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
  • “…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
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “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
  • “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
  • “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 offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, April 13, 2023

AI Summary. The US produced $25.5tn in GDP, about 25% of the world total—roughly its 1990 share—while China's share stands at 18%; the US share of the G7's nominal GDP rose from 40% in 1990 to 58%. Income per person is now about 30% above western Europe and 54% above Japan, adjusted for purchasing power.

Economist Staff The Economist
Date Posted:

Growth in the US has outpaced growth in other advanced peer economies. In 1990, the US accounted for 40% of the nominal GDP of the G7, today it accounts for 58%. @TheEconomist

Has the US maintained its share of global output since 1990?

Core argument: America's $25.5trn of GDP last year was 25% of the world total, nearly the same share as in 1990, while China's share now stands at 18%.

America’s $25.5trn in GDP last year represented 25% of the world’s total—almost the same share as it had in 1990. On that measure China’s share is now 18%. In 1990 America accounted for 40% of the nominal GDP of the G7, a group of the world’s seven biggest advanced economies, including Japan and Germany. Today it accounts for 58%. In PPP terms the increase was smaller, but still significant: from 43% of the G7‘s GDP in 1990 to 51% now. America’s outperformance has translated into wealth for its people. Income per person in America was 24% higher than in western Europe in 1990 in PPP terms; today it is about 30% higher. It was 17% higher than in Japan in 1990; today it is 54% higher. America’s labour-force participation rate has been falling this century, largely because of men dropping out of the workforce. But this American oddity is not large enough to make up for the country’s advantage in raw numbers. Even with lower participation, the past three decades have seen America’s labour force grow by 30%. In Europe the number is 13%, in Japan, just 7%. America’s working-age population—those between 25 and 64—rose from 127m in 1990 to 175m in 2022, an increase of 38%. Contrast that with western Europe, where the working-age population rose just 9% during that period, from 94m to 102m.

Takeaways by Macro Roundup® AI

  1. America's $25.5trn of GDP last year was 25% of the world total, nearly the same share as in 1990, while China's share now stands at 18%.
  2. America's share of G7 nominal GDP rose from 40% in 1990 to 58% today, and from 43% to 51% in purchasing-power-parity terms.
  3. America's working-age population aged 25 to 64 rose 38%, from 127m in 1990 to 175m in 2022, against a 9% rise in western Europe, from 94m to 102m.

AI Summary. Credit conditions have tightened significantly for small businesses, which borrow from small banks and employ nearly 50% of the US workforce at firms with fewer than 500 employees. The author argues it is increasingly difficult to claim banking-sector stress is not weighing on the economy.

Torsten Sløk Apollo
Date Posted:

Torsten Sløk @apolloglobal writes that “it is getting more difficult to argue that the banking crisis is not having a negative impact on the economy,” given that credit conditions for small businesses are at their worst levels since 2012.

Is tighter credit for small businesses weighing on the economy?

Core argument: Credit conditions have tightened significantly for small businesses following the failure of Silicon Valley Bank, and small businesses borrow from small banks.

Credit conditions have tightened significantly for small businesses after SVB failed, and firms with less than 500 employees account for almost 50% of total employment in the US economy. Small businesses borrow from small banks, and it is getting more difficult to argue that the banking crisis is not having a negative impact on the economy.

Takeaways by Macro Roundup® AI

  1. Credit conditions have tightened significantly for small businesses following the failure of Silicon Valley Bank, and small businesses borrow from small banks.
  2. Firms with fewer than 500 employees account for almost 50% of total employment in the US economy.
  3. Tighter small-business credit makes it increasingly difficult to argue that the banking crisis is not having a negative impact on the economy.

AI Summary. In 29% of U.S. opposite-sex marriages both spouses earn about the same, 55% have a husband as primary or sole earner, and 16% have a primary-earning wife. The share of marriages in which the husband is the sole provider fell from 49% to 23% over the past 50 years.

Richard Fry, Carolina Aragao, Kiley Hurst and Kim Parker Pew Research Center
Date Posted:

According to Pew, the husband is the primary or sole breadwinner in 55%, of marriages down from 85% in 1972. In 16% of marriages, the wife is the primary breadwinner. @pewresearch

Are more married couples now earning about the same?

Core argument: In 29% of U.S. opposite-sex marriages both spouses earn about the same amount, and the share of wives earning as much as or significantly more than their husband has roughly tripled over the past 50 years.

While men remain the main breadwinner in a majority of opposite-sex marriages, the share of women who earn as much as or significantly more than their husband has roughly tripled over the past 50 years. In 29% of marriages today, both spouses earn about the same amount of money. Just over half (55%) of marriages today have a husband who is the primary or sole breadwinner and 16% have a breadwinner wife. Far fewer husbands are the sole breadwinner in their marriage these days. The share of marriages where the husband is the primary or sole breadwinner has fallen steadily in recent decades, driven mainly by the declining share of marriages where the husband is the sole provider – this was the arrangement in 49% of marriages in 1972, while today that share is 23%.

Takeaways by Macro Roundup® AI

  1. In 29% of U.S. opposite-sex marriages both spouses earn about the same amount, and the share of wives earning as much as or significantly more than their husband has roughly tripled over the past 50 years.
  2. Husbands remain the primary or sole breadwinner in 55% of U.S. opposite-sex marriages, while 16% have a breadwinner wife.
  3. Marriages in which the husband is the sole provider fell from 49% in 1972 to 23% today, the main driver of the decline in husband-as-primary-or-sole-breadwinner arrangements.

AI Summary. The federal government has proposed setting aside legal precedent and evenly cutting Colorado River water allotments, reducing water delivered to California, Arizona and Nevada by as much as one-quarter after negotiations among the states failed. The river's flows have fallen by one-third compared with historical averages.

Christopher Flavelle New York Times
Date Posted:

The Biden administration is likely to cut the water allocations of California, Arizona and Nevada by 25% each. The Colorado’s flows are down 1/3 relative to its historical average.

Should water allotments be cut evenly when states fail to agree?

Core argument: The Biden administration proposed cutting water delivered to California, Arizona and Nevada by as much as one-quarter, setting aside legal precedent to preserve what remains of the shrinking Colorado River.

After months of fruitless negotiations between the states that depend on the shrinking Colorado River, the Biden administration proposed to put aside legal precedent and save what’s left of the river by evenly cutting water allotments, reducing the water delivered to California, Arizona and Nevada by as much as one-quarter. The size of those reductions and the prospect of the federal government unilaterally imposing them on states have never occurred in American history. The river’s flows have recently fallen by one-third compared with historical averages.

Takeaways by Macro Roundup® AI

  1. The Biden administration proposed cutting water delivered to California, Arizona and Nevada by as much as one-quarter, setting aside legal precedent to preserve what remains of the shrinking Colorado River.
  2. The Colorado River's flows have fallen by one-third compared with historical averages, and months of negotiations among the states that depend on it produced no agreement.
  3. Reductions of this size, and the prospect of the federal government unilaterally imposing them on states, have never occurred in American history.

AI Summary. China is leading commercialization of sodium-ion batteries, which replace lithium with sodium, a chemically similar material selling for 1–3% of lithium's price; 16 of 20 sodium battery factories planned or under construction worldwide are in China. Consultancy Benchmark Minerals projects China will hold nearly 95% of global sodium battery capacity within two years.

Keith Bradsher New York Times
Date Posted:

Sodium-ion batteries might be around the corner. Sodium is 1-3% of the price of lithium. The US has 90% of the world’s readily mined soda ash reserves, the primary source of sodium.

Is China set to dominate global sodium battery production?

Core argument: Of 20 sodium battery factories planned or under construction worldwide, 16 are in China, and Benchmark Minerals projects China will hold nearly 95 percent of global sodium battery capacity within two years.

China is positioning itself to command the next big innovation in rechargeable batteries: replacing lithium with sodium, a far cheaper and more abundant material. Sodium, found all over the world as part of salt, sells for 1 to 3 percent of the price of lithium and is chemically very similar. Recent breakthroughs mean that sodium batteries can now be recharged daily for years, chipping away at a key advantage of lithium batteries. The energy capacity of sodium batteries has also increased. Research into using sodium for batteries began in earnest in the 1970s, led then by the United States. Japanese researchers made crucial advances a dozen years ago. Chinese companies have since taken the lead in commercializing the technology. Out of 20 sodium battery factories now planned or already under construction around the world, 16 are in China, according to Benchmark Minerals, a consulting firm. In two years, China will have nearly 95 percent of the world’s capacity to make sodium batteries. Lithium battery production will still dwarf sodium battery output at that point, Benchmark predicts, but advances in sodium are accelerating. The United States accounts for over 90 percent of the world’s readily mined reserves for soda ash, the main industrial source of sodium. Deep under the southwestern Wyoming desert lies a vast deposit of soda ash, formed 50 million years ago. Soda ash there has long been extracted for America’s glass manufacturing industry.

Takeaways by Macro Roundup® AI

  1. Of 20 sodium battery factories planned or under construction worldwide, 16 are in China, and Benchmark Minerals projects China will hold nearly 95 percent of global sodium battery capacity within two years.
  2. Sodium sells for 1 to 3 percent of the price of lithium, is chemically very similar and is found worldwide as part of salt, and recent advances allow sodium batteries to be recharged daily for years with greater energy capacity.
  3. The United States holds over 90 percent of the world's readily mined reserves of soda ash, the main industrial source of sodium, including a deposit formed 50 million years ago under the southwestern Wyoming desert long mined for glass manufacturing.

AI Summary. Berkshire Hathaway reduced its stake in Taiwan Semiconductor Manufacturing by 86%, a sale that could have fetched $3.7bn at the average share price over the period. The decision was attributed to concerns over geopolitical tensions between China and Taiwan, not to any reassessment of the business or its management.

Max Reyes Bloomberg
Date Posted:

Warren Buffett sold his stake in Taiwan Semiconductor Manufacturing Company, citing geopolitical risk. @markets

Warren Buffett sold his stake in Taiwan Semiconductor Manufacturing Company, citing geopolitical risk. @markets

Do geopolitical tensions over Taiwan drive investors to cut chipmaker stakes?

Core argument: Berkshire Hathaway cut its stake in Taiwan Semiconductor Manufacturing Co. by 86% in the fourth quarter, a sale that could have fetched $3.7 billion assuming shares were sold at the period's average price.

The billionaire investor took credit for Berkshire’s investment in TSMC amid speculation that one of his investing deputies picked the stock. He said the decision to reduce its stake in the business by 86% in the fourth quarter—which could have fetched $3.7 billion assuming the shares were sold at the average price over the period—resulted from concerns over geopolitical tensions between China and Taiwan, conditions he described as being outside of the company’s control. “I re-evaluated that part of it,” Buffett said. “I didn’t re-evaluate the business, the management, or anything of the sort.”

Takeaways by Macro Roundup® AI

  1. Berkshire Hathaway cut its stake in Taiwan Semiconductor Manufacturing Co. by 86% in the fourth quarter, a sale that could have fetched $3.7 billion assuming shares were sold at the period's average price.
  2. Warren Buffett attributed the TSMC sale to concerns over geopolitical tensions between China and Taiwan, conditions he described as outside Berkshire's control, saying he re-evaluated that part rather than the business or management.
  3. Buffett took credit for Berkshire's TSMC investment amid speculation that one of his investing deputies picked the stock, and praised both TSMC and BYD after selling shares of both firms.

Friday, April 14, 2023

AI Summary. The cost of insuring against a US government default has risen to its highest level in more than a decade amid the political impasse over the debt ceiling. Five-year credit default swaps priced at 46 basis points remain well below levels reached during the 2008-09 financial crisis.

Kate Duguid, Lauren Fedor and Colby Smith Financial Times
Date Posted:

The cost of insuring against a US default via credit default swaps is at its highest level since 2012 as traders position for a protracted debt ceiling fight. @ft

Has the cost of insuring against a US default risen?

Core argument: Five-year credit default swaps on US government debt have risen to 46 basis points, the highest level in more than a decade, an early sign of market concern over the debt ceiling impasse in Washington.

The cost of buying insurance against a US government default has shot to its highest level in more than a decade, in an early sign of market concerns about the political impasse in Washington over the debt ceiling. At 46 basis points, the price of five-year credit default swaps remains well below levels hit during the 2008-09 financial crisis, but the bond market has also indicated nerves about the possible default date.

Takeaways by Macro Roundup® AI

  1. Five-year credit default swaps on US government debt have risen to 46 basis points, the highest level in more than a decade, an early sign of market concern over the debt ceiling impasse in Washington.
  2. At 46 basis points, the cost of insuring against a US default remains well below levels reached during the 2008-09 financial crisis.
  3. The bond market has indicated nerves about the possible date of a US government default.

AI Summary. France's statistics agency finds a 71% correlation between individuals' positions on the national income scale over a roughly 15-year span, with the richest and poorest groups least likely to change bracket. The authors say this inertia is greater than in the US, where studies have shown a higher probability of moving up or down.

William Horobin Bloomberg
Date Posted:

The French government reported that France had much lower income mobility than the US btw 2003-2019, with little movement in the top and bottom quintiles. Among those in the top 1% in 2003, 41% were still there in 2019. @markets

Is income mobility in France lower than in the US?

Core argument: France's statistics agency Insee found a 71% correlation between French people's positions on the income scale in 2003 and 2019, with the richest and poorest groups least likely to change bracket.

According to the first long-term study by France’s statistics agency Insee, there was a 71% correlation between the position of French people on the income scale between 2003 and 2019, with the richest and poorest groups least likely to change bracket. That inertia is greater than in the US, where a deeper history of income mobility studies has shown a higher probability of ascending or descending, the authors of the French report said. Among the lowest 20% in terms of income in 2003, 62% were still in that group in 2019.  Only 2% of the group rose to the level of the 20% highest incomes.

Takeaways by Macro Roundup® AI

  1. France's statistics agency Insee found a 71% correlation between French people's positions on the income scale in 2003 and 2019, with the richest and poorest groups least likely to change bracket.
  2. Among French people in the lowest 20% of incomes in 2003, 62% remained in that group in 2019, and only 2% rose into the top 20%.
  3. The authors of the Insee report said France's income inertia is greater than in the US, where a deeper history of mobility studies has shown a higher probability of ascending or descending the income scale.

AI Summary. The US Chips Act committed $52bn in direct semiconductor manufacturing and research subsidies plus an estimated $24bn in tax credits over eight years, with Intel potentially receiving up to $12bn for new US facilities. Intel's planned plants in Arizona, Ohio and Germany have already reached around $60bn in first-phase costs.

Richard Waters Financial Times
Date Posted:

The US is about to deploy $52B in direct subsidies to arrest a slide in US semiconductor production from 37% in 1990 to 12% in 2022. @FinancialTimes

Can government subsidies turn a chipmaker into a domestic manufacturing champion?

Core argument: The US Chips Act committed $52bn in direct subsidies for semiconductor manufacturing and research and development, plus an estimated $24bn of tax credits over eight years.

Last year’s US Chips Act committed $52bn in direct subsidies to support semiconductor manufacturing and boost research and development, along with an estimated $24bn worth of tax credits over the next eight years. Intel has announced a spate of giant new manufacturing plants, known as fabs, with the economies of scale needed to justify the capital-intensive processes. There are two fabs planned outside Phoenix, two more in Ohio and a new €17bn mega plant in Germany that represents the country’s biggest investment since the second world war. The cost for the first phases of these developments has already reached around $60bn, and the German government is pushing Intel to expand its plans in exchange for the higher subsidies the company is seeking. Under the Chips Act, Intel could receive up to $12bn to support its new US facilities, with extra subsidies for an advanced chip packaging plant in New Mexico and further tax credits.

Takeaways by Macro Roundup® AI

  1. The US Chips Act committed $52bn in direct subsidies for semiconductor manufacturing and research and development, plus an estimated $24bn of tax credits over eight years.
  2. Intel's first phases of new fabs — two outside Phoenix, two in Ohio and a €17bn German mega plant described as Germany's biggest investment since the second world war — have already cost around $60bn.
  3. Intel could receive up to $12bn under the Chips Act for its new US facilities, with additional subsidies for an advanced chip packaging plant in New Mexico and further tax credits.

AI Summary. The Inflation Reduction Act directs at least $369bn in subsidies and tax credits toward decarbonisation-related sectors, following infrastructure legislation that also channels billions to clean infrastructure. Because some provisions cap no eligible spending, an investment rush could push public expenditure to $800bn over the next decade.

Economist Staff The Economist
Date Posted:

.@TheEconomist reports that, between the Inflation Reduction Act and the Infrastructure bill, the American government could spend $800B on decarbonization-related sectors, through a combination of direct spending and tax credits.

Do uncapped clean energy subsidies push public spending toward $800bn?

Core argument: The Inflation Reduction Act directs at least $369bn in direct subsidies and tax credits toward decarbonisation-related sectors, following the Bipartisan Infrastructure Law, which also channels billions in subsidies to clean infrastructure.

The Inflation Reduction Act funnels at least $369bn in direct subsidies and tax credits to decarbonisation-related sectors. It came on the heels of the Bipartisan Infrastructure Law, which also shovels billions in subsidies towards clean infrastructure. Some of the provisions offer generous tax credits, with no caps on the amount of spending eligible for the incentives. A mad investment rush, should it materialise, could lead to public expenditure of $800bn over the next decade. An official at a big utility says her firm has projects in the works across America that, if successful, will secure a staggering $2bn in funding from the two laws.

Takeaways by Macro Roundup® AI

  1. The Inflation Reduction Act directs at least $369bn in direct subsidies and tax credits toward decarbonisation-related sectors, following the Bipartisan Infrastructure Law, which also channels billions in subsidies to clean infrastructure.
  2. Some Inflation Reduction Act provisions cap no spending eligible for their tax credits, and an investment rush, should it materialise, could lead to public expenditure of $800bn over the next decade.
  3. An official at a big utility says her firm has projects in the works across America that, if successful, would secure $2bn in funding from the Inflation Reduction Act and the Bipartisan Infrastructure Law.

AI Summary. Leveraged loan default rates and bankruptcy filings indicate a default cycle has begun. The Federal Reserve's interest rate increases are intended to slow the economy to slow inflation, and tighter bank lending standards raise the risk that the slowdown arrives faster.

Torsten Sløk Apollo
Date Posted:

Noting an uptick in both leveraged loan default rates and bankruptcy filings, Torsten Sløk @apolloglobal argues that “a default cycle has started.”

Has a corporate default cycle begun?

Core argument: Leveraged loan default rates and bankruptcy filings indicate that a default cycle has started.

Data for leveraged loan default rates and bankruptcy filings show that a default cycle has started. This is not surprising. The entire goal of the Fed with raising interest rates is to slow the economy down to slow down inflation, and adding tighter bank lending standards increases the risk that the slowdown could come faster.

Takeaways by Macro Roundup® AI

  1. Leveraged loan default rates and bankruptcy filings indicate that a default cycle has started.
  2. The Federal Reserve's aim in raising interest rates is to slow the economy in order to slow inflation, which makes the onset of a default cycle unsurprising.
  3. Tighter bank lending standards, added to higher interest rates, increase the risk that the economic slowdown arrives faster.