidence that this is happening, with U.S. imports of Mexican manufactured goods roughly 60% higher than before the pandemic as of October. Interestingly, Mexico has gained share of U.S. imports in some low-tech industrial sectors such as plastics and textiles, while China has lost share.

Takeaways by Macro Roundup® AI

  1. U.S. imports of Mexican manufactured goods were roughly 60% higher as of October than before the pandemic, according to Bank of America analysts who see some evidence Mexico is gaining from the U.S.-China trade war.
  2. Mexico has gained share of U.S. imports in some low-tech industrial sectors such as plastics and textiles, while China has lost share.
  3. Mexico's advantages include lower wages than China, an established manufacturing sector anchored by the automotive industry, and a geographic position for serving the U.S. market, which matters more since the rise of videoconferencing raised the importance of sharing a time zone.

AI Summary. Shifting US production to countries with balanced or deficit trade, such as Mexico, is likely to raise US exports to those countries because wages and household income make up a higher share of their output. Relocating to large-surplus countries instead converts part of export revenues into savings, since workers there receive a smaller share of what they produce.

Michael Pettis @michaelxpettis
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.@michaelxpettis argues that moving production away from chronic surplus countries like China to countries like Mexico will increase global demand as Mexican export revenues are converted to imports.

.@michaelxpettis argues that moving production away from chronic surplus countries like China to countries like Mexico will...

Does shifting production to balanced-trade countries raise US exports?

Core argument: Pettis argues Washington has a stronger economic case for shifting production to countries with balanced trade or trade deficits, such as Mexico, than to countries running large, persistent trade surpluses.

There is a stronger economic reason for Washington to encourage switching production from countries with large-persistent trade surpluses to countries, like Mexico, with balanced trade, or even trade deficits. Because wages and household income comprise a higher share of Mexican output, when an American business shifts production to Mexico, this will likely increase US imports from Mexico. This is not what happens when a US business relocates to a trade surplus country. In that case, because their workers receive a much lower share of what they produce, and their businesses a higher share, part of the country's export revenues are converted into savings.

Takeaways by Macro Roundup® AI

  1. Pettis argues Washington has a stronger economic case for shifting production to countries with balanced trade or trade deficits, such as Mexico, than to countries running large, persistent trade surpluses.
  2. Because wages and household income make up a higher share of Mexican output, Pettis argues that an American business moving production to Mexico will likely raise US imports from Mexico.
  3. In trade-surplus countries, where workers receive a much lower share of what they produce and businesses a higher share, Pettis argues part of export revenues is converted into savings.

AI Summary. British "silent generation" and baby boomers grew more conservative with age, and Gen X is following the same path, but millennials, born 1981-1996, diverged from that trajectory. The most likely explanation is a cohort effect, with US survey data showing millennials favoring greater redistribution from rich to poor than earlier generations.

John Burn-Murdoch Financial Times
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An analysis by @jburnmurdoch suggests millennials in the US and UK are breaking a historical pattern of becoming more conservative in their voting behavior as they age.

Are millennials failing to grow more conservative with age?

Core argument: Britain's "silent generation", born 1928–1945, was five percentage points less conservative than the national average at age 35 but roughly five points more conservative by age 70, according to the author's calculations.

By my calculations, members of Britain’s “silent generation”, born between 1928 and 1945, were five percentage points less conservative than the national average at age 35, but around five points more conservative by age 70. The “baby boomer” generation traced the same path, and “Gen X”, born between 1965 and 1980, are now following suit. Millennials — born between 1981 and 1996 — started out on the same trajectory, but then something changed. The most likely explanation is a cohort effect — that millennials have developed different values to previous generations.  This is borne out by US survey data showing that, having reached political maturity in the aftermath of the global financial crisis, millennials are tacking much further to the left on economics than previous generations did, favoring greater redistribution from rich to poor.

Takeaways by Macro Roundup® AI

  1. Britain's "silent generation", born 1928–1945, was five percentage points less conservative than the national average at age 35 but roughly five points more conservative by age 70, according to the author's calculations.
  2. Baby boomers traced the same rightward path with age as the silent generation, and Gen X, born 1965–1980, are now following it, while millennials, born 1981–1996, began on that trajectory before diverging.
  3. The author attributes the millennial divergence most likely to a cohort effect, citing US survey data showing millennials, who reached political maturity after the global financial crisis, tacking further left on economics and favoring greater redistribution from rich to poor.

AI Summary. Millennials hold roughly the same wealth per capita as Baby Boomers and Gen X did at the same age, while Gen X is about $100,000 or 18% wealthier per capita than Boomers were at that age. A broad decline in wealth has had little effect on Millennials, whose largest asset category is real estate rather than stocks.

Jeremy Horpedahl Economist Writing Every Day
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cording to @jmhorp Millennials are keeping pace with Baby Boomers and Gen X in terms of generational wealth per capita.

Are younger generations as wealthy as earlier ones at the same age?

Core argument: Gen X holds roughly $100,000 more wealth per capita than Baby Boomers did at the same age, about 18% greater.

Millennials are roughly equal in wealth per capita to Baby Boomers and Gen X at the same age. Gen X is currently much wealthier than Boomers were at the same age: about $100,000 per capita or 18% greater. Wealth has declined significantly in 2022, but the hasn’t affected Millennials very much since they have very little wealth in the stock market (real estate is by far their largest wealth category.)

Takeaways by Macro Roundup® AI

  1. Gen X holds roughly $100,000 more wealth per capita than Baby Boomers did at the same age, about 18% greater.
  2. Millennials are roughly equal in wealth per capita to Baby Boomers and Gen X at the same age.
  3. Wealth declined significantly in 2022, but Millennials were affected little because they hold very little wealth in the stock market, with real estate their largest wealth category by far.

AI Summary. Alcohol-induced deaths in the US rose from 39,043 in 2019 to 54,258 in 2021, according to the Centers for Disease Control and Prevention, with the population-adjusted death rate more than double its level in the 2000s. Even so, US alcohol consumption likely remains below that of many affluent countries, particularly in Europe.

Justin Fox Bloomberg
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Americans are drinking at elevated levels in the aftermath of the pandemic with inflation-adjusted spending up 15% in 2022 vs. just before the pandemic. @foxjust

Have alcohol-induced deaths in the US continued rising?

Core argument: US deaths from alcohol-induced causes rose from 39,043 in 2019 to 54,258 in 2021, according to the Centers for Disease Control and Prevention, with the population-adjusted death rate now more than double its level in the 2000s.

There is clear evidence that more people are drinking too much. Deaths from alcohol-induced causes rose from 39,043 in 2019 to 54,258 in 2021, according to the Centers for Disease Control and Prevention, and the population-adjusted death rate is now more than double what it was in the 2000s. Provisional data also show an encouraging decline in alcohol-induced deaths in the first half of 2022, although that trend could change as final numbers become available. Even after the big increases of the past couple of years, US alcohol consumption likely still lags that of many affluent countries, especially in Europe. And yes, Americans drank lots more back in the 1970s — not to mention the 1830s, when estimated per-capita consumption was nearly three times what it was in 2020.

Takeaways by Macro Roundup® AI

  1. US deaths from alcohol-induced causes rose from 39,043 in 2019 to 54,258 in 2021, according to the Centers for Disease Control and Prevention, with the population-adjusted death rate now more than double its level in the 2000s.
  2. Provisional data show alcohol-induced deaths declining in the first half of 2022, a trend that could change as final numbers become available.
  3. US alcohol consumption likely still lags that of many affluent countries, especially in Europe, and Americans drank more in the 1970s and in the 1830s, when estimated per-capita consumption was nearly three times the 2020 level.

AI Summary. Legislation and executive actions enacted by the Biden Administration are projected to add more than $4.8tn to budget deficits over 2021–2031. That net figure reflects roughly $4.6tn of new spending, about $500bn of tax cuts and breaks, and $700bn of added interest costs, partly offset by $400bn of spending cuts and $600bn of revenue increases.

CRFB Staff Center For A Responsible Federal Budget
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During Biden’s first two years in office, he has approved at least $4.8T of new borrowing according to @BudgetHawks.

How much have recent policies added to projected budget deficits?

Core argument: Policies enacted by the Biden Administration through legislation and executive actions since January 2021 will add more than $4.8 trillion to budget deficits between 2021 and 2031.

Since January 2021, the Biden Administration has enacted policies through legislation and executive actions that will add more than $4.8 trillion to budget deficits between 2021 and 2031. The $4.8 trillion is the net result of roughly $4.6 trillion of new spending, about $500 billion of tax cuts and tax breaks, and $700 billion of additional interest costs that are partially offset by $400 billion of spending cuts and $600 billion of revenue increases.

Takeaways by Macro Roundup® AI

  1. Policies enacted by the Biden Administration through legislation and executive actions since January 2021 will add more than $4.8 trillion to budget deficits between 2021 and 2031.
  2. The $4.8 trillion total combines roughly $4.6 trillion of new spending, about $500 billion of tax cuts and tax breaks, and $700 billion of additional interest costs.
  3. Partially offsetting the Biden Administration's deficit increases are $400 billion of spending cuts and $600 billion of revenue increases.

AI Summary. Transfer benefits phase out so quickly that the effective marginal tax rate in the lowest three income quintiles approaches 100%, meaning an extra dollar earned can cost roughly a dollar of benefits. Hours worked in the lower quintiles have plummeted, though the authors stop short of asserting a causal link.

John Cochrane The Grumpy Economist
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.@JohnHCochrane reviews Phil Gramm, Robert Ekelund and John Early book and highlights their big finding, “The effective marginal tax rate in the lowest three quintiles is effectively 100%. Earn a dollar and lose a dollar of benefits. Why work?”

Do benefit phase-outs impose near-100% marginal tax rates on low earners?

Core argument: Gramm, Ekelund, and Early's tables show an effective marginal tax rate near 100% across the lowest three quintiles, where a dollar earned is offset by a dollar of lost benefits.

Why has work collapsed in the bottom decile? Here we might have a big debate. $11.76 per hour (2017) isn't a lot. But the previous graphs certainly contain a suggestion worth pursuing: The effective marginal tax rate in the lowest three quintiles is effectively 100%. Earn a dollar and lose a dollar of benefits. Why work? Gramm Ekelund and Early are careful, and don't make any causal assertions here. They don't really even stress the fact popping from the table as much as I have. But the fact is a fact, a nearly 100% tax rate + an income effect isn't a positive for labor supply, and the amount of work in lower quintiles has plummeted.  This is a book about facing facts and this one is undeniable.

Takeaways by Macro Roundup® AI

  1. Gramm, Ekelund, and Early's tables show an effective marginal tax rate near 100% across the lowest three quintiles, where a dollar earned is offset by a dollar of lost benefits.
  2. Work has collapsed in the bottom decile, and the amount of work in the lower quintiles has plummeted.
  3. Gramm, Ekelund, and Early make no causal assertions linking the near-100% effective marginal tax rate to falling labor supply, though such a rate combined with an income effect is not a positive for labor supply.

AI Summary. World Health Organization estimates put remaining life expectancy for 15-year-old Russian males in 2019 at 53.7 years, the same as in Haiti and worse than in 23 of the 46 countries the United Nations classifies as least developed. Projecting from those survival patterns, more than one in four 20-year-old Russian males would die before age 60, twice the European risk.

Nicholas Eberstadt American Enterprise Institute
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Nicholas Eberstadt @AEI notes that prior to the Russo-Ukrainian War life expectancy for a 15-year-old Russian male “was essentially indistinguishable from 15-year-old males in Haiti.”

Do Russian men face survival odds like the least developed countries?

Core argument: WHO estimates put remaining life expectancy for 15-year-old Russian males in 2019 at 53.7 years, identical to the estimate for 15-year-old males in Haiti.

According to World Health Organization estimates, life expectancy in 2019 for 15-year-old Russian males was essentially indistinguishable from 15-year-old males in Haiti. This is not a typo. The estimate for both Haiti and Russia was 53.7 years. That teenage Russian male stood worse survival chances in Russia than in 23 of the 46 countries the United Nations categorizes as “least developed” — among them Mali, Yemen, and even war-decimated Afghanistan. Projecting from 2019 survival trajectories, over one in four 20-year-old males will die before their 60th birthday. The corresponding risk in Europe is only half that high — and those European aggregates, remember, are distorted by including Russia in them.

Takeaways by Macro Roundup® AI

  1. WHO estimates put remaining life expectancy for 15-year-old Russian males in 2019 at 53.7 years, identical to the estimate for 15-year-old males in Haiti.
  2. A 15-year-old Russian male in 2019 faced worse survival odds than counterparts in 23 of the 46 countries the UN classifies as "least developed," including Mali, Yemen, and Afghanistan.
  3. Projecting from 2019 survival trajectories, over one in four 20-year-old Russian males will die before their 60th birthday, twice the corresponding risk in Europe, whose aggregates include Russia.

Wednesday, January 4, 2023

AI Summary. The repricing of unprofitable companies is closer to its end than its beginning, as valuations have compressed to a fraction of their peak sales multiples. After the dot-com crash, tech companies that remained unprofitable continued to languish while the roughly 50% that became profitable rallied sharply to catch up with consistently profitable peers.

Michael Cembalest J.P. Morgan
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J.P. Morgan’s Michael Cembalest argues that there may be attractive investment opportunities following last year’s tech company repricing: ~50% of large-cap tech companies that were unprofitable in 2000 were eventually able to generate profits and healthy returns.

Is the repricing of unprofitable companies closer to its end?

Core argument: Peloton priced at 1x sales versus its peak of 19x sales at the end of 2020 marks the point, the author argues, to weigh whether unprofitable companies can become profitable.

After last year’s selloff, we’re much closer to the end of the young unprofitable companies/mega-valued unprofitable companies repricing than the beginning. By the time Peloton is priced at 1x sales rather than its peak level of 19x sales at the end of 2020, it’s time to start thinking about whether unprofitable companies can become profitable or not. Many unprofitable companies are in that position since the market did not require them to be profitable. The aftermath of the 2000-2002 dot-com crash is interesting in this regard: The chart above shows the performance of tech companies from 2000 to 2004 based on their initial and subsequent profitability.  Companies that remained unprofitable continued to languish. However, unprofitable companies that became profitable by 2004 rallied sharply, catching up to companies that had been profitable all along. This incorporates the benefit of perfect hindsight; still, it does indicate that for stock pickers that sift through the wreckage to try and identify survivors, there may be attractive opportunities. The size of ["unprofitable in 2000" cohort that became profitable by 2004] was roughly 50% of the “unprofitable in 2000” universe.

Takeaways by Macro Roundup® AI

  1. Peloton priced at 1x sales versus its peak of 19x sales at the end of 2020 marks the point, the author argues, to weigh whether unprofitable companies can become profitable.
  2. Roughly 50% of tech companies unprofitable in 2000 became profitable by 2004, and that cohort rallied sharply to catch up with companies profitable all along, while those that remained unprofitable languished.
  3. The author argues that many companies are unprofitable because the market did not require profitability, and that stock pickers sifting the wreckage for survivors may find attractive opportunities.

AI Summary. Employees of private technology companies are selling shares on secondary markets, where stakeholders in a private company sell to third parties, as firms including Klarna and Stripe cut costs, according to brokers and investors. Laid-off workers often must exercise shares within 60 days, forcing sales into a weak market.

Tabby Kinder Financial Times
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Shares of privately held tech firms traded on secondary markets have collapsed in price. Platforms such as Rainmaker Securities have facilitated private security transactions and have made the price declines of private companies more transparent. @ft

Are start-up employees selling shares as private valuations fall?

Core argument: Employees of tech companies including Klarna and Stripe are flooding secondary markets, where holders of private company shares sell to third parties, as the firms undertake aggressive cost-cutting, according to brokers and investors.

Employees of embattled tech groups are flooding secondary markets — where stakeholders in a private company sell shares to third parties — as the industry’s former darlings such as Klarna and Stripe have been forced into aggressive cost-cutting measures, according to brokers and investors. For many workers who have lost their jobs, their shares vest within 60 days, forcing them to sell during the worst downturn in a decade. Some companies are offering an extension on this timeframe, according to brokers, although some sellers want to get out of their holdings over fears the market rout will get worse next year. However, trading in many of these companies showed a return to, or an improvement on, pre-pandemic prices, following a significant jump in valuations during a VC fundraising boom in 2021.

Takeaways by Macro Roundup® AI

  1. Employees of tech companies including Klarna and Stripe are flooding secondary markets, where holders of private company shares sell to third parties, as the firms undertake aggressive cost-cutting, according to brokers and investors.
  2. Laid-off tech workers whose shares vest within 60 days are forced to sell into the worst downturn in a decade, though some companies are extending that timeframe, according to brokers.
  3. Trading in many of these private companies showed a return to or improvement on pre-pandemic prices, following the significant jump in valuations during the 2021 venture capital fundraising boom.

AI Summary. About 70 blank-check acquisition companies have liquidated and returned cash to investors in a single month, exceeding the total number of such liquidations in the market's history, according to data provider SPAC Research. Their creators have lost more than $600m on those liquidations and more than $1.1bn over the year.

Amrith Ramkumar Wall Street Journal
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Since the start of December over 70 SPACs have liquidated, generating losses for SPAC creators of over $600M for the month and driving total losses to $1.1B. @WSJ

Since the start of December over 70 SPACs have liquidated, generating losses for SPAC creators of over $600M for the month...

Is the blank-check company boom ending in mass liquidations?

Core argument: Roughly 70 special-purpose acquisition companies have liquidated and returned cash to investors since the start of December, more than the total number of SPAC liquidations in the market's history, according to SPAC Research.

Roughly 70 special-purpose acquisition companies have liquidated and returned money to investors since the start of December. That is more than the total number of SPAC liquidations in the market’s history, according to data provider SPAC Research. SPAC creators have lost more than $600 million on liquidations this month and more than $1.1 billion this year, the data show. There are still nearly 400 SPACs together holding about $100 billion that have yet to find deals, according to SPAC Research. There are another roughly 150 SPACs holding about $25 billion that have reached merger agreements but haven’t closed them.

Takeaways by Macro Roundup® AI

  1. Roughly 70 special-purpose acquisition companies have liquidated and returned cash to investors since the start of December, more than the total number of SPAC liquidations in the market's history, according to SPAC Research.
  2. SPAC creators have lost more than $600 million on liquidations in December and more than $1.1 billion over the year, according to SPAC Research data.
  3. Nearly 400 SPACs holding about $100 billion have yet to find deals, and another roughly 150 holding about $25 billion have reached merger agreements that have not closed, according to SPAC Research.

AI Summary. Across "normal" subperiods, personal consumption inflation of 1–3% accompanied real consumption growth of about 2–3%, with a positive relationship between the two, but high-inflation subperiods showed roughly 6% inflation alongside average consumption growth. This pattern suggests that high inflation reflected supply disruptions or other demand components rather than strong consumption growth.

Juan Sánchez Federal Reserve Bank Of St. Louis
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According to an analysis by @stlouisfed, tighter monetary policy did not impact consumption growth until November 2022.

Did high inflation coincide with unusually strong consumption growth?

Core argument: Annualized PCE inflation ran about 6% in both April 2021–February 2022 and March–July 2022 while real consumption growth was average, suggesting the high inflation came from something other than growing consumer demand.

The blue dots in the figure show three “normal” subperiods, in which [annualized PCE] inflation was between 1% to 3% and real consumption growth was about 2% to 3%. There is also a positive relationship between consumption growth and inflation. The red dots show two high inflation subperiods, from April 2021 to February 2022 and from March to July 2022. Although inflation was very high (about 6%) in both periods, consumption growth was average. This suggests the high inflation was because of something other than growing demand. In that case, inflation during these periods may be associated with supply disruptions, or other components of demand (e.g., government consumption), rather than high real consumption growth. Since March 2022, the Federal Reserve has raised interest rates, so the second period highlighted in red also corresponds to a period of tightening monetary policy. From March to July 2022, inflation continued at 6%, and consumption growth was slightly higher than in the previous months. This pattern suggests that monetary policy, at least during those months, didn’t yet reduce consumption growth. The last four months are depicted with green dots [with seasonally-adjusted monthly PCE and real consumption growth rates annualized.] Two patterns are clear. First, inflation is significantly lower in the four months and is now close to 1%. Second, real consumption growth was very high during August and October but finally decreased to an annual rate of just over 0% in November. Thus, only the data corresponding to November suggests that the monetary mechanism described above may be working.

Takeaways by Macro Roundup® AI

  1. Annualized PCE inflation ran about 6% in both April 2021–February 2022 and March–July 2022 while real consumption growth was average, suggesting the high inflation came from something other than growing consumer demand.
  2. From March to July 2022, after the Federal Reserve began raising interest rates, inflation continued at 6% and consumption growth was slightly higher than in prior months, suggesting monetary policy had not yet reduced consumption growth.
  3. In the final four months shown, annualized PCE inflation fell to close to 1%, while real consumption growth was very high in August and October before decreasing to an annual rate of just over 0% in November.

AI Summary. American manufacturing firms cite materials and labor shortages as major constraints on production at the highest levels in decades, with supply chains in disarray and demand exceptionally strong.

Joseph Politano Apricitas Economics
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Independent analyst @JosephPolitano notes that the primary driver of capacity under-utilization for American manufacturing firms has shifted from insufficient orders to insufficient supply of labor and materials.

Are shortages constraining manufacturing production at the highest levels in decades?

Core argument: American manufacturing firms cite materials and labor shortages as major constraints on production at the highest levels in decades.

American manufacturing firms are also citing materials and labor shortages as major constraints to production at the highest levels in decades. Everywhere you look, supply chains seem to be in disarray—and demand seems to be off the charts.

Takeaways by Macro Roundup® AI

  1. American manufacturing firms cite materials and labor shortages as major constraints on production at the highest levels in decades.
  2. Supply chains appear to be in disarray while demand runs exceptionally high, raising the question of how monetary policy should operate in a shortage economy.

AI Summary. Google and Facebook parent Meta together accounted for 48.4% of U.S. digital advertising spending, their combined share falling below 50% for the first time in nearly a decade, according to estimates from research firm Insider Intelligence. The firm projects that share will decline further to 44.9%.

Patience Haggin Wall Street Journal
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According to data from Insider Intelligence, Google and Facebook’s share of digital advertising was 48.4% in 2022, and is expected to decline to 44.9% in 2023, as Amazon, TikTok, and digital streamers gain share. @WSJ

Is the largest online ad duopoly's US market share shrinking?

Core argument: Google and Meta together accounted for 48.4% of U.S. digital-ad spending in 2022, their first combined share below 50% since 2014, according to estimates from Insider Intelligence.

For the first time in nearly a decade, the two largest players in online advertising are no longer raking in the majority of U.S. digital-ad dollars, a decline that industry insiders expect to continue in years to come. Alphabet Inc.’s; Google and Facebook parent Meta Platforms Inc. accounted for a combined 48.4% of U.S. digital-ad spending in 2022, according to estimates from research firm Insider Intelligence Inc. Their combined U.S. market share hadn’t been under 50% since 2014, said Insider Intelligence, which expects that number to drop to 44.9% this year.

Takeaways by Macro Roundup® AI

  1. Google and Meta together accounted for 48.4% of U.S. digital-ad spending in 2022, their first combined share below 50% since 2014, according to estimates from Insider Intelligence.
  2. Insider Intelligence expects Google and Meta's combined U.S. digital-ad market share to fall to 44.9% this year, a decline industry insiders expect to continue in years to come.
  3. TikTok and streaming services are emerging as competitors for U.S. digital-ad dollars as Google and Meta's advertising dominance fades.

According to data from Insider Intelligence, Google and Facebook’s share of digital advertising was 48.4% in 2022, and is expected to decline to 44.9% in 2023, as Amazon, TikTok, and digital streamers gain share.

“…For the first time in nearly a decade, the two largest players in online advertising are no longer raking in the majority of U.S. digital-ad dollars, a decline that industry insiders expect to continue in years to come. Alphabet Inc.’s; Google and Facebook parent Meta Platforms Inc. accounted for a combined 48.4% of U.S. digital-ad spending in 2022, according to estimates from research firm Insider Intelligence Inc. Their combined U.S. market share hadn’t been under 50% since 2014, said Insider Intelligence, which expects that number to drop to 44.9% this year….”

Patience Haggin, “Google and Meta’s Advertising Dominance Fades as TikTok, Streamers Emerge,” Wall Street Journal, January 4, 2023, https://www.wsj.com/articles/google-and-metas-advertising-dominance-fades-as-tiktok-netflix-emerge-11672711107

Google and Meta’s Advertising Dominance Fades as TikTok, Streamers Emerge

For the first time in nearly a decade, the two largest players in online advertising are no longer raking in the majority of U.S. digital-ad dollars, a decline that industry insiders expect to continue in years to come.

Alphabet Inc.’s Google and Facebook parent Meta META Platforms Inc. accounted for a combined 48.4% of U.S. digital-ad spending in 2022, according to estimates from research firm Insider Intelligence Inc. Their combined U.S. market share hadn’t been under 50% since 2014, said Insider Intelligence, which expects that number to drop to 44.9% this year.

The ad businesses of Google and Meta are still growing, but Insider’s data suggest the pace is slower than the rest of the U.S. digital-advertising market. Insider forecasting analyst Zachary Goldner said the erosion of their combined market share was the result of brands having access to more advertising formats.

“All marketers want more options,” Mr. Goldner said.

Google and Meta each faced headwinds in 2022, as people spent less time online than in the early days of the pandemic; marketers concerned about a possible economic downturn reined in ad spending; Amazon and ByteDance Ltd.’s TikTok continued their emergence as a force in digital advertising; and more streaming services started to embrace advertising.

Meta and other social-media companies including Snap Inc. also suffered from Apple Inc.’s 2021 decision to require apps on its devices to ask users if they wanted to be tracked. The majority of iPhone users opted not to be, hitting the heart of Meta’s business: its ability to target ads at users with precision and prove to marketers that the ads generate sales.

Google wasn’t as affected by Apple’s move, because its flagship search-ad business relies on customer intent—users’ search terms immediately reveal what they are interested in—rather than data collected from app and web tracking. Its U.S. digital-advertising market share slightly rose to 28.8% in 2022, Insider Intelligence said, but is expected to fall to 26.5% this year.

Google didn’t respond to a request for comment. On the company’s most recent earnings call in October, executives talked about how search-based advertising tends to do well during challenging economic times.

Meta had no comment. In its most recent earnings call, Meta said the tracking restriction continued to affect its ad business but noted the effect had diminished.

Apple’s tracking restriction had an impact for emerging e-commerce companies, which are important to Meta’s ad business. Supergut Chief Executive Marc Washington said the maker of gut-health products used to spend about 80% of its ad budget on Meta’s Facebook and Instagram platforms, with the rest going to Google. In early 2022, he noticed that the cost of bringing in new customers through advertising on Meta’s platforms was twice as high as it was before Apple’s privacy changes. Supergut shifted about half of what it spent on Meta to TikTok, a short-form video platform popular with younger audiences.

Mr. Washington said Meta remained Supergut’s most efficient advertising platform, but said there are early indications of “TikTok ads performing as well and in some cases better than some of our Meta campaigns.”

TikTok’s command of the U.S. digital-ad market more than doubled in 2022, Insider Intelligence said, thanks to its nearly 100 million U.S. monthly active users, the virality of the platform and its hold over Gen Z, millennials and influencers. Still, its overall share remains small, accounting for 2% of U.S. digital-ad spending, according to Insider Intelligence, which expects that number to grow to 2.5% this year.

The gains came as TikTok has received increased scrutiny from Washington, D.C., over national-security concerns U.S. officials say the Chinese-owned app poses—accusations that TikTok has disputed. The company also faces competition from Google’s YouTube and Meta’s Instagram, which have launched offerings that mimic its short-form video-recommendation format.

One already large digital-advertising player that gained market share in the U.S. last year was Amazon, whose ad business is powered by its ability to target users by their purchase and browsing history. The e-commerce giant accounted for 11.7% of U.S. digital-ad spending last year and is poised to grow to 12.4% in 2023, Insider said.

“Our advertising is at the point where consumers are ready to spend,” Amazon Chief Financial Officer Brian Olsavsky said on the company’s October conference call.

Sam Bloom, chief executive of digital-ad agency Camelot Strategic Marketing and Media, said some of its clients that had withheld selling on Amazon started doing so last year, using Amazon ads to promote their products on the platform.

Other retailers have followed in Amazon’s footsteps by building digital-ad businesses based on their consumer data, known as retail media networks. Combined, Walmart Inc., eBay Inc., Etsy Inc. and Instacart took in about 1.4% of digital-ad dollars spent in the U.S. last year, according to Insider.

Edwin Fu, chief executive of Placements.io Inc., a tech company that works with digital- publishers and online retailers on billing systems for their ad inventory, described the rise of retail media networks as a “massive race to do what Amazon did.”

Streaming services also are commanding a larger slice of the digital-advertising pie. Mr. Bloom said many of its clients are shifting their spending away from traditional television and toward video platforms in an effort to reach younger viewers.

Insider said Roku Inc., Walt Disney Co.’s Hulu, Paramount Global’s Pluto TV and Paramount+, Fox Corp.’s Tubi and Comcast Corp.’s Peacock accounted for about 3.6% of U.S. digital-ad spending last year. The trend is expected to accelerate now that the streaming industry’s two-largest players, Netflix Inc. and Disney+, have launched ad-supported versions.

Vincent Létang, executive vice president of global market research at Magna, a media- investment firm that is part of Interpublic Group of Cos.‘ Mediabrands, called Netflix and Disney’s entry into the market “a game-changing moment” for ad-supported streaming. “They bring a potentially huge number of viewers,” he said, and a wealth of premium video content.

Given the emergence of new digital-advertising alternatives, Google and Meta’s declining market share is hardly surprising, said digital ad consultant Ratko Vidakovic. The surprise was actually their 2021 performance, an aberration that he said was caused by the pandemic.

U.S. digital-ad spending grew by a whopping 41% in 2021, according to media and data giant GroupM, part of WPP PLC. That growth number dipped to 10.7% last year and is expected to slip to 9.2% this year. GroupM expects overall ad spending in the U.S.—excluding political advertising—to grow by 5.5% this year.

Despite the expectations of slowing growth, digital-advertising platforms will take in an ever-larger share of ad dollars this year, GroupM said: Nearly two-thirds of total U.S. ad spending is expected to go to digital advertising in 2023, compared with less than half in 2019, the last year before the pandemic.

AI Summary. In Pennsylvania's Senate race, the Democratic candidate won by about 5 percentage points, improving on the prior Democratic presidential margin across nearly the whole state. His gains averaged 7 points in counties at least 60% white without a college degree, versus 3 points elsewhere.

Geoffrey Skelley FiveThirtyEight
Date Posted:
Is Database:
Database

.@FiveThirtyEight analyst @geoffreyvs finds that Fetterman’s margin of victory was provided by non-college white voters: Fetterman polled 7pp better than Biden in counties dominated by non-college whites.

Did Democrats gain most among white voters without college degrees?

Core argument: John Fetterman defeated Republican Mehmet Oz by about 5 percentage points in Pennsylvania's Senate race, improving on Biden's margin across almost the entire state.

John Fetterman bettered Biden’s margin across almost the entire state on his way to defeating Republican Mehmet Oz by about 5 percentage points, his largest improvements over Biden tended to be in red-leaning counties with higher shares of white residents without a college degree. In counties with a population that’s at least 60 percent white without a college degree — which together produced about 36 percent of the state’s 2022 vote — Fetterman’s margin was 7 points better than Biden’s, on average, compared with just 3 points better elsewhere.

Takeaways by Macro Roundup® AI

  1. John Fetterman defeated Republican Mehmet Oz by about 5 percentage points in Pennsylvania's Senate race, improving on Biden's margin across almost the entire state.
  2. In Pennsylvania counties at least 60 percent white without a college degree, which together produced about 36 percent of the state's 2022 vote, Fetterman's margin averaged 7 points better than Biden's, compared with 3 points better elsewhere.
  3. Fetterman's largest improvements over Biden tended to come in red-leaning counties with higher shares of white residents without a college degree.

“…In counties with a population that’s at least 60 percent white without a college degree — which together produced about 36 percent of the state’s 2022 vote — Fetterman’s margin was 7 points better than Biden’s, on average, compared with just 3 points better elsewhere….”

Geoffrey Skelley, “The Voters Who Helped Democrats Keep the Senate,” FiveThirtyEight, December 19, 2022, https://fivethirtyeight.com/features/biden-coalition-2022-senate-democrats/

The Voters Who Helped Democrats Keep the Senate

Coming into the 2022 midterm elections, the Democratic Party wasn’t sure what to do with its standard-bearer. With his poor approval rating, President Biden wasn’t a hot commodity on the campaign trail, as Democrats — facing an electoral environment that history suggested would be unfavorable — feared losing both chambers of Congress.

But after all the votes were tallied, Democrats retained control of the Senate by winning the chamber’s four most important races, holding onto seats in Arizona, Georgia and Nevada and picking up an open seat in Pennsylvania. The candidates who won these races didn’t do so by remaking the Democratic coalition in their states. In fact, county-level data suggests that their performances mostly tracked along Biden’s performance in the 2020 presidential election, which saw him carry all four states by narrow margins.

Where these Democratic candidates did gain ground suggests that they largely replicated Biden’s coalition while also making some small but specific inroads. In Pennsylvania counties with lots of white voters without a college degree, in some heavily Hispanic parts of Arizona, in the Atlanta metropolitan area in Georgia — Democrats won Senate seats by exceeding the margins Biden used to win each state in 2020. And even in Nevada, where Democratic Sen. Catherine Cortez Masto’s margin of victory was smaller than Biden’s, her performance in more affluent areas with larger numbers of white voters with a college degree suggests that she made up enough ground to offset her slightly smaller margins in lower-turnout and more racially diverse areas.

To examine how these various trends played out in each state, we took a look at the county-level results and how the Democratic winners’ margins compared to Biden’s in 2020. We also dug into how these changes related to demographic and population data from the U.S. Census Bureau.1 County-level data can’t always provide a clear picture of how different groups voted, so we also spent some time looking beneath the county level — at congressional district- or precinct-level results — to explore some of the key factors that propelled Democrats to victory.

Out of this quartet, the one Democratic pickup was the open seat in Pennsylvania, which saw a striking reversion of a recent trend in American elections: white voters without a college degree increasingly opting for Republican candidates. Indeed, while Democratic Sen.-elect John Fetterman bettered Biden’s margin across almost the entire state on his way to defeating Republican Mehmet Oz by about 5 percentage points, his largest improvements over Biden tended to be in red-leaning counties with higher shares of white residents without a college degree, as the chart below shows.

This pattern proved vital to the result because white voters without a college degree make up a big chunk of the Keystone State’s electorate. Three in four Pennsylvanians are white, putting the state in the top half of the whitest states in the country, and almost two in three of them do not have a bachelor’s degree. Former President Trump won the state in 2016, in part due to gains among voters in this group, and came just shy of defeating Biden there in 2020.

But Fetterman’s improvement wasn’t an accident, as his campaign spent a lot of time and effort appealing to blue-collar white voters in places where Democrats have lost ground in recent years. In counties with a population that’s at least 60 percent white without a college degree — which together produced about 36 percent of the state’s 2022 vote — Fetterman’s margin was 7 points better than Biden’s, on average, compared with just 3 points better elsewhere. It’s hard to know how much Oz’s profile as a Hollywood-connected television celebrity also played into these results. Fact is, Oz may have been an especially weak candidate when it came to appealing to less affluent voters in more rural areas, where Fetterman made some of his most sizable gains compared to Biden. But overall, Fetterman’s improvement in farther-flung places mattered because it reduced the GOP’s ability to run up massive margins outside the state’s two major metropolitan areas, which Republicans need in order to have a path to victory in Pennsylvania.

This focus coupled successfully with Fetterman’s profile as a former mayor of a struggling post-industrial town in the Pittsburgh area, which produced especially strong results for Fetterman in the western part of the state. Not only is western Pennsylvania whiter than the eastern part of the state, but parts beyond Allegheny County (Pittsburgh) were once more Democratic-leaning before becoming much redder in recent years. Thanks to his campaign and background, Fetterman’s margin was 8.5 points better than Biden’s across the entire Pittsburgh metropolitan statistical area, including double-digit overperformances in some of the area’s more peripheral and red-leaning counties.3 Now, Fetterman didn’t flip any of these counties, but he significantly reduced the Republican margin across most parts of the state’s western half. For instance, Greene County in the state’s southwest corner still went for Oz by 30 points, but Trump won it by 43 points in 2020.

At the same time, Fetterman’s winning performance didn’t necessarily involve massive engagement from every part of the Biden coalition. Fetterman ran about even with Biden’s 2020 showing in the larger Philadelphia metropolitan area, which was partly due to reduced turnout among Black voters. Philadelphia proper saw notably lower participation compared with 2018, the previous midterm, whereas the total number of votes cast was up almost everywhere else in the state. Nevertheless, Fetterman also did almost 5 points better than Biden in areas of the state outside of the Philadelphia and Pittsburgh metropolitan areas, showing the wide breadth of his outperformance.

Similar to Fetterman, Sen. Mark Kelly of Arizona won his race by holding together most of Biden’s coalition while also making small gains elsewhere. His 5-point victory over Republican Blake Masters came in part because he won a high level of support among Latino voters, a Democratic-leaning group that shifted somewhat toward Republicans in the 2020 presidential election — a trend the GOP had hoped to build on in 2022. As the chart below shows, Kelly improved on Biden’s margins most everywhere, but there was no relationship between the share of a county’s Latino population and how much Kelly outperformed Biden.4 Take the two counties that have majority-Hispanic populations: Kelly performed 3 points better than Biden in Santa Cruz (which is 83 percent Hispanic) and ran about even with Biden in Yuma (65 percent).

But about three-fourths of the state’s voters live in Maricopa County (Phoenix) and Pima County (Tucson), so the topline numbers in those counties may not tell us much about the Latino vote specifically (the counties are 32 and 38 percent Latino, respectively). So we have to look within those counties to get a clearer understanding of how the state’s Latino population voted. For instance, in the Maricopa-based 3rd Congressional District — Arizona’s most heavily Latino seat (58 percent by voting-age population) — Kelly did about 4 points better than Biden did in 2020, according to Daily Kos Elections. This suggests that, at the very least, Kelly probably didn’t lose much — if any — ground among Latino voters.

This takeaway is confirmed by Equis Research, a Latino-focused political firm that compared their modeled race and ethnicity voter data to precinct-level results in Maricopa. Equis found that as the share of the Latino population in a precinct grew, Kelly’s performance improved at about the same rate as Biden’s had in 2020. And across majority Latino precincts in Maricopa, Equis calculated that Kelly did about 1 point better than Biden.

Kelly also made further inroads in competitive or red-leaning areas in Phoenix with larger white populations. Within Maricopa County, Kelly did 5 to 7 points better than Biden in the 1st, 4th, 5th and 8th congressional districts (all but the 5th are entirely in Maricopa). These districts vary quite a bit in terms of partisanship, too, as the 1st and 4th are both highly competitive and the 5th and 8th districts are both solidly red. Considering registered Republicans in Maricopa turned out at a slightly higher rate than registered Democrats, Kelly’s performance suggests he may have won over some right-leaning (or formerly right-leaning) voters to outperform Biden’s 2020 showing.

Staying in the Southwest, Nevada also provided another key hold for Democrats in the Senate. Unlike the Democratic winners in Pennsylvania, Arizona and Georgia, Cortez Masto didn’t outperform Biden’s 2020 numbers statewide, but she did just enough to come out on top against Republican Adam Laxalt by 0.8 points statewide after Biden carried the state by 2.4 points in 2020. She did this by holding onto similar levels of support in places with large Latino populations and by performing on par (or slightly better) in areas with more college-educated white voters, who have been moving toward Democrats nationally.

But as always, Nevada came down to the vote tallies in Clark County (Las Vegas) and Washoe County (Reno), and in the end, Cortez Masto managed to lose a little ground in the former while staying even with Biden in the latter. And because Clark and Washoe contributed the vast majority of the statewide vote, Cortez Masto didn’t benefit much — but also didn’t hurt her chances — by running a tad better than Biden in the rest of the state.

Nevada has very few counties with sizable populations, so analyzing the state’s vote means moving below the county level to some extent. The three largest cities in Nevada — Las Vegas, Henderson and North Las Vegas — are all based in Clark County, and using precinct-level data, we can see that Cortez Masto did a tad better than Biden in wealthier and whiter Henderson while losing a little ground in the more racially and ethnically diverse Las Vegas and North Las Vegas. While she lost Henderson, a more well-educated GOP-leaning city that’s 60 percent white, Cortez Masto actually did 1 point better than Biden. And though she easily carried Las Vegas (42 percent white) and North Las Vegas (just 24 percent), Cortez Masto’s margin of victory was 1 point lower than Biden in the former and 2 points lower in the latter.

These are small differences, to be sure, but given the closeness of the race, every little shift mattered. Moreover, Cortez Masto performed almost identically to Biden in Washoe County as a whole, which looks similar to Henderson, another sign that whiter, wealthier and more educated areas in the two major metropolitan centers of the state didn’t break for the GOP but instead helped Cortez Masto stay in office. Turnout was also part of the story, however, as Clark had the sharpest drop in vote share amongst all Nevada counties compared with 2020’s vote totals, and more diverse places like Las Vegas and North Las Vegas saw steeper declines than whiter and more affluent areas like Henderson.

Still, this doesn’t mean Latino voters, who make up close to 30 percent of the state’s population, weren’t vital to Cortez Masto’s reelection. Equis Research examined the precinct-level vote in Clark and found that, crucially, Cortez Masto’s support in heavily Latino precincts was almost identical to Biden’s backing in the same places. As we saw throughout the country in 2020, Biden underperformed 2018 and 2016 Democratic numbers among Hispanics in Clark, but Cortez Masto avoided letting things slip further, which could have cost her reelection.

In Georgia’s Dec. 6 runoff, Democratic Sen. Raphael Warnock defeated Republican Herschel Walker by nearly 3 points after neither candidate won an outright majority in November. While the urban and suburban counties in Arizona, Nevada and Pennsylvania were crucial to the Democratic wins in those states, Georgia may have provided the best demonstration for how a Democratic candidate’s strong performance in such places led to victory.

Using FiveThirtyEight’s urbanization index,5 we can see that the more densely populated a county, the better Warnock tended to do compared to Biden’s 2020 margin. Most notably, Warnock increased Democratic vote share across the Atlanta metro area, including running up margins in the city’s increasingly diverse suburbs — a national trend we’ve seen in major population centers and one that helped Biden win the presidency two years ago.

Warnock’s improvement speaks to the proliferation of parts of the Democratic coalition in the Atlanta area, including a growing base of Black voters and a shift among white college-educated voters toward the party, but also meaningfully large Latino and Asian communities in parts of the region, too. The results also demonstrate how increased diversity in formerly lily-white suburban counties like Cobb and Fayette has changed the politics of such places dramatically.

Warnock’s most impressive showing was in the 11 counties of the Atlanta Regional Commission, which constituted almost half of Georgia’s vote in the 2022 runoff. Warnock won this region by almost 34 points, a 6-point improvement on Biden’s performance. Most of the region’s vote came from four principal counties: DeKalb and Fulton, which contain the city of Atlanta, and Cobb and Gwinnett, which are big suburban counties that sit north of Atlanta. Warnock outperformed Biden’s marks in each county by 5 to 7 points, despite a fair bit of variation in the racial and ethnic makeup of these places: DeKalb and Fulton have majority and plurality Black populations, respectively; Gwinnett’s population is roughly one-third white, one-quarter Black and one-fifth Latino; and Cobb’s population is half white and a quarter Black.

But his improvement over Biden showed up elsewhere in the Atlanta metro area, too. This included strong performances in two fairly different counties just south of the city: Warnock outperformed Biden by 7 points in Clayton County, which is 69 percent Black, but he also outdid Biden by 6 points in Fayette, a majority white and increasingly competitive county next door.

Outside of Atlanta and its environs, Warnock’s improvement over Biden was spottier, but he still tended to do better in counties surrounding other smaller cities in the state, such as Augusta, Columbus, Macon and Savannah, which are also comparatively more urban or suburban than much of the state. For his part, Walker did better than Trump in many places, but as the chart conveys, most of them were rural and less populous, which together couldn’t remotely make up for Walker’s losses in the more populous parts of the state.

The political environment will shift and change before we get to the 2024 election, but these performances show how Democrats can win if they maintain backing from the party base, gain support in increasingly diverse suburbs and campaign even in more rural and whiter places that have moved toward the GOP. It’s of course not all up to Democrats, as Republicans will need to pick stronger statewide candidates who can challenge Democrats’ ability to make inroads among more GOP-leaning constituencies. But at least in 2022, these four Democrats largely retained most of Biden’s coalition and at times added to it, which ensured Democrats continued control of the Senate in the next Congress.

AI Summary. Republicans won the national U.S. House popular vote 51% to 48% — a two-point edge after adjusting for races with only one major party on the ballot — and drew the most House votes in the four states where their Senate candidates fell short: Pennsylvania, Arizona, Georgia, and Nevada. Republicans backed by Trump in primaries ran far behind mainstream Republicans.

Nate Cohn New York Times
Date Posted:

.@Nate_Cohn of @NYT notes that Republicans won the national House vote 51% to 48% but lost statewide in key Senate races where they won the statewide House vote, as candidates backed by former President Trump ran far behind mainstream Republicans in PA, AZ, GA, and NV.

Why did popular-vote winners still lose key Senate races?

Core argument: Republicans won the national U.S. House popular vote by three points, 51 percent to 48 percent, and still led by two points after adjusting for races in which only one major party appeared on the ballot.

Republicans won the national House popular vote by three percentage points — 51 percent to 48 percent. They still won by two points after adjusting for races in which only one major party was on the ballot. Republican candidates won the most votes for U.S. House in all four of the crucial Senate states where Republicans fell short: Pennsylvania, Arizona, Georgia, and Nevada. The “MAGA” Republicans — as characterized by The Cook Political Report, based on their backing from Mr. Trump in the primaries — ran far behind the mainstream Republicans.

Takeaways by Macro Roundup® AI

  1. Republicans won the national U.S. House popular vote by three points, 51 percent to 48 percent, and still led by two points after adjusting for races in which only one major party appeared on the ballot.
  2. Republican U.S. House candidates won the most votes in all four crucial Senate states where Republicans fell short: Pennsylvania, Arizona, Georgia and Nevada.
  3. "MAGA" Republicans, as characterized by The Cook Political Report based on Donald Trump's backing in the primaries, ran far behind mainstream Republican candidates.