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 very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “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
  • “…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 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
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…a 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
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Monday, July 10, 2023

AI Summary. Early retirements during the pandemic cut labor supply, and the resulting wage spike drew in workers who had not been seeking jobs, lifting prime-age labor force participation to multi-year highs near 1990s peaks. With little slack left, moderating employment growth would reflect labor scarcity accompanied by reaccelerating wages.

Joseph Wang Fed Guy Blog
Date Posted:
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.@FedGuy12 argues slowing employment growth is consistent with an American economy that is at full employment and running out of workers. This works against Fed aims, as higher wages are needed to attract marginal workers into the labor force.

Does slowing employment growth reflect labor scarcity and rising wages?

Core argument: The prime-age labor force participation rate has risen to multi-year highs and sits not far below the all-time highs last seen in the 1990s, suggesting very little slack in the labor market and that additional workers will be increasingly difficult and expensive to find.

The pandemic was a significant negative labor supply shock because it led to a wave of early retirements. This sudden labor shortage led to a spike in wages, which appeared to draw in people who were otherwise not looking for a job. The prime-age labor force participation rate has risen to multi-year highs and is not too far from all-time highs last seen in the 1990s. This suggests that there is very little slack in the labor market and additional workers will be increasingly difficult and expensive to find. While that shock has been digested, workers continue to retire and place increasing demand on a stagnant worker pool. In this scenario, moderating employment growth reflects labor scarcity and would be accompanied by reacceleration of wages similar to that seen in the most recent non-farm payroll report.

Takeaways by Macro Roundup® AI

  1. The prime-age labor force participation rate has risen to multi-year highs and sits not far below the all-time highs last seen in the 1990s, suggesting very little slack in the labor market and that additional workers will be increasingly difficult and expensive to find.
  2. The pandemic acted as a negative labor supply shock by triggering a wave of early retirements, and the resulting labor shortage spiked wages, which appeared to draw in people who had not been looking for work.
  3. With workers continuing to retire and placing increasing demand on a stagnant worker pool, moderating employment growth would reflect labor scarcity and be accompanied by a reacceleration of wages like that in the most recent non-farm payroll report.

Related Articles:

  • “The Great Retirement Boom”: The Pandemic-Era Surge in Retirements and Implications for Future Labor Force Participation — An increase in the retired share of the working-age population of nearly 1.5 percentage points above pre-pandemic levels—more than 3.5m additional retirees—accounts for essentially all of the shortfall in the labor force participation rate, while other causes of non-participation such as caregiving have receded.
  • Unions’ Inflation Warning? — The share of people aged 16 and over working or looking for work fell when the pandemic hit and has only partly recovered, with population aging accounting for most of the remaining shortfall. That implies economic activity must run at a lower level to avoid persistent wage and price inflation.

AI Summary. US Bureau of Labor Statistics time-use data show time young American men spent playing games rose by nearly three-quarters of an hour from 2019 to 2022, exceeding the increase over the prior 16 years, with most of the added gaming time coming from work and sports, exercise and recreation.

Justin Fox Bloomberg
Date Posted:

.@foxjust reports that young American men who play video games played for an average of almost four hours a day in 2022.

Are young men gaming more and working less?

Core argument: Time young men spent "playing games" rose by nearly three-quarters of an hour from 2019 to 2022, a larger increase than over the previous 16 years, according to the US Bureau of Labor Statistics' American Time Use Survey.

Statistics released last month by the US Bureau of Labor Statistics from the annual American Time Use Survey show that the time young men spent “playing games” — the survey doesn’t differentiate between electronic and non-electronic games, but most researchers assume it’s chiefly the former — rose by nearly three-quarters of an hour from 2019 to 2022, more than it had increased over the previous 16 years. It does appear that, since the pandemic, most of the additional gaming time has come from work and sports/exercise/recreation. American men 65 and older spent an average of just more than five hours a day watching TV in 2022, up from just more than four in 2003.

Takeaways by Macro Roundup® AI

  1. Time young men spent "playing games" rose by nearly three-quarters of an hour from 2019 to 2022, a larger increase than over the previous 16 years, according to the US Bureau of Labor Statistics' American Time Use Survey.
  2. Most of young men's additional gaming time since the pandemic appears to have come from work and sports, exercise, and recreation, though the survey does not distinguish electronic from non-electronic games.
  3. American men 65 and older watched TV an average of just over five hours a day in 2022, up from just over four hours in 2003.

Related Articles:

AI Summary. US imports from Mexico lost share to China after China joined the World Trade Organization, and Mexico now appears to be benefiting from a retreat from China. On an unsmoothed basis, monthly US imports from Mexico have exceeded those from China for the first time in 20 years.

John Authers Bloomberg
Date Posted:

Mexican exports to the United States exceeded Chinese exports for the first time in two decades reports @Johnauthers

Is Mexico gaining US import share as China loses it?

Core argument: U.S. imports from Mexico exceeded those from China over the last three months on an un-smoothed basis, the first time Mexico has held that lead in 20 years.

This is how the imports to the US from Mexico and China have moved over the last three decades. For both countries, trade agreements made a huge difference, with Mexico suffering grievously from lost share after China entered the World Trade Organization in 2001. Now, it appears to be benefiting from the retreat from China. These numbers are shown as 12-month moving averages to avoid the distortions that come with the Chinese lunar new year holiday. The last three months, on an un-smoothed basis, actually show Mexican imports exceeding those from China for the first time in 20 years.

Takeaways by Macro Roundup® AI

  1. U.S. imports from Mexico exceeded those from China over the last three months on an un-smoothed basis, the first time Mexico has held that lead in 20 years.
  2. Mexico lost substantial share of U.S. imports after China joined the World Trade Organization in 2001, and now appears to be benefiting from the retreat from China.
  3. Trade agreements made a large difference to U.S. imports from both Mexico and China over three decades, with the figures presented as 12-month moving averages to avoid distortions from the Chinese lunar new year holiday.

Related Articles:

  • Global Trade Is Shifting, Not Reversing — Mexico is positioned to gain from shifting U.S.-China trade, with lower wages than China, an established manufacturing base anchored by autos, and proximity to the U.S. market. Bank of America analysts note U.S. imports of Mexican manufactured goods are roughly 60% above pre-pandemic levels, with Mexico gaining U.S. import share in plastics and textiles as China loses share.
  • Globalization Isn’t Dead. But It’s Changing — China's share of US imports fell from a peak of 22% to under 17%, while other Asian economies and Mexico gained share. Vietnam's exports to the US rose from under $10bn to more than $120bn, Mexico's roughly doubled to over $400bn, and the Philippines, Taiwan, Thailand, India, and Malaysia also grew exports rapidly.

AI Summary. Financial investors have shifted away from copper toward cash-generating assets as interest rates rise, with futures positioning implying more bets on falling prices than recovery. Prices remain about $2,500 a tonne above marginal production costs, suggesting the correction removed froth rather than pushing prices too low.

Economist Staff The Economist
Date Posted:

Despite predictions of a ‘train wreck’ of copper supply shortfalls, prices have dropped around 10% since January. EVs and green mandates will boost long-term demand, but short-term financial market interest has been muted. #Copper @TheEconomist

Why are copper prices falling despite tight future supply?

Core argument: Copper prices remain $2,500 a tonne above production costs at the marginal mine, implying the correction has taken froth out of the market rather than pushed prices too low, and that prices could stay subdued for a while.

Financial investors are snubbing copper. As interest rates rise, they prefer to hold cash-generating assets rather than commodities, which yield nothing. For much of this year,, “non-commercial” net positioning on copper-futures markets has been in the red, implying that more investors are betting prices will fall than recover. Yet today’s prices remain $2,500 a tonne above production costs at the marginal mine. This implies that the recent correction has taken froth out of the market, rather than pushed prices too low, suggesting they could stay subdued for a while. Supply may struggle to keep up. The average age of the world’s ten biggest mines is 64, which is forcing miners to dig deep for ores of ever lower quality, making each new tonne of refined copper costlier to produce. New mines are scarce. Assuming all certain and probable projects go ahead, McKinsey, a consultancy, forecasts that supply will hit 30m tonnes by 2031, 7m tonnes short of estimated demand.

Takeaways by Macro Roundup® AI

  1. Copper prices remain $2,500 a tonne above production costs at the marginal mine, implying the correction has taken froth out of the market rather than pushed prices too low, and that prices could stay subdued for a while.
  2. Non-commercial net positioning on copper-futures markets has been negative for much of this year, as rising interest rates push investors toward cash-generating assets over commodities that yield nothing.
  3. McKinsey forecasts copper supply will reach 30m tonnes by 2031, 7m tonnes short of estimated demand, with the average age of the world's ten biggest mines at 64 years forcing miners to dig deeper for lower-quality ores.

Related Articles:

  • Copper Mine Flashes Warning of ‘Huge Crisis’ for World Supply — Analysts at Wood Mackenzie estimate a greener world will be short about 6m tons of copper by next decade, requiring a dozen new mines on the scale of Rio Tinto's Oyu Tolgoi in Mongolia. BloombergNEF projects demand for refined copper will grow 53% by 2040 while mine supply rises only 16%.
  • Glencore Says This Time Is Different for Coming Copper Shortage — Glencore estimates a cumulative gap between projected copper demand and supply of 50m tons through 2030, against current world demand of about 25m tons a year, and argues the industry will not lift supply as it has in previous cycles. The company says copper prices do not yet reflect the coming deficit.

AI Summary. Companies acquired by private equity firms average operating profit margins 0.5% above their industry in the three years before the deal, drop in the transaction year, and afterward recover only to the industry average. The authors argue this pattern reflects buying higher-performing companies that mean-revert rather than post-deal efficiency gains.

Dan Rasmussen, Minje Kwun and Lila Alloula Verdad
Date Posted:
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.@verdadcap Minje Kwun and Lila Alloula argue that there is little evidence to support the claim that the private equity industry as a whole engineers operational improvements.

Does private equity ownership improve the operating margins of acquired companies?

Core argument: Private equity targets run EBITDA margins averaging 0.5% above their industry in the three years before a deal, then settle at exactly the industry standard afterward, 50bps below pre-acquisition levels.

For EBITDA margins, we notice that PE firms tend to target companies outperforming their industries: EBITDA margin is on average 0.5% above industry standard in the three years before the deal. In the year the transaction is completed, the metric drop sharply. We hypothesize that major LBO transactions are distracting to management and lead to suboptimal outcomes from a sales and margin perspective during the deal year. Once the deal has been completed, growth and margins recover, but do not on average return to pre-deal levels. EBITDA margin averages out to exactly the industry standard, 50bps lower than pre-acquisition. While PE firms are typically praised for their efficiency and cost-control, the graph on EBITDA margins shows a negligible difference in actual profitability. The supposed efficiency and cost-cutting isn’t showing up in the numbers. Instead, PE firms appear to be buying slightly higher-performing companies that then experience some mean reversion post-acquisition.

Takeaways by Macro Roundup® AI

  1. Private equity targets run EBITDA margins averaging 0.5% above their industry in the three years before a deal, then settle at exactly the industry standard afterward, 50bps below pre-acquisition levels.
  2. EBITDA margins drop sharply in the year an LBO closes, which the author attributes to major transactions distracting management, with growth and margins recovering afterward but not returning to pre-deal levels on average.
  3. Private equity's reputed efficiency and cost-cutting does not show up in profitability figures, which show a negligible difference; instead, firms appear to buy slightly higher-performing companies that then mean-revert.

Related Articles:

  • Private Equity Fundamentals — An analysis of North American private equity- and venture-backed companies with public stock or debt finds they trade at 22.4x adjusted earnings, in line with small-cap growth stocks, but at 33.4x on standard accounting measures with net debt of 8.8x earnings. The authors describe the group as heavily leveraged and mostly cash-flow negative.

AI Summary. Average global air temperature set new records three times within a single week. Aside from global warming, the biggest influence on Earth's temperature is the El Niño-Southern Oscillation, and because past highs have typically come near the end of a strong El Niño, the recent switch to El Niño is unlikely to explain these records.

Economist Staff The Economist
Date Posted:

The new mean global air temperature record is more than half a degree warmer than the hottest temperature recorded in 1980.

Does the shift to El Niño explain record global temperatures?

Core argument: The average global air temperature set records three times in one week, on July 3rd, July 4th, and July 6th.

On July 3rd the average global air temperature reached a new record. On July 4th the average global air temperature reached a new record. And on July 6th the average global air temperature reached a new record. The biggest influence on the Earth’s temperature, aside from global warming, is the El Niño-Southern Oscillation (ENSO). This is the first El Niño in seven years. Previous highs have often occurred towards the end of a strong El Niño, when the warming pattern has heated the Earth. The recent switch to El Niño, therefore, is unlikely to be the cause of the latest record-breaking temperatures. Its effect should be in full swing next summer, when more records could be set. That would be the first time new records have been attained in two consecutive years.

Takeaways by Macro Roundup® AI

  1. The average global air temperature set records three times in one week, on July 3rd, July 4th, and July 6th.
  2. Aside from global warming, the El Niño-Southern Oscillation is the biggest influence on the Earth's temperature, and the present El Niño is the first in seven years.
  3. Previous temperature highs have often come toward the end of a strong El Niño, so the recent switch to El Niño is unlikely to be the cause of the latest records, with its effect expected in full swing next summer.

Related Articles:

  • Earth Keeps Breaking Temperature Records Due to Global Warming — The average worldwide temperature reached a record 17C (63F), surpassing the prior record of 16.9C, and then climbed to 17.2C a day later, according to data from the US National Centers for Environmental Prediction.
  • Climate Shocks Are Making Parts of America Uninsurable. It Just Got Worse — 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.

AI Summary. A study in the Chinese Center for Disease Control and Prevention's official journal found the suicide rate among children aged 5 to 14 in China rose from about 0.2 to about 0.8 per 100,000 people over 11 years. Among 15- to 24-year-olds, the rate fell 6.8% annually before rising 19.6% annually through 2021.

Wang Xintong Nikkei Asia
Date Posted:

The suicide rate for 5-14-year-old Chinese quadrupled between 2010-2021 @NikkeiAsia

Is the youth suicide rate in China rising sharply?

Core argument: China's suicide rate among children aged 5–14 rose from about 0.2 to about 0.8 per 100,000 people over an 11-year period, according to a study published June 23 in China CDC Weekly.

During the 11-year period, the suicide rate among children aged 5 to 14 increased from about 0.2 to about 0.8 per 100,000 people, according to the study published June 23 in China CDC Weekly, the official journal of the Chinese Center for Disease Control and Prevention. The study also found that the suicide rate for 15- to 24-year-olds fell by 6.8% per year from 2010 to 2017, but then surged at an annual rate of 19.6% to 2021, the latest available data.

Takeaways by Macro Roundup® AI

  1. China's suicide rate among children aged 5–14 rose from about 0.2 to about 0.8 per 100,000 people over an 11-year period, according to a study published June 23 in China CDC Weekly.
  2. The suicide rate for Chinese 15- to 24-year-olds fell 6.8% per year from 2010 to 2017, then rose at an annual rate of 19.6% through 2021, the latest available data in the study.
  3. China CDC Weekly, the official journal of the Chinese Center for Disease Control and Prevention, published the study on rising youth suicide rates.

Related Articles:

AI Summary. China's unemployment rate for 16- to 24-year-olds reached 20.8%, the highest since the data series began in 2018 and above levels in European countries such as France and Italy. The national civil service examination drew a record 2.6mn applicants, nearly 2x the 2019 figure, with a 1.4% success rate.

Sun Yu and Joe Leahy Financial Times
Date Posted:
Is Database:
Database

While China’s overall unemployment rate is stable at 5.2% in May, but youth unemployment at nearly 21% is above now even higher than Italy. China’s civil service exam had twice as many applicants as in 2019.

Is youth unemployment in China rising to record levels?

Core argument: China's youth unemployment rate reached 20.8% for 16–24-year-olds in May, the largest proportion since the data series began in 2018 and higher than in European countries such as France and Italy.

In May, 20.8% of 16 to 24-year-olds were unemployed, the largest proportion since the data series started in 2018 and higher than in European countries such as France and Italy. China’s grueling national civil service examination, drew a record 2.6mn applicants this year, nearly twice the number in 2019. The success rate was just 1.4%.

Takeaways by Macro Roundup® AI

  1. China's youth unemployment rate reached 20.8% for 16–24-year-olds in May, the largest proportion since the data series began in 2018 and higher than in European countries such as France and Italy.
  2. China's national civil service examination drew a record 2.6mn applicants this year, nearly twice the 2019 number, with a success rate of just 1.4%.

Related Articles:

  • Why Has Youth Unemployment Risen So Much in China? — 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.
  • Can China Fix Youth Unemployment Woes With Military Recruitment Drive? — More than 90% of China's military recruitment this year could come from recent graduates and high school students, which analysts say serves both the People's Liberation Army's modernisation targets and the country's record youth unemployment. Military academies remain less attractive to top students than leading public universities.

Tuesday, July 11, 2023

AI Summary. Across advanced economies, core inflation is significantly positively associated with growth in government debt since the start of the pandemic, and the authors expect this decade's fiscal expansions to shift price levels permanently higher. They argue this differs from permanently higher inflation, projecting inflation to diminish as temporary deficits normalize, with medium-term inflation expectations still anchored near central bank targets.

Peder Beck-Friis and Richard Clarida PIMCO
Date Posted:
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Peder Beck-Friis and Richard Clarida @PIMCO argue that fiscal policy has been a key driver of the current temporary inflationary episode, consistent with @JohnHCochrane fiscal theory of the price level.

Does rising government debt raise price levels without raising inflation?

Core argument: Across advanced economies, core inflation and sovereign debt growth show a significant positive relationship since the start of the pandemic, and the fiscal expansions delivered this decade will likely push price levels permanently higher.

In advanced economies, there’s a significant positive relationship between core inflation and sovereign debt growth since the start of the pandemic. The fiscal expansions delivered this decade will likely lead to price levels adjusting permanently higher. But this is not the same thing as permanently higher inflation: Our base case is that as temporary pandemic-related deficits gradually normalize, inflation is likely to diminish – and today’s restrictive monetary policies aim to accelerate this process. And unlike in the 1970s, monetary policy credibility appears intact, with medium-term inflation expectations still anchored around central bank targets.

Takeaways by Macro Roundup® AI

  1. Across advanced economies, core inflation and sovereign debt growth show a significant positive relationship since the start of the pandemic, and the fiscal expansions delivered this decade will likely push price levels permanently higher.
  2. A permanently higher price level differs from permanently higher inflation: the base case is that inflation diminishes as temporary pandemic-related deficits gradually normalize, a process today's restrictive monetary policies aim to accelerate.
  3. Unlike in the 1970s, monetary policy credibility appears intact, with medium-term inflation expectations still anchored around central bank targets.

Related Articles:

  • The Second Great Experiment Update — Newer macroeconomic theory using forward-looking rather than adaptive expectations holds that inflation is stable under an interest rate target and can fade on its own even when interest rates sit below the inflation rate. Under the fiscal theory of the price level, a burst of inflation devalues government debt and ends once the real value of that debt is restored.
  • Inflation and Debt Across Countries — Across countries there is little correlation between monetary expansion and inflation, and the fitted relationship depends heavily on one or two observations. Monetary and fiscal theories agree that money printed to finance deficits is inflationary, but disagree on whether a large bond-buying program without deficits would raise inflation.
  • Waining Inflation, Supply and Demand — Inflation appears to be waning, but this does not vindicate the view that inflation was purely supply shocks, since a supply shock raises prices only temporarily and cannot permanently raise the price level. Cumulative inflation has shifted the price level up by roughly 10–20%, and under the fiscal or demand view that shift is permanent absent fiscal retrenchment.

AI Summary. Across countries there is little correlation between monetary expansion and inflation, and the fitted relationship depends heavily on one or two observations. Monetary and fiscal theories agree that money printed to finance deficits is inflationary, but disagree on whether a large bond-buying program without deficits would raise inflation.

John Cochrane The Grumpy Economist
Date Posted:

.@JohnHCochrane argues that current conditions of trillion-dollar deficits with 3.6% unemployment are not consistent with a persistent decline in inflation.

Does monetary expansion across countries correlate with inflation?

Core argument: Cross-country data show little correlation between monetary expansion and inflation, and the regression slope depends heavily on one or two points, despite the large US M2 expansion that preceded US inflation and the subsequent large M2 decline.

There was a big expansion in M2 before the US inflation. Monetarists took a victory lap. M2 has since fallen a lot. There is not much correlation between monetary expansion and inflation across countries, however. The slope of the regression also clearly depends on one or two points. Money or debt, which is it? When governments print money to finance deficits (or interest-bearing reserves), fiscal theory and monetary theory agree, there is inflation. Printing money (helicopters) is perhaps particularly powerful, as debt carries a reputation and tradition of repayment, which money may not carry. A core issue separating monetary and fiscal theory is whether a big monetary expansion without deficits or other fiscal news would have any effects. Would a $5 trillion QE (buy bonds, issue money) with no deficit have had the same inflationary impact? Monetarists, yes; fiscalists, no.

Takeaways by Macro Roundup® AI

  1. Cross-country data show little correlation between monetary expansion and inflation, and the regression slope depends heavily on one or two points, despite the large US M2 expansion that preceded US inflation and the subsequent large M2 decline.
  2. Fiscal theory and monetary theory agree that inflation follows when governments print money or interest-bearing reserves to finance deficits, with helicopter money perhaps particularly powerful because debt carries a reputation and tradition of repayment that money may not.
  3. A core issue separating monetary and fiscal theory is whether a $5 trillion quantitative easing operation—buying bonds and issuing money with no deficit or other fiscal news—would be inflationary, which monetarists affirm and fiscalists deny.

Related Articles:

  • The Second Great Experiment Update, — Newer macroeconomic theory using forward-looking rather than adaptive expectations holds that inflation is stable under an interest rate target and can fade on its own even when interest rates sit below the inflation rate. Under the fiscal theory of the price level, a burst of inflation devalues government debt and ends once the real value of that debt is restored.
  • Waining Inflation, Supply and Demand — Inflation appears to be waning, but this does not vindicate the view that inflation was purely supply shocks, since a supply shock raises prices only temporarily and cannot permanently raise the price level. Cumulative inflation has shifted the price level up by roughly 10–20%, and under the fiscal or demand view that shift is permanent absent fiscal retrenchment.
  • Fiscal Arithmetic and the Global Inflation Outlook — Across advanced economies, core inflation is significantly positively associated with growth in government debt since the start of the pandemic, and the authors expect this decade's fiscal expansions to shift price levels permanently higher. They argue this differs from permanently higher inflation, projecting inflation to diminish as temporary deficits normalize, with medium-term inflation expectations still anchored near central bank targets.

AI Summary. The authors estimate that greater dispersion in productivity growth among an industry's input and idea suppliers has a strong negative effect on that industry's own productivity growth, using data on 462 US manufacturing industries and 42 non-manufacturing industries. Their evidence implies most of the US productivity slowdown can be explained by rising cross-industry variance in productivity growth.

Daron Acemoglu, David Autor and Christina Patterson National Bureau of Economic Research
Date Posted:

.@DrDaronAcemoglu @davidautor show that declining manufacturing productivity growth since the 1970s can be explained by “bottlenecks” where slowdowns in TFP growth of a sector’s suppliers undermine that sector’s productivity.

Does uneven productivity growth across supplier industries explain the productivity slowdown?

Core argument: The authors estimate that greater dispersion of total factor productivity growth among an industry's input and idea suppliers exerts a powerful negative influence on that industry's own growth opportunities.

The foundational idea of our approach is that innovation in any one industry relies on complementary innovations in—and subsequent productivity gains from—its input and idea suppliers. Our framework yields a simple estimating equation that links growth in sectoral TFP to both the average TFP and the dispersion (variance) of TFP among that sector’s inputs. We estimate this equation using 462 manufacturing industries between 1977 and 2007, and also for the entire US economy between 1987 and 2007 by combining our manufacturing data with 42 non-manufacturing industries. Our estimates indicate that greater dispersion of TFP growth among an industry’s suppliers exerts a powerful negative influence on its own growth opportunities. At face value, our evidence implies that the bulk of the productivity slowdown in the United States (and several other industrialized economies) can be explained by the sizable increase in the cross-industry variance of TFP growth and innovation.

Takeaways by Macro Roundup® AI

  1. The authors estimate that greater dispersion of total factor productivity growth among an industry's input and idea suppliers exerts a powerful negative influence on that industry's own growth opportunities.
  2. The authors' framework links growth in sectoral TFP to both the average TFP and the variance of TFP among a sector's inputs, estimated across 462 manufacturing industries from 1977 to 2007 and the whole US economy from 1987 to 2007 with 42 non-manufacturing industries added.
  3. At face value, the evidence implies that the bulk of the US productivity slowdown, and that of several other industrialized economies, can be explained by the sizable increase in cross-industry variance of TFP growth and innovation.

Related Articles:

AI Summary. In California public schools, the authors estimate that the arrival of one Asian student in a high-socioeconomic-status suburban district is associated with the departure of 1.5 white students, alongside rising academic performance. They suggest this reflects parental concerns about academic competition rather than housing market dynamics or direct racial animus.

Leah Platt Boustan, Christine Cai, and Tammy Tseng National Bureau of Economic Research
Date Posted:
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Evidence from CA shows that between 2002-2016 Asian immigration is associated with a decline in white student enrollment in public schools. @leah_boustan

Do white families leave suburban school districts when Asian students arrive?

Core argument: The arrival of one Asian student in a high-socioeconomic-status suburban California school district leads on average to the departure of 1.5 white students, a rate somewhat lower than but not dissimilar to flight from Black/Hispanic populations documented in other settings.

We find substantial white flight from Asian students entering high-socioeconomic status suburban districts: on average, the arrival of one Asian student in a suburban school district leads to the departure of 1.5 white students, a rate of white flight that is somewhat lower but not too dissimilar from flight from Black/Hispanic We find substantial white flight from Asian students entering high-socioeconomic status suburban districts: on average, the arrival of one Asian student in a suburban school district leads to the departure of 1.5 white students, a rate of white flight that is somewhat lower but not too dissimilar from flight from Black/Hispanic populations documented in different settings. Academic performance also rises with Asian entry to high-SES suburban districts. After ruling out correlated patterns of Black/Hispanic entry and direct racial animus, and confirming that housing market dynamics cannot account for the observed departure rate, we suggest that white flight from high-SES districts may be due to parental concerns about academic competition, particularly in a state like CA where entry to public colleges and universities is determined in part by relative high school performance. This pattern is consistent with qualitative sociological evidence about white-Asian encounters in suburban settings.

Takeaways by Macro Roundup® AI

  1. The arrival of one Asian student in a high-socioeconomic-status suburban California school district leads on average to the departure of 1.5 white students, a rate somewhat lower than but not dissimilar to flight from Black/Hispanic populations documented in other settings.
  2. Academic performance in high-socioeconomic-status suburban California districts rises with Asian student entry.
  3. After ruling out correlated Black/Hispanic entry, direct racial animus, and housing market dynamics as an explanation for the departure rate, the authors suggest white flight may stem from parental concerns about academic competition, since California public college entry depends in part on relative high school performance.

Related Articles:

  • Can Democrats Survive the Looming Crisis in New York City’s Outer Boroughs? — Just over a third of the decline in the Democratic margin of victory came from the suburbs, with New York City voters—through a mix of defection and abstention—accounting for most of the rest. Precincts that are at least three-quarters Hispanic or Asian swung 58 and 52 points toward Republicans, versus 32 points in white and 8 points in black precincts.
  • Where New York’s Asian Neighborhoods Shifted to the Right — Voters in Asian neighborhoods across New York City shifted 23 percentage points toward Republicans in a governor's election compared with the prior one, though these areas remained Democratic overall. A New York Times precinct-level analysis finds this was the largest electoral shift in the city's Asian neighborhoods between 2006 and 2022.

AI Summary. NATO's defence expenditure figures for member countries may diverge considerably from those quoted by media, published by national authorities, or given in national budgets, reflecting differences in economic data sources and in NATO's definition of defence expenditure versus national definitions.

NATO Staff North Atlantic Treaty Organization
Date Posted:

According to @NATO 11 of 31 member nations will hit the 2% spending target this year, up from 3 in 2014. Germany will only spend 1.57%.

Why do NATO defence spending figures differ from national ones?

Core argument: NATO's report on defence expenditure of member countries for 2014–2023 draws economic and demographic information from the European Commission's Directorate-General for Economic and Financial Affairs (DG ECFIN) and the OECD.

In the figures and tables that follow, NATO also uses economic and demographic information available from the Directorate-General for Economic and Financial Affairs of the European Commission (DG ECFIN), and the Organisation for Economic Co-operation and Development (OECD). In view of differences between both these sources and national GDP forecasts, and also the definition of NATO defence expenditure and national definitions, the figures shown in this report may diverge considerably from those which are quoted by media, published by national authorities, or given in national budgets. Equipment expenditure includes expenditure on major equipment as well as on research and development devoted to major equipment. Personnel expenditure includes pensions paid to retirees.

Takeaways by Macro Roundup® AI

  1. NATO's report on defence expenditure of member countries for 2014–2023 draws economic and demographic information from the European Commission's Directorate-General for Economic and Financial Affairs (DG ECFIN) and the OECD.
  2. NATO cautions that its published figures may diverge considerably from those quoted by media, published by national authorities, or given in national budgets, owing to differences between these sources, national GDP forecasts, and NATO versus national definitions of defence expenditure.
  3. In NATO's accounting, equipment expenditure covers major equipment as well as research and development devoted to major equipment, while personnel expenditure includes pensions paid to retirees.

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  • The Cost of the Global Arms Race — 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.
  • The Age-Old Question: How Do Governments Pay For Wars? — Denmark abolished a centuries-old religious holiday, requiring people to work that day, partly to help pay for extra defence spending, a move 70% of Danes opposed in one poll. The Stockholm International Peace Research Institute calculates global defence spending rose 4% to a record $2.24tn and is set to keep rising even as higher interest rates raise governments' borrowing costs.

AI Summary. US Navy data show 18 of its 49 attack submarines — 37% — are out of commission for repairs because of naval shipyard delays, up from 28% and well above the 20% industry best practice. The report argues this leaves the US at a disadvantage against China's numerically larger fleet.

Anthony Capaccio Bloomberg
Date Posted:

37% of the Navy’s attack submarines (18 of 49) are out of commission and awaiting repairs, up from 28% in 2017.

37% of the Navy’s attack submarines (18 of 49) are out of commission and awaiting repairs, up from 28% in 2017.

Are shipyard repair delays sidelining a growing share of US attack submarines?

Core argument: 18 of the US Navy's 49 attack submarines — 37% — are out of commission for repairs amid delays at naval shipyards, according to previously undisclosed Navy data published by the Congressional Research Service.

Delays at naval shipyards mean that nearly 40% of US attack submarines are out of commission for repairs, about double the rate the Navy would like, according to new data released by the service. As of this year, 18 of the US Navy’s 49 attack submarines — 37% — were out of commission, according to previously undisclosed Navy data published by the Congressional Research Service. That leaves the US at a critical disadvantage against China’s numerically superior fleet. That’s up from 28% overall in 2017 and 33% in 2022, and below the industry best practice of 20%.

Takeaways by Macro Roundup® AI

  1. 18 of the US Navy's 49 attack submarines — 37% — are out of commission for repairs amid delays at naval shipyards, according to previously undisclosed Navy data published by the Congressional Research Service.
  2. The 37% out-of-commission rate for US attack submarines is up from 28% in 2017 and 33% in 2022, against an industry best practice of 20%.
  3. The share of US attack submarines sidelined for repairs is about double the rate the Navy would like, leaving the US at a disadvantage against China's numerically superior fleet.

Related Articles:

  • Weapons Makers Can’t Hire Enough Workers as Ukraine War Drives Demand — Weapons makers face a shortage of skilled workers needed to fulfill an influx of orders driven by higher arms demand, with US shipbuilding among the sectors hardest hit by pandemic-era retirements. General Dynamics, a large US Navy shipbuilder, hired 24,000 staff in a year but raised net head count only 3,400, to 106,500.
  • US Can’t Keep Up with China’s Warship Building, Navy Secretary Says — The US Navy says China's navy could field up to 400 ships in coming years, up from about 340, while the US fleet sits under 300. US naval shipyards cannot match Chinese output: China has 13 shipyards, and one reportedly has more capacity than all US shipyards combined.

AI Summary. A town in Canada's Northwest Territories about 300 miles from the Arctic Ocean reached 100°F, described by a climatologist as the farthest north reading of 37°C or higher in Canadian climate records. Canadian fire authorities report a record 22.7m acres burned, exceeding the previous high of 17.5m acres.

Ian Livingston Washington Post
Date Posted:

Towns 300 miles south of the Arctic Ocean are seeing temperatures of 100 degrees which could accelerate wildfires. A record 22.7 million acres of Canada have burned so far this year, up from a previous record of 17.5 million acres in 1995.

Has Canada set new records for northern heat and acres burned?

Core argument: Norman Wells, in Canada's Northwest Territories about 300 miles from the Arctic Ocean, reached 100 degrees on Saturday, a mark climatologist Brian Brettschneider called easily the farthest north in the Canadian climate record for a reading of 37C (99F) or higher.

In the desolate and oil-rich region of the Northwest Territories, nestled in the wooded Taiga Plains about 300 miles from the Arctic Ocean, the small town of Norman Wells hit 100 degrees on Saturday. It was “easily the farthest north in Canada with a reading of 37C (99F) or higher in the Canadian climate record,” tweeted climatologist Brian Brettschneider, before the mercury ultimately ticked up to 100. The scorching temperatures over western Canada exacerbated the country’s unprecedented wildfire crisis. A record 22.7 million acres (9.2 million hectares) have burned so far, according to the Canadian Interagency Forest Fire Centre, blowing past the previous high mark of 17.5 million acres (7.1 million hectares) in 1995. There are months of the wildfire season to go.

Takeaways by Macro Roundup® AI

  1. Norman Wells, in Canada's Northwest Territories about 300 miles from the Arctic Ocean, reached 100 degrees on Saturday, a mark climatologist Brian Brettschneider called easily the farthest north in the Canadian climate record for a reading of 37C (99F) or higher.
  2. A record 22.7 million acres (9.2 million hectares) have burned in Canada, exceeding the previous high of 17.5 million acres (7.1 million hectares) set in 1995, according to the Canadian Interagency Forest Fire Centre.
  3. Scorching temperatures over western Canada exacerbated the country's wildfire crisis, with months of the wildfire season still to come.

Related Articles:

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  • Global Temperatures Have Broken Records Three Times In A Week — Average global air temperature set new records three times within a single week. Aside from global warming, the biggest influence on Earth's temperature is the El Niño-Southern Oscillation, and because past highs have typically come near the end of a strong El Niño, the recent switch to El Niño is unlikely to explain these records.

AI Summary. Much of Florida is recording its warmest year on record, with temperatures 3–5 degrees above normal and coastal waters in the Florida Keys reaching 92–96 degrees versus the more typical upper 80s. The National Oceanic and Atmospheric Administration reports about 40% of the world's oceans face a marine heat wave, the highest share on record.

Dan Stillman Washington Post
Date Posted:
Is Database:
Database

Coastal waters in Florida are currently between 92 and 96 degrees vs. typical averages in the upper 80s. About 40% of the world’s oceans are facing a marine heat wave according to @NOAA.

How warm have Florida's coastal waters and oceans worldwide become?

Core argument: Water temperatures in the Florida Keys have reached 92 to 96 degrees, which meteorologist Bob Henson called "downright shocking"; WFLA-TV chief meteorologist Jeff Berardelli said such waters are more typically in the upper 80s.

Much of Florida is seeing its warmest year on record, with temperatures running 3 to 5 degrees above normal. While some locations have been setting records since the beginning of the year, the hottest weather has come with an intense heat dome cooking the Sunshine State in recent weeks. That heat dome has made coastal waters extremely warm, including “downright shocking” temperatures of 92 to 96 degrees in the Florida Keys, meteorologist and journalist Bob Henson said Sunday in a tweet. “That’s boiling for them! More typically it would be in the upper 80s,” tweeted Jeff Berardelli, chief meteorologist and climate specialist at WFLA-TV in Tampa. The hot waters around Florida are connected to record-breaking ocean heat worldwide. About 40 percent of the world’s oceans are facing a marine heat wave, NOAA reported. That is the highest percentage on record, and it could reach 50 percent by September.

Takeaways by Macro Roundup® AI

  1. Water temperatures in the Florida Keys have reached 92 to 96 degrees, which meteorologist Bob Henson called "downright shocking"; WFLA-TV chief meteorologist Jeff Berardelli said such waters are more typically in the upper 80s.
  2. Much of Florida is seeing its warmest year on record, with temperatures running 3 to 5 degrees above normal and an intense heat dome bringing the hottest weather in recent weeks.
  3. NOAA reported that about 40 percent of the world's oceans face a marine heat wave, the highest percentage on record, and that share could reach 50 percent by September.

Related Articles:

  • Climate Shocks Are Making Parts of America Uninsurable. It Just Got Worse — 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.
  • Global Temperatures Have Broken Records Three Times In A Week — Average global air temperature set new records three times within a single week. Aside from global warming, the biggest influence on Earth's temperature is the El Niño-Southern Oscillation, and because past highs have typically come near the end of a strong El Niño, the recent switch to El Niño is unlikely to explain these records.