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
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…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
  • “…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
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, May 30, 2023

AI Summary. An analysis by two economists argues that future inflation will be driven by more persistent factors, chiefly a labor market they describe as still overheated and in need of cooling. They suggest disinflation without a significant rise in unemployment may be possible, noting that job vacancies have fallen without unemployment rising.

Paul Krugman Krugman Wonks Out
Date Posted:

.@paulkrugman takeaway from @benbernanke and @ojblanchard1 new research is that “immaculate disinflation” is still a real possibility.

Can inflation fall without a significant rise in unemployment?

Core argument: Olivier Blanchard and Ben Bernanke point to the labor market, which they say remains overheated and needs to cool, as the key to future inflation, even granting that government spending contributed to inflation's initial rise.

Even if you believe that excessive government spending played a big role in the initial rise in inflation, future inflation will reflect more persistent factors — which, in Olivier Blanchard and Ben Bernanke analysis, means focusing on the labor market, which they say is still overheated and needs to cool. The six-million-job question is whether this cooling off needs to involve a large rise in unemployment. The paper is actually fairly optimistic on that question, suggesting that “immaculate disinflation,” inflation coming down without any significant rise in unemployment, may be possible, and that even if it isn’t, those grim projections we were hearing a year ago about the need for many years of high unemployment no longer seem plausible. The ratio of vacancies to the unemployed as their measure of labor market tightness. And what has been really striking since late 2022 is that vacancies have come way down without any rise in unemployment.

Takeaways by Macro Roundup® AI

  1. Olivier Blanchard and Ben Bernanke point to the labor market, which they say remains overheated and needs to cool, as the key to future inflation, even granting that government spending contributed to inflation's initial rise.
  2. The Blanchard-Bernanke paper suggests "immaculate disinflation" — inflation falling without a significant rise in unemployment — may be possible, and that earlier projections of many years of high unemployment no longer seem plausible.
  3. Using the ratio of job vacancies to unemployed workers as their measure of labor market tightness, Blanchard and Bernanke observe that vacancies have come down substantially since late 2022 without any rise in unemployment.

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.
  • Inflation: A Series of Unfortunate Events vs. Original Sin — 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.

AI Summary. The college enrollment rate for recent U.S. high-school graduates ages 16–24 fell to 62% from 66.2% before the pandemic, after peaking at 70.1%, according to Labor Department data. Teen unemployment reached a 70-year low of 9.2%, and hourly earnings for rank-and-file leisure and hospitality workers rose nearly 30% over four years versus roughly 20% for all workers.

Harriet Torry Wall Street Journal
Date Posted:

Rising costs of college plus a hot job market have driven down the college enrollment rate for American high school graduates aged 16-24 to 62% in 2022, down from 66% pre-pandemic. Male enrollment dropped to 57% from 67%.

Are strong job prospects pulling high-school graduates away from college?

Core argument: The college enrollment rate for recent U.S. high-school graduates ages 16 to 24 fell to 62% last year from 66.2% in 2019, after peaking at 70.1% in 2009, according to Labor Department data.

The college enrollment rate for recent U.S. high-school graduates, ages 16 to 24, declined to 62% last year from 66.2% in 2019, just before the pandemic began, according to the latest Labor Department data. The rate topped out at 70.1% in 2009. The unemployment rate for teenage workers ages 16 to 19 fell to a 70-year low of 9.2% last month, fueling larger pay increases. Average hourly earnings for rank-and-file leisure and hospitality workers were up nearly 30%, seasonally adjusted, from April 2019 to April 2023, compared with roughly 20% during the same period for all workers. College enrollment has declined by about 15% in the past decade, according to federal data. The reasons include the high cost of university education, colleges closing and uneven returns from getting a degree, as well as the hot job market.

Takeaways by Macro Roundup® AI

  1. The college enrollment rate for recent U.S. high-school graduates ages 16 to 24 fell to 62% last year from 66.2% in 2019, after peaking at 70.1% in 2009, according to Labor Department data.
  2. The unemployment rate for teenage workers ages 16 to 19 fell to a 70-year low of 9.2% last month, fueling larger pay increases.
  3. Average hourly earnings for rank-and-file leisure and hospitality workers rose nearly 30%, seasonally adjusted, from April 2019 to April 2023, compared with roughly 20% for all workers, while college enrollment declined about 15% over the past decade.

AI Summary. In the US, death rates at age 39 for the cohort born in 1980 exceeded those of cohorts born in 1970 and 1960, and death rates at age 29 for the 1990 cohort were indistinguishable from the 1950 cohort's. In Japan, mortality at 29 fell over 80% across comparable cohorts versus under 8% in the US.

Nicholas Eberstadt American Enterprise Institute
Date Posted:
Is Database:
Database

Nicholas Eberstadt @AEI notes that, even prior to the Covid pandemic, the mortality rates of American adults born after 1980 exceeded previous cohorts.

Have younger American cohorts stopped seeing mortality improvements?

Core argument: By 2019, before COVID, the US Class of 1980's death rates at age 39 exceeded those of the Classes of 1970 and 1960, and the Class of 1990's death rates at age 29 were indistinguishable from the Class of 1950's.

The awful truth remains: By 2019—that is, even before COVID—the Class of 1980’s death rates at age 39 were higher than their counterparts’ from the Classes of 1970 and 1960. At age 29, the Class of 1990’s death rates were indistinguishable from those of the Class of 1950. In Japan, the Class of 1990’s mortality rate at age 29 was over 80 percent lower than those of their “grandparents” from the Class of 1930. In the US, the corresponding differential was less than 8 percent. If we look carefully at Figure 2, we can see unwelcome “crossovers”—where death rates in adulthood exceeded those of earlier cohorts—for every US cohort from the Class of 1950 onward in the years after the Berlin Wall fell (1990 onward). This is what prolonged stagnation—at times, even reversal—in national health progress looks like.

Takeaways by Macro Roundup® AI

  1. By 2019, before COVID, the US Class of 1980's death rates at age 39 exceeded those of the Classes of 1970 and 1960, and the Class of 1990's death rates at age 29 were indistinguishable from the Class of 1950's.
  2. Japan's Class of 1990 had a mortality rate at age 29 more than 80 percent below that of the Class of 1930, while the corresponding US differential was under 8 percent.
  3. Every US cohort from the Class of 1950 onward shows "crossovers" in which adult death rates exceeded those of earlier cohorts in the years after 1990, a pattern described as prolonged stagnation, at times reversal, in national health progress.

Related Articles:

  • Who Won the Cold War? Part I — The Federal Reserve puts American households' net worth at nearly $140tn, an average of over $400,000 per person and over $1m per household of 2.5 people. Estimates of median wealth per adult in current US dollars across 170 countries and places allow this record to be compared with America's Cold War treaty allies in Europe and Asia.
  • Who Won the Cold War? Part II — Americans born around 1990 had higher death rates in their 20s than peers in affluent allied countries, and the gap widened across young adulthood. By age 29, US mortality for that cohort was about 2x New Zealand's, 2.5x France's, 3x Japan's, and 4x Italy's or Spain's.

AI Summary. The pandemic-era buildup in household savings has been spent for most families, with the share of households reporting savings equal to three months of expenses down to just above pre-pandemic levels. Higher-income households are less likely to hold a sufficient emergency fund than before the pandemic.

Joseph Politano Apricitas Economics
Date Posted:

.@JosephPolitano estimates that Americans have only $750B of excess savings – or $650B adjusted for inflation. At the current pace of spending the excess savings will be exhausted by the end of 2023.

Have households spent the savings built up during the pandemic?

Core argument: The share of U.S. households reporting savings worth 3 months of expenses has dipped to just above pre-pandemic levels, and from most families' perspectives the excess savings accumulated during the pandemic are now entirely gone.

From most families’ perspectives, the excess savings accumulated during the pandemic are now entirely gone. The share of households saying they had savings worth 3 months of expenses dipped to just above pre-pandemic levels, with higher-income households being noticeably less likely to have a sufficient emergency fund than they were in 2019.

Takeaways by Macro Roundup® AI

  1. The share of U.S. households reporting savings worth 3 months of expenses has dipped to just above pre-pandemic levels, and from most families' perspectives the excess savings accumulated during the pandemic are now entirely gone.
  2. Higher-income U.S. households are noticeably less likely to hold a sufficient emergency fund than they were in 2019.

AI Summary. Migration to rich countries has reached record levels, with roughly 1.2m people moving to Britain in a year, net migration to Canada more than double its previous record, and net migration to Germany exceeding its 2015 peak. The foreign-born population of the rich world is rising faster than at any point in history.

Economist Staff The Economist
Date Posted:

Advanced economies are facing a wave of immigration, with the foreign-born population of major advanced economies running at the fastest pace in several decades. @TheEconomist

Is migration to rich countries reaching record levels?

Core argument: Britain received 1.2m immigrants last year, almost certainly the most ever, while nearly 1.4m people on net are expected to move to America this year, one-third more than before the pandemic.

Last year 1.2m people moved to Britain—almost certainly the most ever. Net migration (i.e., immigrants minus emigrants) to Australia is currently twice the rate before the covid-19 pandemic. Spain’s equivalent figure recently hit an all-time high. Nearly 1.4m people on net are expected to move to America this year, one-third more than before the pandemic. In 2022 net migration to Canada was more than double the previous record. In Germany it was even higher than during the “migration crisis” of 2015. The rich world as a whole is in the middle of an unprecedented migration boom. Its foreign-born population is rising faster than at any point in history.

Takeaways by Macro Roundup® AI

  1. Britain received 1.2m immigrants last year, almost certainly the most ever, while nearly 1.4m people on net are expected to move to America this year, one-third more than before the pandemic.
  2. Net migration to Canada in 2022 was more than double the previous record, Germany's exceeded levels seen during the 2015 "migration crisis," and Spain's recently hit an all-time high.
  3. The rich world's foreign-born population is rising faster than at any point in history, with net migration to Australia currently running at twice its pre-covid rate.

AI Summary. Data from the Cooperative Election Study show millennials and Gen Z have voted increasingly for Democratic House candidates over time, contrary to the adage that voters grow more conservative as they age. One political scientist notes such generational shifts translate slowly into vote share and can be offset by Republican gains elsewhere.

Thomas Edsall New York Times
Date Posted:

.@Edsall provides evidence that younger Americans have shifted to the political left; but given older voters’ higher turnout rates, he argues it may take over 20 years for the Democrats to net 3pp on their vote share.

Do younger voters become more conservative as they age?

Core argument: Cooperative Election Study data show millennials (born 1981–1996) and Gen Z (born 1997 and after) have become more Democratic over time, defying the adage that voters grow more conservative as they age.

Defying the adage among practitioners and scholars of politics that voters become more conservative as they age — millennials (those born between 1981 and 1996) and Gen Z (those born in 1997 and afterward) have in fact become decidedly more Democratic over time, according to data compiled by the Cooperative Election Study. The graphic below, which is derived from the study, shows a significant increase in voting for House Democratic candidates among millennials and Gen Z. Brian Schaffner, a political scientist at Tufts observed "Because the population is very big and turnout rates tend to be much higher for older adults, these trends can be slow to lead to significant gains. For example, in 2018, I applied a life expectancy model to our C.E.S. data and using that model I calculated that it would take more than 20 years for Democrats to gain just 3 percentage points on their vote share from differential mortality. Those gains could easily be offset by Republicans doing a bit better among other groups. For example, part of what has helped them in recent elections is that even while the share of the population who are non-college white people is in decline, it is still a large group that (1) has come to vote more Republican in the past decade and (2) has seen its turnout rate increase during the same period."

Takeaways by Macro Roundup® AI

  1. Cooperative Election Study data show millennials (born 1981–1996) and Gen Z (born 1997 and after) have become more Democratic over time, defying the adage that voters grow more conservative as they age.
  2. Tufts political scientist Brian Schaffner, applying a life expectancy model to 2018 Cooperative Election Study data, calculated that Democrats would take more than 20 years to gain 3 percentage points of vote share from differential mortality.
  3. Schaffner notes that Democratic gains could be offset by Republican strength among non-college white voters, a declining but still large group that has voted more Republican and seen its turnout rise over the past decade.

Related Articles:

  • Millennials are Shattering the Oldest Rule in Politics — British "silent generation" and baby boomers grew more conservative with age, and Gen X is following the same path, but millennials, born 1981-1996, diverged from that trajectory. The most likely explanation is a cohort effect, with US survey data showing millennials favoring greater redistribution from rich to poor than earlier generations.
  • What Happened In 2022 — Young voters aged 18–29 backed Democrats by 65%, and in heavily contested states turnout among those eligible in two consecutive elections rose 6%. Women voters, for whom abortion rights were often the top issue, favored Democrats in close races, while "MAGA" Republicans underperformed in contested Senate, gubernatorial, and congressional contests.

AI Summary. German start-up Proxima Fusion has raised €7mn to develop a stellarator, an alternative to the better-known tokamak device, for generating electricity by fusing atoms. A stellarator's twisted structure is harder to design and build but produces a more stable plasma that could let scientists sustain the fusion reaction longer.

Tom Wilson Financial Times
Date Posted:

The first startup to ever spin off of German’s Max Planck Institute is using an alternative approach to fusion power that offers potentially more stable plasma than tokamak devices.

The first startup to ever spin off of German’s Max Planck Institute is using an alternative approach to fusion power...

Can a twisted fusion device sustain reactions longer than conventional designs?

Core argument: Proxima Fusion, incorporated in January, raised €7mn in initial funding to develop a stellarator fusion machine, which it hopes can provide a future source of abundant, emissions-free power.

A German start-up has secured initial funding to develop a revolutionary fusion energy machine that it hopes can provide a future source of abundant, emissions-free power. Proxima Fusion, incorporated in January, aims to build a complex device known as a stellarator and is the latest company to join the emerging fusion industry’s effort to generate electricity by fusing atoms. Although the amount of funding is small at only €7mn, it is significant as Proxima is the first fusion company to spin out of Germany’s revered Max Planck Institute for Plasma Physics. Little known outside the world of plasma physics, a stellarator is an alternative to the better-known tokamak device. The twisted structure of the stellarator is more complicated to design and build than a traditional tokamak but produces a more stable plasma that could enable scientists to sustain the fusion reaction for longer.

Takeaways by Macro Roundup® AI

  1. Proxima Fusion, incorporated in January, raised €7mn in initial funding to develop a stellarator fusion machine, which it hopes can provide a future source of abundant, emissions-free power.
  2. Proxima Fusion is the first fusion company to spin out of Germany's Max Planck Institute for Plasma Physics.
  3. A stellarator's twisted structure is more complicated to design and build than the better-known tokamak but produces a more stable plasma that could enable scientists to sustain the fusion reaction for longer.

AI Summary. Pharmaceutical firms favor incremental drugs because they are easier to evaluate, even though novel drugs generate more learning that improves future screening decisions. The authors argue policymakers could strengthen incentives for novel research by making it easier for firms to capture indirect revenues from successor projects, which accrue even when the original project fails.

Alexander Frankel, Joshua Krieger, Danielle Li and Dmitris Papanikolaou National Bureau of Economic Research
Date Posted:

.@JoshuaLKrieger @Danielle__Li @DimitrisPapan20 examine R+D investment in drug development and find that research into novel therapies often leads to profitable opportunities in successor therapies that are closely related.

Why do drug companies favor incremental research over novel research?

Core argument: Pharmaceutical firms prefer investing in incremental drugs, which are easier to evaluate, even though novel drugs generate more learning.

If past research informs current work, then firms face a choice. Is it more valuable to learn from exploring new areas, or to exploit the information revealed by past work? In this paper, we show that despite novel drugs generating more learning, firms prefer to invest in incremental drugs, which are easier to evaluate. This presents a dynamic tension: while firms value the ability to discard incremental drugs that are unlikely to succeed, they are reluctant to make the types of exploratory R&D investments that improve future screening decisions.  our results suggest that policymakers could provide stronger incentives for firms to develop novel drugs by making it easier for them to appropriate indirect revenues from potential successors. These revenues, which can exist even when the focal project fails, disproportionately increase the overall returns to investing in newer, more uncertain research areas.

Takeaways by Macro Roundup® AI

  1. Pharmaceutical firms prefer investing in incremental drugs, which are easier to evaluate, even though novel drugs generate more learning.
  2. A dynamic tension arises in which firms value the option to discard incremental drugs unlikely to succeed but remain reluctant to make exploratory R&D investments that improve future screening decisions.
  3. Policymakers could strengthen incentives for novel drug development by making it easier for firms to appropriate indirect revenues from potential successors, which can exist even when the focal project fails.

Wednesday, May 31, 2023

AI Summary. The US dollar shows no long-term downward trend and sits above its long-term average in both nominal and real terms, though the reading depends on which dollar index is used.

Jens Nordvig Money: Inside and Out
Date Posted:

With the reemergence of the “de-dollarization” debate, @jnordvig looks at the market and concludes, “The dollar is not weak. The dollar is strong. Perhaps not in the narrative told. But in the actual market it is.”

Is the dollar actually in a long-term decline?

Core argument: The US dollar shows no long-term downward trend, and across dollar indexes it trades above its long-term average in both nominal and real terms.

There is no long-term trend of USD decline. It always depends on which dollar index you look at. But regardless of the index, you will find that the USD is above its long-term average, in nominal and real terms currency, despite all the Dollar Hatred.

Takeaways by Macro Roundup® AI

  1. The US dollar shows no long-term downward trend, and across dollar indexes it trades above its long-term average in both nominal and real terms.
  2. Assessments of dollar strength depend on which dollar index is used, though the conclusion that the currency sits above its long-run average holds regardless of the index chosen.

AI Summary. State Farm, California's largest homeowner insurer, stopped accepting applications for most new home insurance policies statewide, citing rapidly growing catastrophe exposure. Florida faced a similar retreat by national carriers after Hurricane Andrew and responded with a market of small insurers backed by a state-mandated company providing windstorm coverage to homeowners who cannot obtain private insurance.

Christopher Flavelle, Jill Cowan and Ivan Penn New York Times
Date Posted:

California’s largest homeowner insurance company, State Farm, will no longer sell coverage in the state citing “rapidly growing catastrophe exposure” due to wildfires.

Are insurers retreating from states with growing catastrophe exposure?

Core argument: State Farm, which insures more homeowners in California than any other company, will stop accepting applications for most new insurance policies statewide — not only in wildfire zones — citing "rapidly growing catastrophe exposure.".

The largest homeowner insurance company in California, State Farm, announced that it would stop selling coverage to homeowners. That’s not just in wildfire zones, but everywhere in the state. State Farm, which insures more homeowners in California than any other company, said it would stop accepting applications for most types of new insurance policies in the state because of “rapidly growing catastrophe exposure.” California’s woes resemble a slow-motion version of what Florida experienced after Hurricane Andrew devastated Miami in 1992. The losses bankrupted some insurers and caused most national carriers to pull out of the state. In response, Florida established a complicated system: a market based on small insurance companies, backed up by Citizens Property Insurance Corporation, a state-mandated company that would provide windstorm coverage for homeowners who couldn’t find private insurance.

Takeaways by Macro Roundup® AI

  1. State Farm, which insures more homeowners in California than any other company, will stop accepting applications for most new insurance policies statewide — not only in wildfire zones — citing "rapidly growing catastrophe exposure.".
  2. California's insurance retreat resembles a slow-motion version of Florida's experience after Hurricane Andrew devastated Miami in 1992, when losses bankrupted some insurers and drove most national carriers out of the state.

AI Summary. Entrepreneurship is lower in countries with older populations: a one-standard-deviation rise in median age, about 3.5 years, is associated with a 2.5 percentage point decline in the share of adults starting businesses, against a global entrepreneurship rate near 6.1%. Japan once led patent output in 35 major global industries but now leads in three.

Economist Staff The Economist
Date Posted:

Advanced economies currently have three 20–64-year-olds for everyone over 65. In 27 years, that ratio will be 2:1. @TheEconomist suggests aging societies will also see a decline in innovation.

Do aging populations reduce entrepreneurship and innovation?

Core argument: James Liang finds that a one standard deviation rise in a country's median age, about 3.5 years, is associated with a 2.5 percentage point decline in the entrepreneurship rate, against a global rate of roughly 6.1% in 2010.

James Liang, a Chinese economist and demographer, notes that entrepreneurship is markedly lower in older countries: an increase of one standard deviation in the median age in a country, equivalent to about 3.5 years, leads to a decrease of 2.5 percentage points in the entrepreneurship rate (the proportion of adults who start their own business). That is a huge effect, considering the global entrepreneurship rate was around 6.1% in 2010. As recently as 2010, Japanese inventors were the leading producers of patents in 35 big global industries according to the World Intellectual Property Organisation, an agency of the un. As of 2021, Japan is the leader in just three. The country has fallen behind not only China, which now occupies most of the top spots, but America too.

Takeaways by Macro Roundup® AI

  1. James Liang finds that a one standard deviation rise in a country's median age, about 3.5 years, is associated with a 2.5 percentage point decline in the entrepreneurship rate, against a global rate of roughly 6.1% in 2010.
  2. Japanese inventors led patent production in 35 big global industries in 2010 but in just three as of 2021, according to the World Intellectual Property Organisation.
  3. Japan has fallen behind both China, which occupies most of the top spots in patent production by industry, and America.

AI Summary. Building a billion-user platform now requires tens of billions in investment and decades before losses end and returns arrive, a barrier few firms can clear. Apple, Microsoft, Alphabet, and Amazon together account for 21% of the S&P index, with Google Cloud's roughly $35bn cost aided by its existing consumer and enterprise ecosystem.

Matthew Ball MatthewBall.co
Date Posted:

According to @ballmatthew’s estimate, Meta has lost at least $49B on its metaverse effort, Reality Labs, in an attempt to establish leadership in AR/VR. This investment exceeds the scale of the biggest efforts of Apple/Amazon/Google to date.

What does it take to build a billion-user platform?

Core argument: Apple, Microsoft, Alphabet, and Amazon together account for 21% of the S&P, with Apple and Microsoft alone large enough to constitute the index's second-largest sector behind the rest of big tech and ahead of energy and healthcare.

More than ever, our economy runs on ecosystems. Not just broad partnerships, large commercial deals, or expansive networks, but ecosystems. It’s to our collective interest that there’s maximum competition at the foundational platform layer and every application and service layer, too. But the cost of competition is now in the tens of billions, if not more. In a weird way, Google Cloud is cheap at $35B, but most can’t spend that much, let alone wait fifteen years for losses to end and another decade or more to generate a net return. In fact, it’s likely Google couldn’t have invested as heavily were it not for near-zero interest rates over the past decade. And that the investment wouldn’t have worked at all were it not for Google’s own ecosystem, including the consumer-facing (and Android-integrated) Google Photos, Gmail, and Drive, as well as its enterprise offerings such as Workspace. The prohibitive cost of entry has led to phenomenal profits. Apple, Microsoft, Alphabet, and Amazon are now 21% of the S&P (Apple and Microsoft are so large that alone, they would be the second largest sector of the S&P, behind the rest of big tech, and ahead of energy and healthcare).

Takeaways by Macro Roundup® AI

  1. Apple, Microsoft, Alphabet, and Amazon together account for 21% of the S&P, with Apple and Microsoft alone large enough to constitute the index's second-largest sector behind the rest of big tech and ahead of energy and healthcare.
  2. Google Cloud represents roughly $35B, a sum most firms cannot spend, let alone sustain through fifteen years of losses and another decade or more before generating a net return.
  3. Google likely could not have invested so heavily without near-zero interest rates over the past decade, and the investment would not have worked absent Google's own ecosystem of Google Photos, Gmail, Drive, and Workspace.

AI Summary. Census survey data show 45.1% of recent US high school graduates enrolled in four-year colleges in 2022, above the 44.4% rate in 2019 and the second-highest level in the series. The overall enrollment decline reflects falling two-year college enrollment, down about 12 percentage points from its 2012 peak.

Jeremy Horpedahl Economist Writing Every Day
Date Posted:

The decline in college attendance by recent high school graduates is entirely driven by a decline in students choosing to attend 2yr schools. In 2022, 45.1% of high school graduates enrolled in a 4yr school above the 2019 level of 44.4%. @jmhorp.

Is falling college enrollment driven by two-year schools, not four-year?

Core argument: 45.1% of recent U.S. high school graduates were enrolled in four-year colleges and universities in 2022, above 2019's 44.4% and the second-highest level in the CPS data, behind only 2016's 46%.

Are young people really skipping traditional four-year colleges for other opportunities? The answer is a big fat No. And we can even use the same data the WSJ used (from the CPS) to prove it, but slice it more finely. The percent of recent high school graduates enrolled in 4-year colleges and universities in 2022 was 45.1%. That’s slightly higher than 2019 (44.4%) and is, in fact, the second highest level ever in this data, with only 2016 being higher at 46%. So what gives? The decline that the WSJ is reporting is entirely driven by a decline in enrollment at 2-year colleges, though you would never get a hint of that in the article. You might even think it was the opposite: perhaps young people are forgoing 4-year colleges in favor of trade schools! Nope. Here’s the data. Notice that this is in fact the exact same data as the WSJ is using. If you add the two figures for 2022, it’s the same 62% in the WSJ article. But 4-year college enrollment is up slightly since 2019, while 2-year enrollment is down about 5 percentage points. Also, it doesn’t really seem like a pandemic-induced change: this is a long-run decline in 2-year college enrollment of about 12 percentage points since the peak in 2012.

Takeaways by Macro Roundup® AI

  1. 45.1% of recent U.S. high school graduates were enrolled in four-year colleges and universities in 2022, above 2019's 44.4% and the second-highest level in the CPS data, behind only 2016's 46%.
  2. The overall enrollment decline the Wall Street Journal reported is driven by two-year colleges, whose enrollment is down about 5 percentage points since 2019, while four-year enrollment rose slightly.
  3. Two-year college enrollment among recent high school graduates has fallen about 12 percentage points since its 2012 peak, a long-run decline rather than a pandemic-induced change.

Related Articles:

  • More High-School Grads Forgo College in Hot Labor Market — The college enrollment rate for recent U.S. high-school graduates ages 16–24 fell to 62% from 66.2% before the pandemic, after peaking at 70.1%, according to Labor Department data. Teen unemployment reached a 70-year low of 9.2%, and hourly earnings for rank-and-file leisure and hospitality workers rose nearly 30% over four years versus roughly 20% for all workers.

AI Summary. US households have been large buyers of US Treasury securities, while foreign demand has been more limited because of higher currency-hedging costs, with foreigners instead adding $3tn of equities during the pandemic. With a 5% budget deficit, the Federal Reserve shrinking its balance sheet, and the Treasury rebuilding its cash balance, attention will turn to who buys US government debt.

Torsten Sløk Apollo
Date Posted:

Noting American households have been the largest buyer of US Treasuries during the hiking cycle; Torsten Sløk @apolloglobal argues that deficits of 5% means the market “will soon begin to focus on who will be buyers of US government debt.”

Who will buy US government debt as supply grows?

Core argument: US households have been large buyers of US Treasuries as the Federal Reserve has raised rates, while foreign demand for Treasuries has been more limited because of higher hedging costs.

As the Fed has been raising rates, US households have been big buyers of US Treasuries. The appetite for Treasuries from foreigners has been more limited because of higher hedging costs. Foreigners have instead increased their holdings of equities by $3 trillion during the pandemic.  With a 5% budget deficit combined with QT and the Treasury’s need to replenish cash in the Treasury General Account, markets will soon begin to focus on who will be buyers of US government debt.

Takeaways by Macro Roundup® AI

  1. US households have been large buyers of US Treasuries as the Federal Reserve has raised rates, while foreign demand for Treasuries has been more limited because of higher hedging costs.
  2. Foreign investors increased their holdings of US equities by $3 trillion during the pandemic instead of adding Treasuries.
  3. With a 5% budget deficit, quantitative tightening, and the Treasury's need to replenish cash in the Treasury General Account, markets will soon focus on who will buy US government debt.

AI Summary. Major crime on New York's subways is on track to run 13.4% below 2019 levels, but ridership remains down about a third, so crime per rider is much higher this year than from 2006 through 2019. Property crime has not risen; violent incidents account for the increase.

Justin Fox Bloomberg
Date Posted:

.@foxjust notes that adjusted for subway ridership major crimes are running at 2005 levels giving up almost two decades of progress.

Does adjusting subway crime for ridership change the picture?

Core argument: Major New York subway crime is on track to run 13.4% below 2019 levels this year, lower than in all but a few years of the past quarter century.

Major subway crime is on track to be 13.4% lower this year than in 2019 and lower than in all but a few years during the past quarter century. Then again, subway ridership is still down about a third from 2019 levels. Adjust for that, as one should, and the picture changes. Measured this way, subway crime rose 86% in the first year of the pandemic. It has fallen since but is still running much higher this year than from 2006 through 2019. It’s not exactly what you’d call out of control, though, just settling back toward normal after a once-in-a-century shock. My less-than-scientific take is that there are more troubled people on New York’s subways than before the pandemic, and less-crowded stations and cars have made it easier for them to make trouble. For-profit subway crime hasn’t risen; senseless acting-out has.

Takeaways by Macro Roundup® AI

  1. Major New York subway crime is on track to run 13.4% below 2019 levels this year, lower than in all but a few years of the past quarter century.
  2. Adjusted for ridership, which remains down about a third from 2019, New York subway crime rose 86% in the pandemic's first year and, though falling since, still runs much higher this year than from 2006 through 2019.
  3. For-profit subway crime has not risen while senseless acting-out has, which the author attributes, unscientifically, to more troubled people on the subways and less-crowded stations and cars that make it easier to cause trouble.