Edward Conard

Top Ten New York Times Bestselling Author

  • “…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 must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…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
  • “…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
  • “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
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Monday, April 3, 2023

AI Summary. The authors estimate that each 10% increase in the share of the US population aged 60+ lowered GDP per capita by 5.5%, with one-third from slower employment growth and two-thirds from slower labor productivity growth. Their estimate implies population aging reduced annual GDP per capita growth by 0.3 percentage points.

Nicole Maestas, Kathleen Mullen and David Powell American Economic Journal
Date Posted:

.@NicoleMaestas2 @KathleenJMullen @thedavidpowell use state-by-state variation to estimate the decline in productivity growth caused by an older population; they find that a 10% increase in the 60+ population decreases per capita GDP growth by 5.5%.

How much does population aging reduce GDP per capita growth?

Core argument: Using variation in the predetermined component of population aging across US states for 1980–2010, the authors estimate that each 10 percent increase in the share of the population age 60+ reduced per capita GDP by 5.5 percent.

Population aging is expected to slow US economic growth. We use variation in the predetermined component of population aging across states to estimate the impact of aging on growth in GDP per capita for 1980–2010. We find that each 10 percent increase in the fraction of the population age 60+ decreased per capita GDP by 5.5 percent. One-third of the reduction arose from slower employment growth; two-thirds due to slower labor productivity growth. Labor compensation and wages also declined in response. Our estimate implies population aging reduced the growth rate in GDP per capita by 0.3 percentage points per year during 1980–2010.

Takeaways by Macro Roundup® AI

  1. Using variation in the predetermined component of population aging across US states for 1980–2010, the authors estimate that each 10 percent increase in the share of the population age 60+ reduced per capita GDP by 5.5 percent.
  2. Two-thirds of the estimated reduction in per capita GDP came from slower labor productivity growth and one-third from slower employment growth, with labor compensation and wages also declining in response to population aging.
  3. The authors' estimate implies population aging reduced the growth rate of US GDP per capita by 0.3 percentage points per year during 1980–2010.

AI Summary. Early consumer artificial intelligence applications have largely been wrappers around marketing copy, image generation, and office tasks like spreadsheets and presentations. In shared spaces such as the image generator Midjourney's Discord server, users can see each other's prompts and results and iterate on them in real time, producing rapid collective experimentation and greater sophistication.

Paul Kedrosky and Eric Norlin Irregular Ideas
Date Posted:

.@pkedrosky @defrag argue that emerging feedback loops in terms of use of AI and a collapse in coding cost will fast track AI development. “This wave has hardly begun, and the next phase of AI apps and services is coming faster than anyone expects.”

.@pkedrosky @defrag argue that emerging feedback loops in terms of use of AI and a collapse in coding cost will fast track...

Does shared prompting in public spaces speed up AI experimentation?

Core argument: The first attention-getting AI applications have largely been wrappers around marketing copy, image creation, and office tasks such as spreadsheets and six-slide go-to-market decks.

The first few attention-getting applications and services [of AI] have largely been wrappers, whether around marketing (click here to build a blog post for teenagers promoting XYZ), image creation (here is a prompt to create pictures of happy skiers), or office activities, like spreadsheets and presentations (create a six-slide deck for a typical hardware product go-to-market plan). At the same time, the feedback loops are changing. You can see this in the Discord server of the popular and controversial generative AI service Midjourney, where people can see one another’s image creation prompts, and the results, and then they rapidly iterate in real-time on top of each other’s prompts, moving rapidly to fringe ideas, as well as much higher levels of sophistication and verisimilitude. You are seeing, for the first time, real-time, mass evolution, as people and groups are de facto creating increasingly complex applications right in front of you.

Takeaways by Macro Roundup® AI

  1. The first attention-getting AI applications have largely been wrappers around marketing copy, image creation, and office tasks such as spreadsheets and six-slide go-to-market decks.
  2. On Midjourney's Discord server, users see one another's image prompts and results and iterate on them in real time, moving rapidly toward fringe ideas and higher levels of sophistication and verisimilitude.
  3. Shared, visible AI prompt feedback loops amount to real-time mass evolution, with people and groups de facto creating increasingly complex applications in public view.

AI Summary. University of Chicago researchers note that $1 invested in the Nasdaq quadrupled between 1996 and 2000 before falling back to its 1996 level by 2002, while US total productivity growth rose from about 1% a year in the 1990s to 2.5% in 2004 and 2005. Most of those surprise productivity gains went to old-economy sectors.

Brian Chingono Verdad
Date Posted:

.@verdadcap_quant argues that the European market, with a Price/Earnings valuation of 13X vs 22x in the Nasdaq, looks like the better buy, given the likelihood of long-term convergence in growth rates between European and American firms.

Do old-economy sectors capture most productivity gains after a tech bubble?

Core argument: University of Chicago professors Luboš Pástor and Pietro Veronesi note that $1 invested in the Nasdaq quadrupled between 1996 and March 2000, then fell back to its 1996 level by October 2002 after the internet bubble burst.

University of Chicago professors Luboš Pástor and Pietro Veronesi note that “the value of $1 invested in the Nasdaq quadrupled between 1996 and March 2000, then fell back to the 1996 level by October 2002” after the internet bubble had burst and a critical threshold of widespread internet access had been reached in the United States in 2002. On the other hand, productivity growth in the US economy accelerated sharply after the internet revolution ended in 2002. According to Pástor and Veronesi’s analysis of data from the Bureau of Labor Statistics, total productivity growth in the US economy “averaged about 1% per year in the 1990s, but it increased sharply after 2002: from 1% per year in 2002 to 1.5% in 2003 and 2.5% in 2004 and 2005.” It appears most of the surprise productivity gains in the US after 2002 went to the old economy sectors.  Rather than paying bubble prices today in hopes of a bubble extension through AI, we think investors could benefit most from this revolution over the long term by siding with Europe’s proletariat old-economy sectors that are undervalued by global capitalists today and could see an uprising of productivity in the future.

Takeaways by Macro Roundup® AI

  1. University of Chicago professors Luboš Pástor and Pietro Veronesi note that $1 invested in the Nasdaq quadrupled between 1996 and March 2000, then fell back to its 1996 level by October 2002 after the internet bubble burst.
  2. Pástor and Veronesi's analysis of Bureau of Labor Statistics data finds US total productivity growth averaged about 1% per year in the 1990s and in 2002, rising to 1.5% in 2003 and 2.5% in 2004 and 2005.
  3. Most of the surprise US productivity gains after 2002 appear to have gone to old-economy sectors, suggesting investors could benefit most over the long term by siding with Europe's undervalued old-economy sectors rather than paying bubble prices today.

AI Summary. Eurozone narrow money is contracting as depositors shift checking deposits into longer-maturity accounts, a shift the author attributes to interest-rate normalisation and the European Central Bank's shrinking balance sheet. Broader deposit measures are declining less dramatically, and banks are still extending net new loans to households and companies, though in very small amounts.

Chris Marsh Money: Inside and Out
Date Posted:

Credit creation in the Eurozone is now negative, and M1 has experienced its sharpest decline ever. @GeneralTheorist

Does shrinking narrow money signal weakness or a shift into longer-maturity deposits?

Core argument: Eurozone M1 is collapsing as demand deposits shift into longer maturities, which the author characterises as part of the necessary adjustment as rates normalise and the ECB balance sheet shrinks.

Monetary statistics are of growing importance post-pandemic, but are difficult to interpret since there are many shocks playing out at the same time. Eurozone M1 is indeed collapsing as demand deposits are moved to longer maturities. But this is part of the necessary adjustment as rates normalise and the ECB balance sheet shrinks. Aggregate deposit dynamics are less dramatic than the trends in sight deposits (= checking deposits) alone. On the credit side, banks are still providing net net loans to households and non-financial corporates, but in very small size. And the credit impulse (the 6-month change in the flow of credit, the second derivative of the stock over the past year) is very negative, since we came from a period of elevated credit growth.

Takeaways by Macro Roundup® AI

  1. Eurozone M1 is collapsing as demand deposits shift into longer maturities, which the author characterises as part of the necessary adjustment as rates normalise and the ECB balance sheet shrinks.
  2. Aggregate eurozone deposit dynamics are less dramatic than the trends in sight deposits alone, and monetary statistics remain difficult to interpret while many shocks play out at the same time.
  3. Eurozone banks are still extending net new loans to households and non-financial corporates, but in very small size, and the credit impulse — the 6-month change in the flow of credit — is very negative following a period of elevated credit growth.

AI Summary. US domestic banks hold $16tn in deposits, about a third more than at the start of 2020, and after a one-time outflow of roughly $185bn (about 3% of small banks' deposits) small-bank deposits were stable. The greater concern is deposit costs rather than deposit flows, as rising rates paid on deposits could squeeze bank margins.

Robert Armstrong Financial Times
Date Posted:

.@rbrtrmstrng notes despite headlines of deposit flight US bank deposits are a third higher than they were relative to 2020 but bank deposit rates will compress bank margins.

Are deposit costs a bigger concern for banks than deposit outflows?

Core argument: US domestic banks hold $16tn of deposits, a third higher than at the start of 2020, which the author argues makes worries about a banking system liquidity crisis seem overwrought.

There are 16 trillion dollars of deposits in domestic banks. US bank deposits are a third higher than they were at the start of 2020, which makes worries about a banking system liquidity crisis seem a little overwrought (though, to be fair, it is changes in liquidity, not absolute liquidity levels, that matter most to markets). There was a one-time outflow of about $185bn, or about 3 per cent of small banks’ deposits. The next week, however, small bank deposits were stable. US banks do not seem to have a deposit outflow problem. The problem we worry about (to return to a theme we have banged on about for some weeks now) is not deposits flows but deposits costs. The concern is that until a few weeks ago businesses and households were doing what they usually do, and sleepily ignoring the rate they were earning on their bank accounts. Then stupid SVB went and woke everyone up. Already, deposit rates had been rising slowly (from roughly nothing), and may accelerate now, crimping bank margins even as the economy slows.

Takeaways by Macro Roundup® AI

  1. US domestic banks hold $16tn of deposits, a third higher than at the start of 2020, which the author argues makes worries about a banking system liquidity crisis seem overwrought.
  2. Small banks saw a one-time outflow of roughly $185bn, about 3 per cent of their deposits, but small bank deposits were stable the following week.
  3. The author's concern is deposit costs rather than deposit flows, arguing that SVB woke depositors up to the rates they earn, so slowly rising deposit rates may accelerate and crimp bank margins even as the economy slows.

AI Summary. Money market fund assets track the monetary policy cycle with a lag of one to two years, expanding following tightening cycles. During the recent tightening, money fund yields rose 4.13 percentage points while deposit rates stayed flat, and industry assets grew from $4.31tn to $4.62tn.

Gara Afonso, Marco Cipriani et al Federal Reserve Bank of New York
Date Posted:

Between April 2022 and January 2023, the AUM of the Money market fund industry increased from $4.31T to $4.62T. Historical lags between rate increases and flows into money market funds suggest that this growth will continue. @NewYorkFed

Do money market fund assets grow after interest rate tightening cycles?

Core argument: Money market fund yields rose 4.13 percentage points during the current tightening cycle, in line with the authors' prior estimate of the beta on MMF shares for 2002–2020, while deposit rates remained flat.

The size of the MMF industry tracks the monetary policy cycle, albeit with a lag. The chart above shows the assets under management (AUM) of the MMF industry, along with the EFFR and the spread between the MMF yield and the three-month retail CD rate. As the chart shows, the MMF industry did indeed expand following the monetary policy tightening cycles of 2004-08, 2015-18, and 2022 onward. The expansions, however, took place with a lag of one to two years. During the current tightening cycle, MMF yields have increased by 4.13 percentage points, in line with our previous estimate of the beta on MMF shares between 2002 and 2020; in contrast, deposit rates have remained flat. Moreover, consistent with these results, the AUM of the MMF industry has increased as the Federal Reserve has tightened rates, from $4.31 trillion in April 2022 to $4.62 trillion in January 2023. The relatively small magnitude of this increase in the size of the MMF industry, against a rate hike of 4.25 percentage points, is likely due to a lag with which monetary policy affects investor flows in MMFs; the recent monetary policy tightening, in fact, could lead to a further expansion of the MMF industry in the near future.

Takeaways by Macro Roundup® AI

  1. Money market fund yields rose 4.13 percentage points during the current tightening cycle, in line with the authors' prior estimate of the beta on MMF shares for 2002–2020, while deposit rates remained flat.
  2. Money market fund assets under management rose from $4.31 trillion in April 2022 to $4.62 trillion in January 2023, a modest increase against a 4.25 percentage point rate hike the authors attribute to a lag in investor flows.
  3. The money market fund industry expanded following the tightening cycles of 2004–08, 2015–18, and 2022 onward, with each expansion lagging by one to two years, and the authors suggest recent tightening could bring further expansion.

AI Summary. An assessment of about 380 U.S. metro areas ranked Nashville, Tennessee as the country's hottest job market, followed by Austin, Texas and Jacksonville, Florida. The rankings were based on five factors: the unemployment rate, labor-force participation rate, changes in employment levels, labor-force size, and wages.

Sarah Chaney and Danny Dougherty Wall Street Journal
Date Posted:

According to a @WSJ analysis, the strongest job markets in the country are in Sunbelt cities such as Nashville and Austin.

Are Sunbelt metro areas home to the nation's strongest job markets?

Core argument: Nashville ranked as the top U.S. job market of 2022 in a Wall Street Journal analysis with Moody's Analytics, followed by Austin, Texas, and Jacksonville, Fla.

To find the best job markets in America, head to the South. Nashville, Tenn., topped the list of 2022’s hottest job markets, followed by Austin, Texas, and Jacksonville, Fla. The Wall Street Journal, working with Moody’s Analytics, assessed about 380 metro areas. The rankings determined the strongest labor markets based on five factors: the unemployment rate, labor-force participation rate, changes to employment levels, the size of the labor force and wages in 2022. Larger areas, with more than one million residents, were ranked separately from smaller ones.

Takeaways by Macro Roundup® AI

  1. Nashville ranked as the top U.S. job market of 2022 in a Wall Street Journal analysis with Moody's Analytics, followed by Austin, Texas, and Jacksonville, Fla.
  2. The Wall Street Journal and Moody's Analytics assessed about 380 metro areas using five factors: the unemployment rate, labor-force participation rate, changes to employment levels, labor-force size and 2022 wages.
  3. The rankings ranked metro areas with more than one million residents separately from smaller ones.

AI Summary. Older Chinese workers are largely shut out of the job market, disproportionately lacking the education and skills needed to move into higher-paid or less physically demanding work. Official data show more than two-thirds of migrant workers born in the 1960s finished only middle school, and just one-fifth received professional training.

Sun Yu Financial Times
Date Posted:

Younger Chinese workers have much higher educational attainment than older cohorts. Older workers lack the skills to shift to lower-intensity work as they age. “I am going to keep working until I die,” said a 61-year-old cementer. @FT

Why are older Chinese workers shut out of the job market?

Core argument: More than two-thirds of Chinese migrant workers born in the 1960s finished only middle school, according to official data, and just one-fifth have received professional training.

Older workers also disproportionately lack advanced education and skills that would allow them to transition into higher-paid or lower-intensity work as they age. More than two-thirds of migrant workers born in the 1960s only finished middle school, according to official data, while just one-fifth have received professional training. That compares with two-thirds of those born in the 1980s and 1990s who have attained at least a high school education. “I haven’t had a chance to pick up any tradable skills since I began working at 18,” said Meng Yuhong, a 56-year-old day labourer.

Takeaways by Macro Roundup® AI

  1. More than two-thirds of Chinese migrant workers born in the 1960s finished only middle school, according to official data, and just one-fifth have received professional training.
  2. Two-thirds of Chinese migrant workers born in the 1980s and 1990s have attained at least a high school education, compared with under a third of the 1960s cohort.
  3. Older Chinese workers disproportionately lack the advanced education and skills that would let them shift into higher-paid or lower-intensity work as they age, leaving China's over-50s cut out of the job market.

Tuesday, April 4, 2023

AI Summary. Data on over 760,000 US inventors show they are increasingly concentrated in large incumbent firms and less likely to work for young firms or become entrepreneurs; inventors hired by incumbents rather than young firms see earnings rise 12.6% while innovative output falls 6–11% over four years.

Ufuk Akcigit and Nathan Goldschlag National Bureau of Economic Research
Date Posted:

.@ngoldschlag @ufukakcigit find that inventors are increasingly concentrated in large incumbent firms, and that incumbents often catch and kill young inventors.  An inventor hired by an incumbent firm sees their earnings increase and productivity decrease.

Does inventor concentration in large incumbent firms reduce innovative output?

Core argument: Inventors hired by incumbents rather than young firms see earnings rise 12.6% while their innovative output falls 6–11% over four years, based on employment-history data covering more than 760,000 US inventors.

Our paper uses novel data on the employment history of over 760 thousand inventors, to investigate the model’s predictions. We show empirically that (i) inventors are increasingly concentrated in large incumbents, less likely to work for young firms, and less likely to become entrepreneurs, (ii) when an inventor is hired by an incumbent, compared to a young firm, their earnings increases by 12.6 percent and their innovative output declines by 6 to 11 percent over four years. Our analysis has documented that inventor reallocation toward large incumbents, at least the way it happened in recent decades, might be lowering the growth capacity of the country.

Takeaways by Macro Roundup® AI

  1. Inventors hired by incumbents rather than young firms see earnings rise 12.6% while their innovative output falls 6–11% over four years, based on employment-history data covering more than 760,000 US inventors.
  2. US inventors are increasingly concentrated in large incumbent firms and less likely to work for young firms or to become entrepreneurs.
  3. The authors argue that inventor reallocation toward large incumbents, at least as it occurred in recent decades, might be lowering the country's growth capacity.

AI Summary. Blackstone clients requested $4.5bn in withdrawals from its non-traded real estate income trust in a single month, while the firm pitched investors on opportunities arising from US economic turbulence. Blackstone argued that pullbacks in regional bank lending would constrain new construction, limiting supply and pushing rents higher at its properties.

Antoine Gara and Mark Vandevelde Financial Times
Date Posted:

Requested redemptions on Blackstone Real Estate Income Trust ($70 billion in assets) were up 15% in March to $4.5 billion. Blackstone paid out only $666 million in redemptions; it was the fifth straight month that they had limited redemptions.

Requested redemptions on Blackstone Real Estate Income Trust ($70 billion in assets) were up 15% in March to $4.5 billion. ...

Are investors withdrawing from a real estate fund despite bullish supply arguments?

Core argument: Blackstone clients requested $4.5bn of withdrawals from the Breit real estate fund in March, even as the firm's executives promoted real estate investment opportunities they said would arise from US economic turbulence.

Blackstone clients asked to pull $4.5bn from a closely followed real estate fund in March, even as the company’s executives were promoting investment opportunities in the sector that they said would arise from US economic turbulence. At the Spring Place private members club in Manhattan, Blackstone said the unfolding financial crisis could bolster Breit’s earnings because it would constrain bank financing for new real estate construction, crimping supply and providing upward pressure on rents at its properties, according to four people who attended. Blackstone executives told the group that a big crop of new apartments coming into the market will only crimp profits for a short time. Regional banks, the major financier of US apartments, will cut back on new lending commitments as they feel pressure from deposit outflows and rising interest rates, Blackstone predicted.

Takeaways by Macro Roundup® AI

  1. Blackstone clients requested $4.5bn of withdrawals from the Breit real estate fund in March, even as the firm's executives promoted real estate investment opportunities they said would arise from US economic turbulence.
  2. Blackstone told investors at Manhattan's Spring Place private members club that the unfolding financial crisis could bolster Breit's earnings by constraining bank financing for new construction, crimping supply and pushing up rents at its properties, according to four attendees.
  3. Blackstone predicted that regional banks, the major financier of US apartments, will cut back new lending commitments under pressure from deposit outflows and rising interest rates, and said a large crop of new apartments will crimp profits only briefly.

AI Summary. Economic decoupling makes global supply chains less elastic, less efficient, and more costly, reducing their ability to offset inflationary pressures and leaving central banks to contain price growth by suppressing demand. The combination of elevated interest rates and heavy sovereign debt compounds fiscal pressures, while a fragmented economy with barriers to technology diffusion is unlikely to reverse weak productivity growth.

Michael Spence Project Syndicate
Date Posted:

Michael Spence argues that the Sino-American decoupling “are as far-reaching as they are severe.” He argues that such decoupling will likely lead to higher inflation, which might compound fiscal pressure in the west.

Michael Spence argues that the Sino-American decoupling “are as far-reaching as they are severe.” He argues that such...

Does economic decoupling raise inflation pressures and weaken productivity growth?

Core argument: As global supply chains become less elastic, less efficient, and more costly, their ability to offset inflationary pressures will decline, leaving central banks to manage price growth alone by suppressing excess demand, the author argues.

Make no mistake: the economic consequences of this lurch toward confrontation are as far-reaching as they are severe. As global supply chains become less elastic, less efficient, and more costly, their ability to counteract inflationary pressures will decline. Central banks will thus be left to manage price growth alone, by suppressing excess demand. The combination of higher interest rates and heavy sovereign-debt burdens will compound fiscal pressures. Though lower inflation could ease those pressures, interest rates are likely to remain elevated for a while, especially if suboptimal global economic trends and secular forces like population aging cause supply-side conditions to deteriorate. Nor is the downward trend in productivity growth – which has become particularly pronounced in the last decade – likely to be reversed in a fragmented global economy with barriers to technology development and diffusion.

Takeaways by Macro Roundup® AI

  1. As global supply chains become less elastic, less efficient, and more costly, their ability to offset inflationary pressures will decline, leaving central banks to manage price growth alone by suppressing excess demand, the author argues.
  2. The author contends that higher interest rates combined with heavy sovereign-debt burdens will compound fiscal pressures, with rates likely to remain elevated if supply-side conditions deteriorate from suboptimal global economic trends and population aging.
  3. The downward trend in productivity growth, particularly pronounced over the last decade, is unlikely to reverse in a fragmented global economy with barriers to technology development and diffusion, according to the author.

AI Summary. China has 76 port terminals able to handle large ships carrying more than 14,000 20ft containers, while south and south-east Asian countries have 31 between them, according to research group Drewry. This shortage of deep-water capacity elsewhere in Asia could make it harder for Western businesses to shift trade away from China.

Oliver Telling, Martin Stabe, Chan Ho-him and Andrew Edgecliffe-Johnson Financial Times
Date Posted:

Research group Drewry notes that China has 76 port terminals able to accommodate the large ships that make up 2/3 of the shipping capacity btw Europe and Asia.  South and south-east Asian countries have only 31 such port terminals.

Does limited deep-water port capacity in Asia hinder shifting trade from China?

Core argument: China has 76 port terminals able to handle ships carrying more than 14,000 20ft containers, compared with just 31 across south and south-east Asian countries combined, according to research group Drewry.

Ports in the rest of Asia will need significant investment to match the capacity of Chinese harbours, according to analysis that shows how western businesses could struggle to loosen ties with the world’s largest exporter. More than 80 per cent of goods are transported by ship, according to the UN. But data from research group Drewry shows that other Asian manufacturing hubs have a dearth of harbours able to accommodate the largest ships that have become essential for transporting goods from east to west. While China has 76 port terminals able to support large ships carrying more than 14,000 20ft containers, south and south-east Asian countries have just 31 between them. Large vessels make up about two-thirds of the shipping capacity for services between east Asia and Europe, according to data provider MDS Transmodal.

Takeaways by Macro Roundup® AI

  1. China has 76 port terminals able to handle ships carrying more than 14,000 20ft containers, compared with just 31 across south and south-east Asian countries combined, according to research group Drewry.
  2. Large vessels account for about two-thirds of shipping capacity on east Asia–Europe services, according to MDS Transmodal, and other Asian manufacturing hubs lack harbours able to accommodate them.
  3. More than 80 per cent of goods are transported by ship, according to the UN, and analysis indicates western businesses could struggle to loosen ties with China without significant port investment elsewhere in Asia.

AI Summary. Tangible investment in property, factories and equipment fell from 12.5% to 8.5% of private gross domestic product, while intangible investment in intellectual property, software and process knowledge rose from about 11.5% to 16.75%. The author argues demand for tangible capital investment will now have to rise.

Steven Bogden Wall Street Journal
Date Posted:

Btw 1985-2021 the capital intensity of the American economy was relatively flat as a rise in intangible investment was offset by a decline in tangible investment. @stevebogden makes the case that this dynamic is about to end.

Btw 1985-2021 the capital intensity of the American economy was relatively flat as a rise in intangible investment was...

Will demand for tangible capital investment rise after decades of decline?

Core argument: U.S. tangible investment in property, factories and equipment fell from 12.5% to 8.5% of private GDP between 1985 and 2021, while intangible investment in intellectual property, software and process knowledge rose from about 11.5% to 16.75%.

The U.S. economy is about to become more capital-intensive. Demand for intangible investment will continue to grow to meet the needs of a tech-driven economy. Artificial intelligence will likely enable much cheaper software to diffuse faster throughout the economy. But for the first time in decades, demand for investment in tangible capital will have to rise to meet emerging economic challenges. From 1985 to 2021, tangible investment—including property, factories and equipment—decreased from 12.5% to 8.5% of private gross domestic product. That decrease was more than compensated for by growth in intangible investment—including intellectual property, software and process knowledge—which rose from about 11.5% to 16.75% to meet the demands of an increasingly digital economy. Overall, the rate of total private capital investment from 1985 to 2021 grew only 1%.

Takeaways by Macro Roundup® AI

  1. U.S. tangible investment in property, factories and equipment fell from 12.5% to 8.5% of private GDP between 1985 and 2021, while intangible investment in intellectual property, software and process knowledge rose from about 11.5% to 16.75%.
  2. The rate of total private capital investment in the U.S. grew only 1% from 1985 to 2021, as gains in intangible investment more than compensated for the decline in tangible investment.
  3. The U.S. economy is poised to become more capital-intensive, with demand for tangible investment rising for the first time in decades and artificial intelligence likely enabling much cheaper software to diffuse faster through the economy.

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AI Summary. A higher ratio of people aged 59 and over to children under 15 is strongly negatively correlated with GDP growth, as are higher median age and a larger share over 59. In China's northeastern provinces, where fertility fell a decade before the rest of the country, growth has stalled.

Yi Fuxian Project Syndicate
Date Posted:

.@fuxianyi argues that evidence from demographically older provinces northeastern China (where the economy is the same size as in 2012) foreshadows the future impact of demographic change on southern and western China.

Does an aging population correlate with slower economic growth?

Core argument: The aging index — people aged 59 and over per 100 people younger than 15 — correlates strongly negatively with GDP growth, as do higher median age and a higher share of people over 59, while a higher share of children aged 14 and under correlates positively.

While population aging may not directly cause economic recession, a higher aging index – the number of people aged 59 and over per 100 individuals younger than 15 – has a strong negative correlation with GDP growth, as does a higher median age and proportion of people over 59. A higher proportion of children aged 14 and under correlates positively with GDP growth. These dynamics are already apparent across Chinese regions. With relatively younger populations, southern and western China are still growing. But in the Heilongjiang, Liaoning, and Jilin provinces of northeastern China – where fertility rates fell a decade ahead of the rest of the country – the economic engine has stalled. Though China’s government claims that northeastern China’s economy grew by 5% annually in 2013-19 and by 3% annually in 2020-22, the fourth national economic census showed that the region’s GDP in 2019 was the same size as in 2012.

Takeaways by Macro Roundup® AI

  1. The aging index — people aged 59 and over per 100 people younger than 15 — correlates strongly negatively with GDP growth, as do higher median age and a higher share of people over 59, while a higher share of children aged 14 and under correlates positively.
  2. Northeastern China's Heilongjiang, Liaoning, and Jilin provinces, where fertility rates fell a decade ahead of the rest of the country, have stalled economically, while relatively younger southern and western China continues to grow.
  3. China's government reports northeastern GDP growth of 5% annually in 2013-19 and 3% annually in 2020-22, but the fourth national economic census showed the region's 2019 GDP was the same size as in 2012.