Edward Conard

Top Ten New York Times Bestselling Author

  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason 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 represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “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
  • “…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
  • “…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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Monday, April 10, 2023

AI Summary. Chinese companies now hold several places in the global top 25 corporate research and development spenders — Huawei ranks sixth, behind Microsoft, alongside TikTok owner ByteDance, WeChat and gaming company Tencent, and e-commerce and cloud provider Alibaba — whereas Huawei was previously the only Chinese firm in that group.

Justin Fox Bloomberg
Date Posted:

Chinese firms now make up 4 of the top 25 leading firms in research and development spending, according to a @foxjust analysis.

Are Chinese firms rising among the world's top research spenders?

Core argument: Huawei, ByteDance, Tencent and Alibaba rank among the global top 25, compared with Huawei alone five years earlier.

When I last compiled one of these lists five years ago, mobile infrastructure and device maker Huawei Investment & Holding Co. was in sixth place behind Microsoft, just as it is here, but it was the only Chinese company in the global top 25. It has been joined by TikTok owner ByteDance Ltd., WeChat owner and gaming giant Tencent Holdings Ltd. and e-commerce, payments and cloud-computing purveyor Alibaba Group Holding Ltd.

Takeaways by Macro Roundup® AI

  1. Huawei, ByteDance, Tencent and Alibaba rank among the global top 25, compared with Huawei alone five years earlier.
  2. Huawei holds sixth place behind Microsoft, the same position it occupied five years earlier when it was the only Chinese company in the top 25.

AI Summary. US prime-age employment rates have fully recovered and now match or exceed pre-pandemic levels across nearly every age and demographic group, with the unemployment rate falling from nearly 15% at the pandemic's peak to about 3.5%. Even so, US employment rates trail peer countries including Japan, Germany, Canada, and Australia, which experienced smaller employment shocks and faster recoveries.

Joseph Politano Apricitas Economics
Date Posted:

Payrolls are now 3mm workers above the pre-pandemic level. Peer economies recovered from the pandemic even more rapidly; peak American prime-age employment still lags peer economies. @JosephPolitano

Has US employment recovered while still trailing peer countries?

Core argument: The US unemployment rate fell from nearly 15% in April 2020 to 3.5%, near historic lows.

Today, three short years after the first spike in unemployment caused by the COVID-19 pandemic, American prime-age employment rates have fully recovered and even exceeded 2020 levels. It marks one of the most rapid, comprehensive, and broad-based labor market recoveries in US history, with the unemployment rate dropping from nearly 15% in April 2020 to near-historic-lows of 3.5% today. Across nearly every relevant age and demographic group, as many or more people are working today than in 2019. America’s employment rates have fallen well behind those in peer countries over the last two decades, and during the pandemic that gap has only increased. Japan, Germany, Canada, Australia, and more saw smaller employment shocks from the initial effects of COVID and more rapid labor market expansions than the US over the last three years.

Takeaways by Macro Roundup® AI

  1. The US unemployment rate fell from nearly 15% in April 2020 to 3.5%, near historic lows.
  2. American prime-age employment rates have recovered and exceeded 2020 levels, with as many or more people working across nearly every relevant age and demographic group than in 2019.
  3. US employment rates have fallen well behind peer countries over the last two decades, and the gap widened during the pandemic as Japan, Germany, Canada, and Australia saw smaller employment shocks and faster labor market expansions.

AI Summary. Immigration into the US labor market has added 4 million workers, returning the working-age immigrant population to its pre-pandemic trend. High immigration contributes to solid job growth, a higher participation rate, and limits upside pressure on wages, helping the Federal Reserve cool the labor market and slow inflation.

Torsten Sløk Apollo
Date Posted:

The American working-age immigrant population is now back to its pre-pandemic trend. @Apolloglobal

How does high immigration help cool the labor market and inflation?

Core argument: Immigration added 4 million workers to the US labor market over the past 2½ years, returning the working-age immigrant population to its pre-pandemic trend.

Over the past 2½ years, immigration into the US labor market has increased by 4 million workers, and the working age immigrant population is now back at its pre-pandemic trend. High immigration contributes not only to solid job growth, including in leisure and hospitality, but also to increasing the participation rate and limiting the upside pressures on wages. The bottom line is that high immigration is helpful for the Fed as it tries to cool down the labor market and slow down inflation.

Takeaways by Macro Roundup® AI

  1. Immigration added 4 million workers to the US labor market over the past 2½ years, returning the working-age immigrant population to its pre-pandemic trend.
  2. High immigration contributes to solid job growth, including in leisure and hospitality, while raising the participation rate and limiting upside pressure on wages.
  3. High immigration is helpful for the Federal Reserve as it works to cool the labor market and slow inflation.

AI Summary. U.S. construction spending on manufacturing facilities reached $108bn in a single year, a record annual total and more than was spent building schools, healthcare centers or office buildings. Much of the growth is in electric-vehicle batteries and semiconductors, national priorities backed by billions of dollars in government incentives.

John Keilman Wall Street Journal
Date Posted:

Construction spending on American manufacturing facilities hit $108B in 2022, the highest level on record. @wsj

Is factory construction spending in the US hitting record highs?

Core argument: U.S. manufacturing-related construction spending reached $108 billion in 2022, the highest annual total on record according to Census Bureau data, exceeding spending on building schools, healthcare centers or office buildings.

Production at U.S. factories rose last year, but few things were produced at a more furious pace than factories themselves. Construction spending related to manufacturing reached $108 billion in 2022, Census Bureau data show, the highest annual total on record—more than was spent to build schools, healthcare centers or office buildings. Much of the growth is coming in the high-tech fields of electric-vehicle batteries and semiconductors, national priorities backed by billions of dollars in government incentives. Other companies that once relied exclusively on lower-cost countries to manufacture eyeglasses and bicycles and bodybuilding supplements have found reasons to come home.

Takeaways by Macro Roundup® AI

  1. U.S. manufacturing-related construction spending reached $108 billion in 2022, the highest annual total on record according to Census Bureau data, exceeding spending on building schools, healthcare centers or office buildings.
  2. Much of the growth in U.S. factory construction is concentrated in electric-vehicle batteries and semiconductors, national priorities backed by billions of dollars in government incentives.
  3. Companies that once relied exclusively on lower-cost countries to manufacture eyeglasses, bicycles and bodybuilding supplements have found reasons to move production back to the U.S.

AI Summary. U.S. nonresidential construction spending reached $982bn, nearly 17% higher than a year earlier, while nonresidential construction employment rose 3.3%, or 149,100 workers. Contractors are ramping up hiring of entry-level laborers to compensate for shortages of other workers, and these less productive hires are contributing to bigger backlogs and longer job completion times.

Bob Tita Wall Street Journal
Date Posted:

As spending on nonresidential construction surges, contractors are increasingly constrained by their workforce. The number of construction-industry carpenters is under the 2019 pre-pandemic level, while the number of electricians is just above the 2019 level. @WSJ

As spending on nonresidential construction surges, contractors are increasingly constrained by their workforce. The number...

Are worker shortages slowing nonresidential construction despite rising spending and hiring?

Core argument: U.S. nonresidential construction spending totaled $982 billion in February, nearly 17% higher than a year earlier and steady with January, according to the U.S. Census Bureau.

Spending on nonresidential construction for February, the most recent month available, totaled $982 billion, nearly 17% higher than a year earlier and steady with January, according to the U.S. Census Bureau. The number of U.S. nonresidential construction workers in March increased by 3.3%, or 149,100 workers, from the same month last year, the Bureau of Labor Statistics said Friday. Contractors have been ramping up hiring of entry-level laborers in an attempt to compensate for shortages of other workers. These newer workers are contributing to bigger backlogs and jobs taking longer to finish because they are typically less productive than the older, higher-skilled workers they are replacing.

Takeaways by Macro Roundup® AI

  1. U.S. nonresidential construction spending totaled $982 billion in February, nearly 17% higher than a year earlier and steady with January, according to the U.S. Census Bureau.
  2. The number of U.S. nonresidential construction workers rose 3.3%, or 149,100 workers, in March from the same month a year earlier, the Bureau of Labor Statistics said.
  3. Contractors have ramped up hiring of entry-level laborers to compensate for shortages of other workers, and those newer workers are contributing to bigger backlogs and longer job completion times because they are typically less productive than the older, higher-skilled workers they replace.

AI Summary. The trust fund for Medicare hospital insurance for the elderly is projected to be exhausted by 2031 and the Social Security old-age benefits fund by 2033. These mandatory programs cost $2.2tn, or 8.6% of GDP, exceeding total discretionary federal spending including housing, education, and defense.

Economist Staff The Economist
Date Posted:

The Social Security and Medicare Board of Trustees estimate that the trust fund for Medicare will be exhausted by 2031. This is three years later than their previous estimate (due to savings from Covid deaths). The Social Security trust fund will be exhausted in 2033. @TheEconomist

Are the main US entitlement trust funds nearing exhaustion?

Core argument: Medicare's hospital insurance trust fund will run out of money by 2031, a reprieve from the previous estimate of 2028 attributed to the deadliness of covid-19, while Social Security's old-age benefits fund will be exhausted by 2033.

The trust fund that pays for hospital insurance for patients of Medicare, the health-insurance scheme for the elderly, will run out of money by 2031; that is actually a reprieve from the previous estimate of 2028, because of the deadliness of covid-19. The fund that pays old-age benefits for Social Security, the state pension scheme, will be exhausted by 2033. These mandatory programmes are the behemoths of federal spending, costing $2.2trn (8.6% of GDP) in total in 2022. This already eclipses the total of the discretionary spending approved in the federal budget—including on housing, education and even defence—that causes so much argument on Capitol Hill.

Takeaways by Macro Roundup® AI

  1. Medicare's hospital insurance trust fund will run out of money by 2031, a reprieve from the previous estimate of 2028 attributed to the deadliness of covid-19, while Social Security's old-age benefits fund will be exhausted by 2033.
  2. Medicare and Social Security, the behemoths of federal spending, cost $2.2trn in total in 2022, equal to 8.6% of GDP.
  3. Spending on Medicare and Social Security already eclipses the total discretionary spending approved in the federal budget, including housing, education and defence.

AI Summary. Comparing families that qualified for smaller and larger Child Tax Credit payments, the authors detect no significant differences in labor force participation or hours worked. Their confidence intervals rule out a 0.3 percentage point participation decline from a 10 percentile increase in the credit relative to income.

Brandon Enriquez, Damon Jones and Ernest Tedeschi National Bureau of Economic Research
Date Posted:

.@nomadj1s and @ernietedeschi present evidence showing that the expansion of the child tax credit in 2021 didn’t significantly reduce labor supply in the short term.

Does a larger child tax credit reduce parents' labor supply?

Core argument: The authors detect no significant differences in labor force participation or hours worked between families qualifying for smaller and larger expanded Child Tax Credit transfers, using difference-in-differences and triple difference comparisons before and after payout.

We compare labor market outcomes—labor force participation and hours worked—for families who qualified for smaller and larger Child Tax Credit (CTC) transfers, before and after the credit was paid out. Using a difference-in-differences and triple difference approach, we do not detect significant labor supply differences in response to variation in the size of the CTC. When framed as an increase in cash-on-hand, our confidence intervals rule out a labor force participation rate decline of 0.3 percentage points in response to a 10 percentile increase in CTC relative to income, or when cast as a change in the return to entering employment, we rule out an extensive labor supply elasticity of 0.005.

Takeaways by Macro Roundup® AI

  1. The authors detect no significant differences in labor force participation or hours worked between families qualifying for smaller and larger expanded Child Tax Credit transfers, using difference-in-differences and triple difference comparisons before and after payout.
  2. Framed as added cash-on-hand, the authors' confidence intervals rule out a labor force participation rate decline of 0.3 percentage points in response to a 10-percentile increase in Child Tax Credit relative to income.
  3. Cast as a change in the return to entering employment, the authors' estimates rule out an extensive labor supply elasticity of 0.005.

Tuesday, April 11, 2023

AI Summary. Real interest rates on US Treasuries have fallen by about 5 percentage points across all maturities over the past four decades, suggesting the natural rate of interest has also declined. Long-term forces driving the natural rate suggest interest rates in advanced economies will eventually converge back toward pre-pandemic levels.

Philip Barrett, Christoffer Koch, Jean-Marc Natal, Diaa Noureldin and Josef Platzer International Monetary Fund
Date Posted:

.@IMFNews writes that the core drivers of the decline in the natural rate of interest, population aging and slower total factor productivity growth, have not gone away. The IMF expects the natural rate to revert to pre-pandemic levels.

Will interest rates in advanced economies return to pre-pandemic levels?

Core argument: Real US Treasury rates across all maturities have fallen by about 5 percentage points over the last four decades once cyclical fluctuations and term premiums are stripped out, suggesting the US natural rate of interest has also declined.

Looking through cyclical fluctuations and term premiums, real rates have fallen steadily, by about 5 percentage points over the last four decades across all [US Treasuries] maturities. Given that the natural rate of interest is a long-term attractor for real rates, this suggests that the natural rate of interest has also fallen, at least in the United States. Long-term forces driving the natural rate suggest that interest will eventually converge toward pre-pandemic levels in advanced economies. While low natural rates may ease pressure on fiscal policy, they do not negate the need for fiscal responsibility. Important government support during the pandemic has strained public accounts, requiring some budget consolidation to ensure long-term debt sustainability.

Takeaways by Macro Roundup® AI

  1. Real US Treasury rates across all maturities have fallen by about 5 percentage points over the last four decades once cyclical fluctuations and term premiums are stripped out, suggesting the US natural rate of interest has also declined.
  2. Long-term forces driving the natural rate suggest interest rates in advanced economies will eventually converge toward pre-pandemic levels.
  3. Low natural rates may ease pressure on fiscal policy but do not remove the need for fiscal responsibility, as pandemic government support strained public accounts and some budget consolidation is required for long-term debt sustainability.

AI Summary. Weekly Federal Reserve data show the largest two-week cutbacks on record in total bank lending, in lending to corporations, and in lending to real estate, as banks respond to deposit outflows. Immediate banking-sector risks are fading, but this behavioral shift is beginning to weigh on the economic outlook.

Torsten Sløk Apollo
Date Posted:

Torsten Sløk @apolloglobal reports that last week saw the largest two-week cut in bank lending in US history. “In short, the credit crunch has started.”

Are banks cutting lending sharply in response to deposit outflows?

Core argument: Weekly Fed data show the largest two-week cutback in US bank lending in history following the SVB collapse and subsequent deposit outflows.

Weekly Fed data released every Friday at 4:15 pm shows how banks are responding to the SVB collapse and subsequent deposit outflows. The largest 2-week cutback in bank lending in US history. The largest 2-week cutback in bank lending to corporates in US history. Largest decline in lending to real estate on record. Fed hikes were already cooling the economy, and the latest weekly Fed data shows that the banking sector response since SVB is magnifying the speed of the slowdown. The bottom line is that the immediate risks in the banking sector are starting to fade, but the behavioral change in the banking sector is beginning to weigh on the economic outlook.

Takeaways by Macro Roundup® AI

  1. Weekly Fed data show the largest two-week cutback in US bank lending in history following the SVB collapse and subsequent deposit outflows.
  2. Bank lending to corporates registered its largest two-week decline in US history, and lending to real estate fell by the most on record, according to weekly Fed data.
  3. Fed rate hikes were already cooling the economy, and the banking sector's response since SVB is magnifying the speed of the slowdown even as immediate banking-sector risks start to fade.

AI Summary. The authors find state minimum wage increases account for only a modest share of the wage gains realized by minimum wage workers, with improving macroeconomic conditions and movement across occupations and industries appearing more important. Wage increases are the norm among minimum wage workers even absent minimum wage hikes.

Michael Strain and Jeffrey Clemens American Enterprise Institute
Date Posted:

.@MichaelRStrain @jeffreypclemens report that wage gains for near minimum-wage workers in states that increase the mandated minimum wage are similar to states without a minimum wage.

How much do minimum wage hikes drive low-wage workers' raises?

Core argument: Fewer than one-third of workers employed at the time of both Current Population Survey interviews remain in minimum wage jobs at the second interview twelve months later, the authors find.

We find that state minimum wage changes account for a modest fraction of the wage gains realized by minimum wage workers. Improvements in macroeconomic conditions and progression across occupations and industries appear to play a more significant role. We find that wage increases are the norm among minimum-wage workers, even in the absence of minimum wage increases. The twelve-month time horizon we can analyze in the Outgoing Rotation Groups of the Current Population Survey is quite far from being a career. Even over this relatively short horizon, fewer than one-third of those employed at the time of both interviews remain employed in minimum wage jobs at the time of their second interview. Second, the fact that this fraction has been quite stable over time suggests the operation of the labor market, at least with respect to the wage gains it delivers to low-wage workers, has not changed substantially over the last several decades. interview. Second, the fact that this fraction has been quite stable over time suggests the operation of the labor market, at least with respect to the wage gains it delivers to low-wage workers, has not changed substantially over the last several decades. It may be that some workers churn into and out of minimum wage jobs over a period of years.

Takeaways by Macro Roundup® AI

  1. Fewer than one-third of workers employed at the time of both Current Population Survey interviews remain in minimum wage jobs at the second interview twelve months later, the authors find.
  2. The authors find that state minimum wage changes account for a modest fraction of the wage gains realized by minimum wage workers, with improvements in macroeconomic conditions and progression across occupations and industries appearing to play a more significant role.
  3. Wage increases are the norm among minimum wage workers even absent minimum wage increases, and the authors suggest the stability of this pattern indicates the labor market's delivery of wage gains to low-wage workers has not changed substantially over several decades.

AI Summary. Pew Research Center data show 56% of Americans say they pay more than their fair share of taxes, a view held by a majority or plurality of every major demographic group. The author argues proposed social safety-net expansions cannot be financed solely by raising taxes on the small sliver of top earners and wealthiest households.

Cathy Rampell Washington Post
Date Posted:

.@crampell notes that 56% of Americans say that they pay “more than” their fair share of taxes. She argues that paying for current commitments solely by taxing the rich requires “mathematical jiujitsu,” and therefore taxes will go up across the board.

Can taxing only top earners fund safety-net expansion?

Core argument: 56 percent of Americans say they pay more than their "fair share" of taxes, according to Pew Research Center data, a view held by a majority or plurality of every major demographic group.

Most Americans — 56 percent — say they pay more than their “fair share” of taxes, Pew Research Center’s latest data shows. This belief is held by a majority or a plurality of every major demographic group. Democrats still wish to expand the social safety net, however, which requires — you guessed it! — more tax revenue. Democrats square the circle with some mathematical jiujitsu, by claiming that all those safety-net expansions can be paid for solely by soaking “the rich.” Who counts as rich, you ask? It’s a vanishingly small sliver of the population. According to Biden, only the top 3 percent of households (i.e., those earning more than $400,000 a year) can afford to pay higher taxes; according to Ocasio-Cortez, it’s instead only roughly the top 0.03 percent (i.e., those with a net worth above $100 million). Alas, there’s not remotely enough money on those would-be money trees to pay for all the things that Democrats want.

Takeaways by Macro Roundup® AI

  1. 56 percent of Americans say they pay more than their "fair share" of taxes, according to Pew Research Center data, a view held by a majority or plurality of every major demographic group.
  2. Biden holds that only the top 3 percent of households, those earning more than $400,000 a year, can afford higher taxes, while Ocasio-Cortez points to roughly the top 0.03 percent, those with net worth above $100 million.
  3. The author argues that taxing only the narrow sliver of households Democrats count as rich cannot raise nearly enough revenue to fund their desired safety-net expansions.

AI Summary. Bank deposit rates tend to lag changes in the Federal Reserve's benchmark interest rate, especially when rates are rising; the deposit "beta" measures the share of a policy rate change passed through to depositors. Deposit rates continue to lag, but pass-through is approaching levels not seen since the early 2000s.

Alena Kang-Landsberg, Stephan Luck, and Matthew Plosser Federal Reserve Bank of New York
Date Posted:

Interest payments on deposits lag the Federal Funds rate but the “deposit beta” (or the pass-through of fed funds rate raises to deposit rates) is approaching levels not seen since the financial crisis. @NYFedResearch

How much of rate hikes are banks passing to depositors?

Core argument: In 2022:Q4 the average fed funds rate reached 3.7 percent while interest-bearing deposit rates reached 1.4 percent, illustrating how deposit rates lag policy rate increases.

Deposit rates tend to lag changes in the fed funds rate, particularly during a rising interest rate environment. In 2022:Q4, the average fed funds rate reached 3.7 percent and interest-bearing deposit rates reached 1.4 percent. The deposit beta is the portion of a change in the fed funds rate that is passed on to the deposit rate. Deposit betas can be calculated for individual changes in the fed funds rate or as a cumulative measure over a tightening cycle. The charts below summarize the cumulative change in deposit rates relative to the cumulative change in the fed funds rate over the last five tightening cycles. Deposit rates continue to lag the fed funds rate, but the pass-through of policy rates is quickly approaching levels not seen since the early 2000s.

Takeaways by Macro Roundup® AI

  1. In 2022:Q4 the average fed funds rate reached 3.7 percent while interest-bearing deposit rates reached 1.4 percent, illustrating how deposit rates lag policy rate increases.
  2. The deposit beta measures the share of a change in the fed funds rate passed through to deposit rates, and can be computed for individual rate changes or cumulatively across a tightening cycle.
  3. Compared with the last five tightening cycles, deposit rates continue to lag the fed funds rate, but pass-through of policy rates is approaching levels not seen since the early 2000s.