Edward Conard

Top Ten New York Times Bestselling Author

  • “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
  • “…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
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…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
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…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 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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, August 1, 2023

AI Summary. The Bank of Japan's low interest rate policy anchors global bond yields, and that anchor is set to move higher, making U.S. Treasury bonds less attractive to Japanese investors. With this marginal source of demand fading as Treasury supply is set to increase, U.S. yields are likely to drift higher.

Joseph Wang Fed Guy Blog
Date Posted:

.@FedGuy12 argues that “Treasury yields will continue to drift higher,” as higher Japanese yields will move the marginal Japanese buyer out of the Treasury market just as Treasury issuance is increasing.

Will higher Japanese interest rates push U.S. Treasury yields higher?

Core argument: The Bank of Japan's low interest rate policy anchors global bond yields, and that anchor is set higher soon, leaving U.S. bonds even less attractive to Japanese investors whose exit would allow U.S. yields to drift higher.

The BOJ’s low interest policy remains an anchor of global bond yields, but that anchor will soon be set at a higher level. U.S. bonds will appear even more unattractive to Japanese investors, whose exit from the market would allow U.S. bond yields to drift higher. The eventual Fed rate cuts would reduce FX hedging costs and potentially bring back some Japanese investors, but until then it looks like one more marginal source of demand is evaporating even as Treasury supply is set to increase. This suggests that Treasury yields will continue to drift higher.

Takeaways by Macro Roundup® AI

  1. The Bank of Japan's low interest rate policy anchors global bond yields, and that anchor is set higher soon, leaving U.S. bonds even less attractive to Japanese investors whose exit would allow U.S. yields to drift higher.
  2. Japanese demand for Treasuries looks like one more marginal source of demand evaporating even as Treasury supply is set to increase, suggesting Treasury yields will continue to drift higher.
  3. Eventual Federal Reserve rate cuts would reduce FX hedging costs and potentially bring back some Japanese investors to the U.S. bond market.

Related Articles:

  • American Gothic — US tax increases since 1950 of 2% of GDP or more occurred when overall tax receipts were a much smaller share of GDP than today. Restoring the ratio of entitlement to non-defense discretionary spending to its earlier level of 2.2x would require tax increases larger than those historical precedents.
  • China Isn’t Selling Treasuries — US data on foreign holdings of Treasury securities does not reliably identify the true owners, since several of the largest reported holders — including Belgium, the Cayman Islands, Luxembourg, and Ireland — are financial and custodial centers rather than real holders. Adjusting for Belgian accounts, China's visible holdings of US bonds have held near $1.6tn.

AI Summary. US imports of tariffed goods from China are estimated to be about $150bn below where they would otherwise be, with Mexico filling much of the gap. Manufacturing accounts for 13% of India's gross domestic product, below the government's 25% goal, and Indian manufacturers' value-add is 20% versus 49% for China.

Bloomberg Staff Bloomberg
Date Posted:

Bloomberg’s @TomOrlik writes that Mexico and Vietnam have been the biggest beneficiaries of the realignment of global supply chains, a process that he thinks “has barely begun.”

Are tariffs shifting US imports away from China toward other suppliers?

Core argument: Bloomberg calculates that US imports of tariffed goods from China are running about $150 billion below where they would otherwise be, with Mexico filling much of the gap.

Bloomberg calculates that US imports of tariffed goods from China are down about $150 billion from where they’d otherwise be. Mexico is filling much of the gap. The share of manufacturing in India’s gross domestic product stands at 13%, well below Modi’s 25% goal. China outperforms India in making sophisticated technology—the so-called value-add that leads consumers to pay more for items such as electronics. Chinese manufacturers’ value-add is currently 49%, compared with 20% for India’s, the government says.

Takeaways by Macro Roundup® AI

  1. Bloomberg calculates that US imports of tariffed goods from China are running about $150 billion below where they would otherwise be, with Mexico filling much of the gap.
  2. Manufacturing accounts for 13% of India's gross domestic product, well below Prime Minister Modi's 25% goal.
  3. Chinese manufacturers' value-add stands at 49% against 20% for India's, according to the government, with China outperforming India in making sophisticated technology such as electronics.

Related Articles:

  • Mexico Seeks to Solidify Rank As Top U.S. Trade Partner, Push Further Past China — Mexico is the top U.S. trading partner, accounting for 15.4% of all U.S. goods trade versus 15.2% for Canada and 12.0% for China, with four-month bilateral trade of $263bn. Manufactured goods made up $234.2bn of that total, with $157bn of Mexican imports and $107bn of U.S. exports.
  • Take Away China, and a Stealth Bull Market Emerges — 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.

AI Summary. The gap between the S&P 500's expected earnings yield and the 10-year U.S. government bond yield has narrowed to about 1.1 percentage points, its smallest since 2002. Measured against the 10-year inflation-protected Treasury yield, the spread is about 3.5 percentage points, the lowest since 2003.

Sam Goldfarb Wall Street Journal
Date Posted:

The equity risk premium is at its lowest level since 2002.

Is the extra yield from stocks over bonds shrinking?

Core argument: The gap between the S&P 500's earnings yield and the 10-year Treasury yield fell to about 1.1pp last week, its narrowest since 2002, threatening a recent hot streak for major indexes.

The extra reward for holding stocks instead of bonds has fallen to its lowest level in 20 years, threatening a recent hot streak for major indexes. One method for gauging the value of stocks is to compare their earnings yield—calculated by dividing a company’s expected earnings over the next year by its stock price—to the yield on government bonds, considered the closest thing to a risk-free return. The gap between the earnings yield of the S&P 500 and the yield on the 10-year U.S. government bond dropped to around 1.1pp last week, its narrowest since 2002. The spread to the yield on the 10-year Treasury inflation-protected security, seen by some analysts as the better benchmark because corporate earnings tend to adjust with inflation, has similarly fallen to its lowest level since 2003, at around 3.5pp.

Takeaways by Macro Roundup® AI

  1. The gap between the S&P 500's earnings yield and the 10-year Treasury yield fell to about 1.1pp last week, its narrowest since 2002, threatening a recent hot streak for major indexes.
  2. The spread between the S&P 500 earnings yield and the 10-year Treasury inflation-protected security yield fell to roughly 3.5pp, its lowest since 2003, a benchmark some analysts prefer because corporate earnings tend to adjust with inflation.
  3. One method for gauging the value of stocks compares their earnings yield—expected earnings over the next year divided by stock price—with government bond yields, considered the closest thing to a risk-free return.

Related Articles:

  • Market Resilience or Investors in Denial: The Market at Mid-Year 2023 — The S&P 500 rose 15.91% in the first half of 2023 and the tech-heavy NASDAQ returned nearly twice that, while the expected return on stocks fell from 9.82% to 8.81% and the implied equity risk premium slipped from 5.94% to 5%. The author argues that premium, roughly its average since 2008, does not signal a bubble.
  • Mr. Toad’s Wild Ride: The Impact Of Underperforming 2020 and 2021 US IPOs — Between 40% and 60% of US initial public offerings generate negative returns even in favorable periods, so average IPO returns far exceed median returns and depend on a small set of large winners. Excluding just the top 3% of IPOs turns average net returns negative and cuts average absolute returns by more than half.

AI Summary. Miami-Dade County lost 79,535 residents to net migration to other parts of Florida and other states over a recent multiyear stretch, an analysis of U.S. Census Bureau data by the Brookings Institution found, and the county's population shrank despite partial offset from foreign immigration. Miami home prices rose 53%.

Konrad Putzier and Deborah Acosta Wall Street Journal
Date Posted:

Miami-Dade County’s population shrank between 2019 -2022, the first decrease since the 1970s. The number of employed workers in May was just under 2019 levels.

Are rising home prices driving residents out of Miami?

Core argument: Miami-Dade County lost 79,535 people through net migration to other parts of Florida or other states between 2020 and 2022, according to a Brookings Institution analysis of U.S. Census Bureau data.

Miami-Dade lost 79,535 people through net migration to other parts of Florida or other states between 2020 and 2022, according to an analysis of U.S. Census Bureau data by the Brookings Institution. Although foreign immigration offset some of the loss and helped the county’s population rise slightly last year, Miami-Dade County’s population still shrank between 2019 and 2022—its first population loss over a multiyear period since at least 1970, according to the Federal Reserve Bank of St. Louis. Home prices in Miami have soared 53% since June 2020, according to online listing site Zillow, the second most out of the top 50 metropolitan housing markets after Tampa.

Takeaways by Macro Roundup® AI

  1. Miami-Dade County lost 79,535 people through net migration to other parts of Florida or other states between 2020 and 2022, according to a Brookings Institution analysis of U.S. Census Bureau data.
  2. Miami-Dade's population shrank between 2019 and 2022 despite foreign immigration offsetting some of the loss, its first multiyear population decline since at least 1970, according to the Federal Reserve Bank of St. Louis.
  3. Miami home prices have risen 53% since June 2020, the second largest increase among the top 50 U.S. metropolitan housing markets after Tampa, according to Zillow.

Related Articles:

  • Young Families Have Not Returned to Large Cities Post-Pandemic — The under-five population in large urban U.S. counties fell 6.1% while overall population in those counties fell 0.9%, with declines exceeding 10% in the largest counties including New York, Cook County, Illinois, and Los Angeles. Losses of young families were more severe in the Mid-Atlantic and West Coast, while the under-five population grew in Southeastern urban counties.
  • Home Insurers Are Charging More and Insuring Less — Arizona, Texas, North Carolina, Oregon, Illinois and Utah approved the largest home-insurance rate increases, ranging from 20% to 30%, while some insurers have stopped selling new policies in states such as California and pulled back from disaster-prone areas. Reinsurance premiums, which insurers buy to offload risk, rose 33% to 50% at recent renewals.
  • A $100 Billion Wealth Migration Tilts US Economy’s Center of Gravity South — Six fast-growing Southern states — Florida, Texas, Georgia, North and South Carolina, and Tennessee — now contribute more to US GDP than the Northeast, including the Washington-New York-Boston corridor. The Southeast accounted for more than two-thirds of US job growth since the pandemic began, nearly double its pre-pandemic share, and housed 10 of the 15 fastest-growing large American cities.

AI Summary. Density functional theory calculations on copper-substituted lead phosphate apatite ("LK99") identify correlated isolated flat bands at the Fermi level, a common signature of high transition temperatures in established superconductor families. The author attributes these bands to a structural distortion induced by the copper ions and a chiral charge density wave from lead lone pairs.

Sinead Griffin Lawrence Berkeley National Lab
Date Posted:

Research from Lawrence Berkeley National Lab @sineatrix suggests that the potential superconductivity breakthrough announced by South Korean researchers is plausible.

Does copper-substituted lead phosphate apatite show electronic signatures linked to high-temperature superconductivity?

Core argument: Density functional theory calculations on Cu-substituted lead phosphate apatite ("LK99") identify correlated isolated flat bands at the Fermi level, a signature common to established families of superconductors with high transition temperatures.

A recent report of room temperature superconductivity at ambient pressure in Cu-substituted apatite (‘LK99’) has invigorated interest in the understanding of what materials and mechanisms can allow for high-temperature superconductivity. Here I perform density functional theory calculations on Cu-substituted lead phosphate apatite, identifying correlated isolated flat bands at the Fermi level, a common signature of high transition temperatures in already established families of superconductors. I elucidate the origins of these isolated bands as arising from a structural distortion induced by the Cu ions and a chiral charge density wave from the Pb lone pairs. These results suggest that a minimal two-band model can encompass much of the low-energy physics in this system.

Takeaways by Macro Roundup® AI

  1. Density functional theory calculations on Cu-substituted lead phosphate apatite ("LK99") identify correlated isolated flat bands at the Fermi level, a signature common to established families of superconductors with high transition temperatures.
  2. The isolated flat bands in Cu-substituted lead phosphate apatite are attributed to a structural distortion induced by the Cu ions together with a chiral charge density wave from the Pb lone pairs.
  3. The calculations suggest a minimal two-band model can encompass much of the low-energy physics of Cu-substituted lead phosphate apatite, reported to show room temperature superconductivity at ambient pressure.

Related Articles:

  • Korean Team Claims To Have Created The First Room-Temperature, Ambient-Pressure Superconductor — A South Korean research team claims to have created a superconductor that works at room temperature and ambient pressure, reporting that electrical resistance in their LK-99 samples fell to near zero and that the material showed the magnetic levitation effect characteristic of superconductivity. The team says levitation was only partial, which they attribute to impurities in the material.

AI Summary. Satellite records show the share of the world's land area burned annually has trended downward since the early 2000s, from about 3% to a record-low 2.2%.

Bjorn Lomborg Wall Street Journal
Date Posted:

.@BjornLomborg argues that the narrative around forest fires has been distorted by the media. He notes that the percentage of the globe that burns each year has been declining since 2001.

Is the share of global land burned by fire declining?

Core argument: Satellite records show global burned area hit a record low of 2.2% of the world's land in 2022, down from about 3% in the early 2000s, with the annual area burned trending downward since then.

For more than two decades, satellites have recorded fires across the planet’s surface. The data are unequivocal: Since the early 2000s, when 3% of the world’s land caught fire, the area burned annually has trended downward. In 2022, the last year for which there are complete data, the world hit a new record-low of 2.2% burned area. While the complete data aren’t in for 2023, global tracking up to July 29 by the Global Wildfire Information System shows that more land has burned in the Americas than usual. But much of the rest of the world has seen lower burning—Africa and especially Europe. Globally, the GWIS shows that burned area is slightly below the average between 2012 and 2022, a period that already saw some of the lowest rates of burned area.

Takeaways by Macro Roundup® AI

  1. Satellite records show global burned area hit a record low of 2.2% of the world's land in 2022, down from about 3% in the early 2000s, with the annual area burned trending downward since then.
  2. Global Wildfire Information System tracking through July 29 shows more land burned than usual in the Americas, while Africa and especially Europe saw lower burning.
  3. The Global Wildfire Information System shows global burned area slightly below the 2012–2022 average, a period that already included some of the lowest rates of burned area.

Related Articles:

  • Canada Sees Its Farthest-North 100-Degree Temperature As Wildfires Rage — 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.

Wednesday, August 2, 2023

AI Summary. Fiscal theory holds that a one-time $5tn fiscal expansion produces a one-time rise in the price level sufficient to inflate away $5tn of debt value, after which inflation stops even if the Federal Reserve does nothing. Raising interest rates lowers current inflation at the cost of more-persistent inflation, a beneficial smoothing.

John Cochrane Wall Street Journal
Date Posted:
Is Database:
Database

.@JohnHCochrane takes a victory lap, arguing that the fiscal theory of the price level is the most descriptive theory of inflation.

.@JohnHCochrane takes a victory lap, arguing that the fiscal theory of the price level is the most descriptive theory of...

Does a one-time fiscal expansion cause a one-time price level rise?

Core argument: In fiscal theory, a one-time $5 trillion fiscal blowout produces a one-time rise in the price level just large enough to inflate away $5 trillion of debt value, after which inflation stops even if the Federal Reserve does nothing.

A one-time $5 trillion fiscal blowout causes a one-time rise in the level of prices, just enough to inflate away the value of the debt by $5 trillion. Then inflation stops, even if the Federal Reserve does nothing. The Fed is still important in fiscal theory. The Fed bought about $3 trillion of the new debt and converted it to interest-paying reserves. Giving people checks backed by reserves is arguably a more powerful inducement to spend than giving people Treasury bonds. Now, by raising interest rates, the Fed lowers current inflation but at the cost of more-persistent inflation. That smoothing is beneficial. These are core propositions of fiscal theory, stated ahead of time and at odds with conventional theories.

Takeaways by Macro Roundup® AI

  1. In fiscal theory, a one-time $5 trillion fiscal blowout produces a one-time rise in the price level just large enough to inflate away $5 trillion of debt value, after which inflation stops even if the Federal Reserve does nothing.
  2. The Federal Reserve bought about $3 trillion of the new debt and converted it into interest-paying reserves, and giving people checks backed by reserves is arguably a more powerful inducement to spend than giving them Treasury bonds.
  3. By raising interest rates, the Federal Reserve lowers current inflation at the cost of more-persistent inflation, a beneficial smoothing that fiscal theory stated ahead of time and that is at odds with conventional theories.

Related Articles:

  • Waning 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.
  • 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.

AI Summary. Arrests for minor "broken-windows" offenses—counted as misdemeanors, violations, and infractions per 100,000 residents—fell 74% in New York, 77% in Washington, DC, and 81% in Los Angeles over the period studied, declining steadily in New York and Los Angeles.

Charles Murray American Enterprise Institute
Date Posted:
Is Database:
Database

.@charlesmurray argues that urban disorder has increased since 2013, when cities abandoned broken-windows policing.

How much have arrests for minor offenses fallen in major cities?

Core argument: Arrests for broken-windows offenses fell 74% in New York, 77% in Washington, DC, and 81% in Los Angeles between 2013 and 2022, measured as misdemeanor, violation, and infraction arrests per 100,000 population.

I created a “broken-windows arrest rate” analogous to the violent and property crime rates by summing arrests in the eight categories, dividing them by the size of the city’s population, and expressing the result as the number of arrests per 100,000 population. To ensure that all these qualified as minor crimes, I included only arrests that were charged as misdemeanors, violations, or infractions, excluding arrests charged as felonies. The graph below shows the proportional change in those arrest rates using 2013 as the baseline. In New York and Los Angeles, the fall in arrests for broken-windows offenses was steep and steady from 2013 to 2020. Washington is different, with a sudden rise in broken-windows arrests in Washington in 2019. The anomaly was created entirely by a one-year spike in arrests for prostitution and solicitation, the result of a policy decision to clear the streets of prostitutes near hotels. If arrests for prostitution and solicitation are deleted from the Washington data, the trendline of broken-windows offenses shows the same unbroken decline as the trendlines for New York and Los Angeles. As of 2022, arrests for broken-windows offenses since 2013 had fallen by 74% in New York, 77% in Washington, and 81% in Los Angeles. There was no apparent “Floyd effect” in New York or Los Angeles. A case for a small effect can be made for Washington.

Takeaways by Macro Roundup® AI

  1. Arrests for broken-windows offenses fell 74% in New York, 77% in Washington, DC, and 81% in Los Angeles between 2013 and 2022, measured as misdemeanor, violation, and infraction arrests per 100,000 population.
  2. No apparent "Floyd effect" appears in New York or Los Angeles, where broken-windows arrests declined steeply and steadily from 2013 to 2020, though a case for a small effect can be made for Washington, DC.
  3. Washington, DC's 2019 spike in broken-windows arrests was created entirely by a one-year rise in prostitution and solicitation arrests following a policy decision to clear the streets near hotels; excluding those arrests leaves an unbroken decline.

Related Articles:

  • Pandemic Murder Wave Has Crested. Here’s the Postmortem — Murders in 93 US cities fell 5% year over year after the increase that began in 2020, though homicides remained 4,764 (28.7%) above pre-pandemic levels, according to data compiled by AH Datalytics. US murder rates remain far higher than in other wealthy nations.

AI Summary. After spiking during the COVID-19 pandemic, the share of income US households save fell to near historic lows and remains around 4.6%, below its pre-pandemic level of roughly 9%. Households whose real income and wealth do not improve must either slow spending, particularly on goods, or finance it with more borrowing and risk deteriorating financial health.

Wendy Edelberg and Sofoklis Goulas Brookings Institution
Date Posted:

.@WendyEdelberg notes the current 4.6% personal savings rate and argues that households must either cut spending or undermine financial health by borrowing to maintain current spending levels.

Can a low household saving rate support strong consumer spending?

Core argument: The U.S. personal saving rate stood at 4.6% as of May 2023, below the roughly 9% rate that prevailed in 2019, after falling under 3% of disposable personal income in June 2022, close to a historic low.

The rate at which households saved out of income saw large fluctuations during the COVID-19 pandemic. In 2019 the saving rate hovered around 9%. After the saving rate spiked to unprecedented levels in 2020 and 2021, it fell dramatically in 2022. In June 2022 households saved less than 3% of DPI, which was close to a historically low level. As of May 2023, the saving rate remains low at 4.6%. Some households may be on a precipice where real income and real wealth do not show marked improvement. To maintain relatively healthy balance sheets, such households can moderate the pace of consumer spending (particularly goods spending). Alternatively, households can maintain the current trends in spending, increasingly financing spending with borrowing, and financial health could deteriorate in a worrying way.

Takeaways by Macro Roundup® AI

  1. The U.S. personal saving rate stood at 4.6% as of May 2023, below the roughly 9% rate that prevailed in 2019, after falling under 3% of disposable personal income in June 2022, close to a historic low.
  2. The saving rate spiked to unprecedented levels in 2020 and 2021 before falling dramatically in 2022, leaving some households possibly on a precipice where real income and real wealth do not show marked improvement.
  3. Households can moderate the pace of consumer spending, particularly on goods, to maintain relatively healthy balance sheets, or maintain current spending trends by increasingly financing them with borrowing, allowing financial health to deteriorate.

Related Articles:

  • Accumulated Savings During the Pandemic: An International Comparison with Historical Perspective — The authors construct measures of excess household savings accumulated during the COVID-19 pandemic and find they have been unwound in the United States, declined in advanced foreign economies, and slowed in emerging market economies. Past recessions featured smaller increases in excess savings and greater persistence in the accumulated stock.
  • The Rise and Fall of Pandemic Excess Savings — Researchers estimate US households accumulated about $2.1tn in excess savings above the pre-pandemic trend before drawing them down, with cumulative drawdowns of $1.6tn leaving roughly $500bn remaining. If recent drawdown rates persist, the authors project remaining excess savings would continue supporting household spending for several more months.

AI Summary. The US economy remained significantly depressed for roughly a decade after the financial crisis, a lost decade the author argues could have been avoided with different policies. The evidence offered is the post-Covid recovery, in which major federal spending programs helped the economy regain lost ground in just over three years.

Paul Krugman Krugman Wonks Out
Date Posted:

.@paulkrugman notes the slow recovery from the Great Recession cost Americans $4.5 trillion and argues that the rapid recovery from the post-pandemic recession suggests Great Recession fiscal policy was too constrained.

Could stronger federal spending have prevented a decade of depressed growth?

Core argument: The U.S. economy remained significantly depressed for roughly a decade after the financial crisis, a lost decade that Krugman argues could have been avoided with the right policies.

You can draw comparable charts for many other economic variables, some of them just showing levels like the two figures above, others showing deviations from the pre-2008 trend. Their consistent shapes all tell the same story: The U.S. economy remained significantly depressed for many years — indeed, a decade or so, after the financial crisis — and this lost decade could have been avoided with the right policies. How do we know that it could have been avoided? Because of what happened the past few years, when the U.S. economy, boosted by major federal spending programs, came roaring back from the Covid slump, regaining all the lost ground in just over three years. If America had done as well after the financial crisis, we would have been back on trend by mid-2011.

Takeaways by Macro Roundup® AI

  1. The U.S. economy remained significantly depressed for roughly a decade after the financial crisis, a lost decade that Krugman argues could have been avoided with the right policies.
  2. The U.S. economy, boosted by major federal spending programs, regained all ground lost in the Covid slump in just over three years, which Krugman treats as evidence the post-2008 shortfall was avoidable.
  3. Had the recovery from the financial crisis matched the post-Covid rebound's pace, Krugman writes, the U.S. would have been back on trend by mid-2011.

Related Articles:

AI Summary. Recent strike waves differ in composition: earlier ones were dominated by teachers and other state and local government workers, while current strikers are mostly private-sector employees, often organizing location-by-location in stoppages too small to appear in Bureau of Labor Statistics counts. The Cornell-ILR Labor Action Tracker recorded 224,000 workers in stoppages versus the Bureau's 120,600.

Justin Fox Bloomberg
Date Posted:

Between UPS reaching a tentative deal with the Teamsters and the Yellow Corp bankruptcy, August won’t be the “Summer of Stikes” but @foxjust notes recent labor activity is increasingly in the private, not the public sector.

Are official strike counts missing today's private-sector labor actions?

Core argument: The Cornell-ILR Labor Action Tracker counted 224,000 workers involved in work stoppages last year, nearly double the BLS tally of 120,600, since BLS counts exclude strikes involving fewer than 1,000 workers.

The strikers in 2018 and 2019 were mostly teachers and other state and local government employees, while this year most are employees of private companies. A lot of current private-sector organizing is on a location-by-location basis with strikes that don’t show up in the BLS counts because they involve fewer than 1,000 workers, with the more inclusive Cornell-ILR Labor Action Tracker counting 224,000 workers involved in stoppages last year, nearly double the BLS tally of 120,600. The 340,000 workers who didn’t go on strike at UPS because the company gave into their wage demands should probably count as a significant union victory even if doesn’t show up in the strike statistics. And according to the US BLS other main measure of strike activity, days on strike divided by total working time, this year may still prove a standout, at least by post-1980 standards.

Takeaways by Macro Roundup® AI

  1. The Cornell-ILR Labor Action Tracker counted 224,000 workers involved in work stoppages last year, nearly double the BLS tally of 120,600, since BLS counts exclude strikes involving fewer than 1,000 workers.
  2. Strikers in 2018 and 2019 were mostly teachers and other state and local government employees, while most of this year's strikers work for private companies, where organizing often proceeds location by location.
  3. The 340,000 UPS workers who did not strike after the company gave in to their wage demands arguably mark a significant union victory absent from strike statistics, and by the BLS measure of days on strike divided by total working time, this year may prove a standout by post-1980 standards.

Related Articles:

  • America Is Barreling Toward a Summer of Strikes — More than 650,000 US workers are on strike or threatening to strike, a level of union activity not seen in decades, with actors and writers already out and unions at UPS and Detroit's three largest automakers poised to join if contract talks fail. One Bank of America analyst put the odds of a United Auto Workers strike above 90%.
  • 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. The Bank of Japan has signaled it will allow yields to trade toward 1% from roughly 0.5%, though its intervention in the market suggests that shift is not imminent. With Japanese domestic investors holding around $2.5tn of US stocks, bonds and credit, Wall Street is weighing volatile spillovers that could reinforce higher-for-longer interest rates.

Michael Mackenzie and Katherine Greifeld Bloomberg
Date Posted:
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Database

The end of the Bank of Japan’s yield control campaign will likely tighten financial conditions globally.

Will rising Japanese bond yields push global interest rates higher?

Core argument: The Bank of Japan has signaled it will allow yields to trade toward 1% from roughly 0.5% now, but its move to step into the market on Monday suggests that shift won't happen soon.

While the Bank of Japan has signaled it will let yields to trade toward 1% from roughly 0.5% now, its decision to step into the market on Monday suggests that won’t happen anytime soon. Still, with domestic investors holding around $2.5 trillion of US stocks, bonds and credit, the very idea that Japan will one day join the developed world in retreating from zero rates has Wall Street sizing up a volatile fallout that could add fuel to the higher-for-longer interest rate era.

Takeaways by Macro Roundup® AI

  1. The Bank of Japan has signaled it will allow yields to trade toward 1% from roughly 0.5% now, but its move to step into the market on Monday suggests that shift won't happen soon.
  2. Japanese domestic investors hold around $2.5 trillion of US stocks, bonds and credit, and Wall Street is sizing up a volatile fallout from Japan eventually retreating from zero rates.
  3. The prospect of Japan joining the developed world in exiting zero rates could add fuel to the higher-for-longer interest rate era.

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  • Raising Anchor — The Bank of Japan's low interest rate policy anchors global bond yields, and that anchor is set to move higher, making U.S. Treasury bonds less attractive to Japanese investors. With this marginal source of demand fading as Treasury supply is set to increase, U.S. yields are likely to drift higher.
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AI Summary. South Korea exported more goods to the United States than to China in 2022, the first time since 2004, according to the Bank of Korea. China's ambassador in Seoul publicly warned South Korea against "decoupling" from the Chinese economy under US influence.

Christian Davies Financial Times
Date Posted:

The United States is South Korea’s largest export market for the first time since 2004 as Korean firms quietly pivot away from China.

Is South Korea shifting its exports from China to the US?

Core argument: South Korea exported more goods to the US than to China in 2022, the first time since 2004, according to Bank of Korea data released in June.

In June, Xing Haiming, China’s ambassador in Seoul, publicly warned South Korea against “decoupling” from the Chinese economy under the influence of the US. South Korea has already embarked on an unmistakable — albeit untrumpeted — pivot away from the Chinese economy. According to data released by the Bank of Korea in June, South Korea exported more goods to the US in 2022 than it did to China for the first time since 2004 when China’s nominal gross domestic product was still less than that of the UK.

Takeaways by Macro Roundup® AI

  1. South Korea exported more goods to the US than to China in 2022, the first time since 2004, according to Bank of Korea data released in June.
  2. China's nominal GDP was still smaller than the UK's in 2004, the previous year in which South Korea's exports to the US exceeded those to China.
  3. Xing Haiming, China's ambassador in Seoul, publicly warned South Korea against "decoupling" from the Chinese economy under the influence of the US.