Edward Conard

Top Ten New York Times Bestselling Author

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

Macro Roundup


Monday, March 27, 2023

AI Summary. Goldman Sachs estimates that in the decade after generative AI reaches half of employers, 7% of workers lose their jobs entirely, though most find nearly as productive work. It projects AI adds about 1.5 percentage points to US labor productivity and 1.4 points globally, nearly $7tn in extra annual world output.

Bryce Elder FT Alphaville
Date Posted:

.@FTAlphaville reports on a @GoldmanSachs note forecasting that AI could add 1.5pp to annual US labor productivity growth, or double the current pace, and that the “AI growth bonus” could add almost $7T to global GDP over 10 years.

How much productivity and job loss will generative AI bring?

Core argument: Goldman Sachs's base case has 7% of workers losing their jobs entirely in the decade after generative AI reaches half of employers, though most of those workers find something nearly as productive to do.

Goldman’s base case is for 7 percent of workers to lose their jobs entirely in the decade after generative AI reaches half of employers, but that most will find something nearly as productive to do. That’s set against broad improvements in workforce efficiency that can add around 1.5 percentage points to US labour productivity — which would be about double the current rate. The AI growth bonus globally may be 1.4 percentage points, representing almost $7tn in extra annual global GDP over 10 years, it estimates.

Takeaways by Macro Roundup® AI

  1. Goldman Sachs's base case has 7% of workers losing their jobs entirely in the decade after generative AI reaches half of employers, though most of those workers find something nearly as productive to do.
  2. Goldman Sachs estimates broad improvements in workforce efficiency could add about 1.5 percentage points to US labour productivity, roughly double the current rate.
  3. Goldman Sachs estimates the global AI growth bonus at 1.4 percentage points, representing almost $7tn in extra annual global GDP over 10 years.

AI Summary. Both the mean and median worker saw wages fail to keep pace with prices in their consumption baskets, a decline in real wages affecting 54% of workers. Workers under 25 saw real wage growth of 4.3%, while older age groups saw declines that grew larger with age.

Victoria Gregory and Elisabeth Harding Federal Reserve Bank Of St. Louis
Date Posted:

.@stlouisfed finds that nominal wage growth did not keep pace with inflation for 54% of US workers.

Did most workers see their wages fall behind prices?

Core argument: 54% of workers experienced negative real wage growth in 2022, as wage growth failed to keep pace with price growth in their consumption baskets, and both the mean and median worker saw real wages decline.

Both the mean and median worker experienced negative real wage growth in 2022, meaning the growth of their wages did not keep up with the growth of prices in their consumption baskets. Altogether, this was the case for 54% of workers. Workers younger than 25 years old experienced a positive real wage growth rate of 4.3%, while other age groups experienced negative real wage growth rates.  In fact, the older the age group, the lower the real wage growth. Similarly, individuals with less than a high school diploma experienced smaller declines in their real wages than those in all other education groups.

Takeaways by Macro Roundup® AI

  1. 54% of workers experienced negative real wage growth in 2022, as wage growth failed to keep pace with price growth in their consumption baskets, and both the mean and median worker saw real wages decline.
  2. Workers younger than 25 posted positive real wage growth of 4.3% in 2022 while all other age groups saw negative real wage growth, with real wage growth lower for each older age group.
  3. Individuals with less than a high school diploma experienced smaller real wage declines in 2022 than workers in all other education groups.

AI Summary. Data from an online dating service covering 80,000 users across ten cities show women block 70% of potential matches versus 55% for men, largely by excluding shorter or younger users. Among both sexes, the 10% with the strictest filters like 11-13 percentage points fewer of their remaining candidates than the 10% with the broadest filters.

Economist Staff The Economist
Date Posted:

.@TheEconomist examines data from an American dating site aimed at educated professionals. They find that, when users do apply filters, they mostly reflect familiar dating preferences that long predate the internet.

Do online daters with stricter filters accept more of their remaining matches?

Core argument: Among 80,000 users of dating site The League across ten cities in January 2023, the 10% with the tightest filters liked 11-13 percentage points fewer of their prospects than the 10% with the broadest filters, for both sexes.

The League’s data cover 80,000 users across ten cities in January 2023. The site chooses pairs of users who pass each other’s filters and present them as “prospects”. If these users both “like” each other, they can chat. Users see a fixed number of candidates per day. This makes it possible to distinguish explicit dating desires (filters) from implicit ones, revealed by how often users like their prospects. Filtering choices follow demographic patterns. Women block 70% of potential matches, compared with 55% for men, mostly because they tend to exclude users who are shorter or younger. Because users with strict filters weed out most unsuitable people pre-emptively, you might expect them to like many of the remaining candidates. But the data show the opposite. For both sexes, the share of prospects liked by the 10% of users with the tightest filters is 11-13 percentage points lower than by the 10% with the broadest ones.

Takeaways by Macro Roundup® AI

  1. Among 80,000 users of dating site The League across ten cities in January 2023, the 10% with the tightest filters liked 11-13 percentage points fewer of their prospects than the 10% with the broadest filters, for both sexes.
  2. Women on The League block 70% of potential matches versus 55% for men, mostly by excluding users who are shorter or younger.
  3. The League's design, which shows users a fixed number of pre-filtered prospects each day, makes it possible to distinguish explicit dating desires expressed in filters from implicit ones revealed by how often users like their prospects.

AI Summary. A Wall Street Journal-NORC poll found 38% of Americans call patriotism very important and 39% say the same of religion, down from 70% and 62% in 1998. Money was the only tested priority to grow in importance, cited as very important by 43% versus 31% in 1998.

Aaron Zitner Wall Street Journal
Date Posted:

Over the past 25 years the number of Americans reporting “patriotism” was “very important” to them declined from 70% to 38% and “having children” declined from 59% to 30%. The number reporting “money” climbed from 31% to 43%. @WSJ

Are Americans placing less importance on patriotism and religion than money?

Core argument: In the Wall Street Journal-NORC poll, 38% of Americans said patriotism was very important to them, down from 70% when the Journal first asked the question in 1998.

Patriotism, religious faith, having children and other priorities that helped define the national character for generations are receding in importance to Americans, a new Wall Street Journal-NORC poll finds. Some 38% of respondents said patriotism was very important to them, and 39% said religion was very important. That was down sharply from when the Journal first asked the question in 1998, when 70% deemed patriotism to be very important, and 62% said so of religion. The only priority the Journal tested that has grown in importance in the past quarter-century is money, which was cited as very important by 43% in the new survey, up from 31% in 1998.

Takeaways by Macro Roundup® AI

  1. In the Wall Street Journal-NORC poll, 38% of Americans said patriotism was very important to them, down from 70% when the Journal first asked the question in 1998.
  2. Religion was rated very important by 39% of respondents in the Wall Street Journal-NORC poll, compared with 62% in 1998.
  3. Money was the only priority tested by the Journal that grew in importance over the past quarter-century, cited as very important by 43%, up from 31% in 1998.

AI Summary. Private equity and venture capital deal activity in aerospace and defence companies totalled $20bn in one year and $34bn the prior year, up from an average of $10.4bn annually in the five years before the pandemic, according to data compiled by PitchBook. European private equity deal activity in defence-focused companies reached €3.8bn, the second highest in a decade.

Leila Abboud and Sylvia Pfeifer Financial Times
Date Posted:

Between 2015-19 private equity and venture capital investment into aerospace and defence averaged $10.4B annually. Investment reached $20B in 2022 after peaking at $34B in 2021. @FT

Is private equity investment in defence companies rising?

Core argument: Global private equity and venture capital deal activity in aerospace and defence companies reached $20bn in 2022 and $34bn in 2021, up from an annual average of $10.4bn during 2015–2019, according to PitchBook data compiled for the FT.

Global deal activity in aerospace and defence companies by private equity and venture capital investors stood at $20bn in 2022 and $34bn in 2021, according to data compiled by PitchBook for the FT. That represents an uplift from before the pandemic when money flowing into the sector averaged $10.4bn annually from 2015 to 2019. European private equity deal activity in defence-focused companies reached €3.8bn in 2021, according to data from PitchBook, the second highest over the past decade after €5.3bn in 2019. The two top PE defence deals by value were done by Advent International, which bought UK-listed groups Cobham for £4bn in 2019 and Ultra Electronics for £2.8bn in 2022.

Takeaways by Macro Roundup® AI

  1. Global private equity and venture capital deal activity in aerospace and defence companies reached $20bn in 2022 and $34bn in 2021, up from an annual average of $10.4bn during 2015–2019, according to PitchBook data compiled for the FT.
  2. European private equity deal activity in defence-focused companies hit €3.8bn in 2021, the second highest of the past decade behind €5.3bn in 2019, according to PitchBook.
  3. Advent International completed the two largest private equity defence deals by value, buying UK-listed Cobham for £4bn in 2019 and Ultra Electronics for £2.8bn in 2022.

AI Summary. The Pentagon is offering suppliers multiyear contracts and sending teams to resolve supply bottlenecks as procurement budgets grow, while abandoning post-Cold War cost-cutting practices such as just-in-time delivery and consolidation of the defense industry. The Defense Production Act is also being used to accelerate new missile programs, including hypersonic weapons.

Eric Lipton New York Times
Date Posted:

The Pentagon has abandoned some of the cost-cutting changes embraced at the end of the Cold War, and President Biden has invoked the Defense Production Act to accelerate development of several hypersonic weapons systems. @NYT

The Pentagon has abandoned some of the cost-cutting changes embraced at the end of the Cold War, and President Biden has...

How is the Pentagon trying to expand weapons production capacity?

Core argument: The Pentagon is offering suppliers multiyear contracts to encourage investment in manufacturing capacity and dispatching teams to resolve supply bottlenecks as procurement budgets grow.

Procurement budgets are growing. The military is offering suppliers multiyear contracts to encourage companies to invest more in their manufacturing capacity and is dispatching teams to help solve supply bottlenecks. More generally, the Pentagon is abandoning some of the cost-cutting changes embraced after the end of the Cold War, including corporate-style just-in-time delivery systems and a drive to shrink the industry. President Biden has also turned to the Defense Production Act — used during the pandemic to speed up the manufacturing of respirators and vaccines — to move ahead with new missile programs faster, including a number of hypersonic weapons being developed for the Air Force, the Army and the Navy.

Takeaways by Macro Roundup® AI

  1. The Pentagon is offering suppliers multiyear contracts to encourage investment in manufacturing capacity and dispatching teams to resolve supply bottlenecks as procurement budgets grow.
  2. The Pentagon is abandoning some cost-cutting practices adopted after the Cold War ended, including corporate-style just-in-time delivery systems and a drive to shrink the defense industry.
  3. President Biden has turned to the Defense Production Act, used during the pandemic to speed production of respirators and vaccines, to advance missile programs including hypersonic weapons for the Air Force, Army and Navy.

AI Summary. Establishment-level U.S. Census data on roughly 35,000 manufacturing plants show that those using robots tend to be larger, pay higher earnings per worker, employ a larger share of production workers, and spend more on capital including information technology. Robots are highly concentrated geographically even after accounting for industry mix.

Erik Brynjolfsson, Cathy Buffington, et al National Bureau of Economic Research
Date Posted:

Evidence from investment in robots suggests robots are complementary to production workers and their adaptation is concentrated in hubs. @erikbryn @CathyBuffington @ngoldschlag @jmirandal

How do manufacturing plants using robots differ, and where are they concentrated?

Core argument: Using data on roughly 35,000 U.S. manufacturing establishments from the Census Bureau's 2018 Annual Survey of Manufactures, the authors provide the first establishment-level analysis of robot use in U.S. manufacturing.

We present results on the distribution of robots in U.S. manufacturing by establishment characteristics and geography using new establishment-level data collected by the U.S. Census Bureau’s Annual Survey of Manufacturers for reference year 2018. This is the first establishment-level analysis of the use of robots in U.S. manufacturing, leveraging data on approximately 35,000 establishments. We find that establishments with robots tend to be larger, have higher earnings per worker, have a larger share of production workers, and spend more on capital expenditures, including IT, than establishments without robots. We also find that the distribution of robots is highly skewed across locations, even after accounting for the different mix of industry and manufacturing employment across locations. Some locations, which we call Robot Hubs, have far more robots than one would expect after accounting for industry mix.

Takeaways by Macro Roundup® AI

  1. Using data on roughly 35,000 U.S. manufacturing establishments from the Census Bureau's 2018 Annual Survey of Manufactures, the authors provide the first establishment-level analysis of robot use in U.S. manufacturing.
  2. The authors find that establishments with robots tend to be larger, pay higher earnings per worker, employ a larger share of production workers, and spend more on capital expenditures, including IT, than establishments without robots.
  3. The distribution of robots across U.S. locations is highly skewed even after accounting for differences in industry mix and manufacturing employment, with some locations, termed Robot Hubs, holding far more robots than industry mix would predict.

Tuesday, March 28, 2023

AI Summary. In an illustrative scenario, a California system with 20 GW of wind, 150 GW of solar and 75 GW of storage would provide only 50 GW of reliable capacity, since each added renewable unit contributes less to reliability. Levelized cost measures ignore this, so grid operators and utilities instead assess effective load-carrying capability.

Michael Cembalest J.P. Morgan
Date Posted:

Michael Cembalest @jpmorgan argues that effective load carrying capacity (ELCC) is a better metric than the levelized cost of energy (LCOE) since this metric reflects the intermittent availability of wind and solar power.

Does levelized cost understate what renewables need to deliver reliable power?

Core argument: A hypothetical deeply decarbonized California system with 20 GW of wind, 150 GW of solar and 75 GW of storage — 245 GW of capacity — would deliver only 50 GW of reliable load-carrying capability, measured as effective load carrying capability (ELCC).

One example: assume that California builds a deeply decarbonized system with 20 GW of wind, 150 GW of solar and 75 GW of storage. This system would only have 50 GW of reliable load with which to meet demand (ELCC=50 GW). Alternatively stated: if this system needed 50 GW of reliable power and was designed with renewables only, it would need 245 GW of wind, solar and storage to make it work. The marginal ELCC of wind, solar and storage are at their highest when renewables are first added to the system; their contribution to system reliability falls rapidly after that. LCOE reflects none of these realities, which is why the ISOs and utilities shown in the text box look at ELCC instead.

Takeaways by Macro Roundup® AI

  1. A hypothetical deeply decarbonized California system with 20 GW of wind, 150 GW of solar and 75 GW of storage — 245 GW of capacity — would deliver only 50 GW of reliable load-carrying capability, measured as effective load carrying capability (ELCC).
  2. The marginal ELCC of wind, solar and storage is highest when renewables are first added to a system and falls rapidly thereafter.
  3. Levelized cost of energy reflects none of these reliability realities, which is why the independent system operators and utilities cited evaluate resources using ELCC instead.

AI Summary. The authors estimate that a 1 percentage point rise in mortgage rates driven by a monetary policy surprise is associated with house prices falling 1% immediately and settling 3% lower three weeks later, working through sellers' list prices within weeks rather than years.

Denis Gorea, Augustus Kmetz, et al Federal Reserve Bank of San Francisco
Date Posted:

Using data from 2000-2019, @sffed researchers conclude that after a 1% mortgage rate increase generated by a policy shock, there is an immediate 1% reduction in house prices and a 3% total reduction after three weeks.

How quickly do house prices respond to monetary policy surprises?

Core argument: A 1 percentage point increase in the mortgage rate generated by a monetary policy shock is associated with house prices falling 1% immediately and settling 3% lower three weeks after the announcement.

We examine how mortgage rates change in response to monetary policy shocks. We use data on 30-year fixed-rate mortgages from the Primary Mortgage Market Survey. We find that monetary policy surprises affect house prices far more quickly than commonly thought. Monetary policy impacts housing prices through list prices—the prices of properties for sale posted by sellers—within a matter of weeks instead of years. The response is driven largely by unanticipated policy changes to forward guidance and large-scale asset purchases. We find that a 1 percentage point increase in the mortgage rate generated by a monetary policy shock is associated with house prices falling immediately by 1%. Prices continue declining in the weeks following a monetary policy announcement and ultimately settle 3% lower three weeks after the shock.

Takeaways by Macro Roundup® AI

  1. A 1 percentage point increase in the mortgage rate generated by a monetary policy shock is associated with house prices falling 1% immediately and settling 3% lower three weeks after the announcement.
  2. Monetary policy transmits to house prices through sellers' list prices within weeks rather than years, far more quickly than commonly thought, based on 30-year fixed-rate mortgage data from the Primary Mortgage Market Survey.
  3. The house price response is driven largely by unanticipated policy changes to forward guidance and large-scale asset purchases.

AI Summary. The decline of more than eight percentage points in real interest rates over three decades cannot be attributed to central banks alone, since inflation would have surged if such low rates were incompatible with the economy's needs. Financial liberalisation, globalisation, China's entry into the world economy, rising inequality, and ageing populations generated large surplus savings.

Martin Wolf Financial Times
Date Posted:

.@martinwolf_ notes that, while extremely low interest rates have had some unfortunate consequences, it is not correct to place the blame entirely on central banks; demographics, the rise of China, and a global savings glut were major factors.

Are central banks alone responsible for decades of falling real interest rates?

Core argument: Real interest rates fell by more than eight percentage points over three decades, a decline the author argues central banks alone could not have delivered, however demented their policies may have been.

Central banks alone, however demented they may have been, could not deliver a decline of more than eight percentage points in real interest rates over three decades. If this huge fall in real interest rates were incompatible with the needs of the economy, one would surely have seen surging inflation. So, what was going on? The big background changes were financial liberalisation, globalisation and the entry of China into the world economy. The latter two not only lowered inflation. They also introduced a country with colossal surplus savings into the world economy. In addition, rising inequality within high-income countries, combined with ageing populations, created huge surplus savings in some of them, too, notably Germany.

Takeaways by Macro Roundup® AI

  1. Real interest rates fell by more than eight percentage points over three decades, a decline the author argues central banks alone could not have delivered, however demented their policies may have been.
  2. The author reasons that if the fall in real interest rates had been incompatible with the economy's needs, surging inflation would have followed, and points instead to financial liberalisation, globalisation and China's entry into the world economy.
  3. Rising inequality within high-income countries, combined with ageing populations, created huge surplus savings in some of them, notably Germany, alongside the colossal surplus savings China brought into the world economy.

AI Summary. Unrealized securities losses at recently failed banks reflect the risk of borrowing short and lending long, echoing thrifts that became insolvent as the Federal Reserve raised rates; between 1980 and 1994, 1,617 banks and 1,295 thrifts closed or received government assistance. Uninsured depositors fled fast enough to limit losses, illustrating market discipline.

Charles Calomiris and Phil Gramm Wall Street Journal
Date Posted:

Phil Gramm and @cwcalomiris draw a parallel btw the current instability in the banking system and the Savings and Loans crisis which also played out against a hiking cycle.

Phil Gramm and @cwcalomiris draw a parallel btw the current instability in the banking system and the Savings and Loans...

Does limiting deposit insurance impose useful discipline on risky banks?

Core argument: Between 1980 and 1994, 1,617 banks and 1,295 thrifts were closed or received government assistance, a wave the author attributes to borrowing short and lending long and to the government's decision to ignore losses in the early 1980s.

The 1980s offer a better perspective on our current banking instability. Losses on securities at Silicon Valley Bank, Signature Bank and many others still waiting to be addressed reflect the risk from borrowing short and lending long—reminiscent of thrift strategies of the 1970s and the government’s decision to ignore losses from pursuing those strategies in the early 1980s. Between 1980 and 1994, 1,617 banks and 1,295 thrifts either were closed or received government assistance. For thrifts, the story began with a government mandate forcing them to specialize in long-term mortgage loans funded with deposits. As the Federal Reserve raised rates, funding costs rose and many thrifts became insolvent.  The difference today, in contrast with the 1980s, is that SVB and Signature Bank relied largely on uninsured deposits, whereas thrifts and banks then had relatively few such deposits. As their risk of failure grew, uninsured depositors (who were slow to respond) still responded fast enough to prevent the banks from becoming deeply insolvent. If those deposits had been insured ex ante, we might now be quietly experiencing resurrection risk-taking from SVB and Signature Bank, with much larger losses to come in those banks and throughout the banking system. The failures of SVB and Signature illustrate the usefulness of what remains of market discipline, which comes from limiting deposit insurance. Regulation failed, but the market didn’t.

Takeaways by Macro Roundup® AI

  1. Between 1980 and 1994, 1,617 banks and 1,295 thrifts were closed or received government assistance, a wave the author attributes to borrowing short and lending long and to the government's decision to ignore losses in the early 1980s.
  2. Thrift insolvencies followed a government mandate forcing specialization in long-term mortgage loans funded with deposits, as funding costs rose when the Federal Reserve raised rates, a pattern the author sees echoed in unaddressed securities losses at Silicon Valley Bank, Signature Bank and others.
  3. Silicon Valley Bank and Signature Bank relied largely on uninsured deposits, unlike the thrifts and banks of the 1980s, and the author argues those depositors responded fast enough to prevent deep insolvency, illustrating the usefulness of market discipline from limited deposit insurance.

AI Summary. Dollar deposits in U.S. banks are de facto fully protected by the U.S. government, but that protection does not extend to the trillions of dollar deposits held at foreign banks, which are supervised by home-country regulators that typically cannot insure dollar deposits. Even U.S. branches of foreign banks tend to lack federal deposit insurance.

Joseph Wang Fed Guy Blog
Date Posted:

.@FedGuy12 notes that there are several trillion in uninsured dollar deposits abroad that aren’t FDIC insured. If these depositors shift their money to the American banking system, it could create contagion risk.

Are dollar deposits at foreign banks protected like domestic ones?

Core argument: Trillions of dollars of deposits sit in foreign banks outside the purview and protection of U.S. regulators, even as dollar deposits in U.S. banks are de facto fully protected by the U.S. government.

Dollar deposits in U.S. banks are now de facto fully protected by the U.S. government, but that protection does not extend to the trillions of dollar deposits in foreign banks. The dollar is unique in that there is an extensive network of foreign banks that offer dollar banking services throughout the world. These banks take dollar deposits and make dollar loans but are outside the purview and protection of U.S. regulators. They are supervised by their home country regulators, who usually do not and cannot offer insurance on dollar deposits. Note that even the U.S. branches of foreign banks tend to be uninsured by the FDIC. Concerns over large foreign banks could easily spark a realization that dollars can only be safe within the U.S. That would be a crisis that could not be easily papered over.

Takeaways by Macro Roundup® AI

  1. Trillions of dollars of deposits sit in foreign banks outside the purview and protection of U.S. regulators, even as dollar deposits in U.S. banks are de facto fully protected by the U.S. government.
  2. Foreign banks take dollar deposits and make dollar loans under home-country supervision, and those regulators usually do not and cannot offer insurance on dollar deposits.
  3. Concerns over large foreign banks could spark a realization that dollars are safe only within the U.S., a crisis that could not be easily papered over; even U.S. branches of foreign banks tend to be uninsured by the FDIC.

AI Summary. Across mostly rich OECD countries, the ratio of people aged 65 and older to those aged 20–64 is expected to rise from one in five in 1990 to one in two by 2050. Men retired at 66 with 12 further years of life expectancy in 1970, versus 64 with 20 years in 2020.

Economist Staff The Economist
Date Posted:

The length of time people spend in retirement has grown across the rich world. In 1970 in OECD countries men retired at 66 and had 12 years life expectancy. By 2020 they retired at 64 and could expect to live another 20 years. @TheEconomist

How much longer do people in rich countries spend retired?

Core argument: The OECD's old-age dependency ratio—people 65 and older relative to those aged 20–64—is expected to rise from one in five in 1990 to one in two by 2050, reflecting fewer births and longer lives.

The combination of fewer births and longer lives means that the old-age dependency ratio—the proportion of people aged 65 and older to those aged between 20 and 64—is expected to rise from one in five in 1990 to one in two by 2050 across the OECD, a club of mostly rich countries. And the time people spend in retirement has shot up in the past 50 years. In 1970 men, on average, retired at 66 and could expect to live another 12 years. In 2020 they retired at 64 and had 20 years ahead of them. French men, in particular, have some of the lengthiest retirements—some 25 years on average, double that of the previous generation (see chart). By contrast, although their life expectancy at retirement has also doubled over the same period, Mexican men today spend 16 years in retirement.

Takeaways by Macro Roundup® AI

  1. The OECD's old-age dependency ratio—people 65 and older relative to those aged 20–64—is expected to rise from one in five in 1990 to one in two by 2050, reflecting fewer births and longer lives.
  2. Men retired at 66 on average in 1970 and could expect to live another 12 years, while in 2020 they retired at 64 with 20 years ahead of them.
  3. French men average some 25 years in retirement, double that of the previous generation, while Mexican men spend 16 years, though their life expectancy at retirement also doubled over the same period.

AI Summary. France's government passed pension reform without a parliamentary vote by invoking a constitutional provision, and the move has been followed by daily clashes between protesters and police, severe transport disruption, uncollected rubbish in Paris, and roughly 15% of petrol stations without fuel due to refinery strikes.

Wolfgang Munchau Euro Intelligence
Date Posted:

.@EuroBriefing argues that if French protests continue, they are likely to intensify, risking France becoming “ungovernable.”

.@EuroBriefing argues that if French protests continue, they are likely to intensify, risking France becoming...

Does passing pension reform without a parliamentary vote trigger widespread unrest?

Core argument: About 15% of French petrol stations are without fuel due to refinery strikes, while rubbish piles up in Paris after bin collectors and workers at a nearby incineration plant stopped working.

Since Emmanuel Macron triggered Art. 49.3 to pass the pension reform without a vote in parliament, there is not one day without some clashes between violent protesters and the police. Today, another general mobilisation will test how far this showdown can go. Transport will be severely interrupted, while rubbish continues to pile up in Paris as bin collectors and workers at an incineration plant close to Paris stopped working. About 15% of petrol stations are now without fuel due to strikes at refineries. A vast contingent of police has been mobilised today, with a show of force likely to be tested by black-hooded protesters. According to the interior minister, there were about 1500 of those ready to use violence last week. Marianne looked at their profile and found that while those black-hooded protesters were classically precarious intellectuals, they also increasingly include young working-class people. What will happen today will be a precursor to how protests evolve. So here we are, a necessary reform that all of a sudden has turned explosive, all reason and proportionality lost.

Takeaways by Macro Roundup® AI

  1. About 15% of French petrol stations are without fuel due to refinery strikes, while rubbish piles up in Paris after bin collectors and workers at a nearby incineration plant stopped working.
  2. Since Emmanuel Macron invoked Article 49.3 to pass the pension reform without a parliamentary vote, clashes between violent protesters and police have occurred daily, with another general mobilisation testing how far the showdown can go.
  3. France's interior minister put the number of black-hooded protesters ready to use violence last week at about 1,500, and Marianne found their profile, classically precarious intellectuals, increasingly includes young working-class people.

AI Summary. A widely cited survey showing dramatically different results on patriotism and community values across waves changed collection methods, from telephone interviews to a high-quality online panel. Respondents speaking to a human interviewer by phone are more likely to answer values questions in ways that make them look like upstanding citizens.

Patrick Ruffini The Intersection
Date Posted:

.@PatrickRuffini argues that Wall Street Journal/NORC recent poll results likely overstate the degree of change due to a shift in methodology to an online survey for 2023 vs. phone surveys in prior years.

Does switching from phone to online surveys change reported patriotism?

Core argument: The dramatically different results between the 2019 and 2023 Wall Street Journal/NORC surveys stem from a change in how the data was collected, not from bad data released by the Journal and NORC.

The point here is not that the Wall Street Journal and NORC released bad data. The dramatically different results we see from 2019 and 2023 are because the data was collected differently. The March 2023 survey was collected via NORC’s Amerispeak, an extremely high-quality online panel. In the fine print below the chart, we can see that data from previous waves was collected via telephone survey. Surveying the exact same types of respondents online and over the phone will yield different results. And it matters most for exactly the kinds of values questions that the Journal asked in its survey. The basic idea is this: if I’m speaking to another human being over the phone, I am much more likely to answer in ways that make me look like an upstanding citizen, one who is patriotic and values community involvement.

Takeaways by Macro Roundup® AI

  1. The dramatically different results between the 2019 and 2023 Wall Street Journal/NORC surveys stem from a change in how the data was collected, not from bad data released by the Journal and NORC.
  2. The March 2023 Wall Street Journal/NORC survey was collected through NORC's Amerispeak online panel, while earlier waves, as noted in the chart's fine print, were collected by telephone.
  3. Respondents speaking to another human being by phone are more likely to answer in ways that make them look like upstanding, patriotic, community-minded citizens, which matters most for the kinds of values questions the Journal asked.

AI Summary. Using the first comprehensive dataset of China's overseas bailouts, the authors find China has extended over $170bn in central bank swap line liquidity to distressed countries plus $70bn in rescue loans from state-owned banks and enterprises, equal to more than 20% of International Monetary Fund lending over the past decade.

Sebastian Horn, Bradley Parks, et al Kiel Working Paper
Date Posted:

As Belt and Road borrowers have come under increasing financial stress China is serving as a lender of last resort providing at least $240B of emergency financing, including at least $40.5B since 2021 @Ch_Trebesch @carmenmreinhart

How large has China's rescue lending to distressed countries become?

Core argument: The People's Bank of China has extended more than USD 170 billion in liquidity support to crisis countries through its global swap line network, including repeated rollovers of maturing swaps, according to a dataset covering 2000–2021.

This paper shows that China has launched a new global system for cross-border rescue lending to countries in debt distress. We build the first comprehensive dataset on China’s overseas bailouts between 2000 and 2021 and provide new insights into China’s growing role in the global financial system. A key finding is that the global swap line network put in place by the People’s Bank of China is increasingly used as a financial rescue mechanism, with more than USD 170 billion in liquidity support extended to crisis countries, including repeated rollovers of swaps coming due. The swaps bolster gross reserves and are mostly drawn by distressed countries with low liquidity ratios. In addition, we show that Chinese state-owned banks and enterprises have given out an additional USD 70 billion in rescue loans for balance of payments support. Taken together, China’s overseas bailouts correspond to more than 20 percent of total IMF lending over the past decade and bailout amounts are growing fast. However, China’s rescue loans differ from those of established international lenders of last resort in that they (i) are opaque, (ii) carry relatively high interest rates, and (iii) are almost exclusively targeted to debtors of China's Belt and Road Initiative. These findings have implications for the international financial and monetary architecture, which is becoming more multipolar, less institutionalized, and less transparent.

Takeaways by Macro Roundup® AI

  1. The People's Bank of China has extended more than USD 170 billion in liquidity support to crisis countries through its global swap line network, including repeated rollovers of maturing swaps, according to a dataset covering 2000–2021.
  2. Chinese state-owned banks and enterprises provided an additional USD 70 billion in rescue loans for balance of payments support, bringing China's overseas bailouts to more than 20 percent of total IMF lending over the past decade.
  3. China's rescue loans differ from those of established international lenders of last resort in being opaque, carrying relatively high interest rates, and going almost exclusively to debtors of the Belt and Road Initiative.