Edward Conard

Top Ten New York Times Bestselling Author

  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…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
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “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
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Friday, January 27, 2023

AI Summary. The share of subprime auto borrowers at least 60 days late on payments reached 5.67%, up from a seven-year low of 2.58%, exceeding the 5.04% peak reached during the Great Recession, according to Fitch Ratings. Average new auto loan rates rose to 8.02% from 5.15% a year earlier, with higher rates for subprime borrowers.

Claire Ballentine Bloomberg
Date Posted:

As rates rise the percentage of subprime auto borrowers who are delinquent on their bills rose to 5.7%, higher than the Great Recession peak of 5.0% in January 2009. Though repossessions are still under pre-pandemic levels. @Bloomberg

Are subprime auto borrowers falling behind on payments at record rates?

Core argument: Subprime auto borrowers at least 60 days late on payments reached 5.67% in December, up from a seven-year low of 2.58% in April 2021 and above the 5.04% Great Recession peak of January 2009, per Fitch Ratings.

In December, the percentage of subprime auto borrowers who were at least 60 days late on their bills rose to 5.67%, up from a seven-year low of 2.58% in April 2021, according to Fitch Ratings. That compares to 5.04% in January 2009, the peak during the Great Recession. Higher interest rates are making it even more difficult to make the monthly payments. The average new auto loan rate was 8.02% in December, up from 5.15% a year earlier, according to Cox Automotive. The rate can be much higher for subprime borrowers. While the number of vehicle repossessions is rising, it’s still below pre-pandemic levels. At Manheim, an auto auction company, the number of repossessed cars increased 11% in 2022 compared to the prior year, but that was still down 26% from 2019.

Takeaways by Macro Roundup® AI

  1. Subprime auto borrowers at least 60 days late on payments reached 5.67% in December, up from a seven-year low of 2.58% in April 2021 and above the 5.04% Great Recession peak of January 2009, per Fitch Ratings.
  2. The average new auto loan rate was 8.02% in December, up from 5.15% a year earlier, according to Cox Automotive, and can be much higher for subprime borrowers.
  3. Repossessed cars at auction company Manheim rose 11% in 2022 from the prior year but remained 26% below 2019 levels.

AI Summary. Housing has two separate bottoms, one for activity and one for prices, and existing home sales may have already bottomed while residential investment is expected to decline further. The author argues house prices, especially inflation-adjusted, will remain under pressure for some time, guessing nominal national declines of 10%+ after a 2.4% seasonally adjusted drop.

Bill McBride Calculated Risk
Date Posted:

.@calculatedrisk argues housing prices in real terms will be under pressure for some time as the bottom in prices can lag the bottom in investment by years. He expects at least 10% decline in nominal prices from peak with 2.4% already having occurred.

Has housing activity bottomed even as home prices keep falling?

Core argument: The Case-Shiller National Index has already fallen 2.4% seasonally adjusted, and the author guesses nominal U.S. house prices will decline 10%+ nationally, while noting the timing and extent of nominal declines is difficult to predict.

My expectation is residential investment will decline further in 2023, although the largest percentage decline was in 2022. If we look at the most comparable period to the current cycle, the 1978 to 1982 period, we see that real house prices bottomed several years after activity bottomed. Activity bottomed in 1981 or early 1982, but house prices didn’t return to the previous peak (inflation adjusted) until mid-1986. The timing and extent of nominal price declines is difficult to predict. I’ve guessed that we will see 10%+ in nominal price declines nationally. We’ve already seen national price declines of 2.4% seasonally adjusted (Case-Shiller National Index) as sellers appear to be willing to give back some of the extraordinary gains over the last two years (not completely “sticky”). The bottom line is that there will be two bottoms for housing: one for activity and the other for prices. Existing home sales may have already bottomed, but we will see further declines in residential investment. Prices - especially in real terms - will be under pressure for some time.

Takeaways by Macro Roundup® AI

  1. The Case-Shiller National Index has already fallen 2.4% seasonally adjusted, and the author guesses nominal U.S. house prices will decline 10%+ nationally, while noting the timing and extent of nominal declines is difficult to predict.
  2. The author expects residential investment to decline further in 2023 even though the largest percentage decline came in 2022, and existing home sales may have already bottomed.
  3. In the 1978 to 1982 period, the most comparable to the current cycle, housing activity bottomed in 1981 or early 1982 but inflation-adjusted house prices did not return to their prior peak until mid-1986.

AI Summary. States relying on the shrinking Colorado River are unlikely to voluntarily agree to deep water-use reductions, which would force the federal government to impose cuts on supplies serving 40m Americans. Allocations assumed an average flow of 17.5m acre-feet a year, but actual flow has averaged under 15m.

Christopher Flavelle New York Times
Date Posted:

The Colorado’s River’s flow has averaged less than 10M acre-feet a year in the past three years vs. a long-term average of under 15M. The reduced flows may force the Federal government to impose water use restrictions affecting 40M Americans. @Cflav

Will the federal government have to impose water cuts on states?

Core argument: The Colorado River's annual flow averaged just over 12 million acre-feet from 2000 through 2022 and fell below 10 million acre-feet in each of the past three years.

The states that rely on water from the shrinking Colorado River are unlikely to agree to voluntarily make deep reductions in their water use which would force the federal government to impose cuts for the first time in the water supply for 40 million Americans. The Colorado River Compact apportioned the water among two groups of states. The so-called upper basin states would get 7.5 million acre-feet a year. The lower basin got a total of 8.5 million acre-feet. A later treaty guaranteed Mexico, where the river reaches the sea, 1.5 million acre-feet. The premise that the river’s flow would average 17.5 million acre-feet each year turned out to be faulty. Over the past century, the river’s actual flow has averaged less than 15 million acre-feet each year. From 2000 through 2022, the river’s annual flow averaged just over 12 million acre-feet; in each of the past three years, the total flow was less than 10 million.

Takeaways by Macro Roundup® AI

  1. The Colorado River's annual flow averaged just over 12 million acre-feet from 2000 through 2022 and fell below 10 million acre-feet in each of the past three years.
  2. States reliant on the Colorado River are unlikely to voluntarily accept deep water-use reductions, which would force the federal government to impose cuts for the first time on a supply serving 40 million Americans.

AI Summary. Japan and the Netherlands are set to join the United States in restricting China's access to advanced semiconductor manufacturing equipment, with Dutch limits extending to at least some of ASML's deep ultraviolet lithography machines and Japan imposing similar limits on Nikon. Such machines are essential to producing certain advanced chips.

Jenny Leonard Bloomberg
Date Posted:

Japan and the Netherlands are finalizing plans to join American exports controls designed to limit Chinese semiconductor production. @Bloomberg

Japan and the Netherlands are finalizing plans to join American exports controls designed to limit Chinese semiconductor...

Are US allies joining restrictions on China's access to chipmaking equipment?

Core argument: Japan and the Netherlands are poised to join the US in limiting China's access to advanced semiconductor manufacturing equipment.

Japan and the Netherlands are poised to join the US in limiting China’s access to advanced semiconductor machinery. The Netherlands will expand restrictions on ASML Holding NV, which will prevent it from selling at least some of its so-called deep ultraviolet lithography machines, crucial to making some types of advanced chips and without which attempts to set up production lines may be impossible. Japan will set similar limits on Nikon Corp.

Takeaways by Macro Roundup® AI

  1. Japan and the Netherlands are poised to join the US in limiting China's access to advanced semiconductor manufacturing equipment.
  2. The Netherlands will expand restrictions on ASML Holding NV, preventing it from selling at least some deep ultraviolet lithography machines that are crucial to making certain advanced chips.
  3. Japan will set limits on Nikon Corp. similar to the Dutch restrictions, and without deep ultraviolet lithography machines, attempts to set up chip production lines may be impossible.

AI Summary. An estimated 200mn unmarried Chinese face family pressure to marry, with young people marrying later and the pool of marriageable youth shrinking each year. The number of Chinese women of childbearing age, defined as 15 to 49, fell by more than 4mn in a year.

Eleanor Olcott Financial Times
Date Posted:

Between 2010 and 2010 the share of Chinese women 20-24 who were unmarried rose from 67.5% to 80.4% as young Chinese delay marriage. @ft

Are family pressure and a shrinking marriage pool reshaping China's population?

Core argument: China's population of women of childbearing age, defined as 15–49 years old, fell by more than 4mn last year, while the total pool of marriageable youth continues to shrink annually.

This week, an estimated 200mn unmarried Chinese returned home to celebrate the lunar new year greeted by relatives brimming with questions about when they plan to get married and start a family. The annual inquisition is such a predictable part of life for young Chinese that social media channels are filled with viral how-to guides coaching people on how to bat away pushy parents. “Everyone has their own technique,” said a Beijing teacher in her late 20s, who has been keeping her boyfriend a secret from her family for years as a pre-emptive strategy against demands for marriage. Young people who do get married are doing so later, while the total pool of China’s marriageable youth continues to shrink annually. The number of women of childbearing age, defined as those between 15 and 49 years old, fell by more than 4mn last year.

Takeaways by Macro Roundup® AI

  1. China's population of women of childbearing age, defined as 15–49 years old, fell by more than 4mn last year, while the total pool of marriageable youth continues to shrink annually.
  2. An estimated 200mn unmarried Chinese returned home for the lunar new year and faced relatives' questions about when they plan to marry and start a family.
  3. Young Chinese who marry are doing so later, and social media channels are filled with viral how-to guides coaching people on batting away pushy parents.

AI Summary. Fiscal conservatives could pursue several debt-limit negotiating goals: ending the Covid emergency designation and related pandemic spending, enacting the TRUST Act to create a congressional commission on Social Security and Medicare solvency, or freezing discretionary spending. In exchange for eliminating the debt limit, progressives could offer tools such as statutory fiscal targets to constrain mandatory spending.

Brian Riedl National Review
Date Posted:

.@Brian_Riedl notes that the eight largest deficit reduction bills since 1985 were attached to debt-limit bills and offers some plausible goals for the negotiation such as ending all pandemic related emergency spending.

What should fiscal conservatives seek in debt-limit negotiations?

Core argument: Fiscal conservatives could seek to end the Covid-emergency designation and terminate all pandemic-related emergency spending, which would also give Democrats a chance to declare victory over the pandemic.

There are several plausible policy goals. Conservatives could seek to end the Covid-emergency designation and end all pandemic-related emergency spending (a chance for Democrats to declare victory over the pandemic, too). Several Democrats have also expressed openness to the TRUST Act, which would create a congressional commission to extend Social Security and Medicare solvency. Conservatives could seek to freeze discretionary spending for the year (which may mean trimming domestic programs to accommodate any defense or veterans’ health hikes). If progressives want to eliminate the debt limit, they can make a deal to provide other tools to address unrestrained mandatory spending, such as statutory fiscal targets.

Takeaways by Macro Roundup® AI

  1. Fiscal conservatives could seek to end the Covid-emergency designation and terminate all pandemic-related emergency spending, which would also give Democrats a chance to declare victory over the pandemic.
  2. Several Democrats have expressed openness to the TRUST Act, which would create a congressional commission to extend Social Security and Medicare solvency.
  3. Freezing discretionary spending for the year may mean trimming domestic programs to accommodate defense or veterans' health increases, and progressives seeking to eliminate the debt limit could trade other tools for mandatory spending, such as statutory fiscal targets.

AI Summary. An aging US population accounts for a shortfall of 1.9m workers, with people 65 and older rising from under 16% to nearly 17% of the population. Labor force participation among older Americans has fallen from 20.7% to 19.3%, a further loss of 500,000 workers.

Elliott Morris and Simon Rabinovitch The Economist
Date Posted:
Is Database:
Database

The aging US population has resulted in a shortfall of 1.9m workers since 2019, with a decline in LFP among older Americans accounting for an additional 500,000 workers lost.

Is an aging population shrinking the American workforce?

Core argument: The aging US population has produced a shortfall of 1.9m workers since 2019, as Americans aged 65+ rose from under 16% to nearly 17% of the population.

The aging US population has resulted in a shortfall of 1.9m workers since 2019, as those aged 65+ have increased from less than 16% to nearly 17% of the population. Labor Force Participation [LFP] among older Americans, which rose from 12.5% in 2000 to 20.7% in early 2020, has declined to 19.3%, matching 2016 levels. This decline in LFP accounts for an additional loss of 500,000 workers. While the LFP rate of prime-age workers (25-54) and the foreign-born workforce have nearly recovered, they do not explain the labor market squeeze. The demand for labor has increased by 3m positions, representing about 3% of all employed, contributing to significant nominal wage gains. Despite slower GDP growth potentially restoring balance, the aging population and early retirements during COVID-19 continue to challenge labor supply.

Takeaways by Macro Roundup® AI

  1. The aging US population has produced a shortfall of 1.9m workers since 2019, as Americans aged 65+ rose from under 16% to nearly 17% of the population.
  2. Labor force participation among older Americans climbed from 12.5% in 2000 to 20.7% in early 2020 before falling to 19.3%, matching 2016 levels and accounting for a further loss of 500,000 workers.
  3. Labor demand has risen by 3m positions, about 3% of all employed, contributing to nominal wage gains, while prime-age (25-54) and foreign-born participation have nearly recovered and do not explain the squeeze.

The aging of the American population has left the US short 1.9M workers relative to 2019. A decline in labor force participation of older workers is responsible for a drop of another 500,000 workers, “…The labor-force participation (LFP) rate of prime-age workers (aged 25-54) and the foreign-born workforce have almost fully recovered. Neither explains the current squeeze. The biggest shortfall comes from Americans getting older and leaving work behind. Since 2019 those aged at least 65 have gone from less than 16% of the population to nearly 17%. Moreover, unlike prime-age workers, many people who retired early as covid-19 struck have not come back to work. LFP among older Americans, which rose from 12.5% in 2000 to 20.7% in early 2020, has dipped to 19.3%, the same as in 2016. The aging of the population accounts for the loss of 1.9m workers (0.7% of people aged at least 16), while the overall drop in LFP, mainly among the old, is responsible for a further 0.5m (0.2%)….”

Elliott Morris and Simon Rabinovitch, "Where have all America’s workers gone?"The Economist, January 24, 2023, https://www.economist.com/graphic-detail/2023/01/24/where-have-all-americas-workers-gone

Where have all America’s workers gone?

Where have all Americas workers gone?: Extended Excerpt Image 1


For months economists have warned of recession in America, but in one crucial area the economy seems overheated: employers are still struggling to find workers. Why is the labour market so tight?

Companies’ hiring plans suggest that the economy remains robust for now. Total labour supply (people who have or are seeking jobs) is roughly back to pre-pandemic levels. By contrast, labour demand (filled plus open jobs) has increased by 3m positions. The excess demand represents about 3% of all those employed, which has contributed to big nominal wage gains. Slower gdp growth—whether a recession or not—will help restore balance.

The supply picture is more complex. During the pandemic, many workers took time off. Immigration, a key source of labour, also fell. Now, however, the labour-force participation (lfp) rate of prime-age workers (aged 25-54) and the foreign-born workforce have almost fully recovered. Neither explains the current squeeze.

Where have all Americas workers gone?: Extended Excerpt Image 2


Instead, the biggest shortfall comes from Americans getting older and leaving work behind. Since 2019 those aged at least 65 have gone from less than 16% of the population to nearly 17%. Moreover, unlike prime-age workers, many people who retired early as covid-19 struck have not come back to work. lfp among older Americans, which rose from 12.5% in 2000 to 20.7% in early 2020, has dipped to 19.3%, the same as in 2016. The ageing of the population accounts for the loss of 1.9m workers (0.7% of people aged at least 16), while the overall drop in lfp, mainly among the old, is responsible for a further 0.5m (0.2%).

Some think that a trend among younger people to scale back their working intensity, known as “quiet quitting”, may have caused the labour market to tighten. Recent research by scholars at Washington University in St Louis reveals a clear reduction in hours worked by those in jobs. But most quiet quitters are high-earning workers, whereas the biggest labour shortages have been in basic service jobs. That points to another factor: illness. In 2022 an average of 1.6m Americans missed at least one week of work per month to recuperate—whether from covid, flu or something else—up from 1m before covid.

Little by little, Americans will get back to better health. Unfortunately for employers, baby-boomers are unlikely to come out of retirement.

Monday, January 30, 2023

AI Summary. U.S. retail purchases have fallen in three of the past four months, and inflation-adjusted spending on services was flat in December. The saving rate has dropped to roughly 3% of monthly income, down from 8.8% before the pandemic, while credit-card balances rose 15% year-over-year, the largest increase in more than two decades.

Harriet Torry and Joe Pinsker Wall Street Journal
Date Posted:

In 2022 consumer spending, which makes up about 70% of the American economy, has outpaced price increases by 2pp, but has fallen for three of the last four months. @WSJ

Are U.S. consumers pulling back on spending while saving less?

Core argument: U.S. retail purchases have fallen in three of the past four months, and inflation-adjusted spending on services including rent, haircuts, and most bills was flat in December, the worst monthly reading in nearly a year.

Retail purchases have fallen in three of the past four months. Spending on services, including rent, haircuts, and the bulk of bills, was flat in December, after adjusting for inflation, the worst monthly reading in nearly a year. The saving rate has fallen to roughly 3% of monthly income, from more than 30% at the start of lockdowns. In 2019, the year before the pandemic, the rate was 8.8%. Credit-card balances were up 15% on the year in the third quarter, according to the Federal Reserve Bank of New York, the largest increase in more than two decades.

Takeaways by Macro Roundup® AI

  1. U.S. retail purchases have fallen in three of the past four months, and inflation-adjusted spending on services including rent, haircuts, and most bills was flat in December, the worst monthly reading in nearly a year.
  2. The U.S. saving rate has fallen to roughly 3% of monthly income, down from more than 30% at the start of pandemic lockdowns and below the 8.8% rate recorded in 2019.
  3. Credit-card balances rose 15% year over year in the third quarter, the largest increase in more than two decades, according to the Federal Reserve Bank of New York.

AI Summary. U.S. local labor markets more exposed to import competition from China saw substantially larger net reductions in their foreign-born populations, with no significant reduction among native-born residents. Within exposed areas, foreign-born and native-born workers had comparably sized declines in employment-to-population ratios.

David Autor, David Dorn and Gordon Hanson National Bureau of Economic Research
Date Posted:

.@davidautor finds that foreign-born populations were more likely than native workers to leave commuting zones that were most impacted by the China Shock. However, the foreign-born population was concentrated in zones with low China trade exposure.

Do foreign-born workers leave local labor markets hit by import competition?

Core argument: U.S. commuting zones at the 75th versus 25th percentile of China trade shock exposure saw 1.7 and 2.3 percentage-point larger 10-year reductions in foreign-born populations with a high school education or less and with some college or more, respectively.

U.S. commuting zones (CZs) that were more exposed to the China trade shock had substantially larger net reductions in the population of foreign-born workers but not in the population of native-born workers. The small and insignificant native-born responses have narrow confidence intervals, which is suggestive of modest heterogeneity in native-born adjustment across places. For foreign-born workers, comparing CZs at the 75th versus 25th percentiles of exposure to the trade shock, the more exposed CZ would have seen 1.7 and 2.3 percentage-point larger [10 yr] reductions, respectively, in the foreign-born population with a high school education or less and in the foreign-born population with some college education or more. Within trade-exposed CZs, foreign-born and native-born workers had comparably sized reductions in employment-population ratios. These trade-induced reductions in employment rates were larger in CZ initial foreign-born population shares were above (relative to below) the nation median. At the time of the surge in import competition from China, foreign-born workers were in the wrong locations to contribute much to regional changes in labor supply.

Takeaways by Macro Roundup® AI

  1. U.S. commuting zones at the 75th versus 25th percentile of China trade shock exposure saw 1.7 and 2.3 percentage-point larger 10-year reductions in foreign-born populations with a high school education or less and with some college or more, respectively.
  2. Net population reductions from the China trade shock were substantially larger for foreign-born workers than for native-born workers, whose small and insignificant responses had narrow confidence intervals, suggestive of modest heterogeneity in native-born adjustment across places.
  3. Within trade-exposed commuting zones, foreign-born and native-born workers had comparably sized reductions in employment-population ratios, with larger reductions where initial foreign-born population shares were above the national median.

AI Summary. Cross-country evidence indicates the link between money growth and inflation depends on the inflation regime: pooling countries over 10-year averages shows a one-to-one relationship between "excess money growth" (money growth minus real GDP growth) and inflation, but splitting observations by inflation level shows this holds only where inflation is relatively high and is virtually absent where inflation is low.

Claudio Borio, Boris Hofmann, and Egon Zakrajšek Bank for International Settlements
Date Posted:

.@BIS_org finds that the relationship between money growth and inflation during periods of high inflation is close to “one to one” during periods of high inflation, but they find little relationship during non-inflationary periods.

Does the money growth–inflation link depend on the inflation regime?

Core argument: Pooling all countries, excess money growth — money growth minus real GDP growth — shows a precisely estimated one-to-one link with inflation across non-overlapping 10-year averages.

The strength of the link between money growth and inflation depends on the inflation regime: it is one-to-one when inflation is high and virtually non-existent when it is low. Panel A illustrates the long-run relationship between inflation and “excess money growth” – the difference between money growth and real GDP growth. The graph displays the relationship between these two variables based on non-overlapping 10-year averages. When the observations from all countries are pooled, the standard relationship emerges clearly: there is a precisely estimated one-to-one link between excess money growth and inflation. But, as shown in panel B, if we split the observations into high- and low-inflation ones using different 10-year average inflation rate thresholds, we see that this relationship exists only when inflation is relatively high. As expected, the difference narrows noticeably as the inflation threshold increases.

Takeaways by Macro Roundup® AI

  1. Pooling all countries, excess money growth — money growth minus real GDP growth — shows a precisely estimated one-to-one link with inflation across non-overlapping 10-year averages.
  2. Splitting observations by 10-year average inflation thresholds shows the money growth–inflation link holds only where inflation is relatively high and is virtually non-existent where inflation is low.
  3. The difference between high- and low-inflation observations narrows noticeably as the inflation threshold used to split the sample increases.

AI Summary. Global investment in the energy transition reached $1.1tn, matching investment in fossil fuels for the first time, according to clean energy research group BloombergNEF. The fossil fuel figure covers oil and gas across upstream, midstream and downstream segments plus power generation without emissions reduction technology.

Nathaniel Bullard Bloomberg
Date Posted:

According to a @Bloomberg analysis, 2022 saw global investment in green energy sources equal investments in fossil fuels for the first time (both were $1.1T.)

Has clean energy investment caught up with fossil fuel investment globally?

Core argument: Global investment in the energy transition reached $1.1 trillion in 2022, equaling investment in fossil fuels for the first time, according to BloombergNEF.

2022 was the first year when investment in the energy transition equaled global investment in fossil fuels, according to the latest data released from clean energy research group BloombergNEF. The money flowing into the upstream, midstream, and downstream segments of oil and gas, and into fossil fuel-fired power generation without emissions reduction technology, was $1.1 trillion last year. Likewise, annual investment in renewable energy, electrified transport and heat, energy storage and other technologies reached $1.1 trillion.

Takeaways by Macro Roundup® AI

  1. Global investment in the energy transition reached $1.1 trillion in 2022, equaling investment in fossil fuels for the first time, according to BloombergNEF.
  2. Fossil fuel investment of $1.1 trillion in 2022 spanned upstream, midstream, and downstream oil and gas plus fossil fuel-fired power generation without emissions reduction technology, according to BloombergNEF.
  3. The $1.1 trillion of energy transition investment in 2022 flowed into renewable energy, electrified transport and heat, energy storage, and other technologies, according to BloombergNEF.

AI Summary. A consultancy study finds that shifting trade patterns have made the global flow of raw materials less efficient and more costly to finance, doubling working capital requirements in commodity trading and likely raising commodity prices for consumers. The report projects average shipping times to rise 8% and global commodity-trading working capital needs to increase by $300bn–$500bn.

Leslie Hook Financial Times
Date Posted:

The commodity sector will require an investment of $300-$500B in working capital going forward due to higher interest rates and volatility related to the Russo-Ukrainian War, according to @McKinsey. @ft

The commodity sector will require an investment of $300-$500B in working capital going forward due to higher interest rates...

Do shifting trade patterns raise commodity financing costs and consumer prices?

Core argument: McKinsey projects working capital requirements for global commodity trading will rise by $300bn–$500bn, after what report lead author Roland Rechtsteiner says was a doubling of the sector's working capital needs since the end of 2020.

Changing trade patterns have made the global flow of raw materials less efficient and more costly to finance and are also likely to push up the price of commodities for consumers, according to a new study by consultancy McKinsey. “Since the end of 2020, we have seen a doubling of the working capital requirements in the commodity trading sector,” said Roland Rechtsteiner, McKinsey partner and lead author of the report. The McKinsey report predicts average shipping times will increase by 8%, energy prices will rise three-fold, and interest costs will rise seven-fold, between the end of 2020 and 2024, and that working capital requirements for commodity trading globally will increase between $300bn and $500bn as a result.

Takeaways by Macro Roundup® AI

  1. McKinsey projects working capital requirements for global commodity trading will rise by $300bn–$500bn, after what report lead author Roland Rechtsteiner says was a doubling of the sector's working capital needs since the end of 2020.
  2. McKinsey predicts average shipping times will increase 8%, energy prices will rise three-fold and interest costs seven-fold between the end of 2020 and 2024.
  3. Changing trade patterns have made the global flow of raw materials less efficient and more costly to finance and are likely to push up commodity prices for consumers, according to McKinsey.

AI Summary. A senior US Air Force general responsible for military air logistics has said in an internal memo that the United States and China are likely to end up at war in 2025, driven by circumstances that would embolden China's leadership.

Demetri Sevastopulo Financial Times
Date Posted:

A four-star American air force general fears that the US and China may go to war in 2025. In a leaked memo to his top commanders, he wrote, “I hope I am wrong. My gut tells me we will fight in 2025.“ @ft @dimi

A four-star American air force general fears that the US and China may go to war in 2025. In a leaked memo to his top...

Is the US likely to end up at war with China?

Core argument: General Mike Minihan, head of US Air Mobility Command, said the United States and China were likely to end up at war because of a series of circumstances that would embolden Chinese president Xi Jinping.

General Mike Minihan, head of US Air Mobility Command, said the two military powers were likely to end up at war because of a series of circumstances that would embolden Chinese president Xi Jinping. “I hope I am wrong. My gut tells me we will fight in 2025,” Minihan wrote in a private memo to his top commanders. As head of Air Mobility Command, Minihan oversees air-related logistics across the US military. The four-star general previously served as deputy head of Indo-Pacific Command, which would be directly responsible for commanding US forces in any conflict with China.

Takeaways by Macro Roundup® AI

  1. General Mike Minihan, head of US Air Mobility Command, said the United States and China were likely to end up at war because of a series of circumstances that would embolden Chinese president Xi Jinping.
  2. Minihan oversees air-related logistics across the US military and previously served as deputy head of Indo-Pacific Command, which would be responsible for commanding US forces in any conflict with China.