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


Friday, March 17, 2023

AI Summary. Labor-force participation for Americans ages 25 to 54 reached 83.1%, surpassing its pre-pandemic peak, something that did not occur in the prior two expansions. Participation for those ages 20 to 24 and over 55 remains well below pre-pandemic levels, with more than 400,000 Americans in their 20s missing from the labor force.

Hal Scott Wall Street Journal
Date Posted:

.@HalScott_HLS argues the Federal Reserve failed to stem the on SVB by not serving as the lender of last resort early on, using its authority under Section 10B of the Federal Reserve Act via the discount window. #Federal Reserve #SVB

.@HalScott_HLS argues the Federal Reserve failed to stem the on SVB by not serving as the lender of last resort early on,...

Has prime-age labor-force participation recovered while young adults lag behind?

Core argument: The labor-force participation rate for Americans ages 25–54 reached 83.1% in February, surpassing its pre-pandemic, pre-recession peak — something that did not occur during either of the two prior economic expansions.

In February, the labor-force participation rate for Americans ages 25 to 54 hit 83.1%, surpassing its pre-pandemic, pre-recession peak — which never happened during the past two economic expansions. The 25-to-54 age group is the core of the labor force, often referred to as “prime age.” But there are 58 million working Americans outside of it, 21 million younger and 37 million older. Teenagers are now substantially more likely to be in the labor force than before the pandemic, so they’re not the issue. But participation rates for those ages 20 to 24 and above 55 are still well short of where they were in February 2020. The decline among young adults is a different story. As the second chart above makes clear, it’s not just the 20-to-24 group that’s affected, with those in their late 20s seeing even bigger declines in participation and employment. There haven’t been big shifts in the age distribution within either group, so composition effects aren’t to blame. It’s simply more than 400,000 Americans in their 20s missing from the labor force, people who should be at the beginning of long careers, not fading into the sunset.

Takeaways by Macro Roundup® AI

  1. The labor-force participation rate for Americans ages 25–54 reached 83.1% in February, surpassing its pre-pandemic, pre-recession peak — something that did not occur during either of the two prior economic expansions.
  2. Participation rates for Americans ages 20–24 and those above 55 remain well short of their February 2020 levels, while teenagers are substantially more likely to be in the labor force than before the pandemic.
  3. More than 400,000 Americans in their 20s are missing from the labor force, with those in their late 20s showing even larger declines in participation and employment than the 20-to-24 group, and shifts in age distribution do not explain the drop.

AI Summary. US labor-force participation for ages 25 to 54 reached 83.1%, surpassing its pre-pandemic peak, while participation rates for those ages 20 to 24 and over 55 remain well below pre-pandemic levels. More than 400,000 Americans in their 20s are missing from the labor force, a decline not explained by shifts in age composition.

Justin Fox Bloomberg
Date Posted:

Labor force participation for workers aged 25-54 hit 83% in Feb, surpassing its pre-pandemic peak. However, participation for those aged 20-24 remains well below pre-pandemic levels, with 400k Americans missing from the labor force. @foxjust

Why are young adults missing from the labor force?

Core argument: U.S. labor-force participation for ages 25–54 reached 83.1% in February, surpassing its pre-pandemic, pre-recession peak, something that did not occur during either of the past two economic expansions.

In February, the labor-force participation rate for Americans ages 25 to 54 hit 83.1%, surpassing its pre-pandemic, pre-recession peak — which never happened during the past two economic expansions. The 25-to-54 age group is the core of the labor force, often referred to as “prime age.” But there are 58 million working Americans outside of it, 21 million younger and 37 million older. Teenagers are now substantially more likely to be in the labor force than before the pandemic, so they’re not the issue. But participation rates for those ages 20 to 24 and above 55 are still well short of where they were in February 2020. The decline among young adults is a different story. As the second chart above makes clear, it’s not just the 20-to-24 group that’s affected, with those in their late 20s seeing even bigger declines in participation and employment. There haven’t been big shifts in the age distribution within either group, so composition effects aren’t to blame. It’s simply more than 400,000 Americans in their 20s missing from the labor force, people who should be at the beginning of long careers, not fading into the sunset.

Takeaways by Macro Roundup® AI

  1. U.S. labor-force participation for ages 25–54 reached 83.1% in February, surpassing its pre-pandemic, pre-recession peak, something that did not occur during either of the past two economic expansions.
  2. More than 400,000 Americans in their 20s are missing from the labor force, with participation for the 20-to-24 group and those in their late 20s still well short of February 2020 levels.
  3. Teenagers are substantially more likely to be in the labor force than before the pandemic, and the absence of big shifts in age distribution within the younger and older groups rules out composition effects.

AI Summary. English-speaking countries including the UK, US, Canada, Australia, New Zealand, and Ireland have stayed at roughly 400 homes per 1,000 residents while western Europe has reached 560, and house prices have risen further and faster in most of the Anglosphere. The author attributes the divergence to a cultural aversion to urban density.

John Burn-Murdoch Financial Times
Date Posted:

Anglosphere countries have a strong preference for low density housing. This has led to much more expensive housing in Anglosphere countries and supply of 400 homes per 1k residence vs. 540 per 1k in western Europe.

Does an aversion to density explain higher English-speaking housing costs?

Core argument: Western Europe's housing stock has reached 560 homes per 1,000 residents, while the UK, US, Canada, Australia, New Zealand, and Ireland have stood still at roughly the 400 per 1,000 both groups shared 40 years ago.

Forty years ago, the UK, US, Canada, Australia, New Zealand, and Ireland had roughly 400 homes per 1,000 residents, level with developed continental European countries. Since then the two groups have diverged, the Anglosphere standing still while western Europe has pulled clear to 560 per 1,000. Unsurprisingly, the same pattern is reflected in house prices, which have risen further and faster in most anglophone countries since the global financial crisis than elsewhere. There appears to be a deep-seated aversion to urban density in anglophone culture that sets these countries apart from the rest.

Takeaways by Macro Roundup® AI

  1. Western Europe's housing stock has reached 560 homes per 1,000 residents, while the UK, US, Canada, Australia, New Zealand, and Ireland have stood still at roughly the 400 per 1,000 both groups shared 40 years ago.
  2. House prices have risen further and faster in most anglophone countries since the global financial crisis than elsewhere, mirroring the divergence in homes per 1,000 residents.
  3. An apparent deep-seated aversion to urban density in anglophone culture sets these countries apart from the rest.

AI Summary. Panamanian immigration data show 49,291 migrants crossed the Darien Gap rainforest between Colombia and Panama en route to the U.S. over a two-month span, more than a fivefold increase from 8,964 in the same period a year earlier. Chinese nationals accounted for about 2,200 of those crossings, up from 71.

Ryan Dube and Shen Lu Wall Street Journal
Date Posted:

Migrants, including a sharp increase in Chinese, are surging into Panama as they seek entry into the United States. Border Patrol agents have arrested 4,271 Chinese nationals since Oct, a 12-fold increase from the same period a year earlier. @WSJ

How sharply have U.S.-bound migrant crossings through the Darien Gap risen?

Core argument: About 2,200 Chinese migrants crossed the Darien Gap in the first two months of 2023, up from 71 recorded passing through Panama in the same period last year.

The number of migrants crossing into Panama after trudging through the treacherous Darien Gap jungle reached record levels in the first two months of the year, data from Panama showed, posing a fresh challenge to their destination country, the U.S. In January and February, 49,291 people from as near as Haiti and as far away as China have crossed the Darien, a span of rainforest separating Panama from Colombia. That is more than a fivefold increase from the 8,964 migrants in the same period last year, according to Panama’s immigration office. About 2,200 Chinese migrants were among those crossing the Darien Gap in the first two months of 2023, a sharp increase in a group that usually has made up a much smaller proportion of migrants through the area. During the same period last year, 71 Chinese migrants were recorded passing through Panama.

Takeaways by Macro Roundup® AI

  1. About 2,200 Chinese migrants crossed the Darien Gap in the first two months of 2023, up from 71 recorded passing through Panama in the same period last year.
  2. Panama's immigration office recorded 49,291 migrants crossing the Darien Gap in January and February, more than a fivefold increase from 8,964 in the same period last year.
  3. The record flow of migrants through the Darien Gap, a rainforest span separating Panama from Colombia, poses a fresh challenge to the U.S. as their destination country.

AI Summary. Texas's population grew 18% from 2010 to 2021 while its economy grew 39%, one and a half times faster than the national economy. In one 12-month span Texas added a net 471,000 residents, the most of any state, with about half arriving from elsewhere in America, a quarter from abroad, and a quarter from births exceeding deaths.

Economist Staff The Economist
Date Posted:

Texas’ population grew 18% from 2010-2021. If trends continue, it may surpass California’s population in the 2040s. With a $2tn 2022 GDP, Texas would rank as the world’s 9th largest economy if independent. @TheEconomist

Is Texas growing in population and economic output faster than the nation?

Core argument: Texas added a net 471,000 residents in the 12 months starting July 2021, the most of any state, equivalent to about 1,290 new Texans per day or roughly 9,000 per week.

The population of Texas as a whole grew by 18% from 2010 to 2021. The state’s economy grew by 39%, one and a half times faster than the national one. The first boom, in people, is remarkable by any standard. In the 12 months starting in July 2021 Texas added a net 471,000 residents, the most of any state. That is equivalent to 1,290 new Texans each day, or around 9,000 a week. Only a quarter of those came from natural increase (the difference between births and deaths). Another quarter were immigrants from abroad. But roughly half were arrivals from elsewhere in America. California still has more people than Texas, although, if current trends persist, Texas will eclipse it as the most populous state at some point in the 2040s

Takeaways by Macro Roundup® AI

  1. Texas added a net 471,000 residents in the 12 months starting July 2021, the most of any state, equivalent to about 1,290 new Texans per day or roughly 9,000 per week.
  2. Roughly half of Texas's population gain came from arrivals from elsewhere in America, with a quarter from natural increase and a quarter from immigration from abroad.
  3. Texas's population grew 18% from 2010 to 2021 while its economy grew 39%, one and a half times faster than the national economy, and if current trends persist Texas will eclipse California as the most populous state at some point in the 2040s.

AI Summary. Heavy rain and snow have begun easing California's long-term drought, which followed the state's driest three-year stretch on record. Many of California's reservoirs have refilled quickly, with a number returning to or surpassing average levels for the season.

Elena Shao, Mira Rojanasakul and Nadja Popovich New York Times
Date Posted:

Recent rain and snowfall in California have replenished reservoirs, helping the state better manage its long-term drought. @nytimes

Has a wet winter eased California's record drought?

Core argument: Torrential rain and snow across California have begun to ease the state's long-term drought, the driest three-year stretch on record.

Torrential rain and snow have again drenched California in recent weeks, amplifying an already wet winter season. The extreme precipitation has begun to ease the state’s long-term drought, the driest three-year stretch on record. The recent storms have quickly refilled many of California’s reservoirs. A number of them have returned to or even surpassed average levels for this time of year, compared with previous years where reservoir levels remained below the historical average.

Takeaways by Macro Roundup® AI

  1. Torrential rain and snow across California have begun to ease the state's long-term drought, the driest three-year stretch on record.
  2. California's reservoirs have refilled quickly during the storms, with a number returning to or surpassing average levels for this point in the year, unlike previous years when levels stayed below the historical average.
  3. California's water woes remain despite a very wet winter season.

Monday, March 20, 2023

AI Summary. Historical patterns suggest large declines in real interest rates after major shocks tend to fade, and structural forces — surging public and private debt, green transition costs, rising defence spending, and populist fiscal pressures — point upward. Central banks may therefore need to hold interest rates higher than in the prior decade to keep inflation stable.

Ken Rogoff Financial Times
Date Posted:

.@krogoff argues that we can’t count on the low borrowing rates associated with secular stagnation to reassert themselves. Given inflation near 5% and extreme stress in the banking system, Rogoff thinks the Fed decision on Mar 21-22 is especially tough.

.@krogoff argues that we can’t count on the low borrowing rates associated with secular stagnation to reassert...

Will central banks need to hold interest rates higher than last decade?

Core argument: Central banks may need to keep the general level of interest rates higher over the next decade than in the last one, even after inflation abates, simply to keep inflation stable.

Ultra-low borrowing rates are not something that can be counted on this time around. If one looks at long-term historical patterns in real interest rates major shocks — for example, the big drop after the 2008 financial crisis — tend to fade over time. There are also structural reasons: for one thing, global debt (public and private) exploded after 2008, partly as an endogenous response to the low rates, partly as a necessary response to the pandemic. Other factors that are pushing up long-term real rates include the massive costs of the green transition and the coming increase in defence expenditure around the world. The rise of populism will presumably help alleviate inequality, but higher taxes will lower trend growth even as higher spending adds to upwards pressure on rates. What this means is that even after inflation abates, central banks may need to keep the general level of interest rates higher over the next decade than they did in the last one, just to keep inflation stable.

Takeaways by Macro Roundup® AI

  1. Central banks may need to keep the general level of interest rates higher over the next decade than in the last one, even after inflation abates, simply to keep inflation stable.
  2. Long-term historical patterns in real interest rates suggest major shocks, such as the drop after the 2008 financial crisis, tend to fade over time, so ultra-low borrowing rates cannot be counted on this time.
  3. Structural forces pushing long-term real rates up include the explosion of global public and private debt after 2008 and during the pandemic, the costs of the green transition, coming increases in defence spending worldwide, and populist tax and spending pressures.

AI Summary. Amid banking-system turmoil, the Federal Reserve's balance sheet expanded $297bn in a week — equivalent to reversing about 15 weeks of balance-sheet shrinkage in roughly half a week — though it remained $315bn smaller than a year earlier. The author argues this is not quantitative easing, since quantitative easing creates reserves that persist at the central bank's discretion.

Chris Marsh Money: Inside and Out
Date Posted:

The Fed’s balance sheet expansion through March 15th offset fifteen weeks of quantitative tightening but doesn’t signal a return to quantitative easing. @GeneralTheorist

Is emergency lending that expands the central bank balance sheet quantitative easing?

Core argument: The Federal Reserve's balance sheet expanded $297bn in the week through Wednesday the 15th following turmoil that began with Silicon Valley Bank, though it remains $315bn smaller than a year earlier.

Following a week of turmoil in the banking system, starting with the tension around Silicon Valley Bank, this week (through Weds. 15th) the Federal Reserve’s balance sheet expanded USD297bn (though still falling USD315bn over the past year). This is equivalent to offsetting 15 weeks of quantitative tightening (QT) in about half a week. It is tempting to conclude that the resumption of balance sheet expansion reflects a return of QE. A brief inspection of the transactions involved reveals this is not the case. In the case of QE, asset purchases and reserves created can be expected to remain in place for an extended period, at the discretion of the central bank. It represents outside money for the private sector, an asset with no associated liability, which cannot be disposed of in the aggregate but to which all must adjust.

Takeaways by Macro Roundup® AI

  1. The Federal Reserve's balance sheet expanded $297bn in the week through Wednesday the 15th following turmoil that began with Silicon Valley Bank, though it remains $315bn smaller than a year earlier.
  2. The $297bn expansion is equivalent to offsetting 15 weeks of quantitative tightening in about half a week.
  3. The balance sheet expansion does not amount to a return of quantitative easing, under which asset purchases and created reserves stay in place for an extended period as outside money the private sector cannot dispose of in the aggregate.

AI Summary. The Federal Reserve and five other major central banks shifted from weekly to daily dollar auctions through their swap lines to ease strains in global funding markets amid banking-sector turmoil. The swap network lets banks outside the US obtain dollars by pledging collateral at their own central banks in exchange for domestic currency.

Colby Smith and Martin Arnold Financial Times
Date Posted:

The Federal Reserve has set up swap lines with other major central banks to improve dollar liquidity, running daily dollar auctions for the first time since the 2020 Covid crisis @FinancialTimes.

The Federal Reserve has set up swap lines with other major central banks to improve dollar liquidity, running daily dollar...

Are central banks expanding dollar auctions to ease global funding strains?

Core argument: The Federal Reserve and five other central banks switched from weekly to daily dollar auctions beginning Monday, saying the move would ease strains in global funding markets amid turmoil in the banking sector.

The Federal Reserve and five other leading central banks have taken fresh measures to improve global access to dollar liquidity as financial markets reel from the turmoil hitting the banking sector. In a joint statement on Sunday, the central banks said that from Monday, they would switch from weekly to daily auctions of dollars in an effort to “ease strains in global funding markets”. The daily swap lines between the Fed and the European Central Bank, Bank of England, Swiss National Bank, Bank of Canada and Bank of Japan would run at least until the end of April, the officials said. The Fed’s swap line network, first set up in 2007, has provided an important funding backstop for global banks during periods of acute market stress. Lenders outside the US can use the swap lines to access dollars in exchange for their domestic currencies by pledging collateral at their respective central banks.

Takeaways by Macro Roundup® AI

  1. The Federal Reserve and five other central banks switched from weekly to daily dollar auctions beginning Monday, saying the move would ease strains in global funding markets amid turmoil in the banking sector.
  2. The daily swap lines between the Fed and the European Central Bank, Bank of England, Swiss National Bank, Bank of Canada and Bank of Japan will run at least until the end of April.
  3. The Fed's swap line network, first set up in 2007, lets lenders outside the US access dollars in exchange for their domestic currencies by pledging collateral at their respective central banks.

AI Summary. Banks' securities holdings shifted from a mix of unrealized gains and losses under relatively low interest rates to declining bond portfolio values as the Federal Reserve raised interest rates. Measuring these unrealized losses as a share of each bank's total assets is one way to gauge stress in the financial sector.

Nate Rattner and Alana Pipe Wall Street Journal
Date Posted:

Banks unrealized losses increased in 2022 as the Fed continued its hiking cycle. @WSJecon

How do rising interest rates create unrealized losses on bank securities?

Core argument: Banks' unrealized gains and losses on securities holdings, measured as a share of each bank's total assets, offer one lens on the turmoil in the financial sector.

One way to understand what is happening in the financial sector is to look at banks’ unrealized gains and losses, or how much their securities holdings have risen or fallen in value. In 2021, it was a mix of gains and losses, and interest rates were relatively low. Last year, as the Federal Reserve raised interest rates, the value of banks' bind portfolios declined. Unrealized losses are shown as a share of each bank's total assets.

Takeaways by Macro Roundup® AI

  1. Banks' unrealized gains and losses on securities holdings, measured as a share of each bank's total assets, offer one lens on the turmoil in the financial sector.
  2. In 2021, when interest rates were relatively low, banks' securities portfolios showed a mix of unrealized gains and losses.
  3. As the Federal Reserve raised interest rates, the value of banks' bond portfolios declined.

AI Summary. Foreign sales of listed American and European companies have grown about 2% a year since 2010, down from 8% in the 2000s and 10% in the 1990s. China accounts for less than one-eighth of Western firms' foreign revenues—8% of European companies' total revenues and 4% of American ones—according to Morgan Stanley.

Economist Staff The Economist
Date Posted:

The foreign sales of American firms have grown 2% a year since 2010 relative to 8% annually in the previous decade. American multinational’s sales were flat in China btw 2017-2020 during the same period they grew 6% annually in India. @TheEconomist

Has foreign sales growth slowed for Western companies?

Core argument: Foreign sales of listed American and European companies have grown just 2% a year since 2010, down from 8% in the 2000s and 10% in the 1990s.

Since 2010 the foreign sales of listed American and European companies have grown by a meager 2% per year, down from 8% in the 2000s and 10% in the 1990s. Look across all industries, and China is responsible for less than one-eighth of Western firms’ foreign revenues, according to Morgan Stanley, an investment bank—a much smaller share than American and European sales across the Atlantic or to the rest of the emerging world. Only 8% of European companies’ total revenues come from China. For their American counterparts, the figure is 4%. According to bea figures, American multinationals’ sales in China were flat between 2017 and 2020. In India they grew by 6% a year in the same period. Western multinationals are, then, becoming somewhat less Chinese. Between 1990 and 2021 the average return on equity of American and European listed companies with less than $1bn in sales fell from 8% to 4%. That for firms with revenues of $10bn or more rose from 12% to 18%. And being big is easier if you are international. In 2021 American and European listed companies with $10bn-plus in revenue generated 43% of their sales abroad on average, compared with just 32% for those with sales below $1bn. Global reach is, in other words, more important than ever.

Takeaways by Macro Roundup® AI

  1. Foreign sales of listed American and European companies have grown just 2% a year since 2010, down from 8% in the 2000s and 10% in the 1990s.
  2. China accounts for less than one-eighth of Western firms' foreign revenues, according to Morgan Stanley, supplying 8% of European companies' total revenues and 4% of American companies'.
  3. Average return on equity for American and European listed firms with $10bn-plus in sales rose from 12% in 1990 to 18% in 2021, while that for firms under $1bn fell from 8% to 4%.

AI Summary. A combined 7% of US survey respondents who were not working cited caregiving as the reason — 5% caring for children and 2% for elderly relatives. Daycare and preschool costs have risen more than 10% since the start of the pandemic, and Bank of America internal data show 7% fewer customers making childcare payments than at the start of 2020.

Anna Zhou, Dale Lin, Peter Su and Ana Maxim Bank of America Institute
Date Posted:

New @BankofAmerica research shows 7% fewer customers were spending money on child care relative to the start of 2020 suggesting the higher cost of childcare is keeping lower earning workers out of labor force.

Are rising childcare costs keeping workers out of the labor force?

Core argument: In the Household Pulse Survey with data as of January 17, 2023, 7% of respondents not working cited caregiving as the reason, split between 5% caring for children and 2% for elderly relatives.

Caregiving responsibilities have prevented some from returning to the workforce. In the latest Household Pulse Survey with data as of January 17, 2023, a combined 7% of respondents not working reported caregiving as the reason. This was broken down further: 5% were looking after children and 2% elderly relatives. The lack of affordable and quality childcare has forced some parents to stay at home instead of returning to work. According to the Consumer Price Index, daycare and preschool costs have increased by more than 10% since the start of the pandemic. This is an even bigger burden for lower-income households, which could partly explain the larger labor force exits at the lower end of the income spectrum. However, across the board, it seems that fewer parents are sending their kids to daycare relative to prepandemic days. Bank of America internal data shows that the number of customers making childcare payments as of December 2022 was 7% lower than at the beginning of 2020

Takeaways by Macro Roundup® AI

  1. In the Household Pulse Survey with data as of January 17, 2023, 7% of respondents not working cited caregiving as the reason, split between 5% caring for children and 2% for elderly relatives.
  2. Daycare and preschool costs have risen more than 10% since the start of the pandemic, according to the Consumer Price Index, a burden weighing more heavily on lower-income households that could partly explain larger labor force exits at the lower end of the income spectrum.
  3. Bank of America internal data shows the number of customers making childcare payments as of December 2022 was 7% lower than at the beginning of 2020.

AI Summary. A revised chart of 20-year price changes puts delivery services — private-sector package and document delivery — at the top rather than health care, indicating the largest increases are not confined to government-dominated sectors. The author argues the key distinction is whether an item is a labor-intensive service or a good, not regulation.

Mike Konczal Rortybomb
Date Posted:
Is Database:
Database

.@mtkonczal updates @Mark_J_Perry price changes graph and argues the implication isn’t government regulation drives price shifts but that goods have deflated and services have inflated.

Do the largest 20-year price increases reflect labor-intensive services rather than regulation?

Core argument: In this version of the AEI 20-year inflation chart, the number one item is not health care but "delivery services" — fees for delivery of letters, documents, and packages at non-US Postal Service facilities such as UPS or FedEx.

In our version of the AEI chart the number one item isn’t health care but ‘delivery services,’ which is “fees for delivery of items such as letters, documents, and packages at non-US Postal Services facilities.” Think UPS or FedEx. This is pretty far from a government monopoly, indeed it’s the private sector alternative to a government program. But it is services and it is labor intensive. The biggest thing, to me, isn’t “regulations” but whether it’s a service or a good. This is academically well known, check out The Missing Inflation Puzzle: The Role of the Wage-Price Pass-Through, which finds that the low inflation of pre-pandemic era “can be traced to a growing disconnect between unemployment and core goods inflation” and that “increased import competition and rising market concentration reduce pass-through from wages to prices” when it comes to goods.

Takeaways by Macro Roundup® AI

  1. In this version of the AEI 20-year inflation chart, the number one item is not health care but "delivery services" — fees for delivery of letters, documents, and packages at non-US Postal Service facilities such as UPS or FedEx.
  2. Delivery services are a labor-intensive private-sector alternative to a government program rather than a government monopoly, which supports the argument that whether an item is a service or a good matters more than regulation.
  3. "The Missing Inflation Puzzle: The Role of the Wage-Price Pass-Through" traces pre-pandemic low inflation to a growing disconnect between unemployment and core goods inflation, finding that increased import competition and rising market concentration reduce wage-to-price pass-through for goods.

AI Summary. US nuclear generation has been flat for decades as retirements of aging plants offset additions, with the only recent new capacity additions coming decades apart. New capacity of 2.2 GW at Georgia's Vogtle plant is expected to add roughly 17-18 TWh per year, pushing US nuclear output back toward, but not reaching, 800 TWh annually.

Gregor Macdonald The Gregor Letter
Date Posted:

Nuclear power generation capacity will increase in the US for the first time since 2016 as Georgia’s Vogtle plant comes online. @GregorMacdonald

Why has US nuclear generation stayed flat for decades?

Core argument: Georgia's Vogtle brings 2.2 GW of new nuclear capacity online in the US this year, producing about 17–18 TWh annually once output flows by summer, having achieved initial criticality.

Nuclear power generation in the United States will finally bump up a little this year, as 2.2 GW of new capacity comes online at Georgia’s Vogtle. The last new nuclear capacity to come online in the US was the second phase of Watts Bar, in 2016; and then twenty years prior with the first phase of Watts Bar, in 1996, and before then the second phase of Comanche Peak in 1993. The US has of course lost a great deal of nuclear capacity as plants like Pilgrim in Massachusetts and San Onofre in California simply got too old, and retired. Accordingly, US power generation from nuclear has been on a treadmill of no-growth for decades. To set the context, compare nuclear’s output since 2010 with combined wind and solar. Vogtle is currently ramping up, and achieved initial criticality earlier this month. By summer, output will be flowing and will produce about 17-18 new TWh per year. You can visit the interactive version of the above chart and roughly see that these new 17-18 TWh per year will likely push total US output back towards 800 TWh per year, without quite getting there.

Takeaways by Macro Roundup® AI

  1. Georgia's Vogtle brings 2.2 GW of new nuclear capacity online in the US this year, producing about 17–18 TWh annually once output flows by summer, having achieved initial criticality.
  2. The last new US nuclear capacity came online with Watts Bar's second phase in 2016, preceded by Watts Bar's first phase in 1996 and Comanche Peak's second phase in 1993.
  3. US nuclear generation has seen no growth for decades as aging plants such as Pilgrim in Massachusetts and San Onofre in California retired, with Vogtle's addition likely pushing total output back toward, without quite reaching, 800 TWh per year.