Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…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
  • “…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
  • “…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 very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…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 comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, February 28, 2023

AI Summary. State-level analysis estimates that a slowdown in immigration to the United States modestly tightened local labor markets, raising the ratio of job vacancies to unemployed workers by 5.5 percentage points. A subsequent rebound in immigration helped close the shortfall in foreign-born labor, contributing a one-point reduction in that ratio.

Evgeniya Duzhak Federal Reserve Bank of San Francisco
Date Posted:
Is Database:
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A strong rebound in immigration in 2022 helped offset tight U.S. labor markets, contributing to a 6-percentage point reduction in the ratio of job vacancies to unemployed workers. @sffed

Does slower immigration tighten local labor markets?

Core argument: State-level analysis finds the slowdown in U.S. immigration raised the ratio of job vacancies to unemployed workers by 5.5 percentage points between 2017 and 2021, tightening local labor markets modestly.

Immigration flows into the United States slowed significantly following immigration policy changes from 2017 to 2020 and the onset of the COVID-19 pandemic. Analysis of state-level data shows that this migration slowdown tightened local labor markets modestly, raising the ratio of job vacancies to unemployed workers (V-U) 5.5 percentage points between 2017 and 2021. More recent data show immigration has rebounded strongly, helping to close the shortfall in foreign-born labor and ease tight labor markets. Data for 2022 show a strong rebound in immigration that has helped offset tight U.S. labor markets by contributing a point reduction in the V–U ratio.

Takeaways by Macro Roundup® AI

  1. State-level analysis finds the slowdown in U.S. immigration raised the ratio of job vacancies to unemployed workers by 5.5 percentage points between 2017 and 2021, tightening local labor markets modestly.
  2. Immigration flows into the United States slowed significantly following immigration policy changes from 2017 to 2020 and the onset of the COVID-19 pandemic.
  3. Data for 2022 show a rebound in immigration that helped close the shortfall in foreign-born labor, contributing a 1-point reduction in the vacancies-to-unemployed ratio.

AI Summary. US household saving rates are low, but business saving has risen over recent decades, with undistributed corporate profits now a bit above $1.2tn and gross US saving running between 17% and 18% of GDP. This asymmetric distribution of the saving burden can create wealth distribution problems over time.

Tyler Cowen Bloomberg
Date Posted:

.@tylercowen notes that America’s low personal savings rate of 4.7% in January 2023 is offset by higher corporate savings which results in a gross savings rate of 17-18% of GDP.

Does business saving offset low US household saving?

Core argument: Undistributed US business profits, per the Federal Reserve's series, stand a bit above $1.2 trillion, having risen significantly from the 1970s and taken off around 2000 with a dip during the financial crisis.

At the household level, Americans have long been poor savers. Are such low savings rates unsustainable for an advanced economy? Not in view of America’s business saving. Looking at the US Federal Reserve’s series on undistributed business profits, it starts to rise significantly in the 1970s, and takes off around 2000 (with a dip for the financial crisis), and currently stands a bit above $1.2 trillion. There are other ways to measure business savings rates, but generally they show a significant upward move over the last few decades. On net, gross US savings rates are hovering between 17% and 18% of GDP. This asymmetric distribution of the savings burden can lead to wealth distribution problems over time.

Takeaways by Macro Roundup® AI

  1. Undistributed US business profits, per the Federal Reserve's series, stand a bit above $1.2 trillion, having risen significantly from the 1970s and taken off around 2000 with a dip during the financial crisis.
  2. Gross US savings rates hover between 17% and 18% of GDP, so low household saving need not make America's overall savings position unsustainable given business saving.
  3. The asymmetric distribution of the savings burden between US households and companies can lead to wealth distribution problems over time.

AI Summary. The Bank of Japan owns more than 100% of all current 10-year Japanese government bonds, including almost 140% of the most recent issue, a result of buying bonds, lending them out to preserve market supply, and then buying them back after short sellers sell them.

Robin Wigglesworth Financial Times
Date Posted:

.@RobinWigg notes a Deutsche Bank report that the Bank of Japan may have purchased “more than 100 per cent of some Japanese government bonds” after accounting for bonds the bank lends to short sellers and subsequently repurchases.

How can a central bank own over 100% of a bond issue?

Core argument: The Bank of Japan owns more than 100% of all on-the-run 10-year Japanese government bonds, and almost 140% of the most recent issue, according to Oxford Economics' Norihiro Yamaguchi.

Deutsche Bank’s tidbit that the BoJ “may” have bought more than 100 per cent of some Japanese government bonds, as it buys the JGBs, lends them out again to ensure the market still has some supply, short sellers borrow it and dump them in the market, only for the BoJ to buy it once more. Here is a killer chart from Oxford Economics’ Norihiro Yamaguchi that puts more flesh on the bone. After buying a record ¥20tn of JBGs last month, the BoJ now owns more than 100 per cent of all on-the-run 10-year Japanese government bonds. In fact, it owns almost 140 per cent of the most recent issue.

Takeaways by Macro Roundup® AI

  1. The Bank of Japan owns more than 100% of all on-the-run 10-year Japanese government bonds, and almost 140% of the most recent issue, according to Oxford Economics' Norihiro Yamaguchi.
  2. The Bank of Japan bought a record ¥20tn of Japanese government bonds in a single month, according to Oxford Economics.
  3. Deutsche Bank describes a loop in which the Bank of Japan buys JGBs, lends them out again to preserve market supply, short sellers borrow and dump them, and the BoJ buys them once more.

AI Summary. The article argues that the United States should treat mass production as equal in importance to invention and research, rather than dismissing manufacturing as a commoditized activity best done overseas. Regaining leadership in emerging technologies requires treating manufacturing as integral to technological advancement.

Dan Wang Foreign Affairs
Date Posted:

.@danwwang argues that US technological competitiveness depends on mass production, “an activity that depends on the kinds of deep process knowledge that can only come from the better training and integration of workers, engineers, and scientists.”

Is mass production as important as invention for technological leadership?

Core argument: Regaining a U.S. lead in emerging technologies requires treating manufacturing as an integral part of technological advancement rather than a sideshow to invention and R&D, the authors argue.

To get better at scaling up, the United States will also have to learn to think differently about the value of manufacturing work. Policymakers must resist the urge to scorn manufacturing as a mere “commoditized activity” that can be done overseas. Instead, the mass production of new technologies needs to be seen as equal in importance to the innovations themselves. For the United States to regain its lead in emerging technologies, it will have to treat manufacturing as an integral part of technological advancement, not a mere sideshow to the more thrilling acts of invention and R & D.

Takeaways by Macro Roundup® AI

  1. Regaining a U.S. lead in emerging technologies requires treating manufacturing as an integral part of technological advancement rather than a sideshow to invention and R&D, the authors argue.
  2. U.S. policymakers must resist scorning manufacturing as a "commoditized activity" suitable for offshoring, and instead value mass production of new technologies as equal in importance to the innovations themselves, the authors argue.
  3. Getting better at scaling up will require the United States to think differently about the value of manufacturing work, the authors argue.

AI Summary. The U.S. Bureau of Labor Statistics projects the country's more than 700,000 electricians will grow about 7% over the next decade, against a 5% average for all occupations. Electricians report being booked months out and struggling to hire, and many are raising wages and prices as federal climate incentives worth several hundred billion dollars take effect.

Amrith Ramkumar Wall Street Journal
Date Posted:

A shortage of electricians is likely to be a headwind to the energy transition. 30% of union electricians are btw 50-70 years old and close to retirement. The average annual electrician salary rose from $50k to $60k btw 2018 and 2022. @WSJ

A shortage of electricians is likely to be a headwind to the energy transition. 30% of union electricians are btw 50-70...

Are there enough electricians to meet electrification demand?

Core argument: The Bureau of Labor Statistics expects the U.S. total of more than 700,000 electricians to grow about 7% over the next decade, slightly faster than the 5% nationwide average.

The current total of more than 700,000 electricians in the U.S. is expected to grow about 7% over the next decade, slightly faster than the nationwide average of 5%, according to the Bureau of Labor Statistics. The climate law will put several hundred billion dollars’ worth of incentives into the economy designed to accelerate the energy transition and boost clean-energy supply chains in the U.S. Electricians say they are booked several months out and struggling to find enough workers to keep up with demand. Many are raising wages and prices and worried that they won’t be able to keep up as government climate incentives kick in. “I’m tired of telling people I can’t help them,” said Brian LaMorte, co-owner of LaMorte Electric Heating and Cooling in Ithaca, N.Y., which does residential heat-pump installations and electric-service upgrades.

Takeaways by Macro Roundup® AI

  1. The Bureau of Labor Statistics expects the U.S. total of more than 700,000 electricians to grow about 7% over the next decade, slightly faster than the 5% nationwide average.
  2. Electricians report being booked several months out and struggling to find enough workers, and many are raising wages and prices to cope with demand.
  3. The climate law will put several hundred billion dollars' worth of incentives into the economy to accelerate the energy transition and boost U.S. clean-energy supply chains, and electricians worry they won't keep up as those incentives kick in.

AI Summary. Apple's Chinese suppliers are likely to shift production out of China faster than many observers expect to preempt US-China tensions, according to AirPods maker GoerTek, which is investing an initial $280m in a Vietnam plant and weighing an India expansion. Bloomberg Intelligence estimates moving 10% of Apple's capacity could take eight years.

Nguyen Xuan Quynh and John Boudreau Bloomberg
Date Posted:

Apple’s suppliers are likely to move capacity out of China faster than Bloomberg Intelligence currently projects, according to a senior executive at GoerTek who manufactures AirPods for Apple. @markets

Apple’s suppliers are likely to move capacity out of China faster than Bloomberg Intelligence currently projects, according...

Are Apple's Chinese suppliers moving production abroad faster than expected?

Core argument: GoerTek, the maker of Apple's AirPods, is investing an initial $280 million in a new Vietnam plant while weighing an India expansion, according to Deputy Chairman Kazuyoshi Yoshinaga.

Apple Inc.’s Chinese suppliers are likely to move capacity out of the country far faster than many observers anticipate to preempt fallout from escalating Beijing-Washington tensions, according to one of the US company’s most important partners. AirPods maker GoerTek is one of the many manufacturers exploring locations beyond its native China. It’s investing an initial $280 million in a new Vietnam plant while considering an India expansion, Deputy Chairman Kazuyoshi Yoshinaga said in an interview. Behind the scenes, 9 out of 10 of Apple’s most important suppliers may be preparing large-scale moves to countries like India, which is dangling incentives to drive Narendra Modi’s Make in India initiative. Bloomberg Intelligence estimates it could take eight years to move just 10% of Apple’s capacity outside of China. The GoerTek executive argues it’ll be far quicker.

Takeaways by Macro Roundup® AI

  1. GoerTek, the maker of Apple's AirPods, is investing an initial $280 million in a new Vietnam plant while weighing an India expansion, according to Deputy Chairman Kazuyoshi Yoshinaga.
  2. Nine out of 10 of Apple's most important suppliers may be preparing large-scale moves to countries such as India, which is offering incentives under Narendra Modi's Make in India initiative.
  3. Bloomberg Intelligence estimates that moving just 10% of Apple's capacity out of China could take eight years, while GoerTek's Kazuyoshi Yoshinaga argues the shift will be far quicker.

AI Summary. Research firm New World Wealth estimates that about 10,800 wealthy Chinese left China in a single year, with Chinese nationals typically accounting for 8%–10% of global millionaire migration. The firm projects roughly 125,000 people with net assets above $1m will relocate, exceeding the prior record of 110,000.

Jason Douglas, Keith Zhai and Stella Yifan Xie Wall Street Journal
Date Posted:

.@WSJ reports an expected increase this year over the 10,800 wealthy Chinese who left the country in 2022. A recent expatriate noted, “We thought if we don’t leave sooner, we may never be able to.”

.@WSJ reports an expected increase this year over the 10,800 wealthy Chinese who left the country in 2022. A recent...

Are wealthy Chinese leaving the country in record numbers?

Core argument: New World Wealth estimates around 10,800 wealthy Chinese left China in 2022, with Chinese nationals typically accounting for 8%–10% of global millionaire migration.

Around 10,800 wealthy Chinese left the country in 2022, according to estimates from New World Wealth, a research firm that tracks the movements and spending habits of the world’s high-net-worth citizens. The company expects around 125,000 people with net assets of more than $1 million to move this year, exceeding the 2019 record of 110,000. Chinese nationals usually account for 8% to 10% of the total. New World Wealth tracks the behavior of around 150,000 individuals in a database to derive its estimates for total migration.

Takeaways by Macro Roundup® AI

  1. New World Wealth estimates around 10,800 wealthy Chinese left China in 2022, with Chinese nationals typically accounting for 8%–10% of global millionaire migration.
  2. New World Wealth expects about 125,000 people with net assets above $1 million to relocate this year, exceeding the 2019 record of 110,000.
  3. New World Wealth derives its migration estimates by tracking the movements and spending habits of around 150,000 high-net-worth individuals in its database.

AI Summary. China's household savings rate reached 33%, 3 percentage points above the pre-pandemic trend, while large industrial companies added $1.1tn in liquid assets annually, more than double the prior $467bn pace. Economists at HSBC and Morgan Stanley expect the end of zero-Covid restrictions to lift services spending, though much of the savings sits in long-term deposits.

Stella Yifan Xie Wall Street Journal
Date Posted:
Is Database:
Database

China’s household savings rate surged to 33% in 2022, 3pp above pre-pandemic trend, as families hoarded cash during Covid lockdowns. Big industrial companies added $1.1T in liquid assets annually from 2020-2022, more than double pre-Covid levels.

Will China's elevated household and corporate savings fuel a consumption rebound?

Core argument: China's household savings rate rose to 33% in 2022, 3 percentage points above the pre-pandemic trend, as families hoarded cash during Covid lockdowns.

China's household savings rate surged to 33% in 2022, 3pp above the pre-pandemic trend, as families hoarded cash during Covid lockdowns. This elevated savings level, alongside big industrial companies adding $1.1tn in liquid assets annually from 2020-2022—more than double the $467bn annual increase pre-Covid—positions China for a potential economic rebound. Economists from HSBC and Morgan Stanley anticipate that the end of zero-Covid policies will boost services spending, potentially lifting consumption growth to its pre-pandemic rate of ~8% annually. However, the conversion of these savings into spending is uncertain, as a significant portion is tied up in long-term deposits. The global impact of China's consumption patterns is significant, with many businesses relying on China for growth amid slowing economies in the U.S. and Europe. Despite the potential for recovery, concerns about consumer confidence and the job market persist, influencing the pace at which savings might translate into economic activity.

Takeaways by Macro Roundup® AI

  1. China's household savings rate rose to 33% in 2022, 3 percentage points above the pre-pandemic trend, as families hoarded cash during Covid lockdowns.
  2. Large Chinese industrial companies added $1.1tn in liquid assets annually during 2020–2022, more than double the $467bn annual increase before Covid.
  3. Economists at HSBC and Morgan Stanley expect the end of zero-Covid policies to boost services spending and lift consumption growth toward its pre-pandemic pace of about 8% a year, though much of the savings sits in long-term deposits.

China's household savings rate was 33% in 2022, 3pp above the pre-pandemic trend, and big industrial companies added $1.1 trillion in liquid assets on average each year, more than double the $467 billion annual increase in the five years before Covid.

“…Chinese families, constrained by Covid lockdowns, hoarded cash and pushed up the country’s household saving rate to a multiyear high of 33% in 2022. Economists from HSBC and Morgan Stanley say the end of China’s strict zero-Covid policies will at minimum fuel a strong recovery in services spending, lifting consumption growth to at least its prepandemic rate of around 8% a year. A large portion of new deposits accumulated by Chinese households last year was locked up in three-year to five-year deposit instruments, which can’t as easily be converted into spending as short-term deposits can, according to a study by research firm Rhodium Group….”

Stella Yifan Xie, "Covid-Era Savings Are Crucial to China’s Economic Recovery,"Wall Street Journal, February 26, 2023, https://www.wsj.com/articles/covid-era-savings-are-crucial-to-chinas-economic-recovery-1ee3310b

Covid-Era Savings Are Crucial to China’s Economic Recovery

The strength of China’s economic rebound this year largely hinges on one uncertainty: whether families and large companies are willing to draw down the pile of cash they built up since the start of Covid-19.

Chinese families, constrained by Covid lockdowns, hoarded cash and pushed up the country’s household saving rate to a multiyear high of 33% in 2022, up 3 percentage points from the prepandemic trend in 2019, according to estimates by Goldman Sachs.

Large industrial companies and exporters also socked away money. From 2020 to 2022, big industrial companies, many state-owned, added $1.1 trillion in liquid assets on average each year, more than double the $467 billion annual increase in the five years before Covid hit, according to economists at China International Capital Corp., an investment bank.

In the U.S., excess savings—some from government stimulus—quickly coursed through the economy, but many experts wonder whether China will likewise have a big rebound in spending or investment this year.

Economists from HSBC and Morgan Stanley say the end of China’s strict zero-Covid policies will at minimum fuel a strong recovery in services spending, lifting consumption growth to at least its prepandemic rate of around 8% a year. Initial data from China’s recent Lunar New Year holiday suggest some Chinese consumers are eager to dine out and visit cinemas again.

Other economists feel more skeptical.

They argue that the savings buildup in China is more a reflection of battered confidence, which is unlikely to be reversed quickly as pains from the pandemic linger. Many Chinese consumers remain nervous because of a depressed housing market and an uncertain jobs picture, which could make them save more and spend less for longer.

Covid-Era Savings Are Crucial to China's Economic Recovery: Extended Excerpt Image 1


“It is premature to conclude that excess savings accumulated by households will support revenge spending in a persistent way,” said David Wang, chief China economist at Credit Suisse.

A slow consumption rebound in China could reverberate globally, damping sales for such companies as Nike Inc., Starbucks Corp. and international auto makers, and resulting in lower-than-expected demand for such commodities as copper and nickel. Many businesses are counting on China, which is projected to account for a third of global growth this year as growth in the U.S. and Europe slows, according to the International Monetary Fund.

Swelling household savings helped push China’s current-account surplus to $417.5 billion last year, the highest level since 2008, underscoring just how entrenched the global trade imbalance has been even as the U.S. and other more-advanced economies attempt to reduce reliance on Chinese imports.

It isn’t clear exactly how big China’s savings pile is. Many economists, concerned about data quality in China, use different methods for their calculations.

Goldman Sachs says it believes Chinese families accumulated about three trillion yuan, equivalent to roughly $431 billion, in excess savings, or less than 3% of China’s gross domestic product, from 2020 to 2022. Economists from Nomura and UBS put the figures higher, at 6.1 trillion yuan and up to 4.6 trillion yuan, respectively, or about 5% and close to 4% of GDP in 2022.

While sizable, those figures are lower than in the U.S., where households put away $2.3 trillion in excess savings from 2020 through September 2021, or nearly 10% of GDP in 2021, according to a study published by the Federal Reserve.

A large portion of new deposits accumulated by Chinese households last year was locked up in three-year to five-year deposit instruments, which can’t as easily be converted into spending as short-term deposits can, according to a study by research firm Rhodium Group.

Given that China’s government refrained from handing out checks directly to households during the pandemic, it could take a while before people become more confident in China’s recovery and significantly scale back their saving, said Tao Wang, an economist at UBS.

More relevant to consumers’ spending appetite, economists say, are income growth and the job market, both of which are recovering slowly.

Zhou Changtian, who works at a state-owned publishing house in Shanghai, ended up saving more during the past three years as his family wasn’t able to travel abroad. Even though he isn’t deeply worried about job security, he isn’t keen on splurging, partly because of inflation fears as the economy reopens.

“It used to cost us 1,000 yuan to stock up on meat in the fridge before Covid. Now we have to pay double,” said Mr. Zhou. “I definitely won’t go on a spending spree.”

Some companies are loosening their purse strings in anticipation of a strong economic recovery. Several industrial companies in China have announced big-ticket projects, including Ganfeng Lithium—one of the world’s largest refiners of strategic metal—which last month unveiled a 15 billion yuan ($2.2 billion) investment to build two battery plants in China.

But Larry Hu, chief China economist at Macquarie Group, is cautious about whether corporations have strong incentives to spend. He expects overall capital expenditure to stay flat compared with last year, in part because of uncertainty at export-oriented companies as overseas demand has weakened.

Another concern: Even though big companies were able to put away money by delaying investments during the pandemic, many smaller Chinese businesses, lacking deep pockets, had to spend savings to survive. Many are still on the ropes—or wiped out entirely.

Beijing restaurant operator Nathan Zhang said he hasn’t been able to repay food and wine suppliers at a bistro he owns, because it was forced to shut down or banned from offering dine-in services several times under Covid restrictions. Even though those restrictions have ended, Mr. Zhang estimates that he has lost about 10% to 20% of his regular clientele.

“While we still harbor hope that the worst is behind us, there are still too many uncertainties,” he said.

Wednesday, March 1, 2023

AI Summary. The authors find no precedent since 1950 for a sizable central-bank-induced disinflation that avoided substantial economic sacrifice or recession, and find that models estimated over periods including high and variable inflation predict the post-pandemic inflation surge better than those estimated over the stable 1985-2019 period.

Stephen Cecchetti, Michael Feroli, et al Chicago Booth Working Paper
Date Posted:

A new @ChicagoBooth paper suggests that “raising the inflation target today would be a serious mistake.” The authors estimate that sustaining a disinflation will require unemployment to rise to 5% from January’s 3.4%.

Can central banks reduce inflation substantially without recession?

Core argument: The authors find no post-1950 precedent for a sizable central-bank-induced disinflation in the United States or other major economies that avoided substantial economic sacrifice or recession.

We start by analyzing the large disinflations that occurred since 1950 in the United States and several other major economies. We estimate and simulate a standard model over several time periods, using various linear and nonlinear measures of labor market slack. We draw three main lessons from the analysis: (1) there is no post-1950 precedent for a sizable central-bank-induced disinflation that does not entail substantial economic sacrifice or recession; (2) regardless of the Phillips curve specification, models estimated over a historical period that includes episodes of high and variable inflation do a better job of predicting the post-pandemic inflation surge than those estimated over the stable inflation period from 1985 to 2019; and (3) simulations of our baseline model suggest that the Fed will need to tighten policy significantly further to achieve its inflation objective by the end of 2025.  We see that the model using the full historical period (1962-2022; red line in the graphic above,) implies that inflation will fall only gradually to 3.7 percent by the end of 2025. By contrast, the model estimated over the stable inflation period (1985-2019; blue line in the graphic above,) has inflation falling quickly to the 2 percent target in the first quarter of 2024.

Takeaways by Macro Roundup® AI

  1. The authors find no post-1950 precedent for a sizable central-bank-induced disinflation in the United States or other major economies that avoided substantial economic sacrifice or recession.
  2. Model simulations estimated over 1962–2022 imply inflation falls only gradually to 3.7 percent by the end of 2025, while the model estimated over the stable-inflation period of 1985–2019 has inflation reaching the 2 percent target in the first quarter of 2024.

AI Summary. The trailing three-year correlation between stocks and bonds turned positive for the first time in decades, after roughly 30 years of negative correlation. Classifying regimes by the standard deviation of the trailing stock-bond correlation shows neutral and positive-correlation environments tend to be good for equities and oil, while Treasury bonds and gold benefit from negative-correlation environments.

Greg Obenshain and Noah Kreutter Verdad
Date Posted:

.@GregObenshain notes that for the first time in 30 years the trailing 3yr correlation between stocks and long-term government bonds turned positive. Regimes in which the correlation btw stocks and bonds were high have been good for equities and oil.

How does the stock-bond correlation regime affect asset returns?

Core argument: The trailing three-year stock-bond correlation turned positive last year for the first time since November 2000, after 30 years in which the stock-bond correlation was negative.

For the past 30 years, the correlation between stocks and bonds has been negative. But last year, the trailing three-year correlation turned positive for the first time since November 2000. We classify regimes by the standard deviation of the trailing stock-bond correlation, measured with a 30-day half-life, with an absolute deviation of 0.5 or greater needed to mark a positive or negative correlation regime. While the effect is not the strongest, it shows that neutral and positive-correlation environments tend to be good for equities and oil, while Treasurys and gold benefit from negative-correlation environments.

Takeaways by Macro Roundup® AI

  1. The trailing three-year stock-bond correlation turned positive last year for the first time since November 2000, after 30 years in which the stock-bond correlation was negative.
  2. Correlation regimes are classified by the standard deviation of the trailing stock-bond correlation measured with a 30-day half-life, requiring an absolute deviation of 0.5 or greater to mark a positive or negative regime.
  3. Neutral and positive-correlation environments tend to be good for equities and oil, while Treasurys and gold benefit from negative-correlation environments, though the effect is not the strongest.

AI Summary. A 2021 study of US adolescents found depressive symptoms diverged by political ideology as well as gender, with liberal girls showing the largest increase and conservative boys the smallest, and liberal boys reporting more depression than conservative girls. The author argues progressive institutions teach catastrophizing and the language of "harm," which reinforces feelings of harm and undermines long-term emotional regulation.

Matt Yglesias Slow Boring
Date Posted:

.@mattyglesias notes that young liberals’ depression rates have increased compared to younger conservatives’ and suggests that this may be caused by a progressive tendency to “catastrophize” political issues.

Do political beliefs shape teen depression beyond gender?

Core argument: Gimbrone, Bates, Prins, and Keyes find in their 2021 paper that liberal girls show the largest increase in depressive affect among US adolescents and conservative boys the smallest, with symptoms diverging by political ideology as well as gender.

A 2021 paper by Catherine Gimbrone, Lisa Bates, Seth Prins, and Katherine Keyes titled “The politics of depression: Diverging trends in internalizing symptoms among US adolescents by political beliefs.” The CDC survey doesn’t ask teens about their political beliefs, but Gimbrone et. al. find not only divergence by gender, but divergence by political ideology. Breaking things down by gender and ideology, they find that liberal girls have the highest increase in depressive affect and conservative boys have the least. But liberal boys are more depressed than conservative girls, suggesting an important independent role for political ideology. Mentally processing ambiguous events with a negative spin is just what depression is. And while the finding that liberals are disproportionately likely to do it is interesting and important, it’s not sound practice to celebrate that or tell them that they are right to do it. Progressive institutional leaders have specifically taught young progressives that catastrophizing is a good way to get what they want. Leaning into the language of “harm” creates and reinforces feelings of harm, and while using that language may give a person some short-term power in progressive spaces, It’s pretty bad for most people’s long-term ability to regulate their emotions, to manage inevitable adversity, and to navigate a complicated world.

Takeaways by Macro Roundup® AI

  1. Gimbrone, Bates, Prins, and Keyes find in their 2021 paper that liberal girls show the largest increase in depressive affect among US adolescents and conservative boys the smallest, with symptoms diverging by political ideology as well as gender.
  2. Liberal boys report more depression than conservative girls in the Gimbrone et al. analysis, suggesting an independent role for political ideology beyond gender.
  3. Progressive institutional leaders have taught young progressives that catastrophizing is an effective way to get what they want, and leaning into the language of "harm" may confer short-term power in progressive spaces while harming long-term emotional regulation and the ability to manage adversity.

AI Summary. An 11-year-old girl in southern Cambodia who died after being infected with H5N1 avian influenza carried a different strain than the one causing mass deaths in wild and domestic birds globally, according to the researchers who sequenced viral samples from her.

Smriti Mallapaty Nature
Date Posted:

The Cambodian girl who died of the bird flu last week had been infected with a different strain than the one that is circulating globally. @Nature

The Cambodian girl who died of the bird flu last week had been infected with a different strain than the one that is...

Did a fatal bird flu case involve the globally circulating strain?

Core argument: An 11-year-old girl in southern Cambodia who died after infection with avian influenza A (H5N1) carried a different strain from the one causing mass deaths in wild and domestic birds globally, according to the scientist who led the viral sequencing.

An 11-year-old girl in southern Cambodia who died last week after being infected with avian influenza A (H5N1) had a different strain than the one causing mass deaths in wild and domestic birds globally, says the scientist who led the effort to sequence viral samples from the girl. Scientists were initially concerned that the girl might have been infected with the widely circulating virus that is now spreading in some mammal species and has infected a handful of people since 2020.

Takeaways by Macro Roundup® AI

  1. An 11-year-old girl in southern Cambodia who died after infection with avian influenza A (H5N1) carried a different strain from the one causing mass deaths in wild and domestic birds globally, according to the scientist who led the viral sequencing.
  2. Scientists were initially concerned the Cambodian girl had been infected with the widely circulating H5N1 virus that is spreading in some mammal species and has infected a handful of people since 2020.

AI Summary. The authors attribute the decline in the U.S. natural rate of interest mainly to rising income inequality rather than demographic shifts, noting the top 10% of earners gained 10–15 percentage points of national income share and now save 3–3.5 percentage points more of national income annually than before 1980.

Amir Sufi Federal Reserve Bank of Kansas City
Date Posted:
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The decline in the natural rate of interest (r*) in the U.S. is primarily driven by rising income inequality rather than demographic shifts. Since the 1980s, the top 10% of earners have increased their share of national income by 10-15pp.

Does rising income inequality explain the falling natural interest rate?

Core argument: The top 10% of U.S. income earners have raised their share of national income by 10–15 percentage points since the 1980s, and the resulting rise in their savings is identified as the primary driver of the decline in the natural rate of interest.

The decline in the natural rate of interest (r*) in the U.S. is primarily driven by rising income inequality rather than demographic shifts. Since the 1980s, the top 10% of income earners have increased their share of national income by 10-15 percentage points, leading to a significant rise in savings. This group now saves 3-3.5 percentage points more of national income annually compared to pre-1980 levels, accounting for 30-40% of total private savings from 1995 to 2019. In contrast, saving rates across age groups show less variation, challenging the demographic explanation. The data indicates that the widening gap in savings between the top 10% and bottom 90% is a key factor exerting downward pressure on r*.

Takeaways by Macro Roundup® AI

  1. The top 10% of U.S. income earners have raised their share of national income by 10–15 percentage points since the 1980s, and the resulting rise in their savings is identified as the primary driver of the decline in the natural rate of interest.
  2. The top 10% of U.S. earners save 3–3.5 percentage points more of national income annually than before 1980, accounting for 30–40% of total private savings from 1995 to 2019.
  3. Saving rates vary less across age groups than across income groups, which challenges the demographic explanation for the fall in r* in favor of the widening savings gap between the top 10% and bottom 90%.

Mian/Straub/Sufi research presented over the weekend at Jackson Hole argues that the rise in inequality, rather than demographics has driven down the interest rates. The basic mechanism is the rich have a greater propensity to save and the resulting risk adverse capital drives down r*, note this study looks at the United States (so it’s not accounting for incoming hot money) Bottom line, "...Downward pressure on the natural rate of interest (r*) is often attributed to an increase in saving. This study uses microeconomic data from the SCF+ to explore the relative importance of demographic shifts versus rising income inequality on the evolution of saving behavior in the United States from 1950 to 2019. The evidence suggests that rising income inequality is the more important factor explaining the decline in r*. Saving rates are significantly higher for high income households within a given birth cohort relative to middle and low income households in the same birth cohort, and there has been a large rise in income shares for high income households since the 1980s. The result has been a large rise in saving by high income earners since the 1980s, which is the exact same time period during which r* has fallen. Differences in saving rates across the working age distribution are smaller, and there has not been a consistent monotonic shift in income toward any given age group. Both findings challenge the view that demographic shifts due to the aging of the baby boom generation explain the decline in r*....

What explains the decline in r ? Rising income inequality versus demographic shifts: Extended Excerpt Image 1


"...Saving rates across the within-birth cohort income distribution vary far more than saving rate differences across the working-age distribution. The top 10% income households within a given birth cohort have a saving rate that is between 10 and 20 percentage points higher than the bottom 90%.The large difference is present over the entire sample period, and it becomes even larger over time. Furthermore, there was a large shift in the share of income going to the top 10% of the withinbirth cohort income distribution from 1983 to 2019. By the end of the sample period, the top 10% of the within-birth cohort income distribution had an income share that was almost 15 percentage points higher than the top 10% prior to the 1980s. The higher saving rate of the top 10% together with the large shift in income to the top 10% combined to generate a significant increase in savings entering the financial system from high income households. Overall, we estimate that between 3 and 3.5 percentage points more of national income were saved by the top 10% from 1995 to 2019 compared to the period prior to the 1980s. This represents 30 to 40% of total private saving in the U.S. economy from 1995 to 2019.The rise in saving by high income households is likely a powerful force putting downward pressure on r*...."

Pushback at demographic argument

"...In contrast, the evidence is less favorable to the view that the baby boom generation is responsible for a rise in saving that pushes down r*. For example, saving rates across the working age distribution do not vary substantially. As a result, even when the baby boomers entered into the higher saving rate middle-age group, the rise in actual saving was modest. More generally, the limited variation in saving rates across the working age distribution makes it difficult for any large shift in income across the age distribution to explain patterns in household saving behavior. Another challenge to the baby boom generation explanation is the time series of income share shifts across the age distribution since the 1980s. The decline in r* has been monotonic and steady from 1980 onward. In contrast, the income share received by age groups with the highest saving rates has shown significant upward and downward movement since the 1980s, reflecting the entry and exit of the baby boom generation into the middle of the working age distribution. There is no statistically significant relationship in the time series between r* and the income share going to households headed by an individual between 45 and 64.This issue is especially pronounced in recent years. The baby boom generation is entering the low saving rate retirement years at the end of the sample, and so their saving should be expected to decline substantially. Yet measures of r* continue to decline. Finally, the large differences in saving behavior between high income households and the rest of the population is present within the baby boom generation. While the top 10% of the baby boom generation saved more than earlier generations, the bottom 90% actually saved less. The difference in saving behavior within the baby boom generation highlights the drawback of treating this generation as a monolith; the rich and non-rich households of the baby boom generation have displayed substantially different saving behavior over their life cycle...."

What explains the decline in r ? Rising income inequality versus demographic shifts: Extended Excerpt Image 2


".... The left panel of Figure 3 shows the saving rates out of own income for within-birth cohort income groups.More specifically, the figure shows the average annualized saving rates out of own income for the period from 1953 to 2019. As mentioned in Section 3, the income groups are formed within a given birth cohort. For example, for the group of households where the household head was born between 1955 and 1964, the methodology estimates the saving rate for each year for the top 10%, next 40%, and bottom 50% within this birth cohort. This helps to ensure that the differences in saving rates across income groups for a given birth cohort are not driven by life-cycle effects. By construction, households with a head that is in the same birth cohort are at similar points of their life cycle regardless of the income position within the birth-cohort.10 For every year of the SCF+, we sum the saving and income for each income group across all birth cohorts present in that year. We then calculate the saving rate of the income group as the sum of the saving by the income group scaled by the sum of income for the income group. For each SCF+ year, this yields a saving rate for the top 10%, next 40%, and bottom 50% of the within-birth cohort income distribution. The left panel of Figure 3 reports the average saving rates for each of the groups across all years of the SCF+. The left panel shows that saving rates are substantially higher for the top 10% income group within a given birth-cohort. The top 10% income group has a saving rate that is 13 percentage points higher than the next 40%, and almost 20 percentage points higher than the bottom 50%. It is well known that higher income households have higher saving rates than lower income households…However, the within-cohort sorting done in this study shows that this large difference is not due to life cycle effects. This is important because high income households may have higher saving rates because high income households happen to be in the part of the life cycle associated with higher saving rates. By examining the within-birth cohort distribution of income, the methodology used here ensures that a life cycle effect is not responsible for the large differences in saving rates across the income distribution. In short, high income households save a significantly larger fraction of their income relative to lower income households, even if they are similar in age. The right panel focuses on saving rates across age bins. As mentioned in Section 3, the saving rate of a given birth cohort is included in an age bin if in that survey year the median age of the birth cohort fits within the bin. As the right panel shows, there are life cycle differences in saving rates, but the differences are smaller in magnitude relative to the differences in saving rates across the within-birth cohort income distribution, especially for cohorts with a median age below 64. A birth cohort saves about 6 percentage points more when it is in the 45 to 54 age bin relative to the 18 to 34 age bin. This is less than half the difference in saving rates between the top 10% and middle 40%, and less than a third the difference between the top 10% and bottom 50%...."

"... The evidence supports the idea that rising income inequality is an important factor putting downward pressure on r*. The saving rates of high income households within a given birth cohort are significantly higher than middle and low income households. As income has shifted toward high income households over time, they have saved 3 to 3.5 percentage points more of national income compared to the pre-1980 period. The evidence is less convincing for the baby boom generation explanation for the decline in r*. Saving rates across the working age distribution do not vary as much compared to saving rates across the within-birth-cohort income distribution, and income shift patterns are ambiguous. Demographics are one of the most cited explanations for the decline in r*. The analysis here casts doubt on one prominent channel for demographics to affect r*. There are likely other channels through which demographics matter for r*; however, these other channels should be articulated clearly and they should be subjected to empirical testing. The relative strength of the rising inequality and shifting demographics hypotheses is perhaps best measured by looking into the future. Current measures of r* are extremely low, and futures markets indicate an expectation that r* will stay low in the future. The traditional demographics view argues that measures of r* should be expected to rise as the baby boom generation retires, a process that is already underway. More recently, there has emerged disagreement on whether shifting demographics should be expected to raise or lower r* going forward..."

What explains the decline in r ? Rising income inequality versus demographic shifts: Extended Excerpt Image 3


"...Figure 4 is a heat map showing the bivariate distribution of saving rates across the within-birth cohort income distribution and the age distribution. As it makes clear, differences in saving rates across the income distribution are substantial for every age group between 18 and 64. Moving south to north across income groups in every age group between 18 and 64 leads to a substantial rise in saving rates. In contrast, fixing the income group, there is much less variation in saving rates across the age distribution. Moving from west to east is not associated with a vast difference in saving rates. Saving rates vary far more by income than by age, at least for households with a head between 18 and 64. The shift-share equation along with the results presented in Figures 3 and 4 provide the first reason why the rise in income inequality is a more powerful force affecting saving relative to demographics. Saving rates differ far more across the within-birth cohort income distribution than the age distribution. Even if there are large changes in income shares across the age distribution due to a particularly large birth cohort such as the baby boom generation, those changes should not be expected to have large effects on saving given that the saving rate differences across the working age distribution are relatively small. In contrast, a change in the share of income across the income distribution should be expected to have large effects. We turn to the change in the share of income in the next section...."

"... The left panel of Figure 5 shows that the share of income going to the top 10% of the within-birth cohort income distribution has increased substantially since the early 1980s. In aggregate, the share of income earned by the top 10% has risen between 10 and 15 percentage points..."

What explains the decline in r ? Rising income inequality versus demographic shifts: Extended Excerpt Image 4


"... Figure 6 shows this important result in more detail. Each marker in Figure 6 represents the share of a given birth cohort’s overall income earned by the top 10% of that birth cohort when the cohort is in a given age bin. Each birth cohort is represented by the same set of markers across the age bins. The earliest birth cohort includes household heads born between 1925 and 1934 and the latest includes those born between 1975 and 1984. As the figure shows, there has been a steady upward trend in the top 10% income share for every subsequent birth cohort across all age bins. As an example, when the 1925 to 1934 birth cohort was in the 45 to 54 age bin (in the 1970s and 1980s), the top 10% of the 1925 to 1934 birth cohort earned 33% of the total income earned by the birth cohort. When the 1965 to 1974 birth cohort was in the 45 to 54 age bin (in the latest years of the sample period), the top 10% earned 47%. During the prime working age years, the top 10% of the 1965 to 1975 birth cohort had an income share that was 14 percentage points higher relative to the top 10% of the 1925 to 1934 birth cohort. There has a been a steady and large rise in the income share of the top 10% within birth-cohort income group. What about shifts in income across the age distribution? The right panel of Figure 5 shows the share of income going to birth cohorts for which the household head has a median age between 45 to 64. We focus on this group because it tends to have the largest saving rates across the age distribution, and previous research suggests that this group is particularly important in driving saving (e.g., Rachel and Smith (2015), Lunsford and West (2019)). The effect of the baby boom generation is clear. The share of income going to the 45 to 64 age group falls steadily until the late 1990s, when the baby boom generation enters into this age group. From the middle 1990s to 2010, the share rises. As the baby boom generation begins to retire during the 2010 to 2019 period (an individual born in 1950 hits 65 in 2015), the share of income going to the 45 to 64 age group begins to fall. A comparison of the two panels of Figure 5 provides another reason why the rise in income inequality is a stronger candidate for explaining the decline in r* relative to the baby boom generation. The rise in the top 10% within-birth cohort income share starts in the 1980s and steadily rises through the end of the sample period, corresponding almost exactly to the downward pattern in r*. In contrast, the income share of the 45 to 64 age bin starts high in the 1960s, falls until the middle 1990s, rises to 2010, and then begins to fall once the baby boomers begin to retire. This pattern is not correlated with the steady decline in r* from 1980 onward….”

What explains the decline in r ? Rising income inequality versus demographic shifts: Extended Excerpt Image 5


"... Figure 7 makes this point explicit by focusing on the time series correlation between r* and the two income shares shown in Figure 5. The left panel shows a scatter plot of r* against the top 10% within birth-cohort income share across the sample period. There is a remarkably strong negative correlation: the rise in the top income share has been closely associated with the decline in r*. In contrast, the right panel shows a weak relationship in the time series between the income share of the 45 to 64 group and r*. The R-squared from a linear regression is 0.74 for the top 10% but only 0.04 for the 45 to 64 group. The weak relationship in the right panel casts doubt on the view that a bulge entering the 45 to 64 age group is responsible for the downward long-term trend in r*….”

What explains the decline in r ? Rising income inequality versus demographic shifts: Extended Excerpt Image 6


"...The saving rate differences and shifts in income shares suggest that the rise in income inequality is the stronger determinant of the change in saving over time, a result that is confirmed in Table 1. In particular, Table 1 focuses on within-birth cohort income groups, and it reports each component of the shift-share equation 3. For the pre-period (t = 0), we focus on annual averages for the 20 years prior to the rise in top income shares: 1962-1983. For the post period…we focus on the last 25 years of the sample in which r* has fallen to an extremely low level: 1995-2019. All values reported in the table represent the average annual values over these time periods. The first column shows average saving rates in the pre-period (s0), and it reveals that there are large differences across income groups, a fact already shown for the full period in Figure 3. The second column shows the change in the annual average top 10% within birth cohort income share…. The top 10% earn 11.8 percentage points more of total income in the post period relative to the pre period, with both the next 40% and the bottom 50% experiencing a substantial reduction. Multiplying these two columns together yields the change in saving expected using the shift-share approach, which is reported in column 3. If saving rates for each group remained stable, the methodology predicts a rise in saving by the top 10% of 3.0 percentage points of national income every year. To put this in perspective, the average private saving to national income ratio for the 1995 to 2019 period was 8.9 percentage points. The shift share alone for the top 10% predicts a rise in saving that is 1/3 of the aggregate amount in the post period. The decline in predicted saving for the bottom 90% is modest given the low initial saving rates...."

What explains the decline in r ? Rising income inequality versus demographic shifts: Extended Excerpt Image 7


".. The saving by the top 10% is slightly larger than predicted, coming to 3.3 percentage points of national income annually. In other words, relative to the 1962 to 1983 period, the top 10% saves 3.3 percentage points more of national income every year, which represents 37 percent of annual average private saving in the post period. In contrast, the bottom 90% have reduced their saving substantially, given the large decline in saving rates....The bottom line from Table 1 is that the rise in income inequality combined with high saving rates of high income households leads to a substantial rise in saving by the top 10% of the within cohort income distribution from 1995 to 2019. The rise in income inequality leads to a large rise in saving, and therefore is a likely culprit when assessing forces that push down r*…”

"...Table 2 conducts a similar exercise using age bins as groups instead of income. As already shown, saving rates across the age distribution do not vary substantially, and the income share shift patterns are more subtle. As a result, it should not be surprising that the shift-share approach does not predict substantial differences in saving across the age distribution. The aging of the population associated with the baby boom generation is evident, as income shares are higher for those between 45 and 74. But the size of the income share shift is modest, and the difference in saving rates is relatively small. In terms of actual saving, saving rates have fallen across almost the entire age distribution, with the exception of the 35 to 44 age bin. They have fallen substantially for the oldest age group evaluated, the 65 to 74 bin. As a result, actual saving has fallen for almost all the age groups. This highlights an important implication: a methodology that ignores the within birth-cohort income distribution will tend to find a steady decline in saving across most of the age distribution....."

What explains the decline in r ? Rising income inequality versus demographic shifts: Extended Excerpt Image 8


'... Figure 8 shows the saving to aggregate national income ratio for the six main birth cohorts of the sample, ranging from those born between 1925 to 1934 to those born between 1975 and 1984. Saving by each birth cohort starts low as the cohort enters the work force, and then shows a hump shape that is particularly striking for the 1935 to 1944 and 1945 to 1954 cohort. The larger size of the baby boom generation translates into a rise in saving coming from that group, particularly for the late baby boomers born between 1955 and 1964. However, the birth cohort coming after the baby boomers (1965 to 1974) also saves substantially more than previous generations. From 2014 to 2019, the saving to national income ratio of the 1965 to 1974 cohort is larger than saving at any point in time for the 1935 to 1944 and 1945 to 1954 birth cohorts. As the results in Section 4.3 suggest, this rise in saving coming from the later birth cohorts is driven entirely by the top of the income distribution within these cohorts. This fact is shown in Figure 9. Starting with the 1955 to 1964 birth cohort (the late baby boomers), the top 10% of each birth cohort shows a substantial rise in saving relative to the top 10% of earlier birth cohorts. For example, consider the top 10% of the 1965 to 1974 birth cohort. This is not a particularly large cohort, and yet the saving by the top 10% of this cohort is larger than saving by the top 10% of any previous cohort with the exception of 1954 to 1965 cohort (the late baby boomers). In contrast, if we focus on the next 40% and bottom 50%, we see that saving is actually falling with each subsequent birth cohort. This is shown in Figure 10. This is particularly striking for the 1965 to 1974 and the 1975 to 1984 birth cohort. The next 40% and bottom 50% are saving less than previous birth cohorts…”

What explains the decline in r ? Rising income inequality versus demographic shifts: Extended Excerpt Image 9

What explains the decline in r ? Rising income inequality versus demographic shifts: Extended Excerpt Image 10


"...The saving heat map in Figure 11 summarizes these results. More specifically, Figure 11 is constructed by taking the average annual saving to national income ratio in each within-cohort income group and age group cell from 1995 to 2019, and then subtracting average from the preperiod from 1962 to 1983. For every age bin except for the 18 to 34 group, the top 10% is saving significantly more in recent years relative to the pre-period. The bottom 90% is saving less in almost every age bin. As with saving rates, the crucial variation is across the within-cohort income distribution, not the age distribution....."

What explains the decline in r ? Rising income inequality versus demographic shifts: Extended Excerpt Image 11


"...In recent years, the rich are saving more and the non-rich are saving less. This statement is true when defining the rich and non-rich within a given birth cohort, and so this result is not due to mechanical life cycle effects. In Figure 12, the saving by the top 10% and bottom 90% of all of the birth cohorts are summed, respectively. As the figure shows, since the 1980s, saving by the top 10% has risen substantially while saving by the bottom 90% has fallen substantially. By the end of the sample period, when evaluating the sum of each group, all of the private saving in the U.S. economy is generated by the top 10%...."

What explains the decline in r ? Rising income inequality versus demographic shifts: Extended Excerpt Image 12

On Rognlie

“…One issue with the wealth-based shift-share approach is that the baseline year age-wealth profile...may be sensitive to the year chosen because of pure valuation effects that are unrelated to saving. This is indeed what has happened to the age-wealth profile in the United States, as shown in Figure 15. The age-wealth profile has changed significantly over the past 50 years, becoming steeper over time. This is especially striking for households with a head that is 65 or older. As a result, a shift-share approach using the age-wealth profile from a baseline year of, say, 1971 will find smaller effects of aging on the wealth to income ratio relative to a shift-share approach using the age-wealth profile from a baseline year of 2019….”

"... In summary, the conclusion we reach based on these results is that the central pattern in the discussion of household saving behavior in the United States since the 1980s is the widening gap in saving between the top 10% and the bottom 90% of the income distribution. Furthermore, this gap does not appear to be driven by life cycle issues, as it is present even when comparing the rich and non-rich within the same birth cohort. Explanations for the decline in r* should be consistent with this widening gap in saving between the rich and the non-rich...."

Atif Mian, Ludwig Straub and Amir Sufi, "What explains the decline in r∗? Rising income inequality versus demographic shifts," Federal Reserve Bank Of Kansas City, August 2021, https://www.kansascityfed.org/documents/8337/JH_paper_Sufi_3.pdf