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, July 25, 2023

AI Summary. The authors estimate that declining interest and corporate tax rates accounted for over 40% of real corporate profit growth from 1989 to 2019, while falling risk-free rates explain the entire expansion in price-to-earnings multiples. Real earnings before interest and taxes grew slightly more slowly than in 1962–1989, at 2.2% versus 2.4% per year.

Michael Smolyansky Federal Reserve Board
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Michael Smolyansky @federalreserve argues the decline in interest and corporate tax rates mechanically explains 40% of real growth in corporate profits between 1989-2019 suggesting lower returns going forward.

How much of corporate profit growth came from lower rates and taxes?

Core argument: Declining interest and corporate tax rates accounted for over 40% of the growth in real corporate profits from 1989 to 2019, while falling risk-free rates explain the entirety of the expansion in price-to-earnings multiples.

The reduction in interest and corporate tax rates was responsible for over 40% of the growth in real corporate profits from 1989 to 2019. Moreover, the decline in risk-free rates over this period explains the entirety of the expansion in price-to-earnings (P/E) multiples. These two factors therefore account for the majority of this period’s exceptional stock market performance. From 1989 to 2019, real corporate profits grew at the robust rate of 3.8% per year. This was almost double the pace seen from 1962 to 1989. The difference in profit growth between these two periods is entirely due to the decline in interest and corporate tax rates from 1989 to 2019. One way to see this is to compare the growth of earnings before subtracting interest and tax expenses (EBIT). In fact, real EBIT growth was slightly lower from 1989 to 2019 compared to 1962 to 1989: 2.2% versus 2.4% per year. The outlook for stock price growth is bleak.

Takeaways by Macro Roundup® AI

  1. Declining interest and corporate tax rates accounted for over 40% of the growth in real corporate profits from 1989 to 2019, while falling risk-free rates explain the entirety of the expansion in price-to-earnings multiples.
  2. Real corporate profits grew 3.8% per year from 1989 to 2019, almost double the pace from 1962 to 1989, a difference attributed entirely to the decline in interest and corporate tax rates.
  3. Real EBIT growth was slightly lower from 1989 to 2019 than from 1962 to 1989, at 2.2% versus 2.4% per year, and the outlook for stock price growth is judged bleak.

Related Articles:

  • The Curious Incident of the Elevated Profit Margins — The US fiscal deficit averaged just under 3% of gross national product from 1950 to 2011 but 6.6% from 2012 to 2022, driven mainly by health and social security spending, a pattern that holds excluding pandemic years. Even assuming permanently elevated profit margins, US equity valuations imply low long-run returns.
  • Charlie Munger: US Banks Are ‘Full of’ Bad Commercial Property Loans — Berkshire Hathaway has compounded annual returns of nearly 20% since 1965, about twice the S&P 500's rate, but that period reflected low interest rates, low equity values, and ample opportunities. Investors now face lower returns amid higher interest rates and more competitors chasing bargains, according to the firm's vice-chairman.

AI Summary. The Bank for International Settlements measure of China's inflation-adjusted, trade-weighted exchange rate has fallen roughly 14% from its recent peak, the largest decline among the 64 countries it tracks. The author argues this reflects a policy choice, with China's central bank having outsourced foreign reserve management to state-run banks while lending increasingly large sums to the domestic banking system.

Matt Klein The Overshoot
Date Posted:

.@M_C_Klein argues the Chinese government is managing the Yuan real exchange rate to boost exports and insulate domestic firms from foreign competition.

Is China's currency decline the result of deliberate policy?

Core argument: China's inflation-adjusted trade-weighted exchange rate, as measured by the BIS using consumer price differences, has fallen roughly 14% since its peak in March, the largest decline among the 64 countries the BIS tracks.

The Bank for International Settlements (BIS) measure of China’s inflation-adjusted trade-weighted exchange rate (based on differences in consumer prices) is down by roughly 14% since the recent peak last March, which is the largest decline out of 64 countries tracked by the BIS. This appears to be a policy choice. While China’s official foreign reserves are substantially lower now than at the peak in 2014, the consolidated position of the PBOC and the state-run banks looks a bit different. As I suggested two years ago, there are good reasons to think that the PBOC has deliberately outsourced reserve management to Chinese banks (which among other things helps explain the continued reductions in reserve requirements). After the PBOC mostly stopped buying foreign currency reserves, it switched to lending increasingly large sums to the domestic banking system.

Takeaways by Macro Roundup® AI

  1. China's inflation-adjusted trade-weighted exchange rate, as measured by the BIS using consumer price differences, has fallen roughly 14% since its peak in March, the largest decline among the 64 countries the BIS tracks.
  2. The yuan's depreciation appears to be a policy choice: China's official foreign reserves sit well below their 2014 peak, but the consolidated position of the PBOC and state-run banks looks different.
  3. There are good reasons to think the PBOC has deliberately outsourced reserve management to Chinese banks, which helps explain continued cuts in reserve requirements, and that after mostly ceasing foreign currency purchases it shifted to lending increasingly large sums to domestic banks.

Related Articles:

  • Setser On China’s Trade Surplus — China's trade data show manufacturing exports sharply higher, pushing its trade surplus up even as its commodity import bill hit record levels. The author argues China's currency remains managed, so a weaker yuan alongside a large surplus reflects policymakers' judgment that they must sustain export growth relative to GDP to offset domestic weakness.
  • China’s Surplus Again Topped 10% Of GDP — China's manufacturing trade surplus again exceeded 10% of its GDP, with its overall goods surplus approaching its pre-global-financial-crisis peak and far larger in dollar terms. Net of processing imports, exports run about 14% of GDP while manufactured imports are under 4%, meaning the rest of the world supplies China with net demand.

AI Summary. Banks have reported a squeeze on net interest margins as deposit funding costs came in higher than expected, reversing the margin expansion typical of a rate-hiking cycle. Customers are shifting out of non-interest-bearing deposits and demanding higher rates on interest-bearing ones, a pattern reported by all but the largest banks.

Joseph Wang Fed Guy Blog
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Large banks are seeing a funding advantage as competition for deposits increases. @FedGuy12

Are rising deposit costs squeezing bank net interest margins?

Core argument: A wide range of banks reported a squeeze on net interest margins as deposit funding costs surprised to the upside, reversing the steady margin expansion of past quarters.

A wide range of banks have reported a squeeze on net interest margins as deposit funding costs have surprised to the upside. In a typical rate hiking cycle, interest income on bank assets tend to rise more quickly than interest paid on deposits. This led to a steady expansion of net interest margins over the past quarters that is suddenly reversing. Banks now see customers both shifting out of non interest bearing deposits and demanding higher interest for interest bearing deposits. This was widely reported in recent earnings calls by all but the largest banks.

Takeaways by Macro Roundup® AI

  1. A wide range of banks reported a squeeze on net interest margins as deposit funding costs surprised to the upside, reversing the steady margin expansion of past quarters.
  2. In a typical rate hiking cycle, interest income on bank assets rises faster than interest paid on deposits, but banks now see customers shifting out of non-interest-bearing deposits and demanding higher rates on interest-bearing ones.
  3. The deposit cost squeeze was reported on earnings calls by all but the largest banks.

Related Articles:

  • All Clear — Data and commentary indicate the banking panic has ended and had only a limited effect on credit availability, with overall bank lending little changed and still growing, reflecting problems at a few poorly managed banks rather than a systemic crisis. Recognition that the banking sector is not collapsing has already prompted some repricing of expected interest rate cuts.
  • Bank Funding during the Current Monetary Policy Tightening Cycle — The banking system's deposit funding declined considerably after monetary policy tightening began, with the most acute outflows concentrated among super-regional banks holding $50bn–$250bn in assets, while banks under $50bn were relatively stable and banks above $250bn received inflows. Banks replaced deposit outflows using alternative funding sources.

AI Summary. Default rates on high-yield bonds and leveraged loans are rising as more companies default under a higher cost of capital, with the Federal Reserve signaling interest rates will stay at these levels for a couple of years. Tighter financing conditions are the channel through which monetary policy restrains the economy and capital markets.

Torsten Sløk Apollo
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Torsten Sløk @apolloglobal notes an uptick in bond defaults and argues that we are at the start of a default cycle. He argues market sentiment will change when a “household name” defaults.

Are corporate defaults rising as the cost of capital stays high?

Core argument: Default rates for high-yield bonds and leveraged loans are rising as more companies default under a higher cost of capital, a trend the author argues markets are not taking seriously.

Markets are not taking the ongoing rise in default rates for HY and loans seriously. The reality is that more and more companies are defaulting because the cost of capital is higher, and Fed Chair Powell says that interest rates will stay at these levels “for a couple of years,” so tight monetary policy will continue to have a greater negative effect on the economy and capital markets. In fact, higher costs of capital is precisely how monetary policy works: By making it more difficult to get financing. Once there is a default by some household name in credit, we will likely see an overnight change in market sentiment from bullish to bearish.

Takeaways by Macro Roundup® AI

  1. Default rates for high-yield bonds and leveraged loans are rising as more companies default under a higher cost of capital, a trend the author argues markets are not taking seriously.
  2. Fed Chair Powell says interest rates will stay at these levels "for a couple of years," so tight monetary policy will continue to weigh more heavily on the economy and capital markets.
  3. A default by a household name in credit would likely flip market sentiment from bullish to bearish overnight, in the author's view.

Related Articles:

  • Small Bank Thoughts John Cochrane — Banking-sector stress that constricts credit is consistent with, rather than an obstacle to, the Federal Reserve's approach to lowering inflation, since the main mechanism by which higher interest rates slow the economy is tighter financial conditions and reduced borrowing for investment and consumer durables. Containing inflation by other means would require reducing fiscal stimulus.
  • Credit Allocation and Macroeconomic Fluctuations — Credit expansions disproportionately channel credit to non-tradable sector firms and households, and the authors find that the sectoral allocation of credit predicts future GDP paths and the likelihood of systemic banking crises. Credit growth to non-tradable industries predicts boom-bust output patterns and elevated financial fragility, while credit to tradable industries is associated with higher future productivity growth.

AI Summary. Fentanyl causes most of the more than 85,000 annual opioid overdose deaths in the US and Canada, and has become the leading cause of death for young US adults. Researchers at Rand Corporation estimate a full year's US fentanyl supply weighs about 5 tonnes, versus roughly 125 tonnes for heroin.

Christine Murray Financial Times
Date Posted:

Current annual US demand for fentanyl is the equivalent of one truckload, making interdiction very difficult. The equivalent US heroin demand would weigh 25X more.

Has fentanyl's small size made drug smuggling harder to stop?

Core argument: Fentanyl causes most of the more than 85,000 annual opioid overdose deaths in the US and Canada, and over the last decade has become the leading cause of death for young adults in the US.

In the last decade, fentanyl has become the leading cause of death for young adults in the US. Fentanyl now causes most of the more than 85,000 annual opioid overdose deaths in the US and Canada. All the fentanyl needed to supply the US for one year weighs the equivalent of 5 tonnes and would easily fit into one lorry, according to researchers at Rand Corporation. That compares with about 125 tonnes for heroin and even more for cocaine.

Takeaways by Macro Roundup® AI

  1. Fentanyl causes most of the more than 85,000 annual opioid overdose deaths in the US and Canada, and over the last decade has become the leading cause of death for young adults in the US.
  2. Rand Corporation researchers estimate all the fentanyl needed to supply the US for one year weighs the equivalent of 5 tonnes and would fit into one lorry.
  3. Supplying the US for a year takes about 125 tonnes of heroin and even more cocaine, compared with roughly 5 tonnes of fentanyl, according to Rand Corporation researchers.

Related Articles:

  • Only One Thing Will Solve the Fentanyl Crisis — Fentanyl or similar synthetic opioids were involved in two-thirds of roughly 107,000 US overdose deaths in a single year, with US drug agents seizing more than 50m fentanyl-laced pills and over 10,000 pounds of fentanyl powder. Methamphetamine flowing from Mexico, aided by cheap chemical inputs, has pushed wholesale prices to historic lows.
  • Drug Overdose Deaths Topped 100,000 Again in 2022 — The Centers for Disease Control and Prevention counted a provisional 109,680 US overdose deaths in a year, essentially flat against 109,179 the prior year. The plateau follows a 16% increase in overdose deaths in one year and a 30% surge the year before.

AI Summary. The Semiconductor Industry Association projects US chipmakers will add roughly 115,000 jobs by 2030, but estimates about 58% could go unfilled based on current degree completion rates. The group says too few Americans study science, engineering, math and technology, while many foreign-born engineering graduates leave the US.

Ian King Bloomberg
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The American semiconductor industry trade association reports the industry is facing a likely shortfall of 60% of the 115,000 new positions they will need through 2030. @markets

Will worker shortages leave most new US chip jobs unfilled?

Core argument: The Semiconductor Industry Association projects chipmakers will add about 115,000 jobs by 2030, but based on current degree completion rates roughly 58% of those positions could remain unfilled.

Chipmakers are on course to add about 115,000 jobs by 2030 [according to] Semiconductor Industry Association (SIA). Based on a study of current degree completion rates, though, about 58% of those projected positions could remain unfilled. Not enough Americans are studying science, engineering, math and technology-related subjects, according to the SIA. And people from other countries who are acquiring those skills are leaving, the group said. At US colleges and universities, more than 50% of master’s engineering graduates and 60% of those with a Ph.D. in engineering are citizens of other countries. About 80% of those master’s graduates and 25% of those who earn doctorates depart the US — either by choice or because immigration policy doesn’t allow them to stay.

Takeaways by Macro Roundup® AI

  1. The Semiconductor Industry Association projects chipmakers will add about 115,000 jobs by 2030, but based on current degree completion rates roughly 58% of those positions could remain unfilled.
  2. The Semiconductor Industry Association attributes the projected shortfall to too few Americans studying science, engineering, math and technology subjects, and to people from other countries with those skills leaving the US.
  3. Citizens of other countries account for more than 50% of master's engineering graduates and 60% of engineering Ph.D.s at US colleges and universities, with about 80% of those master's graduates and 25% of doctorate earners departing the US by choice or because immigration policy does not allow them to stay.

Related Articles:

  • The Extreme Shortage of High IQ Workers — Semiconductor manufacturing requires workers of above-average intelligence, with the most demanding roles needing IQs in the top 1 in 1,000 — a pool of about 164,000 people in the US, of whom perhaps 100,000 can be placed in such professions. The author argues this scarcity explains reliance on high-IQ workers abroad and on smarter tools and non-human intelligence.
  • TSMC To Send Hundreds More Workers To Speed U.S. Plant Construction — Chipmaker TSMC and its suppliers are in talks with the U.S. government on non-immigrant visas to dispatch more than 500 experienced workers to speed construction of its U.S. chip plants, according to chip supply chain executives. Executives said too few U.S. workers have hands-on experience building semiconductor facilities, causing installation delays.

AI Summary. Sea ice around Antarctica has fallen to an all-time low, following earlier record lows, and for the first time in the observational record it has failed to substantially recover during winter, leaving vast stretches of coastline ice free. Scientists describe the decline as a five-sigma event.

Alexandra Alvaro Australian Broadcast Corporation
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According to oceanographer Edward Doddridge the decline in Antarctic ice this winter is “a five-sigma event,” i.e. once every 7.5 million years.

According to oceanographer Edward Doddridge the decline in Antarctic ice this winter is “a five-sigma event,”...

Has Antarctic sea ice fallen to an unprecedented low without winter recovery?

Core argument: Antarctic sea ice extent hit an all-time low, which physical oceanographer Edward Doddridge called a five-sigma event — five standard deviations beyond the mean — expected roughly once every 7.5 million years if nothing had changed.

The sea ice around Antarctica is in sharp decline, scientists observed an all-time low in the amount of sea ice around the icy continent, following all-time lows in 2016, 2017 and 2022. Usually, the ice has been able to recover in winter but this year is different. For the first time, the sea ice extent has been unable to substantially recover this winter, leaving scientists baffled. Physical oceanographer Edward Doddridge said vast regions of the Antarctic coastline were ice free for the first time in the observational record. "To say unprecedented isn't strong enough, for those of you who are interested in statistics, this is a five-sigma event. So it's five standard deviations beyond the mean. Which means that if nothing had changed, we'd expect to see a winter like this about once every 7.5 million years."

Takeaways by Macro Roundup® AI

  1. Antarctic sea ice extent hit an all-time low, which physical oceanographer Edward Doddridge called a five-sigma event — five standard deviations beyond the mean — expected roughly once every 7.5 million years if nothing had changed.
  2. Antarctic sea ice has failed to substantially recover in winter for the first time, following record lows in 2016, 2017 and 2022.
  3. Vast regions of the Antarctic coastline were ice free for the first time in the observational record, according to physical oceanographer Edward Doddridge.

Related Articles:

Wednesday, July 26, 2023

AI Summary. The real (inflation-adjusted) policy interest rate is around 1.5%, about one percentage point above the Federal Reserve's estimate of the neutral rate but lower than levels that preceded past recessions. Persistent underlying inflation, financial conditions that are not tightening, and those relatively low real rates argue for more rate increases than markets expect, which would raise recession risk.

Michael Strain Project Syndicate
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.@MichaelRStrain highlights the fact that monetary policy slows the economy by tightening overall financial conditions, and yet financial conditions have not tightened much in 2023. He predicts more rate increases and a recession.

.@MichaelRStrain highlights the fact that monetary policy slows the economy by tightening overall financial conditions, and...

Do low real interest rates point to more rate hikes ahead?

Core argument: The author calculates the real policy interest rate at roughly 1.5%, one percentage point above the Fed's estimate of the neutral real rate but below levels that prevailed before previous US recessions.

According to my calculations, the real (inflation-adjusted) interest rate is around 1.5%, which is one percentage point higher than the Fed’s estimate of the neutral real policy rate (which neither stimulates nor reduces economic activity). Prior to previous recessions, the real rate has been higher. While current market pricing suggests that the Fed will increase the federal funds rate once more this cycle, I think that is optimistic. Between stubborn and high underlying inflation, financial conditions that aren’t tightening, and real interest rates that are lower than is typical before a significant economic slowdown, there are ample reasons for the Fed to raise rates more than economists and investors currently seem to expect. If that happens, the risk of recession will increase.

Takeaways by Macro Roundup® AI

  1. The author calculates the real policy interest rate at roughly 1.5%, one percentage point above the Fed's estimate of the neutral real rate but below levels that prevailed before previous US recessions.
  2. Market pricing implies one more federal funds rate increase this cycle, which the author considers optimistic given stubborn, high underlying inflation and financial conditions that are not tightening.
  3. The author argues that if the Fed raises rates more than economists and investors expect, the risk of a US recession will increase.

Related Articles:

  • Furman On CPI Report — Headline consumer price inflation fell to 3.0%, largely reflecting a 17% drop in energy prices over the past year, while core inflation registered its lowest reading of the inflationary period as service price growth gradually slowed and goods price growth turned back down.
  • A Default Cycle Has Started — Default rates on high-yield bonds and leveraged loans are rising as more companies default under a higher cost of capital, with the Federal Reserve signaling interest rates will stay at these levels for a couple of years. Tighter financing conditions are the channel through which monetary policy restrains the economy and capital markets.

AI Summary. New research projects that the Atlantic Meridional Overturning Circulation, the network of ocean currents shaping North Atlantic climate, could collapse around midcentury as human-driven warming slows it. A much weaker circulation could cool much of the Northern Hemisphere, speed sea-level rise along North American and European coasts, and reduce rainfall in Africa's Sahel and Asian monsoon regions.

Raymond Zhong New York Times
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New research projects that the Atlantic Meridional Overturning Circulation current will weaken this century which could have a cooling effect on the Northern Hemisphere and reduce rainfall in the monsoon regions of Asia.

New research projects that the Atlantic Meridional Overturning Circulation current will weaken this century which could have...

Will warming cause Atlantic ocean currents to collapse this century?

Core argument: Research published in Nature Communications projects that the Atlantic Meridional Overturning Circulation could collapse around midcentury, with human-driven warming possibly slowing the current network in recent decades.

The last time there was a major slowdown in the mighty network of ocean currents that shapes the climate around the North Atlantic, it seems to have plunged Europe into a deep cold for over a millennium. That was roughly 12,800 years ago when not many people were around to experience it. But in recent decades, human-driven warming could be causing the currents to slow once more. New research published in Nature Communications [projects] the Atlantic Meridional Overturning Circulation, or AMOC could collapse around midcentury. Were the circulation to tip into a much weaker state, the effects on the climate would be far-reaching, though scientists are still examining their potential magnitude. Much of the Northern Hemisphere could cool. The coastlines of North America and Europe could see faster sea-level rise. Northern Europe could experience stormier winters, while the Sahel in Africa and the monsoon regions of Asia would most likely get less rain.

Takeaways by Macro Roundup® AI

  1. Research published in Nature Communications projects that the Atlantic Meridional Overturning Circulation could collapse around midcentury, with human-driven warming possibly slowing the current network in recent decades.
  2. The last major slowdown of the Atlantic current network, roughly 12,800 years ago, appears to have plunged Europe into a deep cold lasting more than a millennium.
  3. A tip into a much weaker Atlantic circulation could cool much of the Northern Hemisphere, speed sea-level rise along North American and European coastlines, bring stormier northern European winters, and most likely reduce rainfall in the Sahel and Asian monsoon regions.

Related Articles:

  • Antarctic Sea Ice Has Shrunk By An Area Nine Times The Size Of Britain — Antarctic sea ice cover fell to 10.7m square km, 1.15m square km below the prior record low for that date and 2.3m square km below the 1981–2010 average. Scientists have not established why sea ice around the continent dropped so steeply after an earlier period of growth.
  • Florida Ocean Temperatures At ‘Downright Shocking’ Levels — 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.

AI Summary. China has become the world's largest exporter of vehicles by volume, a position previously held by Germany or Japan, and has moved into a motor vehicle trade surplus. Its net exports still remain below Japanese and German levels, and Chinese vehicles tend to carry a lower value per car than foreign competitors.

Joseph Politano Apricitas Economics
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China is now the leader in car export volume, but the value of its net exports remains lower than Germany and Japan. @JosephPolitano

How has China become the world's largest vehicle exporter by volume?

Core argument: Ford CEO James Farley said on an earnings call that China became the world's number one exporter of vehicles, a position previously held by Germany or Japan.

“No one noticed—but we noticed,” said Ford CEO James Farley on an earnings call last month, “something monumental happened in our industry, where China became the number one exporter of vehicles globally. It had always been the Germans or the Japanese.” Despite the record-setting rise in gross exports and China’s newfound motor vehicle trade surplus, net exports still remain below Japanese and German levels. The per-car value of Chinese vehicles still tends to be lower than their foreign competitors, and a lot of the rise in exports has been matched by a rise in imports.

Takeaways by Macro Roundup® AI

  1. Ford CEO James Farley said on an earnings call that China became the world's number one exporter of vehicles, a position previously held by Germany or Japan.
  2. Despite record gross vehicle exports and a new motor vehicle trade surplus, China's net vehicle exports remain below Japanese and German levels, with much of the export rise matched by rising imports.
  3. The per-car value of Chinese vehicles tends to be lower than that of their foreign competitors.

Related Articles:

  • China’s Auto Export Wave Echoes Japan’s in the ’70s — The shift from petroleum-fueled internal combustion vehicles to electric vehicles moves resource leverage from Persian Gulf oil producers to critical minerals, with China holding more than half of global processing capacity for lithium, cobalt, and graphite and about a third for nickel. Chinese companies have spent $4.5bn acquiring stakes in nearly 20 lithium mines, mostly in Latin America and Africa.
  • The Chinese Carmakers Planning to Shake Up The European Market — Chinese carmakers are expanding in Europe, with Chery planning up to 15,000 UK car sales and 50 UK showrooms, and Germany's largest car rental company agreeing to buy 100,000 BYD vehicles for its European operations. KPMG estimates Chinese groups could take a 15% share of new car sales in Europe, exceeding Renault's.

AI Summary. Using French firm data, the authors estimate that a 10% rise in electricity prices lowers production by 1.6% and employment by 1.5%, while firm-level energy efficiency rises and profits fall modestly or only among the most gas-intensive firms. These negative effects diminish over time as firms adapt.

Lionel Fontagné, Philippe Martin and Gianluca Orefice Center for Economic and Policy Research
Date Posted:

Between 1996-2019 French firms responded to energy shocks by initially reducing exports and employment but over time they increased their energy efficiency and the negative effects faded. @martinph01

How do firms adjust production, employment, and efficiency to higher energy prices?

Core argument: A 10% increase in electricity prices translates into a 1.6% fall in production and a 1.5% fall in employment at French firms, while energy efficiency at the firm level increases.

The energy price shock also generates a fall in production and employment: a 10% increase in electricity price translates into a 1.6% fall in production and a 1.5% fall in employment. Energy efficiency increases at the firm level. Profits fall but modestly or only for the most gas-intensive firms. However, these negative impacts wane over time. Our interpretation is that during 1995–2019, firms adapted their technology and production processes to higher energy prices and a selection process eliminated those not able to adjust. All in all, these results suggest that firms are able to adjust and adapt strongly to energy shocks but that the competitiveness impact is significant.

Takeaways by Macro Roundup® AI

  1. A 10% increase in electricity prices translates into a 1.6% fall in production and a 1.5% fall in employment at French firms, while energy efficiency at the firm level increases.
  2. Profits fall modestly in response to the energy price shock, or only for the most gas-intensive firms, and these negative impacts wane over time.

AI Summary. Seven automakers—BMW, General Motors, Honda, Hyundai, Kia, Mercedes-Benz and Stellantis—will invest at least $1bn in a joint venture to build 30,000 fast electric-vehicle chargers in the US and Canada, nearly doubling the roughly 32,000 fast chargers in the US. The chargers will accommodate both Tesla's connector standard and the one used by most other carmakers.

Jack Ewing New York Times
Date Posted:

Seven major automakers are investing $1 billion in a joint venture that will almost double the number of EV chargers in the United States.

Seven major automakers are investing $1 billion in a joint venture that will almost double the number of EV chargers in the...

Are automakers teaming up to double US fast-charging capacity?

Core argument: Seven automakers — BMW Group, General Motors, Honda, Hyundai, Kia, Mercedes-Benz Group and Stellantis — will invest at least $1 billion initially in a joint venture to build 30,000 chargers on major highways and other locations in the United States and Canada.

Seven major automakers announced a plan on Wednesday to nearly double the number of fast chargers in the United States in an effort to address one of the main reasons that people hesitate to buy electric cars. The carmakers — BMW Group, General Motors, Honda, Hyundai, Kia, Mercedes-Benz Group,, and Stellantis — will initially invest at least $1 billion in a joint venture that will build 30,000 chargers on major highways and other locations in the United States and Canada. The United States has about 32,000 fast chargers — those that can replenish a drained battery in 10 to 30 minutes. The chargers will have plugs designed to use the connections used by most carmakers other than Tesla, as well as the standard developed by Tesla that Ford, G.M.,, and other companies have said they intend to switch to in 2025.

Takeaways by Macro Roundup® AI

  1. Seven automakers — BMW Group, General Motors, Honda, Hyundai, Kia, Mercedes-Benz Group and Stellantis — will invest at least $1 billion initially in a joint venture to build 30,000 chargers on major highways and other locations in the United States and Canada.
  2. The plan would nearly double the number of fast chargers in the United States, which stands at about 32,000 units capable of replenishing a drained battery in 10 to 30 minutes.
  3. The joint venture's chargers will carry both the plugs used by most carmakers other than Tesla and the standard developed by Tesla, which Ford, G.M. and other companies have said they intend to switch to in 2025.