Edward Conard

Top Ten New York Times Bestselling Author

  • “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
  • “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
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, May 24, 2023

AI Summary. Black employment has improved, and racial gaps in employment are considerably smaller than around 2000, which the author attributes to a gradual decline in racism and racial discrimination as reflected in employment numbers. The author argues sociological work tying lost economic opportunity to social dysfunction is supported by similar dysfunction in white small towns and rural areas left behind economically.

Paul Krugman Krugman Wonks Out
Date Posted:
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.@PaulKrugman argues the decline in black unemployment might have powerful spillover effects in terms of combating the social dysfunction that has plagued black America.

Have racial employment gaps narrowed as discrimination declined?

Core argument: Racial gaps in employment are considerably smaller than around 2000, which the author calls arguably the last period of truly full employment.

The improvement in Black employment matters a lot, and not just because of the income generated. As the sociologist William Julius Wilson argued, the loss of economic opportunities as jobs moved out of urban areas was a major driving force behind social dysfunction in Black communities. I’ve long seen the recent emergence of social dysfunction in largely white small towns and rural areas left behind by a changing economy as a vindication of Wilson’s thesis (and a repudiation of “cultural” explanations). So the fact that Black America is working again is really good news on multiple fronts. But while full employment helps, racial gaps are considerably smaller now than they were circa 2000 — arguably the last time we had truly full employment. Why? I’d argue — this will probably get me in trouble on both the right and the left — that racism and racial discrimination, while both still very real, have gradually declined over time, at least in a way that’s reflected in employment numbers.

Takeaways by Macro Roundup® AI

  1. Racial gaps in employment are considerably smaller than around 2000, which the author calls arguably the last period of truly full employment.
  2. The author attributes the narrowing of employment-based racial gaps to a gradual decline in racism and racial discrimination, while maintaining that both remain real.
  3. Citing sociologist William Julius Wilson's argument that jobs moving out of urban areas drove social dysfunction in Black communities, the author sees similar dysfunction in largely white small towns and rural areas as vindicating that thesis over "cultural" explanations.

AI Summary. Young workers aged 15-24 are particularly vulnerable when economic growth slows, and China's youth unemployment rate does not appear to be an outlier relative to its income level among global peers. Mismatches between the skills graduates acquire in higher education and those employers demand may add to labor market frictions.

Maggie Wei Goldman Sachs
Date Posted:

A @GoldmanSachs analysis notes that China’s youth unemployment is not an outlier globally but that misalignment between college discipline and business requirements remains a persistent challenge.

Why has youth unemployment risen so sharply in China?

Core argument: ILO data showed youth unemployment in 2021 exceeded 20% in a few European countries such as Spain and Italy and was close to 10% in the US, with workers aged 15–24 appearing particularly vulnerable when growth slows.

Young people aged 15-24 years old appear particularly vulnerable when economic growth slows and labor market faces stresses. For example, International Labor Organization (ILO) data showed youth unemployment rate in 2021 was more than 20% in a few European countries such as Spain, Italy, and close to 10% in the US in 2021. Note ILO’s definition is slightly different from NBS’s. ILO uses the 15-24 age group while China’s National Bureau of Statistics (NBS) survey looks at the 16-24 age group. China does not seem to be an outlier when comparing its youth unemployment rate relative to income level among global peers. Although our analysis above suggests youth unemployment rate is quite cyclical and is set to decline as service activity growth improves, there may be other structural headwinds contributing to the high youth unemployment rate. In particular, mismatches between skillset graduates acquired from their higher education and skillset required by employers in industry with booming labor demand might have caused frictions in the labor market and therefore contributed to high youth unemployment rate.

Takeaways by Macro Roundup® AI

  1. ILO data showed youth unemployment in 2021 exceeded 20% in a few European countries such as Spain and Italy and was close to 10% in the US, with workers aged 15–24 appearing particularly vulnerable when growth slows.
  2. China does not appear to be an outlier on youth unemployment relative to its income level compared with global peers, though ILO's 15–24 age definition differs from the 16–24 group used in China's National Bureau of Statistics survey.
  3. China's youth unemployment rate appears largely cyclical and is expected to decline as service activity growth improves, though mismatches between graduates' skills and those employers in industries with booming labor demand require may be a structural contributor.

AI Summary. Natural-gas prices have fallen sharply worldwide after a severe global energy shock, providing a windfall for the global economy as it contends with high inflation. Energy-intensive businesses are restarting operations, consumers face lower bills, and fears of a winter shortage have eased.

Joe Wallace and Kim Mackrael Wall Street Journal
Date Posted:

Natural gas prices are in retreat globally in what should be a positive energy shock to Europe and emerging markets.

Are falling natural-gas prices giving the global economy a boost?

Core argument: Natural-gas prices are in full retreat around the world, reversing the energy shock triggered by Russia's invasion of Ukraine that had produced the worst energy crisis since the 1970s.

This time last year, natural-gas prices were skyrocketing after Russia’s invasion of Ukraine kicked off the worst energy crisis since the 1970s. To the surprise of many prognosticators, that energy shock has now subsided, with gas prices in full retreat around the world. The result is a windfall for the global economy, especially as it contends with stubbornly high inflation. Energy-intensive businesses are restarting operations, consumers are about to enjoy lower bills and fears of a winter shortage have eased.

Takeaways by Macro Roundup® AI

  1. Natural-gas prices are in full retreat around the world, reversing the energy shock triggered by Russia's invasion of Ukraine that had produced the worst energy crisis since the 1970s.
  2. The collapse in gas prices delivers a windfall to the global economy as it contends with stubbornly high inflation, with energy-intensive businesses restarting operations and consumers set to see lower bills.
  3. Fears of a winter gas shortage have eased, an easing of the energy shock that surprised many prognosticators.

AI Summary. A model estimates global deaths remain about 5% above pre-Covid forecasts, though its confidence interval for the current excess-death rate stretches from near zero to mid-2020 levels. Relative to people aged 65 and over, excess-death rates in rich countries are three times lower than elsewhere, but older populations leave overall mortality rates similar.

Economist Staff The Economist
Date Posted:

Globally the mortality rate in the aftermath of the pandemic is running 5% above the 2019 baseline, or 3M excess deaths a year. @TheEconomist

Are global deaths still running above pre-pandemic forecasts?

Core argument: The Economist's model estimates global deaths remain about 5% above pre-Covid forecasts, though its confidence interval for the world's excess-death rate stretches from near zero up to the estimated levels of mid-2020.

Because data on total mortality is scant outside the rich world, our model’s estimates have become less precise over time. Its confidence interval for the world’s current excess-death rate stretches from near zero all the way up to the estimated levels of mid-2020. However, excluding the recent surge in China, its best guess for the past year is around one of every 1M people per day. As a share of people aged at least 65, excess-death rates in rich countries are three times lower than elsewhere. But because such places have older populations, their overall mortality rate is similar. Covid may not be the sole cause of this change. Some countries’ health-care systems remain strained, and cases of other diseases that went untreated in 2020-21 could be raising death rates today. But if covid were indeed responsible for the full increase, it would be tied for the world’s fourth-leading cause of death. At current rates, it would kill more people in the next eight years than in the past three.

Takeaways by Macro Roundup® AI

  1. The Economist's model estimates global deaths remain about 5% above pre-Covid forecasts, though its confidence interval for the world's excess-death rate stretches from near zero up to the estimated levels of mid-2020.
  2. Excluding China's recent surge, the model's best guess for excess deaths over the past year is about one per 1m people per day, with rich countries' rates three times lower than elsewhere as a share of those aged 65 and over, but similar overall given their older populations.
  3. If Covid accounted for the full increase in deaths, it would be tied for the world's fourth-leading cause of death and would kill more people over the next eight years than in the past three, though strained health-care systems and diseases untreated in 2020-21 may also be raising death rates.

AI Summary. Central banks bought 1,079 tonnes of gold bullion in a year, the most since records began in 1950, with prices hovering near the nominal all-time high of $2,072 per troy ounce. Developing countries wary of the US dollar have been diversifying reserves after the West froze $300bn of Russian foreign exchange holdings.

Harry Dempsey and Leslie Hook Financial Times
Date Posted:

Central Banks love gold. Nominal gold prices are close to reaching a nominal high as in 2022 central banks bought 1,079 tonnes of bullion, the most since records began in 1950.

Are central banks buying record gold to diversify away from the dollar?

Core argument: Central banks bought 1,079 tonnes of gold bullion last year, the most since records began in 1950.

Last year central banks bought 1,079 tonnes of bullion—the most since records began in 1950.  As a result, gold has been hovering close to its nominal all-time high of $2,072 per troy ounce—the traditional unit for precious metals—since late March.  There is a geopolitical factor, as developing countries grow wary of the strength of the US dollar. As the west imposed sanctions on Russia following the invasion of Ukraine, the US and its allies froze $300bn of foreign exchange holdings denominated in dollars, euros and sterling. That alarmed many countries with US dollar holdings, whose central banks have been racing to diversify their holdings and buy more gold.

Takeaways by Macro Roundup® AI

  1. Central banks bought 1,079 tonnes of gold bullion last year, the most since records began in 1950.
  2. Gold has hovered close to its nominal all-time high of $2,072 per troy ounce since late March.
  3. After the US and its allies froze $300bn of Russian foreign exchange holdings denominated in dollars, euros and sterling following the invasion of Ukraine, central banks holding dollars have raced to diversify into gold.

AI Summary. The Group of Seven advanced economies' share of global output at purchasing power parity fell from 44% to 30% between 2000 and 2023, while China's rose from 7% to 19%. For some emerging and developing countries, including Brazil, China is a more important economic partner than the Group of Seven.

Martin Wolf Financial Times
Date Posted:
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.@martinwolf_ suggests that the G7 is losing relevance as its share of global GDP declines. He notes that China is a larger trade partner than the G7 for many emerging markets.

Have advanced economies lost their dominant share of global output?

Core argument: The G7's share of global output at purchasing power parity falls from 44% in 2000 to 30% in 2023, while the share of all high-income countries falls from 57% to 41%.

Moreover, both the “unipolar” moment of the US and the economic dominance of the G7 are history. True, the latter is still the most powerful and cohesive economic bloc in the world. It continues, for example, to produce all the world’s leading reserve currencies. Yet, between 2000 and 2023, its share in global output (at purchasing power) will have fallen from 44 to 30 percent, while that of all high-income countries will have fallen from 57 to 41 percent. Meanwhile, China’s share will have risen from 7 to 19 percent. For some emerging and developing countries, China is a more important economic partner than the G7: Brazil is one example. President Luiz Inácio Lula da Silva may have attended the G7, but he cannot sensibly ignore China’s heft.

Takeaways by Macro Roundup® AI

  1. The G7's share of global output at purchasing power parity falls from 44% in 2000 to 30% in 2023, while the share of all high-income countries falls from 57% to 41%.
  2. China's share of global output at purchasing power parity rises from 7% in 2000 to 19% in 2023, and for some emerging and developing countries, including Brazil, China is a more important economic partner than the G7.
  3. The G7 remains the most powerful and cohesive economic bloc in the world and continues to produce all the world's leading reserve currencies, even as the US "unipolar" moment and G7 economic dominance are history.

AI Summary. China has overtaken Japan as the world's largest auto exporter, shipping 1.07m vehicles in a quarter, a 58% year-over-year increase, versus Japan's 950,000. China is also the largest exporter of electric vehicles, accounting for about 35% of global electric vehicle exports, up from 25% two years earlier.

Jacky Wong Wall Street Journal
Date Posted:

.@WSJ reports that in Q1 2023 China overtook Japan as world’s largest auto exporter.

Has China become the world's largest auto and electric vehicle exporter?

Core argument: China exported 1.07 million vehicles in the first quarter, a 58% increase from a year earlier according to official figures, overtaking Japan's 950,000 shipments reported by the Japan Automobile Manufacturers Association to become the world's largest auto exporter.

China overtook Japan as the largest auto exporter in the world last quarter. Surging exports to Russia gave the country’s car exports a big bump. But the strength of China’s electric vehicle ecosystem is also an important factor driving the trend. China exported 1.07 million vehicles in the first quarter of this year, a 58% increase from a year earlier, according to official figures. In comparison, Japan shipped 950,000 vehicles abroad during the quarter, according to the Japan Automobile Manufacturers Association. China is the largest exporter of EVs, and its lead appears to be growing: Around 35% of EVs exported globally came from China last year, compared with 25% in 2021, according to the International Energy Agency.

Takeaways by Macro Roundup® AI

  1. China exported 1.07 million vehicles in the first quarter, a 58% increase from a year earlier according to official figures, overtaking Japan's 950,000 shipments reported by the Japan Automobile Manufacturers Association to become the world's largest auto exporter.
  2. Around 35% of electric vehicles exported globally came from China last year, up from 25% in 2021, according to the International Energy Agency.
  3. Surging exports to Russia boosted China's car exports, and the strength of China's electric vehicle ecosystem is another factor driving the trend.

AI Summary. More than a dozen performances across China, including stand-up comedy, jazz and a touring Japanese choral group, were abruptly cancelled with virtually no explanation, after authorities fined a Chinese comedy studio around $2m over a joke deemed insulting to the military. Performers must submit scripts or set lists for vetting.

Vivian Wang New York Times
Date Posted:

Cultural events across China ranging from musical performances to comedy shows have been cancelled after a stand-up comic was fined $2M for making a joke which authorities in Beijing felt was at the expense of the Chinese military.

Cultural events across China ranging from musical performances to comedy shows have been cancelled after a stand-up comic...

Is China tightening control over live performances and cultural expression?

Core argument: Beijing authorities fined a Chinese comedy studio around $2 million after one of its stand-up performers was accused of insulting the Chinese military in a joke, and police in northern China detained a woman who had defended the comedian online.

The cancellations rippled across the country: A Japanese choral band touring China, stand-up comedy shows in several cities, jazz shows in Beijing. In the span of a few days, the performances were among more than a dozen that were abruptly called off — some just minutes before they were supposed to begin — with virtually no explanation. Just before the performances were scrapped, the authorities in Beijing had fined a Chinese comedy studio around $2 million, after one of its stand-up performers was accused of insulting the Chinese military in a joke; the police in northern China also detained a woman who had defended the comedian online. Those penalties, and the sudden spate of cancellations that followed, point to the growing scrutiny of China’s already heavily censored creative landscape. China’s top leader, Xi Jinping, has made arts and culture a central arena for ideological crackdowns, demanding that artists align their creative ambitions with Chinese Communist Party goals and promote a nationalist vision of Chinese identity. Performers must submit scripts or set lists for vetting, and publications are closely monitored.

Takeaways by Macro Roundup® AI

  1. Beijing authorities fined a Chinese comedy studio around $2 million after one of its stand-up performers was accused of insulting the Chinese military in a joke, and police in northern China detained a woman who had defended the comedian online.
  2. More than a dozen performances in China were abruptly canceled within a few days — including a Japanese choral band's tour, stand-up comedy shows in several cities and jazz shows in Beijing — some minutes before they were to begin and with virtually no explanation.
  3. Xi Jinping has made arts and culture a central arena for ideological crackdowns, demanding that artists align their creative ambitions with Chinese Communist Party goals and promote a nationalist vision of Chinese identity, with performers required to submit scripts or set lists for vetting.

Thursday, May 25, 2023

AI Summary. The authors estimate New York City office values fell 45% in 2020 and 39% in the longer run, a $453bn value destruction, with lower-quality buildings hit hardest as tenants shifted to higher-quality space. They argue this has implications for local public finances and financial sector stability.

Arpit Gupta, Vrinda Mittal and Stijn Van Nieuwerburgh National Bureau of Economic Research
Date Posted:

.@arpitrage @VrindaMittal2 @SVNieuwerburgh update their research on the pandemic’s impact on New York City commercial office space and find a 39% long run decline in overall office values, representing $453B in value destruction.

How much office value has remote work destroyed?

Core argument: The authors estimate New York City office values fell 45% in 2020 and 39% in the longer run, the latter amounting to $453 billion of value destruction after accounting for pandemic-induced cash flow and discount rate effects.

We revalue the stock of New York City commercial office buildings taking into account pandemic-induced cash flow and discount rate effects. We find a 45% decline in office values in 2020 and 39% in the longer-run, the latter representing a $453 billion value destruction. Higher quality office buildings were somewhat buffered against these trends due to a flight to quality, while lower quality office buildings see much more dramatic swings. These valuation changes have repercussions for local public finances and financial sector stability.  The decline in office values and the surrounding CBD retail properties, whose lease revenues have been hit at least as hard as office, has important implications for local public finances. For example, the share of real estate taxes in NYC’s budget was 53% in 2020, 24% of which comes from office and retail property taxes.

Takeaways by Macro Roundup® AI

  1. The authors estimate New York City office values fell 45% in 2020 and 39% in the longer run, the latter amounting to $453 billion of value destruction after accounting for pandemic-induced cash flow and discount rate effects.
  2. Higher quality office buildings were somewhat buffered by a flight to quality, while lower quality office buildings show much more dramatic valuation swings, according to the authors' revaluation.
  3. Real estate taxes made up 53% of New York City's budget in 2020, with 24% of that from office and retail property taxes, and the authors argue declines in office and central business district retail values carry implications for local public finances and financial sector stability.

AI Summary. Internal Revenue Service data on taxpayers who moved between filing years show New York losing affluent taxpayers, a trend that would be disastrous for a state that draws almost half its revenue from income taxes paid by those making $200,000 or more. Rising stock, housing, and other asset prices offset those losses.

Justin Fox Bloomberg
Date Posted:

The rise in asset prices in 2020-21 shielded New York state from the consequences of the flight of higher income workers. @foxjust

Does the loss of affluent taxpayers threaten New York's revenue?

Core argument: New York relies on income taxes paid by those making $200,000 or more a year for almost half its revenue, so continued outmigration of affluent taxpayers, even in less extreme form, would be disastrous for the state's finances.

The 2020-21 numbers here were released in late April by the Internal Revenue Service. They sort taxpayers by whether and where they moved between filing their taxes in 2020 and filing them in 2021; the adjusted gross incomes are for the 2020 tax year. It has been two years since May 17, 2021 — that year’s belated income tax filing deadline — and a lot has changed. But New York has continued to lose population, and if the trend depicted above were to continue, even in less extreme form, it would be disastrous for the finances of a state that relies on income taxes paid by those making $200,000 or more a year for almost half its revenue. That the loss of affluent taxpayers didn’t lead to disaster during the pandemic mainly had to do with how much the prices of stocks, houses and other assets rose in 2020 and 2021.

Takeaways by Macro Roundup® AI

  1. New York relies on income taxes paid by those making $200,000 or more a year for almost half its revenue, so continued outmigration of affluent taxpayers, even in less extreme form, would be disastrous for the state's finances.
  2. IRS data released in late April sort taxpayers by whether and where they moved between filing in 2020 and 2021, with adjusted gross incomes reported for the 2020 tax year.
  3. New York's loss of affluent taxpayers did not produce a fiscal disaster during the pandemic mainly because prices of stocks, houses and other assets rose in 2020 and 2021.

AI Summary. When nominal interest rates exceed nominal growth, the revenues, wages and tax receipts that borrowers earn grow more slowly than the interest accumulating on their debt, giving debt levels the potential to explode. Surveyed economists project the US is about to cross that threshold, after a stretch in which nominal growth exceeded nominal rates.

Economist Staff The Economist
Date Posted:

Since the end of 2009 US nominal GDP growth has been higher than nominal rates, outside of the acute pandemic period. Based on current forecasts, this is about to change, creating increasing risks for private and public debtors. @TheEconomist

Are US interest rates about to outpace nominal growth?

Core argument: America is about to cross into an i > g world, where nominal interest rates exceed nominal growth, based on a panel of economists surveyed by Bloomberg.

In an i > g world [nominal interest rates higher than nominal growth,] growth in the revenues, wages or tax receipts that a debtor earns will be slower than the interest accumulating on their borrowing, meaning debt levels have the potential to explode. An i > g world is unfamiliar to America and most of the West. Since the end of 2009 nominal growth has been higher than nominal rates (aside from the first half of 2020, when the covid-19 pandemic crashed the economy). Now America is about to cross the threshold, [based on a panel of economists surveyed by Bloomberg.]  It is far easier to swallow a high cost of capital when it is matched by high returns on said capital. And that will not be the case for much longer.

Takeaways by Macro Roundup® AI

  1. America is about to cross into an i > g world, where nominal interest rates exceed nominal growth, based on a panel of economists surveyed by Bloomberg.
  2. Since the end of 2009, US nominal growth has exceeded nominal rates, aside from the first half of 2020 when the covid-19 pandemic crashed the economy, leaving an i > g world unfamiliar to America and most of the West.
  3. When interest accumulates faster than a debtor's revenues, wages or tax receipts grow, debt levels have the potential to explode, and a high cost of capital is far easier to swallow when matched by high returns on that capital.

AI Summary. Food and energy shocks do not explain core inflation, which the author attributes predominantly to excess demand rather than unpredictable shocks, with only the excess of headline over core inflation due to accident. Shortages are consistent with demand increases supporting higher overall consumption, and a soft landing to 2% inflation is unlikely.

Jason Furman Brookings Institution
Date Posted:

.@jasonfurman differs from @benbernanke and @ojblanchard1, arguing that core inflation was primarily driven by the “original sin” of excessive fiscal stimulus.

Was core inflation driven by excess demand rather than supply shocks?

Core argument: The author argues core inflation was predominantly "original sin," or predictable, while the excess of headline over core inflation stemmed from an unfortunate accident.

Was inflation the result of unpredictable shocks (i.e., unfortunate events) or was it predictable (i.e., original sin)? My view: core predominantly original sin but excess of headline was due to an unfortunate accident. An elegant paper but it does not answer whether inflation was “a series of unfortunate events” or “original sin”. The paper does suggest that food and energy shocks do not explain core inflation. Shortages are consistent with demand increases—and demand supporting higher overall consumption. It may be more fruitful to ignore the labor market in assessing large non-linear shocks. Regardless, we all agree about the present situation--and the unlikelihood of a soft landing to 2% inflation.

Takeaways by Macro Roundup® AI

  1. The author argues core inflation was predominantly "original sin," or predictable, while the excess of headline over core inflation stemmed from an unfortunate accident.
  2. The paper suggests food and energy shocks do not explain core inflation, though the author holds that it does not settle whether inflation resulted from a series of unfortunate events or original sin.
  3. The author contends shortages are consistent with demand increases supporting higher overall consumption, that ignoring the labor market may be more fruitful in assessing large non-linear shocks, and that a soft landing to 2% inflation is unlikely.

Related Articles:

  • What Caused the U.S. Pandemic-Era Inflation? — The authors estimate that food and especially energy price shocks, along with increased demand for durable goods combined with supply-chain shortages, accounted for much of U.S. pandemic-era inflation, while the contribution of tight labor markets was small or negative early on. They estimate that tight labor-market conditions became an increasingly important, though not dominant, source of inflation over time.

AI Summary. Global defence spending rose nearly 4% in real terms to over $2tn, and new commitments and forecast increases, if implemented, are estimated to add more than $200bn a year worldwide. If countries below 2% of GDP reached that level and others added half a percentage point, outlays would rise by close to $700bn annually.

Economist Staff The Economist
Date Posted:

In 2022, global defense spending increased 4% to at least $2T a year. @TheEconomist argues this won’t be inflationary as the spending is still low relative to Cold War levels.

How much would rising military commitments add to global defense spending?

Core argument: Global defence spending rose nearly 4% in real terms last year to over $2trn, and share prices of defence firms are outperforming the overall stockmarket.

Last year defence spending worldwide increased by nearly 4% in real terms to over $2trn. The share prices of defence firms are performing better than the overall stockmarket. We estimate that total new defence commitments and forecast spending increases, if implemented, will generate over $200bn in extra defence spending globally each year. It could be a lot more. Imagine that countries which currently spend less than 2% of GDP per year meet that level and that the remainder increase spending by half a percentage point of GDP. Global defence outlays would rise by close to $700bn a year. There is little reason to believe that the new cold war will be sharply inflationary. Not even the fiercest hawks are calling for defence spending, as a share of GDP, to return to the levels of the 1960s or 1970s.

Takeaways by Macro Roundup® AI

  1. Global defence spending rose nearly 4% in real terms last year to over $2trn, and share prices of defence firms are outperforming the overall stockmarket.
  2. Total new defence commitments and forecast spending increases, if implemented, are estimated to generate over $200bn in extra defence spending globally each year.
  3. If countries spending below 2% of GDP reached that level and the rest added half a percentage point of GDP, global defence outlays would rise by close to $700bn a year.

AI Summary. Microsoft has identified stealthy intrusions by Volt Typhoon, a Chinese state-sponsored actor, against US critical infrastructure organizations spanning communications, manufacturing, utilities, transportation, maritime, government, information technology, and education. Microsoft assesses with moderate confidence that the campaign is developing capabilities that could disrupt critical communications infrastructure between the US and Asia during future crises.

Microsoft Threat Intelligence Microsoft
Date Posted:

Microsoft uncovered a Chinese attack on American infrastructure that would enable the Chinese government to disrupt communication between the US and Asia during a crisis.

Is a Chinese state-sponsored actor prepositioning inside US critical infrastructure?

Core argument: Microsoft assesses with moderate confidence that Volt Typhoon, a Chinese state-sponsored actor active since mid-2021, is pursuing development of capabilities that could disrupt critical communications infrastructure between the United States and the Asia region during future crises.

Microsoft has uncovered stealthy and targeted malicious activity focused on post-compromise credential access and network system discovery aimed at critical infrastructure organizations in the United States. The attack is carried out by Volt Typhoon, a state-sponsored actor based in China that typically focuses on espionage and information gathering. Microsoft assesses with moderate confidence that this Volt Typhoon campaign is pursuing development of capabilities that could disrupt critical communications infrastructure between the United States and Asia region during future crises. Volt Typhoon has been active since mid-2021 and has targeted critical infrastructure organizations in Guam and elsewhere in the United States. In this campaign, the affected organizations span the communications, manufacturing, utility, transportation, construction, maritime, government, information technology, and education sectors. Observed behavior suggests that the threat actor intends to perform espionage and maintain access without being detected for as long as possible.

Takeaways by Macro Roundup® AI

  1. Microsoft assesses with moderate confidence that Volt Typhoon, a Chinese state-sponsored actor active since mid-2021, is pursuing development of capabilities that could disrupt critical communications infrastructure between the United States and the Asia region during future crises.
  2. Volt Typhoon has targeted critical infrastructure organizations in Guam and elsewhere in the United States, spanning the communications, manufacturing, utility, transportation, construction, maritime, government, information technology, and education sectors.
  3. Microsoft found Volt Typhoon activity focused on post-compromise credential access and network system discovery, with observed behavior suggesting the actor intends to perform espionage and maintain undetected access for as long as possible.