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


Monday, May 15, 2023

AI Summary. Changes in asset prices affect welfare only for those who buy or sell, so changes in wealth are not a good proxy for changes in welfare. The authors find middle-aged individuals benefited from asset-price movements, driven by declining equity prices, while retirees were hurt — even though middle-aged and older households saw sharp wealth declines.

Edmund Crawley and William Gamber Federal Reserve Board
Date Posted:

A @federalreserve analysis finds the recent changes in asset prices have benefited middle aged workers, who can now buy assets at lower prices, compared to retirees, who are primarily asset sellers.

Do changes in wealth accurately measure changes in welfare?

Core argument: The analysis finds that individuals near age 40 benefited most in welfare terms from asset-price changes during this tightening cycle, primarily because of the decline in equity prices, even though that age group saw large declines in wealth.

A change in asset prices affects an individual's welfare only if they buy or sell the asset. Otherwise, the change in wealth implied by a change in the price of an asset is only "on paper." For example, a family who faces no financial constraints and lives in the same house for its entire life is not affected by changes in the value of that house.  A key takeaway from our analysis is that the change in wealth is not a good proxy for the change in welfare. The top panel in figure 3 shows that the age group that has benefited the most from the asset-price changes in this tightening cycle are those near age 40. By contrast, this age group has seen large declines in wealth. We find that middle-aged individuals benefited significantly from these asset price movements, primarily driven by the decline in the price of equities. Retirees, on the other hand, were hurt by these asset price movements. These welfare results sharply contrast with the changes in wealth these groups have experienced: young people, whose few assets are concentrated in housing, have seen their wealth rise a little; people in middle age and older, who hold more equities than any other age group, have seen sharp declines in their wealth.

Takeaways by Macro Roundup® AI

  1. The analysis finds that individuals near age 40 benefited most in welfare terms from asset-price changes during this tightening cycle, primarily because of the decline in equity prices, even though that age group saw large declines in wealth.
  2. Changes in wealth are not a good proxy for changes in welfare, since an asset price change affects an individual only if they buy or sell the asset; a financially unconstrained family living in the same house for life is unaffected by changes in its value.
  3. Retirees were hurt by these asset price movements, while young people, whose few assets are concentrated in housing, saw wealth rise a little and middle-aged and older individuals, who hold more equities than any other age group, saw sharp wealth declines.

AI Summary. Total US family wealth rose from about $38tn in 1989 to $140tn in 2022, adjusted for inflation, and $84tn is projected to pass from older Americans to millennial and Gen X heirs through 2045. Households holding at least $5m in liquid assets, 1.5% of all households, account for 42% of expected transfers.

Talmon Joseph Smith New York Times
Date Posted:

As the baby boomers start to die their children are poised to inherit $16T over the next decade.

Will a small share of wealthy households receive most inherited wealth?

Core argument: Of the $84 trillion projected to pass from older Americans to millennial and Gen X heirs through 2045, $16 trillion is set to transfer within a decade.

Of the 73 million baby boomers, the youngest are turning 60. The oldest boomers are nearing 80. In 1989, total family wealth in the United States was about $38 trillion, adjusted for inflation. By 2022, that wealth had more than tripled, reaching $140 trillion. Of the $84 trillion projected to be passed down from older Americans to millennial and Gen X heirs through 2045, $16 trillion will be transferred within the next decade. Individuals with at least $5 million and $20 million in cash or easily cashable assets make up 1.5 percent of all households. Together, they constitute 42 percent of the volume of expected transfers through 2045, according to the financial research firm Cerulli Associates. That’s about $36 trillion as of 2020—numbers that have most likely increased since.

Takeaways by Macro Roundup® AI

  1. Of the $84 trillion projected to pass from older Americans to millennial and Gen X heirs through 2045, $16 trillion is set to transfer within a decade.
  2. Households holding at least $5 million and $20 million in cash or easily cashable assets make up 1.5 percent of all households but account for 42 percent of expected transfers through 2045, about $36 trillion as of 2020, according to Cerulli Associates.
  3. Total U.S. family wealth more than tripled from about $38 trillion in 1989 to $140 trillion in 2022, adjusted for inflation.

AI Summary. Japan's experience indicates an aging society is not inherently inflationary: despite decades of a shrinking working-age population, its total number of workers has risen as women entered paid employment and people in their 60s and 70s stayed in or returned to work. The US is projected to have more favorable demographics than most other rich countries and China.

Matt Klein The Overshoot
Date Posted:

.@M_C_Klein notes that the experience of Japan suggests that fewer workers supporting more dependents does not necessarily lead to inflation.

Does an aging society inevitably drive inflation higher?

Core argument: Japan shows that an aging society is not inherently prone to inflation, having instead been maligned as the singular example of deflation attributable to macroeconomic mismanagement after the end of the 1980s debt bubble.

Japan—which has gone through the gray transition first—shows that an aging society is not inherently prone to inflation. In fact, Japan was once maligned as the singular example of deflation attributable to macroeconomic mismanagement following the end of the 1980s debt bubble. Encouragingly, Japan also shows how to minimize the challenges associated with massive demographic changes. Even though the working-age population of Japan has been shrinking for decades, the number of Japanese workers has been rising as women have entered paid employment in size. Japan’s “young elderly” (60s and 70s) have also increasingly remained in employment, or re-entered employment, to help take care of the “old elderly”. Japan may be an extreme case, but it could also be a model for others. The U.S. is projected to have much more favorable demographics than most of the other rich countries (and China), but it too has a large untapped supply of would-be workers who could help reduce the burden of providing for retirees and other dependents.

Takeaways by Macro Roundup® AI

  1. Japan shows that an aging society is not inherently prone to inflation, having instead been maligned as the singular example of deflation attributable to macroeconomic mismanagement after the end of the 1980s debt bubble.
  2. Japan's working-age population has been shrinking for decades, yet the number of Japanese workers has risen as women entered paid employment in size and "young elderly" in their 60s and 70s stayed in or re-entered work.
  3. The U.S. is projected to have much more favorable demographics than most other rich countries and China, and also has a large untapped supply of would-be workers who could reduce the burden of providing for retirees and other dependents.

AI Summary. Fourteen million mortgages were refinanced during the COVID-era refinance boom: roughly 5m borrowers extracted a total of $430bn in home equity, while 9m refinanced without extracting equity and cut their aggregate annual housing costs by $24bn.

Andrew Haughwout, Donghoon Lee, Daniel Mangrum, Joelle Scally, and Wilbert van der Klaauw Federal Reserve Bank of New York
Date Posted:

1/3 of outstanding mortgage balances were refinanced during the pandemic housing boom, including $430B in home equity extraction. @NewYorkFed argues this “will potentially provide significant support to future consumption.”

How much did homeowners gain from the pandemic refinancing boom?

Core argument: Fourteen million mortgages were refinanced during the COVID refinance boom, with effects on the mortgage market expected to last for years.

In the end, fourteen million mortgages were refinanced during the COVID refinance boom, and these refinances will have effects on the mortgage market for years to come. Many borrowers who refinanced during the boom have improved either their cash flow, through a reduction in payments on their existing properties, or their liquidity by extracting equity from those properties. Approximately five million borrowers extracted a total of $430 billion in home equity from their refinancing. Meanwhile, nine million refinanced their loans without equity extraction and lowered their monthly payments, resulting in an aggregate reduction of $24 billion annually in their annual housing costs.

Takeaways by Macro Roundup® AI

  1. Fourteen million mortgages were refinanced during the COVID refinance boom, with effects on the mortgage market expected to last for years.
  2. Approximately five million borrowers extracted a total of $430 billion in home equity through refinancing, improving their liquidity.
  3. Nine million borrowers refinanced without extracting equity and lowered their monthly payments, reducing aggregate annual housing costs by $24 billion a year.

AI Summary. Domestic migration data indicate that the dozen most expensive large US metros, nearly all coastal, previously gained college-educated workers while losing large numbers of workers without degrees, but are now losing both groups. For most of this century, metros of a million or more residents captured all net gains from college-educated migrants.

Emily Badger, Robert Gebeloff and Josh Katz New York Times
Date Posted:

Prime age (here 21-64) college educated workers are now moving out of the 12 most expensive metropolitan areas in the US.

Are expensive coastal metros now losing college graduates too?

Core argument: Domestic migration data show the 12 large U.S. metros with the highest living costs, nearly all coastal, are now losing both college-educated workers and workers without degrees, after years of gaining graduates while shedding non-degree workers.

It appears in domestic migration data that, years after lower-wage residents have been priced out of expensive coastal metros, higher-paid workers are now turning away from them, too. For most of this century, large metros with a million residents or more have received all of the net gains from college-educated workers migrating around the country, at the expense of smaller places. But among those large urban areas, the dozen metros with the highest living costs — nearly all of them coastal — have had a uniquely bifurcated migration pattern: As they saw net gains from college graduates, they lost large numbers of workers without degrees. At least, that was true until recently. Now, large, expensive metros are shedding both kinds of workers.

Takeaways by Macro Roundup® AI

  1. Domestic migration data show the 12 large U.S. metros with the highest living costs, nearly all coastal, are now losing both college-educated workers and workers without degrees, after years of gaining graduates while shedding non-degree workers.
  2. For most of this century, U.S. metros with a million or more residents captured all of the net gains from college-educated workers migrating across the country, at the expense of smaller places.

AI Summary. Bank reserves stand around $3.2t versus a common Federal Reserve estimate of roughly $2.2t (8% of GDP) for the lowest comfortable level, and reserves are on track to approach that level within months. Growth in reverse repo balances and rebuilding of the Treasury's cash account would draw reserves down.

Joseph Wang Fed Guy Blog
Date Posted:

.@FedGuy12 notes that the replenishment of the Treasury General Account will likely come from households, who are now the marginal buyer of Treasuries. This will possibly drive bank reserves below the Fed’s Lowest Comfortable Level of Reserves.

Are bank reserves approaching the lowest comfortable level within months?

Core argument: Bank reserves stand near $3.2t against a common Fed estimate of the Lowest Comfortable Level of Reserves of about $2.2t (8% of GDP), a level reserves are on track to approach within a few months.

Bank reserves are on track to approach a common estimate of the Lowest Comfortable Level of Reserves (“LCLoR”) within a few months. At the moment, reserves sit around $3.2t and a common Fed estimate places LCLoR at around $2.2t (8% of GDP). In addition to quantitative tightening, two events may soon reduce bank reserves to around $2.2t. First, Reverse Repo (RRP) is likely to steadily increase as Money Market Fund (MMF) assets continue to rise and Federal Home Loan Bank (FHLB) debt issuance declines. Second, the Treasury General Account’s eventual replenishment will likely be financed largely from reserves. The decline in reserves may only be temporary, as persistent bill issuance would eventually redirect liquidity out of the RRP and back into the banking system.

Takeaways by Macro Roundup® AI

  1. Bank reserves stand near $3.2t against a common Fed estimate of the Lowest Comfortable Level of Reserves of about $2.2t (8% of GDP), a level reserves are on track to approach within a few months.
  2. Beyond quantitative tightening, two forces may pull reserves toward $2.2t: a steady rise in Reverse Repo balances as Money Market Fund assets grow and Federal Home Loan Bank debt issuance declines, and the Treasury General Account's replenishment financed largely from reserves.
  3. The decline in reserves may prove temporary, since persistent bill issuance would eventually redirect liquidity out of the Reverse Repo facility and back into the banking system.

AI Summary. Bank funding-cost spreads stepped up to successively higher levels after two regional bank failures, which the author argues is a lasting drag on the economy. The author estimates the rise in borrowing costs equals a permanent Federal Reserve rate hike of 200bps for regional banks and 50bps for large banks, or a bit more than 100bps economy-wide.

Torsten Sløk Apollo
Date Posted:

The increase in borrowing costs since the SVB collapse so far is equivalent to ~ 100bps for the banking sector, putting pressure on net interest margins. Torsten Sløk @apolloglobal

How much do higher bank funding costs tighten the economy?

Core argument: The rise in bank borrowing costs since Silicon Valley Bank's failure corresponds to a permanent Fed hike of 200bps for regional banks and 50bps for large banks, according to the author's estimates.

Spreads first moved up to a higher level after SVB and then another higher level after FRC, showing that the ongoing banking crisis is having a permanent negative effect on the economy.  Put differently, the increase in borrowing costs since SVB failed corresponds to a 200bps permanent Fed hike for regional banks and 50bps permanent Fed hike for large banks. Weighing these estimates together using the shares of loans and leases accounted for by small and large banks, respectively, gives an economy-wide Fed tightening of a bit more than 100bps for the entire banking sector. In short, the jump in funding costs for banks is permanent, and it has become a lot more expensive for many banks to run their business, and the banking crisis is not over.

Takeaways by Macro Roundup® AI

  1. The rise in bank borrowing costs since Silicon Valley Bank's failure corresponds to a permanent Fed hike of 200bps for regional banks and 50bps for large banks, according to the author's estimates.
  2. Weighting the regional and large-bank estimates by their shares of loans and leases yields an economy-wide tightening of a bit more than 100bps for the entire banking sector.
  3. Bank spreads stepped up to a higher level after Silicon Valley Bank failed and to a further higher level after First Republic, which the author reads as a permanent negative effect on the economy.

AI Summary. Greece's economy shrank by almost a quarter from peak to trough and output remains substantially below pre-crisis levels, though reforms have stabilised it and produced real improvements. Greek goods exports rose 90% between 2010 and 2021, compared with 42% for the euro area as a whole.

Martin Arnold and Mary McDougall Financial Times
Date Posted:

Greek internal devaluation is working. While Greek GDP is still 20% under pre-crisis levels Greek exports were up 90% between 2010-2021 relative to 42% for the Eurozone.

Have reforms delivered real improvements to Greece's economy after its collapse?

Core argument: Greece's goods exports rose 90 per cent between 2010 and 2021, compared with 42 per cent for the euro area as a whole, the chief real improvement credited to the country's reforms.

After shrinking by almost a quarter from peak to nadir, Greece’s output remains substantially below pre-crisis levels. Reforms have not only stabilised an economy in freefall but also led to some real improvements. Chief among them is trade: between 2010 and 2021, the country’s goods exports soared 90 per cent, compared with 42 per cent in the euro area as a whole.

Takeaways by Macro Roundup® AI

  1. Greece's goods exports rose 90 per cent between 2010 and 2021, compared with 42 per cent for the euro area as a whole, the chief real improvement credited to the country's reforms.
  2. Greek output shrank by almost a quarter from peak to nadir and remains substantially below pre-crisis levels, even as reforms stabilised an economy in freefall.
  3. Greece's move from junk to investment grade follows reforms that halted the economy's freefall and produced real improvements, most notably in trade.

AI Summary. Average Greek wages are down more than 25% in real terms and real GDP down 20% since the crisis, with Greece now among the European Union's highest rates of relative poverty. The argument is that Greece's export growth reflects repressed domestic wages and demand rather than higher productivity, which weakens global demand and pressures trading partners' wages.

Michael Pettis @michaelxpettis
Date Posted:

.@michaelxpettis notes the rise in Greek exports is coming at the expense of its trading partners, “there is a real problem with our global trade system when export prowess is mainly a function of the repression of domestic demand.”

Does export growth driven by wage suppression weaken global demand?

Core argument: Average Greek real wages are down more than 25% since 2008 and real GDP is down 20%, which Pettis argues is the source of Greece's export "success," as crushed domestic demand forces more of a shrinking output abroad.

The article also notes that average Greek wages are down more than 25% in real terms since 2008. GDP in real terms is down 20%. This, it turns out, is the secret to export "success". By lowering wages and crushing domestic demand, Greece must export more of what it produces, even as total production has fallen. Its export "success" is mainly the obverse of a brutal drop in wages, and Greece "now has one of the highest rates of relative poverty in the EU." There is a real problem with our global trade system when export prowess is mainly a function of the repression of domestic demand. Countries become successful exporters not by boosting domestic productivity but rather by cutting back on domestic wages. The result is that expanding trade means weaker global demand, which in turn can only be countered by rising debt. And because Greece's export "success" is driven by lower wages, its success also puts downward wage pressure on its trading partners.

Takeaways by Macro Roundup® AI

  1. Average Greek real wages are down more than 25% since 2008 and real GDP is down 20%, which Pettis argues is the source of Greece's export "success," as crushed domestic demand forces more of a shrinking output abroad.
  2. Pettis argues Greece's export gains reflect repression of domestic demand rather than rising productivity, and notes Greece now has one of the highest rates of relative poverty in the EU.
  3. Pettis contends that when export prowess comes from wage cuts rather than productivity, expanding trade weakens global demand, counterable only by rising debt, and exerts downward wage pressure on trading partners.

AI Summary. State audits and independent evaluations of corporate tax incentive programs have found poor targeting, weak oversight, and excessive costs that harmed rather than benefited local governments. Examples include $5.5bn in New York tax credits for a Micron facility and up to $1.75bn in Michigan incentives for a Ford electric vehicle plant.

Nathan Jensen and Steven Pedigo New York Times
Date Posted:
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.@iamstevenpedigo and @NateMJensen write that the CHIPS Act, which requires state and local subsidies to access federal dollars, has thus far been gamed by corporations to the detriment of state and local governments.

Do corporate tax incentives harm the local governments that offer them?

Core argument: New York offered Micron $5.5 billion in tax credits over the life of the project, costing local and state governments upward of $95 million annually, far more than they are likely to gain from hosting the new facilities.

Offering tax breaks and other incentives to corporations has been proved to be one of the least effective ways for localities and states to grow their economies. State audits and independent evaluations of these programs found poor targeting of incentives, weak oversight and excessive costs that harmed rather than benefited local governments. The CHIPS Act and the Inflation Reduction Act are threatening to give [unproductive tax incentives] an enormous infusion of steroids. Micron chose to build in upstate New York [after] the state offered a staggering $5.5 billion in tax credits over the life of the project … costing local and state governments upward of $95 million annually, far more than they are likely to gain from hosting the new facilities.  In February, Ford agreed to build its new electric vehicle plant in Michigan, but only after extracting a promise of as much $1.75 billion in state and local incentives...enough money to pay all the new workers’ salaries for around 15 years.

Takeaways by Macro Roundup® AI

  1. New York offered Micron $5.5 billion in tax credits over the life of the project, costing local and state governments upward of $95 million annually, far more than they are likely to gain from hosting the new facilities.
  2. Ford agreed to build its new electric vehicle plant in Michigan only after extracting a promise of as much as $1.75 billion in state and local incentives, enough to pay all the new workers' salaries for around 15 years.
  3. State audits and independent evaluations of corporate tax-break programs found poor targeting of incentives, weak oversight and excessive costs that harmed rather than benefited local governments, with the CHIPS Act and the Inflation Reduction Act threatening to expand such incentives.

AI Summary. Federal tax collections for the fiscal year through April came in roughly $250bn below projections made months earlier, according to the Congressional Budget Office. The shortfall moved up the date at which the U.S. Treasury could become unable to pay all its bills, raising the prospect of default unless Congress raises the debt ceiling.

Richard Rubin Wall Street Journal
Date Posted:

US federal tax collections are running $250 billion short of recent CBO projections.

Does a shortfall in tax collections move up the debt-ceiling deadline?

Core argument: Congressional Budget Office analysis found tax collections for the current fiscal year through April fell roughly $250 billion short of projections made a few months earlier.

Wall Street and Washington got jolted this month by government warnings that the U.S. could become unable to pay all its bills as soon as June 1. That crunch came months sooner than expected, raising the specter of a default on federal obligations unless Congress increases the debt ceiling.  The reason: the expected annual gusher of tax-season payments didn’t flood into the Treasury. When the Congressional Budget Office analyzed tax collections for the current fiscal year through April, the tally fell about $250 billion short of predictions from just a few months ago.

Takeaways by Macro Roundup® AI

  1. Congressional Budget Office analysis found tax collections for the current fiscal year through April fell roughly $250 billion short of projections made a few months earlier.
  2. The shortfall stems from the expected annual surge of tax-season payments failing to flow into the Treasury.

Tuesday, May 16, 2023

AI Summary. The authors identify a dual U.S. labor market in which a primary segment of about 55% of the population is almost always employed, while a secondary segment of about 14% absorbs most seasonal and business-cycle fluctuations. Workers in the secondary segment have 6x higher turnover and are 10x more likely to be unemployed than primary-segment workers.

Hie Joo Ahn, Bart Hobijn, and Ayşegül Şahin Federal Reserve Board
Date Posted:

New @federalreserve research shows the majority of unemployment in 1980-2021 was concentrated in a Secondary segment of 14% of the population that experiences high labor churn, vs. a Primary segment that is almost always employed.

Does a small segment of workers absorb most labor market fluctuations?

Core argument: Workers in the U.S. primary labor sector, about 55% of the population, are almost always employed and rarely experience unemployment.

Workers in the primary sector, who make up around 55% of the population, are almost always employed and rarely experience unemployment. The secondary sector, which constitutes 14% of the population, absorbs most of the short-run fluctuations, both at seasonal and business cycle frequencies. Workers in this segment experience six times higher turnover rates than those in the primary tier and are ten times more likely to be unemployed than their primary counterparts. The tertiary segment consists of workers who infrequently participate in the labor market but nevertheless experience unemployment when they try to enter the labor force.

Takeaways by Macro Roundup® AI

  1. Workers in the U.S. primary labor sector, about 55% of the population, are almost always employed and rarely experience unemployment.
  2. The secondary sector, 14% of the population, absorbs most short-run labor market fluctuations at both seasonal and business cycle frequencies, with turnover rates six times higher and unemployment ten times more likely than in the primary tier.
  3. The tertiary segment comprises workers who participate in the labor market infrequently yet experience unemployment when attempting to enter the labor force.

AI Summary. U.S. labor force data show immigrants accounted for 49% of labor force growth over roughly the past three decades and their children another 21%, together about 70% of an increase of nearly 32.8m workers. Immigrants rose from about 10% to 18% of the labor force, and immigrants plus their children from 18% to 29%.

David Bier Cato Institute
Date Posted:
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The American labor force grew by 32.8M workers between 1995-2022, and 70% of that growth consisted of immigrants or children of immigrants. Immigrants and their children are 29% of the total American workforce.

How much of labor force growth came from immigrant families?

Core argument: Immigrant workers accounted for 16.1 million (49%) and children of immigrants 6.7 million (21%) of the nearly 32.8 million increase in the U.S. labor force from 1995 to 2022, per Current Population Survey data.

From 1995 to 2022, the U.S. labor force increased from nearly 131.6 million workers to over 164.3 million—an increase of nearly 32.8 million workers: 16.1 million of that increase came from immigrant workers (49%) and 6.7 million were children of immigrants (21%), according to data from the Current Population Survey’s Annual Social and Economic Supplement. Just 9.9 million were U.S.-born citizens without a foreign‐born parent. The actual effect of cutting off all immigration would have been even greater since the working immigrant population would have declined without more immigration by about 4.5 million. Immigrants have increased from about 10% of the U.S. labor force in 1995 to 18% in 2022, and immigrants and their children have gone from 18% to 29%.

Takeaways by Macro Roundup® AI

  1. Immigrant workers accounted for 16.1 million (49%) and children of immigrants 6.7 million (21%) of the nearly 32.8 million increase in the U.S. labor force from 1995 to 2022, per Current Population Survey data.
  2. Just 9.9 million of the U.S. labor force increase from 1995 to 2022 came from U.S.-born citizens without a foreign-born parent, as the total labor force rose from nearly 131.6 million to over 164.3 million.
  3. Immigrants rose from about 10% of the U.S. labor force in 1995 to 18% in 2022, and immigrants plus their children from 18% to 29%; without further immigration, the working immigrant population would have declined by about 4.5 million.

AI Summary. The authors propose capping US federal spending at a long-term average of inflation-adjusted federal revenue, requiring Congress to cut spending or raise taxes if large deficits persist and allowing override only by supermajority. Such a longer-term fiscal framework would separate concerns about debt from the debt ceiling, permitting clean increases in the limit while the framework holds.

Glenn Hubbard Financial Times
Date Posted:

Glenn Hubbard argues that Congress should legislate “a spending limit for the US linked to a long-term average of federal revenue.”

Glenn Hubbard argues that Congress should legislate “a spending limit for the US linked to a long-term average of...

Can a spending cap tied to average revenue resolve debt ceiling standoffs?

Core argument: Tim Kane and the author proposed a US spending limit tied to a long-term inflation-adjusted average of federal revenue, triggering Congressional action to cut spending or raise taxes if large deficits persist, overridable only by a supermajority.

A decade ago, Tim Kane and I proposed a spending limit for the US linked to a long-term average of federal revenue (adjusted for inflation), triggering Congressional action to reduce spending or to raise taxes if large deficits persist. Congress could only override it with a supermajority. The precise mechanism is less important than Sweden’s intuition that a longer-term fiscal framework and direct accountability are needed. Such a mechanism separates worries about debt from the issue of the debt ceiling. Adhering to the budget framework allows future clean increases in the debt ceiling as long as the framework is in place. This would be an advance over our present stand-off and adding near-term spending restraint offers a win for McCarthy.

Takeaways by Macro Roundup® AI

  1. Tim Kane and the author proposed a US spending limit tied to a long-term inflation-adjusted average of federal revenue, triggering Congressional action to cut spending or raise taxes if large deficits persist, overridable only by a supermajority.
  2. Drawing on Sweden's intuition, the authors argue that a longer-term fiscal framework and direct accountability matter more than the precise mechanism chosen.
  3. Such a budget framework would separate concerns about debt from the debt ceiling itself, allowing future clean debt-ceiling increases while the framework holds, with near-term spending restraint offered as a win for McCarthy.

AI Summary. Europe is more economically exposed to China than the US: about 8% of listed European firms' revenues come from China versus 4% for American firms, and multinational investment in China equals 2% of Europe's GDP versus 1% for America. Total China exposure for Europe's big six reached 5.6% of combined GDP, up from 3.9%.

Economist Staff The Economist
Date Posted:
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According to an @TheEconomist analysis, Europe has significantly more economic exposure to China than the US. 8% of public European firms’ revenues are from China relative to 4% for American firms.

Is Europe more economically exposed to China than America?

Core argument: Europe's big six economies have total China exposure of 5.6% of their combined GDP, up from 3.9% in 2011 and above America's 4.2%, on a yardstick measuring exposure as a share of each country's own economy.

Europe is more economically exposed to China than America is. Some 8% of publicly-listed European firms’ revenues are from China, compared with 4% for American ones, according to Morgan Stanley. Europe and America send a similar share of goods exports to China (7-9%), but because Europe is a more trade-intensive economy its sensitivity is higher. Multinational investments in China are worth 2% of Europe’s GDP compared with 1% for America. We have come up with a yardstick of “total China exposure,. We measure each country’s exposure as a share of its own economy.  The European big six’s total China exposure has hit 5.6% of their combined GDP, up from 3.9% in 2011. That is higher than America’s at 4.2%. There is a big range: Italy and Spain are at just 1-2%, France and Britain are at 4-5%. Germany is a huge outlier at 9.9%.

Takeaways by Macro Roundup® AI

  1. Europe's big six economies have total China exposure of 5.6% of their combined GDP, up from 3.9% in 2011 and above America's 4.2%, on a yardstick measuring exposure as a share of each country's own economy.
  2. Germany is an outlier with total China exposure of 9.9% of GDP, while France and Britain sit at 4-5% and Italy and Spain at 1-2%.
  3. Some 8% of publicly listed European firms' revenues come from China versus 4% for American firms, according to Morgan Stanley, and multinational investments in China are worth 2% of Europe's GDP against 1% for America.

AI Summary. A survey of nearly 500 small-business owners found 45% expect to expand their workforces over the next 12 months, down from 58% two months earlier and 59% a year earlier. The share has stayed below 50% for two consecutive months, its lowest level since the early months of the Covid-19 pandemic.

Ruth Simon Wall Street Journal
Date Posted:

A new @WSJ survey found that 45% of small business owners are seeking to expand their workforce in the next year, down from 59% in May of 2022.

Are fewer small businesses planning to expand their workforces?

Core argument: 45% of small-business owners said in May they expect to expand their workforces over the next 12 months, the lowest share since June 2020, according to a Vistage Worldwide survey of nearly 500 owners conducted for The Wall Street Journal.

The portion of small-business owners who expect to expand their workforce over the next year was below 50% for the second month in a row in May, hitting the lowest level since June 2020, during the early months of the Covid-19 pandemic, according to a recent survey conducted for The Wall Street Journal. Forty-five percent of entrepreneurs said in May they expect to expand their workforces in the next 12 months, according to the survey of nearly 500 small-business owners by Vistage Worldwide, a business-coaching and peer-advisory firm. That’s down from 47% in April, 58% in March, and 59% in May 2022.

Takeaways by Macro Roundup® AI

  1. 45% of small-business owners said in May they expect to expand their workforces over the next 12 months, the lowest share since June 2020, according to a Vistage Worldwide survey of nearly 500 owners conducted for The Wall Street Journal.
  2. The share of small-business owners expecting to expand their workforces fell from 59% in May 2022 and 58% in March to 47% in April and 45% in May, according to the Vistage Worldwide survey.
  3. Small-business owners' expectations for workforce expansion stayed below 50% for a second consecutive month in May, according to the survey conducted for The Wall Street Journal.

AI Summary. A man carrying a rare mutation had brain scans showing amyloid plaques and tau protein at levels resembling severe dementia, yet one small region coordinating memory and navigation, the entorhinal cortex, had low tau levels. The authors argue this challenges the theory that Alzheimer's is primarily driven by amyloid plaques.

Sara Reardon Nature
Date Posted:

Researchers have found a mutation that protected a man with early stage Alzheimers from dementia until he was 67. @Nature

Researchers have found a mutation that protected a man with early stage Alzheimers from dementia until he was 67. @Nature

Is Alzheimer's primarily driven by amyloid plaques?

Core argument: Brain scans of a man carrying a rare Alzheimer's mutation showed high levels of amyloid plaques and tau, resembling the brain of a person with severe dementia, says study co-author Joseph Arboleda, an ophthalmologist at Harvard Medical School.

When the researchers scanned his brain, they found high levels of the sticky protein complexes known as amyloid plaques, which are thought to kill neurons and cause dementia, as well as a protein called tau that accumulates as the disease progresses. The brain looked like that of a person with severe dementia, says study co-author Joseph Arboleda, an ophthalmologist at Harvard Medical School in Boston. But one small brain area called the entorhinal cortex, which coordinates skills such as memory and navigation, had low levels of tau.  The study challenges the theory that Alzheimer’s disease is primarily driven by amyloid plaques, which are the targets of several drugs recently approved by the US Food and Drug Administration. The drugs effectively remove amyloid from the brain, but lead to only a moderate improvement in rates of cognitive decline.

Takeaways by Macro Roundup® AI

  1. Brain scans of a man carrying a rare Alzheimer's mutation showed high levels of amyloid plaques and tau, resembling the brain of a person with severe dementia, says study co-author Joseph Arboleda, an ophthalmologist at Harvard Medical School.
  2. The man's entorhinal cortex, a small brain area that coordinates skills such as memory and navigation, had low levels of tau.
  3. The study challenges the theory that Alzheimer's is primarily driven by amyloid plaques, the target of several drugs recently approved by the US Food and Drug Administration that remove amyloid but lead to only moderate improvement in rates of cognitive decline.