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


Thursday, April 27, 2023

AI Summary. Headline GDP growth slowed, but the drag came from volatile inventories, with underlying growth strong. US output sits slightly below the Congressional Budget Office's pre-pandemic forecast, within its rounding error, with most GDP components close to where they were expected to be, though these figures will be revised repeatedly.

Jason Furman @jasonfurman
Date Posted:
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2023 Q1 GDP was .7% below the January 2020 CBO forecast. @jasonfurman notes: “If a Rip Van Winkle economist had GDP data through 2019 and then for 2023-Q1 they would not have thought anything particularly notable had occurred in the interim.”

Is underlying growth strong despite slower headline GDP?

Core argument: Jason Furman argues that headline Q1 GDP slowed because volatile inventories pulled it down, and that growth excluding inventories was strong.

Headline GDP slowed in Q1 but was pulled down by volatile inventories--absent that strong growth. Overall, the economy is a little below what CBO forecast prior to the pandemic. But that is not surprising given that the pandemic did lasting damage to the economy. Plus, it is well within the rounding error of the pre-pandemic forecast. Overall, most components of GDP are basically where they were expected to be prior to the pandemic. If a Rip Van Winkle economist had GDP data through 2019 and then for 2023-Q1 they would not have thought anything particularly notable had occurred in the interim. Finally, a reminder: everything above is wrong. These numbers will be revised many, many times in the coming quarters, years, and even decades.

Takeaways by Macro Roundup® AI

  1. Jason Furman argues that headline Q1 GDP slowed because volatile inventories pulled it down, and that growth excluding inventories was strong.
  2. Furman places the economy a little below CBO's pre-pandemic forecast, calling that unsurprising given the pandemic's lasting damage and within the rounding error of that forecast.
  3. Furman holds that most GDP components are basically where they were expected to be before the pandemic, while cautioning that these figures will be revised many times over coming quarters, years, and decades.

AI Summary. China's manufacturing trade surplus again exceeded 10% of its GDP, with its overall goods surplus approaching its pre-global-financial-crisis peak and far larger in dollar terms. Net of processing imports, exports run about 14% of GDP while manufactured imports are under 4%, meaning the rest of the world supplies China with net demand.

Brad Setser @Brad_Setser
Date Posted:

.@Brad_Setser shows that China has reduced its reliance on manufactured imports while maintaining exports. Net of processing imports, exports are about 14% of GDP, and manufactured imports are now under 4% of GDP.

Does the rest of the world still supply China's manufacturing demand?

Core argument: China's surplus again topped 10% of GDP, with its overall goods trade surplus approaching its pre-global-financial-crisis peak even amid relatively high commodity prices.

Despite all the talk about how the world is standing in the way of China's growth, the world (including the US) continues to supply China with one thing it cannot generate domestically -- demand for its manufactures. China's surplus again topped 10% of its GDP. Even with relatively high commodity prices, China's overall trade surplus (in goods) is approaching its pre-global financial crisis peak. As is the surplus in manufacturing. And of course, in dollars, the surplus is WAY bigger than it was prior to the global financial crisis (dollars are an OK proxy for scaling the surplus v the size of its trading partners). The world still supplies China with a ton of net demand. China simply doesn't import many manufactures for its own use (it imports chips for reexport)  Net of processing imports, exports are about 14% of GDP and manufactured imports are now under 4% of GDP. This is true "deglobalization."

Takeaways by Macro Roundup® AI

  1. China's surplus again topped 10% of GDP, with its overall goods trade surplus approaching its pre-global-financial-crisis peak even amid relatively high commodity prices.
  2. Net of processing imports, China's exports run about 14% of GDP while manufactured imports are now under 4% of GDP, with the world, including the US, supplying net demand for its manufactures.
  3. Measured in dollars, China's surplus is far larger than before the global financial crisis, dollars serving as a rough proxy for scaling the surplus against the size of its trading partners.

AI Summary. US manufacturing construction is running at more than $140bn annualized, with over $60bn going to computer, electronic, and electrical facilities alone — more than all US medical and educational construction combined at about $65bn. Outside semiconductor-related industries, nominal manufacturing construction spending has grown only marginally, implying real declines amid elevated inflation.

Joseph Politano Apricitas Economics
Date Posted:

The boom in American manufacturing investment is being driven almost entirely by the computer/electronic/electrical sector, as the CHIPS Act facilitates semiconductor investments. @JosephPolitano

Is the US manufacturing construction boom confined to semiconductor-related industries?

Core argument: US spending on new domestic manufacturing facilities runs at more than $140 billion annualized, with over $60 billion going to computer, electronic, and electrical manufacturing alone, buoyed by the CHIPS Act.

One thing is for sure so far—the CHIPS Act has already massively buoyed US semiconductor/computer/electronic manufacturing investment and by extension overall US manufacturing construction. At an annualized rate, more than $140B is now being plowed into new domestic manufacturing facilities with more than $60B going to new computer/electronic/electrical manufacturing alone. To put that number in perspective, the current combined value of all medical and educational construction in the US is only about $65B, and the total for all office buildings is only about $80B. Outside of CHIPS-related industries, nominal manufacturing construction spending has grown only marginally—which amidst elevated inflation almost certainly means that real US manufacturing construction would have been on the decline in the absence of CHIPS.

Takeaways by Macro Roundup® AI

  1. US spending on new domestic manufacturing facilities runs at more than $140 billion annualized, with over $60 billion going to computer, electronic, and electrical manufacturing alone, buoyed by the CHIPS Act.
  2. The more than $60 billion annualized flowing into computer, electronic, and electrical manufacturing construction compares with roughly $65 billion for all US medical and educational construction combined and about $80 billion for all office buildings.
  3. Nominal manufacturing construction spending outside CHIPS-related industries has grown only marginally, which amid elevated inflation almost certainly means real US manufacturing construction would have been declining without the CHIPS Act.

AI Summary. Barred from selling many of its most advanced machines in China and targeted by data thefts, Dutch chipmaking-equipment maker ASML is defending its lead by building more sophisticated systems, including a next-generation machine priced above $380m. Analysts argue its main long-term risk is that future lithography systems prove too costly and unwieldy to mass-produce.

Cagan Koc, Ian King and Jillian Deutsch Bloomberg
Date Posted:

The next generation of extreme ultraviolet (EUV) lithography systems may be too complex to mass produce. @markets

The next generation of extreme ultraviolet (EUV) lithography systems may be too complex to mass produce. @markets

How does a chipmaking equipment leader defend its lead amid export restrictions?

Core argument: ASML's next lithography machine, priced above $380 million — more than a Boeing 787 Dreamliner — is set to reach markets in 2025 and can etch patterns on silicon wafers smaller than a virus.

Barred from selling many of its top-end machines in China, and a victim of data thefts, ASML is doing the only thing it can to preserve its almost insurmountable lead: building evermore sophisticated machines. Its next contraption, about the size of an Amsterdam studio apartment, is set to hit markets in 2025. With a price tag of more than $380 million — costlier than a Boeing 787 Dreamliner — it will be capable of etching delicate patterns on silicon wafers smaller than a virus. Already way ahead of rivals, ASML is making sure no one can do what it does for the foreseeable future. Its only real hurdle will be technological limits — building machines that are viable and economical for mass production. “The big long-term risk is that new lithography systems are too costly and unwieldy to produce,” said Chip War author Miller. “ASML will bring its high-NA systems online, but the generation after that, hyper-NA, is still in development. Some ASML staff have speculated it may be too difficult to mass-produce.”

Takeaways by Macro Roundup® AI

  1. ASML's next lithography machine, priced above $380 million — more than a Boeing 787 Dreamliner — is set to reach markets in 2025 and can etch patterns on silicon wafers smaller than a virus.
  2. Barred from selling many of its top-end machines in China and hit by data thefts, ASML is preserving its lead by building evermore sophisticated machines.
  3. Chip War author Miller identifies as ASML's big long-term risk that new lithography systems prove too costly and unwieldy to produce, noting hyper-NA remains in development and some ASML staff have speculated it may be too difficult to mass-produce.

AI Summary. The Federal Reserve Bank of Atlanta's survey of business inflation expectations, which asks firms how much they expect their own costs to rise over the coming year, remains above pre-pandemic levels but has been declining. The author argues the data point to gradually falling inflation without a rise in unemployment.

Paul Krugman Krugman Wonks Out
Date Posted:

.@paulkrugman’s favored inflation measure asks companies how much they expect their costs to rise over the next year, this metric is still elevated but is coming down without a rise in unemployment.

Do business inflation expectations point to falling inflation without higher unemployment?

Core argument: The Atlanta Fed's index of business inflation expectations, which asks companies how much they expect their own costs to rise over the next year, is probably the best available inflation measure, according to the author.

The best available inflation measure is probably the Atlanta Fed’s index of business inflation expectations, which asks companies how much they expect their costs to rise over the next year (a number they may actually know something about). This number is still elevated from pre-pandemic levels but not by a lot, and it has been coming down. Overall, the data seems to me to point to gradually falling inflation, even though unemployment hasn’t gone up. I’m hoping that as more data comes in, this view will be increasingly vindicated. But I’m going to try not to let my hopes color my analysis, and that’s why I’ve put my preferred measures on the record today.

Takeaways by Macro Roundup® AI

  1. The Atlanta Fed's index of business inflation expectations, which asks companies how much they expect their own costs to rise over the next year, is probably the best available inflation measure, according to the author.
  2. Business inflation expectations remain somewhat above pre-pandemic levels but have been coming down, according to the author's reading of the Atlanta Fed index.
  3. The author argues the data point to gradually falling inflation even though unemployment has not risen, and puts his preferred measures on the record to keep his hopes from coloring his analysis.

AI Summary. Working-class voters are projected to outnumber college-educated voters by roughly half again in the US presidential electorate, so slippage among them carries outsize weight. The author argues that if Republicans matched their 13-point national House margin among working-class voters, Democrats would need a college-educated advantage above 30 points to offset it.

Ruy Teixeira The Liberal Patriot
Date Posted:

Ruy Teixeira notes a “working-class sized hole in Biden’s re-elect strategy” that sets up a clear path for President Trump to win a rematch next year, should Trump be the nominee. @AEI

Ruy Teixeira notes a “working-class sized hole in Biden’s re-elect strategy” that sets up a clear path for...

How much does working-class vote slippage weigh on presidential outcomes?

Core argument: Trump carried the overall working-class vote by 4 points in 2020, while Republicans won the nationwide House vote by 13 points in 2022, a margin that would make Trump very hard to beat if replicated in 2024.

A reasonable guess is working-class class voters will be half again as large as college voters in 2024. That means that slippage in the working-class vote can have on outsize effect on the outcome. In 2020, Trump carried the overall working-class vote by 4 points. In 2022, Republicans carried the nationwide House vote by 13 points. If Trump replicated that 2022 margin in 2024, he would be very hard to beat. Absent a countervailing Democratic improvement in the college vote—which the Democrats already carried by 18 points in 2020—Trump would likely carry Arizona, Georgia, Nevada, Wisconsin, and even Pennsylvania and Michigan. A counter trend among the smaller college-educated group could still cancel these effects out but to completely do so it would have to be larger than the working-class shift, spiking Biden’s advantage among the college-educated to over 30 points. Possible, but a very heavy lift. Since Trump is regularly showing double digit advantages among working-class voters in trial heats and has a proven track record in attracting working-class support, the challenge for Biden’s campaign seems clear. They must at all costs prevent the kind of working-class slippage that could put Trump once again in the Oval Office.

Takeaways by Macro Roundup® AI

  1. Trump carried the overall working-class vote by 4 points in 2020, while Republicans won the nationwide House vote by 13 points in 2022, a margin that would make Trump very hard to beat if replicated in 2024.
  2. Replicating that 2022 margin would likely deliver Trump Arizona, Georgia, Nevada, Wisconsin, Pennsylvania, and Michigan, absent a countervailing Democratic improvement among college-educated voters, whom Democrats carried by 18 points in 2020.
  3. Fully offsetting working-class slippage would require Biden's advantage among the smaller college-educated group to exceed 30 points, with working-class voters estimated to be half again as large as college voters in 2024.

Friday, April 28, 2023

AI Summary. The Employment Cost Index shows private wages and compensation rising at annual rates of roughly 4.7%–5.1%, higher than any point in the previous cycle, supporting the argument that wage growth is not slowing and that the measured slowdown in average hourly earnings reflected shifts in workforce composition. Real wages and salaries remain 5% below their pre-pandemic trend.

Jason Furman @jasonfurman
Date Posted:

The Employment Cost Index is consistent with annualized 4% PCE inflation. Real wages are now 5% below their pre-pandemic trend. @Jasonfurman

Is wage growth slowing, or was the apparent slowdown a composition effect?

Core argument: The Employment Cost Index rose at a 4.7% annual rate over the last six months, which Jason Furman says is consistent with 4.0% PCE inflation and weighs in on the side of the argument that wage growth is not slowing.

The Employment Cost Index weighs in on the side of the argument that wage growth is not slowing--suggesting that the average hourly earnings slowdown was a spurious result of composition. Over the last six months, ECI went up at a 4.7% annual rate, consistent with 4.0% PCE inflation. The previous showed private wages excluding incentive occupations, probably the best measure. All the measures consistent. At an annual rate over the last 3 months: Private comp +4.7%; Private wages +4.9%; Private wages ex incentive+ 5.1%. All are higher than any time in the last cycle. This leaves real wages and salaries 5 percent below their pre-pandemic trend.

Takeaways by Macro Roundup® AI

  1. The Employment Cost Index rose at a 4.7% annual rate over the last six months, which Jason Furman says is consistent with 4.0% PCE inflation and weighs in on the side of the argument that wage growth is not slowing.
  2. Over the last three months at an annual rate, private compensation rose 4.7%, private wages 4.9%, and private wages excluding incentive occupations 5.1%, all higher than any time in the last cycle.
  3. Jason Furman suggests the average hourly earnings slowdown was a spurious result of composition, and that real wages and salaries remain 5% below their pre-pandemic trend.

AI Summary. The value of European stock market listings fell to its lowest level in a decade, with a single €75bn carmaker listing in Frankfurt accounting for 60% of the total raised. US outperformance in listing numbers and valuations reflects Silicon Valley's technology scene and ultra-loose monetary policy that pushed cash into equities.

Katie Martin and Nikou Asgari Financial Times
Date Posted:

In a survey of capital markets in the past two decades, @ft concludes that Europe has failed to take share from American capital markets. European firms that list in the US have raised 4x more money than American firms that list in Europe.

Why are European stock markets falling behind the US?

Core argument: The value of European stock listings in 2022 fell to its lowest level in a decade, with Porsche's €75bn Frankfurt listing alone accounting for 60 per cent of the total amount raised, according to Dealogic data.

The value of European listings in 2022 dropped to its lowest point in a decade, according to Dealogic data. Just one deal — the €75bn listing of carmaker Porsche in Frankfurt — accounted for 60 per cent of the total amount raised. In the UK, newly listed companies raised 90 per cent less in 2022 than the heights of 2021, with just 45 companies listing in London, according to LSE data. Only six of those raised more than £100mn of new money. The massive outperformance of the US in recent years — both in terms of listing numbers and in the valuations that companies there can command — was a product of the two factors: the technology scene in Silicon Valley, and the ultra-loose monetary policy that drove cash into riskier assets such as equities.

Takeaways by Macro Roundup® AI

  1. The value of European stock listings in 2022 fell to its lowest level in a decade, with Porsche's €75bn Frankfurt listing alone accounting for 60 per cent of the total amount raised, according to Dealogic data.
  2. Newly listed UK companies raised 90 per cent less in 2022 than at the 2021 peak, with just 45 companies listing in London and only six raising more than £100mn of new money, according to LSE data.
  3. US outperformance in both listing numbers and the valuations companies there command was a product of two factors: Silicon Valley's technology scene and ultra-loose monetary policy that drove cash into riskier assets such as equities.

AI Summary. Apple and Microsoft's combined weighting in the S&P 500 index reached a record 14%, and adding Alphabet, Amazon, Meta and Nvidia brings nearly a quarter of every dollar invested in the index into just six companies. Apple and Microsoft together added more than $1tn in market value, nearly half the index's gains.

Subrat Patnaik Bloomberg
Date Posted:

Apple and Microsoft now make up 14% of the S&P 500 after adding $1T of combined market value since the start of the year. Including Alphabet, Amazon, Meta and Nvidia, 25% of the S&P 500 is in 6 firms.

Have big tech companies reached a record share of the index?

Core argument: Apple and Microsoft's combined weighting in the S&P 500 jumped to a record 14% after strong earnings from Microsoft and others fueled a rally in technology stocks.

Apple Inc. and Microsoft Corp. have never held more sway over the S&P 500 Index. The world’s two most-valuable companies saw their combined weightings in the benchmark jump to a record 14% this week after strong earnings reports from Microsoft and others fueled a rally in technology stocks. When you include Alphabet Inc., Amazon.com Inc., Meta Platforms Inc. and Nvidia Corp, nearly a quarter of every dollar put into the S&P 500 is now split between just six names. Apple and Microsoft alone have added more than $1 trillion in combined market value in 2023, nearly half of the gains for the entire S&P 500.

Takeaways by Macro Roundup® AI

  1. Apple and Microsoft's combined weighting in the S&P 500 jumped to a record 14% after strong earnings from Microsoft and others fueled a rally in technology stocks.
  2. Apple, Microsoft, Alphabet, Amazon.com, Meta Platforms and Nvidia together account for nearly a quarter of every dollar put into the S&P 500.
  3. Apple and Microsoft alone added more than $1 trillion in combined market value in 2023, nearly half of the gains for the entire S&P 500.

AI Summary. Germany is in early-stage talks to restrict exports to China of chemicals used to manufacture semiconductors, supplied by Merck and BASF. Officials weighing the measure are aware it could damage business ties with China, Germany's largest trading partner.

Michael Nienaber, Jenny Leonard and Kamil Kowalcze Bloomberg
Date Posted:

Germany may join the American export controls on China and limit the export of chemicals used to manufacture semiconductors. China is Germany’s largest trading partner. @markets

Is Germany weighing export limits on chip chemicals to China?

Core argument: Germany is in talks to limit exports to China of chemicals used to manufacture semiconductors, as Berlin steps up efforts to reduce its economic exposure to China.

Germany is in talks to limit the export of chemicals to China that are used to manufacture semiconductors as Berlin steps up efforts to reduce its economic exposure to the Asian nation. While Germany does not have advanced chip-making technologies, Merck and BASF provide firms around the world with critical chemicals required for making semiconductors. Merck’s products or services are found in almost every single chip in the world, while BASF is a market leader in Europe and Asia, home to the world’s most important contract chipmakers including Taiwan Semiconductor Manufacturing Co. Without supplies from Merck and BASF, China could face more challenges in developing advanced chip technologies and even its capabilities to make semiconductors could be affected. Talks within the ruling coalition on such export controls are still at an early stage and officials are aware that any such decision could damage business ties with China, which has become Germany’s largest trading partner, the people said.

Takeaways by Macro Roundup® AI

  1. Germany is in talks to limit exports to China of chemicals used to manufacture semiconductors, as Berlin steps up efforts to reduce its economic exposure to China.
  2. Merck's products or services are found in almost every chip in the world and BASF is a market leader in Europe and Asia, home to contract chipmakers including Taiwan Semiconductor Manufacturing Co.; without their supplies, China could face more challenges developing advanced chip technologies.
  3. Talks on such export controls within Germany's ruling coalition remain at an early stage, and officials are aware that any decision could damage business ties with China, which has become Germany's largest trading partner.

AI Summary. The authors estimate that uncapping federal graduate student borrowing increased previously constrained students' borrowing and shifted their debt from private to federal sources, but had no effect on graduate enrollment, the racial and gender composition of entering students, human capital accumulation, or later earnings. They find the resulting increase in federal loans significantly raised program prices.

Sandra Black, Lesley Turner and Jeffrey Dennings Working Paper
Date Posted:
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New research shows that a major increase in federal student loan funding that started in 2006 had the effect of dramatically increasing tuition without improving either inclusion or the future earnings of graduates. @JeffDenning @Econ_Sandy @AEI

Does uncapping graduate student loans expand access or just raise tuition?

Core argument: The 2006 Graduate PLUS program, which essentially uncapped federal borrowing for graduate programs, increased previously constrained students' borrowing and shifted their loan composition from private to federal debt, according to the authors.

In 2006, the federal government essentially uncapped student borrowing for graduate programs with the introduction of the Graduate PLUS loan program. We find that access to additional federal loans increased previously constrained students’ borrowing and shifted the composition of their loans from private to federal debt. However, the increase in borrowing limits had no effect on graduate student enrollment or the racial and gender composition of entering graduate students. We find little evidence of short or longer-run effects on the human capital accumulation of students who were or would have been constrained by federal borrowing limits in the absence of Grad PLUS, even though cumulative debt significantly increased for these students when they gained access to Grad PLUS loans. This suggests that access to additional liquidity did not constrain graduate student borrowers’ human capital investments prior to the implementation of Grad PLUS. We also find little evidence of an impact on later earnings, consistent with no change in human capital accumulation. Where we do see effects is on program prices. Grad PLUS-driven increases in federal student loans significantly increased program prices.

Takeaways by Macro Roundup® AI

  1. The 2006 Graduate PLUS program, which essentially uncapped federal borrowing for graduate programs, increased previously constrained students' borrowing and shifted their loan composition from private to federal debt, according to the authors.
  2. The authors find no effect of higher federal borrowing limits on graduate enrollment or the racial and gender composition of entering graduate students, and little evidence of short- or longer-run effects on human capital accumulation or later earnings.
  3. Grad PLUS-driven increases in federal student loans significantly increased graduate program prices, the authors find, even as cumulative debt rose for students who would otherwise have been constrained by federal borrowing limits.

AI Summary. AI may allow important businesses to operate with very few employees, illustrated by an estimate of about 375 staff at OpenAI versus more than 60,000 at Meta. The author argues such firms would place a premium on talent selection and high pay, and would have less need to go public, raising the importance of venture capital.

Tyler Cowen Bloomberg
Date Posted:

.@tylercowen argues that the diffusion of AI will enable important companies to run with a small number of employees managing automated AI-based systems.

.@tylercowen argues that the diffusion of AI will enable important companies to run with a small number of employees...

Will AI shrink major companies to a few hundred employees?

Core argument: OpenAI, producer of ChatGPT — described as the most rapidly growing consumer technology product in history — has roughly 375 employees by one recent estimate, against more than 60,000 at Meta even after layoffs.

Consider ChatGPT, which has been described as the most rapidly growing consumer technology product in history. It is produced by OpenAI, headquartered in San Francisco. By one recent estimate the company has about 375 employees. By contrast, Meta, even after some layoffs, currently has more than 60,000. OpenAI will make more hires. Still, it may be time to reset expectations for what a major tech company looks like. Important businesses with a small number of employees will need to hire exactly the right people to oversee the larger automated and AI-managed superstructures. Talent selection will rise in importance as a skill, and the people in these smaller units will command very high compensation. Investing will evolve as well, with Americans less likely to own businesses in their stock portfolios. If businesses become smaller overall, they will not have the same need to go public to raise capital for expansion. They will be privately held. Venture capital will rise in importance, but since most solo investors face SEC restrictions on making venture investments, they will have to put their money elsewhere.

Takeaways by Macro Roundup® AI

  1. OpenAI, producer of ChatGPT — described as the most rapidly growing consumer technology product in history — has roughly 375 employees by one recent estimate, against more than 60,000 at Meta even after layoffs.
  2. Important businesses with few employees will need to hire exactly the right people to oversee larger automated and AI-managed superstructures, raising talent selection's value as a skill and commanding very high compensation.
  3. Smaller businesses may have less need to go public to raise expansion capital and would stay privately held, raising venture capital's importance while SEC restrictions keep most solo investors out of venture investing.

AI Summary. Higher defense spending accounted for about one-fifth of US economic growth in a recent quarter, contributing 21 basis points of a 1.1% annualized rise in gross domestic product, according to Commerce Department data. That marks a swing from an earlier stretch when falling defense outlays subtracted an average of 23 basis points from growth.

Matthew Boesler and Roxana Tiron Bloomberg
Date Posted:

Higher defense spending accounted for 20% of US economic growth in Q1 2023. @markets

Is rising defense spending propping up US economic growth?

Core argument: Higher US defense spending contributed 21 basis points of the 1.1% annualized GDP growth in the first quarter, about one-fifth of total growth, according to a Commerce Department report.

Higher defense spending accounted for about one-fifth of economic growth in the first quarter — 21 basis points out of the 1.1% annualized increase in GDP — a Commerce Department report showed. From the second quarter of 2022 to the first quarter of 2023, defense contributed an average of 13 basis points to GDP growth. That’s a sizeable swing from the previous five quarters when declining defense spending was slowing the economy down, with an average drag of 23 basis points over that period. 

Takeaways by Macro Roundup® AI

  1. Higher US defense spending contributed 21 basis points of the 1.1% annualized GDP growth in the first quarter, about one-fifth of total growth, according to a Commerce Department report.
  2. Defense spending added an average of 13 basis points to US GDP growth from the second quarter of 2022 through the first quarter of 2023, the Commerce Department report showed.
  3. In the preceding five quarters, declining US defense spending cut an average of 23 basis points from GDP growth, a sizeable swing from its subsequent positive contribution.