Edward Conard

Top Ten New York Times Bestselling Author

  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…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
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “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
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “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 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


Thursday, June 22, 2023

AI Summary. The high-tech sector remains more dynamic than the rest of the economy, but the gap has faded as firm entry rates declined in both. The national firm entry rate peaked at 13.5% and the high-tech rate at 17.9%, and the gap between them narrowed from 5–6 percentage points to under one.

Connor O'Brian Economic Innovation Group
Date Posted:

.@cojobrien argues that the sectors of the economy with a high share of STEM workers appear to have converged with the rest of the economy in terms of their startup rate.

Is the high-tech sector becoming less dynamic like the broader economy?

Core argument: The gap between U.S. High Tech and national firm entry rates fell below one percentage point in 2018, an all-time low, down from 5 to 6 percentage points in the 1990s.

Although the High Tech sector still remains more dynamic than the non-High Tech sector of the economy, the gap between the two has gradually faded. Beginning with firm entry rate, we see a long-running decline in both the High Tech sector and the broader economy. The national firm entry rate, hitting a series high of 13.5 percent in 1984, fell below 10% during the Great Recession and has yet to recover. The High Tech sector saw much higher startup rates during the 1980s, peaking at 17.9%, also in 1984. High Tech industries saw another huge surge in new startups in the 1990s, coinciding with the dot-com boom, but their startup rates have yet to recover. In 2018, the gap between the national and High Tech startup rates fell below one percentage point to an all-time low, down from 5 to 6percentage points in the 1990s. The rate of new firm creation in the High Tech sector, once far ahead of other sectors, now looks similar to that of the increasingly sclerotic national economy.

Takeaways by Macro Roundup® AI

  1. The gap between U.S. High Tech and national firm entry rates fell below one percentage point in 2018, an all-time low, down from 5 to 6 percentage points in the 1990s.
  2. The national firm entry rate peaked at a series high of 13.5 percent in 1984, fell below 10 percent during the Great Recession, and has yet to recover.
  3. High Tech startup rates peaked at 17.9 percent in 1984 and surged again in the 1990s alongside the dot-com boom, but have yet to recover.

AI Summary. College graduates sort into professional, non-routine occupations where wages rise much more with job tenure, and the author estimates this occupational sorting explains at least half of the life-cycle growth in the college wage premium. That premium is estimated at 22% at age 26, 49% at age 40, and 56% at age 60.

David Deming National Bureau of Economic Research
Date Posted:

.@ProfDavidDeming finds that the college wage premium is driven by occupational sorting: workers with college degrees enter jobs with higher returns to tenure, suggesting the importance of on-the-job training.

Why do wages grow faster for college graduates over their careers?

Core argument: The college wage premium rises from 22% at age 26 to 49% at age 40 and 56% at age 60, and occupational sorting is estimated to explain at least half of this life cycle growth.

Shortly after graduating, workers with college degrees obtain jobs in professional, non-routine occupations with much greater scope for on-the-job learning and wage growth. Less educated workers hold jobs in similar occupations before and after completing schooling. Occupational sorting causes relative wages to grow especially rapidly for college graduates in the initial phase of their careers. However, after a few years, educated workers are less likely to switch jobs, and nearly 90% of life cycle wage growth occurs within rather than between jobs. Wages increase with job tenure much more in professional, nonroutine occupations, which are disproportionately held by college graduates. I estimate that occupational sorting explains at least half of the life cycle growth in the college wage premium. The college wage premium increases from 22% at age 26 to 49% at age 40 and 56% at age 60.

Takeaways by Macro Roundup® AI

  1. The college wage premium rises from 22% at age 26 to 49% at age 40 and 56% at age 60, and occupational sorting is estimated to explain at least half of this life cycle growth.
  2. College graduates move shortly after graduating into professional, non-routine occupations with much greater scope for on-the-job learning and wage growth, while less educated workers hold jobs in similar occupations before and after completing schooling.
  3. Nearly 90% of life cycle wage growth occurs within rather than between jobs, and wages increase with job tenure much more in professional, non-routine occupations disproportionately held by college graduates.

Related Articles:

  • Why Do Wages Grow Faster For Educated Workers? — Most of the return to education reflects workers learning more over time rather than the initial quality their credentials signal, since signaling may secure a better first offer but longer-run wages reflect what has been learned. Signaling models of education fit awkwardly in dynamic rather than static settings.

AI Summary. Most of the return to education reflects workers learning more over time rather than the initial quality their credentials signal, since signaling may secure a better first offer but longer-run wages reflect what has been learned. Signaling models of education fit awkwardly in dynamic rather than static settings.

Tyler Cowen Marginal Revolution
Date Posted:

.@tylercowen thinks @ProfDavidDeming new paper implies that wages are driven by training not quality, suggesting the signaling theory of education is overstated.

.@tylercowen thinks @ProfDavidDeming new paper implies that wages are driven by training not quality, suggesting the...

Do wages grow faster for educated workers because they learn more?

Core argument: Cowen argues that most of the return to education comes from learning more over time rather than from signaling an initial level of quality, since long-run wages reflect what workers have learned.

You will note how this relates to the signaling vs. human capital debates over education. Signaling your quality may put you in a position to learn more over time, as your initial offer likely will be better if you come out of Harvard. But over the longer haul, the wages you earn are the result of what you have learned, not just your initial level of quality. So, most of the return to education is that you learn more over time, and thus most of the return is learning-related rather than initial quality-related. Overall, signaling models behave rather awkwardly in dynamic rather than purely static settings.

Takeaways by Macro Roundup® AI

  1. Cowen argues that most of the return to education comes from learning more over time rather than from signaling an initial level of quality, since long-run wages reflect what workers have learned.
  2. Signaling quality, such as by graduating from Harvard, likely yields a better initial offer that can place a worker in a position to learn more over time, according to Cowen.
  3. Cowen contends that signaling models of education behave awkwardly in dynamic settings rather than purely static ones.

Related Articles:

  • Why Do Wages Grow Faster For Educated Workers? — College graduates sort into professional, non-routine occupations where wages rise much more with job tenure, and the author estimates this occupational sorting explains at least half of the life-cycle growth in the college wage premium. That premium is estimated at 22% at age 26, 49% at age 40, and 56% at age 60.

AI Summary. A decomposition of the change in growth rates between 1979–1999 and 1999–2019 finds that Germany's annual GDP per capita growth fell by 0.67 percentage points, with slower productivity growth subtracting 1.32 points and education 0.43 points. Rising hours worked and labor force participation added 0.5 and 1.38 points, offsetting much of the decline.

Dietrich Vollrath Economic Growth Blog
Date Posted:

.@DietzVollrath notes that the European productivity slowdown could be in part explained by higher labor force participation which drew “relatively less skilled (or possibly less experienced?) workforce that lowered measured productivity growth.”

What drives Europe's slowdown in GDP per capita growth?

Core argument: Germany's annual growth rate of GDP per capita fell by 0.67 percentage points from 1979–1999 to 1999–2019, the slowdown the decomposition seeks to explain.

The entries in the table are the change in the growth rate of each element from 1979-1999 to 1999-2019. In Germany (DEU), for example, the annual growth rate of GDP per capita fell by -0.67 percentage points from the earlier period to the later period. That is the slowdown we're trying to understand. The remaining columns are the breakdown of that drop in the growth rate of GDP per capita into different parts. For example, in Germany the fall in the growth rate of productivity subtracted 1.32 percentage points from the growth rate of GDP per capita, and changes in education subtracted 0.43 percentage points. In contrast, changes in hours worked added 0.5 percentage points to the growth rate and increases in labor force participation added 1.38 percentage points. Those latter things helped offset all the other negatives, making the slowdown not as bad as it could have been.

Takeaways by Macro Roundup® AI

  1. Germany's annual growth rate of GDP per capita fell by 0.67 percentage points from 1979–1999 to 1999–2019, the slowdown the decomposition seeks to explain.
  2. The fall in productivity growth subtracted 1.32 percentage points from Germany's GDP per capita growth rate, and changes in education subtracted 0.43 percentage points.
  3. Increases in labor force participation added 1.38 percentage points and changes in hours worked added 0.5 percentage points to Germany's GDP per capita growth rate, partly offsetting the other negatives.

Related Articles:

  • Fully Grown – European Vacation! and — Europe's growth slowdown reflects a widespread drop in productivity growth rather than changes in physical capital accumulation, with human capital growth also mattering but varying by country. The productivity decline is larger than in the US: in countries such as the UK and France, productivity growth fell from about 2% to near zero or negative.
  • The Slowdown in Europe via Human Capital — Europe's slowdown in GDP per capita growth reflects weaker productivity growth and aging, partly offset by rising labor force participation and hours worked. Gross changes in these growth components between 1979–1999 and 1999–2019 were large but largely offsetting, leaving a net decline of roughly 1 percentage point for most of Europe.

AI Summary. China's Ministry of Finance reported governments across the country held 37tn yuan ($5.1tn) in on-book debt, with no official tally of hidden debt or who owes it. The International Monetary Fund estimated local government financing vehicles held 66tn yuan ($9.2tn) of hidden debt at end-2022, up from 40tn yuan in 2019.

Bloomberg Staff Bloomberg
Date Posted:

The Chinese Ministry of Finance is launching an effort to track gross government debt in China. In February the IMF estimated there was 66T yuan ($9.2T) of local government hidden debt at the end of 2022, up from 40T yuan in 2019. @markets

How much hidden local government debt does China have?

Core argument: The IMF estimated in February that China's local government financing vehicles held 66 trillion yuan ($9.2T) of hidden debt at the end of 2022, up from 40 trillion yuan in 2019, as local governments ramped up off-book borrowing during the pandemic.

Ministry of Finance data showed governments across China had 37 trillion yuan ($5.1T) in on-book debt outstanding at the end of April, but there is no official total for how much hidden debt there is and who owes it. The International Monetary Fund estimated in February that nationwide there was 66T yuan [$9.2T] of local government financing vehicles (LGFV) hidden debt at the end of 2022, up from 40Tyuan in 2019, with that quick increase underscoring how local governments ramped up off-book borrowing and spending during the pandemic to support their local economies. Local officials will be pressed to come clean about their so-called hidden debt as national leaders attempt to get a fuller picture of liabilities across all levels of government, the people said, asking not to be named discussing private information. The campaign is being led by the Ministry of Finance, one of the people said.

Takeaways by Macro Roundup® AI

  1. The IMF estimated in February that China's local government financing vehicles held 66 trillion yuan ($9.2T) of hidden debt at the end of 2022, up from 40 trillion yuan in 2019, as local governments ramped up off-book borrowing during the pandemic.
  2. Ministry of Finance data showed governments across China had 37 trillion yuan ($5.1T) in on-book debt outstanding at the end of April, with no official total for how much hidden debt exists or who owes it.
  3. China's Ministry of Finance is leading a nationwide campaign pressing local officials to disclose hidden debt as national leaders seek a fuller picture of liabilities across all levels of government.

AI Summary. Indian equities rose $440bn to more than $3.5tn in value, making India the world's fifth-largest stock market after the US, China, Japan, and Hong Kong, ahead of France and the UK. Foreign portfolio investors added a net $9.4bn to Indian shares in the quarter, with analysts attributing the bulk of this year's inflows to passive index buying.

Hudson Lockett and Chloe Cornish Financial Times
Date Posted:

India’s stock market has gained 14% in the past three months driven by institutional foreign investors. Indian equities account for 3.3% of global stock market total capitalization.

Are foreign inflows lifting Indian equities into the world's fifth-largest market?

Core argument: Indian equities rose $440bn in value to more than $3.5tn, lifting India above France and the UK to regain the status of the world's fifth-largest stock market after the US, China, Japan, and Hong Kong.

The $440bn increase in the value of Indian equities to more than $3.5tn means India has climbed well above both France and the UK to regain the status of the world’s fifth-largest stock market after the US, China, Japan, and Hong Kong. The Sensex index, which tracks India’s 30 biggest companies by market capitalisation and is weighted towards financial stocks, has been climbing steadily for the past three months and hit a record 63,588 points on Wednesday, spurred by buying from foreign pension and insurance funds. Indian shares have received $9.4bn of net inflows from foreign portfolio investment in the second quarter, according to Bloomberg data. The Kotak Institutional Equities analysts said “the bulk” of the net inflow this year had been passive, meaning fund managers were buying a whole index rather than choosing specific stocks.

Takeaways by Macro Roundup® AI

  1. Indian equities rose $440bn in value to more than $3.5tn, lifting India above France and the UK to regain the status of the world's fifth-largest stock market after the US, China, Japan, and Hong Kong.
  2. The Sensex, which tracks India's 30 biggest companies by market capitalisation and is weighted towards financial stocks, hit a record 63,588 points after climbing steadily for three months, spurred by buying from foreign pension and insurance funds.
  3. Indian shares drew $9.4bn of net foreign portfolio inflows in the second quarter, according to Bloomberg data, and Kotak Institutional Equities analysts said "the bulk" of this year's net inflow had been passive, with managers buying whole indices rather than specific stocks.

Related Articles:

  • India Equity: An Unsung Long-Term Performance Story — Cumulative total returns for Indian equities have been comparable to or better than US equities over roughly three decades, while Chinese equities have lagged both, according to index data for the MSCI India, S&P 500, and MSCI China indexes.
  • India Is Getting an Eye-Wateringly Big Transport Upgrade — India is spending 1.7% of GDP on transport infrastructure this year, roughly twice the level in the United States and most European countries. The stated aim is to cut domestic logistics costs from about 14% of GDP to 8% by 2030.

AI Summary. A researcher argues that "endocrine disrupting" chemicals — including pesticides, bisphenols that harden plastic, and phthalates that soften it — interfere with the body's natural hormones and may be lowering sperm counts and affecting the reproductive development of unborn children. Traces of these chemicals have been found in breast milk, placental tissue, urine, blood, and seminal fluid.

Sarah Neville Financial Times
Date Posted:

Shanna Swan argues that falling sperm counts around the world are likely driven the proliferation of “endocrine disrupting” chemicals which are used in pesticides and plastic manufacturing.

Shanna Swan argues that falling sperm counts around the world are likely driven the proliferation of “endocrine disrupting”...

Are hormone-disrupting chemicals in everyday products lowering sperm counts?

Core argument: A scientist who has spent more than two decades studying endocrine-disrupting chemicals (EDCs) links falling global sperm counts to compounds that interfere with the body's natural hormones, including pesticides, bisphenols and phthalates.

For more than two decades she has devoted her life to studying the effects of “endocrine disrupting” chemicals (EDCs), which can interfere with the body’s natural hormones. These include pesticides, bisphenols, which harden plastic so it can be used in food storage containers and baby bottles, and phthalates, which soften plastic for use in packaging and products such as garden hoses. In recent years, traces of EDCs have been found in breast milk, placental tissue, urine, blood, and seminal fluid. The innocuous products in your kitchen cupboard, bathroom cabinet or garden shed may be lowering sperm counts. They could also affect the reproductive systems of your unborn children. The implications of EDCs for human health don’t stop there: they can disrupt thyroid function, trigger cancer and obesity.

Takeaways by Macro Roundup® AI

  1. A scientist who has spent more than two decades studying endocrine-disrupting chemicals (EDCs) links falling global sperm counts to compounds that interfere with the body's natural hormones, including pesticides, bisphenols and phthalates.
  2. Traces of EDCs have been found in breast milk, placental tissue, urine, blood and seminal fluid, and common kitchen, bathroom and garden products may be lowering sperm counts and affecting the reproductive systems of unborn children.
  3. Beyond reproduction, EDCs can disrupt thyroid function and trigger cancer and obesity; bisphenols harden plastic for food containers and baby bottles, while phthalates soften it for packaging and garden hoses.

Friday, June 23, 2023

AI Summary. The share of U.S. adults who are retired rose above its predicted trend during the COVID-19 pandemic, with excess retirees peaking at an estimated 2.95m and standing at roughly 2.4m thereafter. The authors suggest these excess retirements may be contributing to continued labor market tightness and a low unemployment rate.

Miguel Faria e Castro and Samuel Jordan-Wood Federal Reserve Bank of St. Louis
Date Posted:

.@mfariacastro @stlouisfed finds that, despite a decline in excess retirements that was driven by the market decline in 2022, there are still 2.4mm excess retirements relative to the pre-pandemic trend.

Are excess retirements keeping the labor market tight?

Core argument: Excess U.S. retirees peaked at an estimated 2.95 million in December 2022 and stood at roughly 2.4 million as of April 2023, still well above the predicted trend.

The actual share of retirements roughly tracked the predicted share from January 2000 through February 2020, when the actual share was 18.1%. In the first three months of the pandemic, however, actual share quickly increased to 18.6% versus a predicted share of 18.2%, implying just over one million excess retirees in May 2020. The gap between actual and predicted shares of retirements continued to grow throughout the COVID-19 pandemic and peaked in December 2022, implying an estimated 2.95 million excess retirees in that month. Starting in 2023, the model line begins to flatten out. As of April 2023, we estimate that there were approximately 2.4 million excess retirees in the U.S. Excess retirements are still well above our predicted trend, which may be contributing to a continued tightness in the labor market and low unemployment rate since the recovery from the pandemic recession.

Takeaways by Macro Roundup® AI

  1. Excess U.S. retirees peaked at an estimated 2.95 million in December 2022 and stood at roughly 2.4 million as of April 2023, still well above the predicted trend.
  2. The actual share of retirements roughly tracked the predicted share from January 2000 through February 2020, when it was 18.1%, then rose to 18.6% versus a predicted 18.2% in the pandemic's first three months, implying just over 1 million excess retirees in May 2020.
  3. Excess retirements above the predicted trend may be contributing to continued labor market tightness and a low unemployment rate since the recovery from the pandemic recession.

Related Articles:

  • Pandemic Labor Force Participation and Net Worth Fluctuations — The shortfall in U.S. labor force participation relative to its pre-pandemic peak is attributed mostly to a decline in participation among workers older than 55. The authors estimate that wealth effects from rising net worth can explain between 20% and 36% of the 3.3m excess retirements over the full period studied.
  • Retirements, Net Worth, and the Fall and Rise of Labor Force Participation — Households aged 55–74 lost an average of over $100,000 in net worth amid falling asset returns, reversing part of their earlier gains, reflecting their large holdings of stocks and bonds. The authors estimate this decline in asset values may have drawn an extra 170,000 people aged 51–65 back into the labor force.

AI Summary. The US and India announced defense and technology agreements including an Indian purchase of armed MQ-9B SeaGuardian drones from General Atomics, a $2.75bn Micron semiconductor assembly and test facility in India with $800mn from the company, and General Electric co-producing fighter jet engines in India.

Demetri Sevastopulo and John Reed Financial Times
Date Posted:

India and the US announced a series of agreements that would significantly deepen the relationship between the Indian and American defense industrial bases, including co-production of GE jet engines in India.

India and the US announced a series of agreements that would significantly deepen the relationship between the Indian and...

Are the US and India deepening defense and technology ties?

Core argument: Micron will open a $2.75bn semiconductor assembly and test facility in India, including $800mn of investment from the US company, under agreements announced during Narendra Modi's visit.

Ahead of the visit, US officials said India would commit to buying armed MQ-9B SeaGuardian drones, which are produced by US defence contractor General Atomics. The leaders will also announce that memory chipmaker Micron will open a $2.75bn semiconductor assembly and test facility in India, which will include $800mn in investment from the US company. Biden and Modi also signed an agreement that will result in General Electric co-producing fighter jet engines in India. The agreements, which also include efforts to boost co-operation in space, mark a big push by Washington to draw New Delhi into its orbit as part of a strategy to work with allies and partners to counter China.

Takeaways by Macro Roundup® AI

  1. Micron will open a $2.75bn semiconductor assembly and test facility in India, including $800mn of investment from the US company, under agreements announced during Narendra Modi's visit.
  2. India will commit to buying armed MQ-9B SeaGuardian drones produced by General Atomics, and Biden and Modi signed an agreement for General Electric to co-produce fighter jet engines in India.
  3. The US-India agreements, which also cover space co-operation, mark a push by Washington to draw New Delhi into its orbit as part of a strategy of working with allies and partners to counter China.

Related Articles:

  • Indian Stock Market Surges as Foreign Funds Buy Into National Growth Story — Indian equities rose $440bn to more than $3.5tn in value, making India the world's fifth-largest stock market after the US, China, Japan, and Hong Kong, ahead of France and the UK. Foreign portfolio investors added a net $9.4bn to Indian shares in the quarter, with analysts attributing the bulk of this year's inflows to passive index buying.

AI Summary. Projections see the US share of global equity market value falling from 42% to 35% by 2030, 27% by 2050 and 22% by 2075, while India's share rises from about 2.5-3% to 8% by 2050 and 12% by 2075. China's share is projected to rise from 10% to 15% by 2050 before easing to about 13.5% by 2075.

Kevin Daly and Tadas Gedminas Goldman Sachs
Date Posted:

Goldman Sachs forecast the US’s relative share of global equity market cap to decline to 27% by 2050 from 42% last year. They expect China’s share to grow from 5% to 15% over that time period. They expect India’s share to increase from 2% to 8%.

Will the US share of global equity market cap decline?

Core argument: The US share of global equity market cap is projected to fall from 42% in 2022 to 35% in 2030, 27% in 2050, and 22% in 2075.

Looking at this at a more granular level, we expect the relative share of the US in global equity market cap to decline from 42% in 2022 to 35% in 2030, 27% in 2050, and 22% in 2075. By contrast, we expect China’s share in global market cap to rise from 10% to 15% by 2050, but decline to around 13.5% by 2075. We see the biggest scope for global market cap share increase in India, where our projections imply that India’s global equity market cap share will rise from around 2.5-3% in 2022 to 8% in 2050, and 12% in 2075. Likewise, we project the rest of EMs' share to rise, from 13.5% in 2022 to 17% in 2030, to 24% in 2050, and to 30% in 2075.

Takeaways by Macro Roundup® AI

  1. The US share of global equity market cap is projected to fall from 42% in 2022 to 35% in 2030, 27% in 2050, and 22% in 2075.
  2. India's share of global equity market cap is projected to rise from roughly 2.5–3% in 2022 to 8% in 2050 and 12% in 2075, the biggest scope for increase among markets.
  3. China's share of global market cap is projected to rise from 10% to 15% by 2050 before declining to about 13.5% by 2075, while the rest of emerging markets climb from 13.5% in 2022 to 30% in 2075.

AI Summary. Model estimates for the United States, Canada, and the Euro Area place the natural rate of interest within a few tenths of a percentage point of pre-pandemic estimates, with the main longer-term consequence of the pandemic a reduction in the natural rate of output. The authors find no evidence that the era of historically low natural rates has ended.

Kathryn Holston, Thomas Laubach, and John Williams Federal Reserve Bank of New York
Date Posted:

.@NewYorkFed suggests we will return to a low inflation environment, noting that their estimate of the natural interest rate in the US, Canada and Euro Area in 2022 is close to their 2019 estimate.

Has the pandemic ended the era of historically low natural interest rates?

Core argument: Estimates of the natural rate of interest for the United States, Canada, and the Euro Area in 2022 sit within a few tenths of a percentage point of the corresponding 2019 estimates, based on a modified model estimated through 2022:Q4.

Figure 5 compares the estimates for the United States, Canada, and the Euro Area, respectively, from the modified model estimated through 2022:Q4 with estimates from the model with parameter values fixed their 2019:Q4 values. In all three economies, the estimates of the natural rate of interest in 2022 are within a few tenths of a percentage point of the corresponding estimates in 2019. According to the model estimates, the main longer-term consequence from the pandemic period is a reduction in the natural rate of output, but the imprint on the natural rate of interest appears to be relatively modest. We do not find evidence that the era of historically low estimated natural rates of interest has come to an end.

Takeaways by Macro Roundup® AI

  1. Estimates of the natural rate of interest for the United States, Canada, and the Euro Area in 2022 sit within a few tenths of a percentage point of the corresponding 2019 estimates, based on a modified model estimated through 2022:Q4.
  2. The model estimates identify a reduction in the natural rate of output as the main longer-term consequence of the pandemic period, with a relatively modest imprint on the natural rate of interest.
  3. The authors find no evidence that the era of historically low estimated natural rates of interest has come to an end.

Related Articles:

  • What Have We Learned About the Neutral Rate? — Analysts estimate that if inflation is brought down without a recession, the Federal Reserve's policy rate will stabilize nearer 3–3.25% than the 2.5% longer-run median projection of Federal Reserve officials. Projected shifts in government debt and demographics imply a roughly 0.5 percentage point net increase in the neutral rate over the next decade.

AI Summary. U.S. Census Bureau estimates indicate Black residents are continuing to leave urban centers in the North and West, including Chicago, Detroit, Cleveland and Oakland, adding to decades of decline. The share of the Black population living in metropolitan-area suburbs rose to 44% from 33% over two decades, while the share in central cities fell to 47% from 53%.

Jimmy Vielkind, Jon Kamp, Paul Overberg and Jack Gillum Wall Street Journal
Date Posted:

The Great Migration is reversing as Black American are increasingly migrating from the Midwest and Northeast to the South. @WSJ

Are Black Americans moving out of northern and western cities?

Core argument: The share of the U.S. Black population living in metropolitan-area suburbs rose to 44% by 2020 from 33% two decades earlier, while the share in central cities fell to 47% from 53%.

The latest U.S. Census Bureau estimates, released Thursday, indicate Black residents are continuing to leave many urban centers in the North and elsewhere, adding to decades of decline. These losses have hit many major cities with historically large Black populations, including Chicago, Detroit, Cleveland and Oakland, Calif. Much of the current shift is driven by younger, college-educated Black people who are relocating from northern and western places to the South, said William Frey, a demographer at the Brookings Institution. Nationwide, Black people haven’t suburbanized at the same level as the broader population, but the share of the Black population living in metropolitan-area suburbs reached 44% by 2020 from 33% two decades earlier. Over the same period, the percentage of the Black population living in central cities declined to 47% from 53%.

Takeaways by Macro Roundup® AI

  1. The share of the U.S. Black population living in metropolitan-area suburbs rose to 44% by 2020 from 33% two decades earlier, while the share in central cities fell to 47% from 53%.
  2. Census Bureau estimates indicate Black residents are continuing to leave urban centers in the North and elsewhere, including Chicago, Detroit, Cleveland and Oakland, Calif., adding to decades of decline in cities with historically large Black populations.
  3. Brookings Institution demographer William Frey attributes much of the shift to younger, college-educated Black people relocating from northern and western places to the South.