Edward Conard

Top Ten New York Times Bestselling Author

  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…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
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…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
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “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
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…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


Thursday, September 14, 2023

AI Summary. The authors estimate that resuming student loan payments will subtract 0.5 percentage point from quarterly annualized GDP growth, with a government shutdown cutting roughly 0.2pp and an auto workers' strike 0.05–0.10pp for each week it lasts. They project growth slowing to +1.3% before rebounding to +1.9% as these temporary drags fade and income growth reaccelerates.

Ronnie Walker and Alec Phillips Goldman Sachs
Date Posted:

.@GoldmanSachs argues that the US economy is facing three headwinds in Q4: a resumption of student loan payments, a UAW strike, and a potential government shutdown, slowing quarterly annualized growth from 3.1% in Q3 to 1.3% in Q4.

How much do temporary drags slow quarterly GDP growth?

Core argument: Quarterly annualized GDP growth is expected to slow from +3.1% in Q3 to +1.3% in Q4, compared with consensus forecasts of +2.9% and +0.6%.

First, we expect the resumption of student loan payments to subtract 0.5pp from quarterly annualized GDP growth. Second, the federal government looks more likely than not to temporarily shut down. A government-wide shutdown would reduce quarterly annualized growth by around 0.2pp for each week it lasted. Third, we estimate that reduced auto production from a potential UAW strike would reduce quarterly annualized growth by 0.05-0.10pp for each week it lasted, if all three companies currently undergoing contract negotiations are impacted. We expect quarterly annualized GDP growth to slow from +3.1% in Q3 to +1.3% in Q4 (vs. consensus of +2.9% and +0.6%). We expect the slowdown to be shallow and short-lived, with GDP growth rebounding to +1.9% in Q1 (vs. consensus of +0.1%) as these temporary drags abate and income growth reaccelerates on the back of continued solid job growth and rising real wages.

Takeaways by Macro Roundup® AI

  1. Quarterly annualized GDP growth is expected to slow from +3.1% in Q3 to +1.3% in Q4, compared with consensus forecasts of +2.9% and +0.6%.
  2. The resumption of student loan payments is expected to subtract 0.5pp from quarterly annualized GDP growth, with a government-wide shutdown cutting around 0.2pp per week and a UAW strike affecting all three companies in contract negotiations 0.05–0.10pp per week.
  3. The Q4 slowdown is expected to be shallow and short-lived, with GDP growth rebounding to +1.9% in Q1 versus consensus of +0.1% as temporary drags abate and income growth reaccelerates on continued solid job growth and rising real wages.

Related Articles:

  • Soft Landing Summer — The estimated 12-month US recession probability has been cut to 15%, matching the postwar unconditional average implied by a recession occurring roughly once every seven years, and far below the 60% Bloomberg consensus. The authors expect interest rates to fluctuate in a higher range than in the post-2008 period.
  • Autoworkers Have Good Reason to Demand a Big Raise — Inflation-adjusted average hourly pay for US production and nonsupervisory workers has risen 13% over 20 years, about 0.6% a year, while the average hourly wage for auto production-line workers has fallen 30%. General Motors, Ford and Stellantis earned a combined $42bn in net income over 12 months.
  • The Economic Impact of the Student Loan Restart — 46m Americans owe student loan debt to the Department of Education, with three-quarters owing less than $40k and half owing under $20k. Borrowers with balances above $60k make up 16% of borrowers but hold the majority of outstanding student loan debt.

AI Summary. The US government has funded essentially all of its increased deficit by issuing short-term Treasury bills and drawing down cash reserves rather than selling longer-dated debt, limiting the effect on market liquidity so far. The authors expect that pressure is delayed rather than eliminated, with issuance shifting toward longer maturities as the deficit stays elevated.

Karen Karniol-Tambour and Shane Murphy Bridgewater Associates
Date Posted:

Bridgewater writes that fiscal deficits have thus far helped keep the economy from slowing, but as net Treasury issuance ramps up, deficits are likely to result in “higher interest rates and lower asset prices.”

Has short-term debt issuance delayed the deficit's impact on market liquidity?

Core argument: The US government funded essentially all of the increase in its deficit over the past year by issuing T-bills and drawing down its cash reserves rather than significantly increasing issuance of duration.

The impact on markets of the government’s expanded financing need is largely still ahead of us. Over the past year, the government has funded essentially all of the increase in its deficit by issuing T-bills and spending down its cash reserves rather than significantly ramping up the issuance of duration to the market. As a result, Treasury issuance hasn’t needed to entice money out of other cash and asset markets, and thus the impact of the expanded deficit on liquidity has been minimal thus far. We think this pressure is delayed rather than eliminated: looking forward, we expect that the Treasury will shift its mix of issuance toward more duration, as the budget deficit remains elevated and the share of bills outstanding rises through the range that the Treasury generally prefers to target (though there is plenty of flexibility around the precise proportion).

Takeaways by Macro Roundup® AI

  1. The US government funded essentially all of the increase in its deficit over the past year by issuing T-bills and drawing down its cash reserves rather than significantly increasing issuance of duration.
  2. Because Treasury issuance has not needed to entice money out of other cash and asset markets, the expanded deficit's impact on liquidity has been minimal thus far.
  3. Treasury is expected to shift its issuance mix toward more duration as the budget deficit remains elevated and the share of bills outstanding rises through the range Treasury generally prefers, delaying rather than eliminating the pressure on markets.

Related Articles:

  • Soft Landing Summer — The estimated 12-month US recession probability has been cut to 15%, matching the postwar unconditional average implied by a recession occurring roughly once every seven years, and far below the 60% Bloomberg consensus. The authors expect interest rates to fluctuate in a higher range than in the post-2008 period.
  • Has the Fed Tightened Enough? Guideposts to Consider — Wage growth of about 2.5% would be consistent with 2% inflation given low recent-trend productivity growth, but wage growth is running near 4.5%. On this view inflation is more likely to level out at its current rate than keep falling, pushing the Federal Reserve toward further tightening through rate rises or holding rates high.
  • DM Debt – How to Move Mountains — A debt accounting exercise finds that sustained reductions in government debt are typically driven by strong primary budget balances and above-average growth, with inflation playing little role, while current fiscal projections and market interest rates do not point to falling debt-to-GDP ratios across developed economies. The authors estimate market-implied real interest rates now exceed growth rates in many countries.

AI Summary. Inflation-adjusted Census income data show the share of Black families with incomes under $35,000 fell from half in 1967 to about a quarter, while the share earning over $100,000 rose from 5% to over 30%. The middle group, $35,000 to $100,000, has remained in the mid-40% range.

Jeremy Horpedahl Economist Writing Every Day
Date Posted:
Is Database:
Database

Median family incomes have declined every year since 2019; however, @jmhorp notes that median black household income is now the highest it’s ever been.

Have Black families' incomes risen substantially over recent decades?

Core argument: The share of Black families with inflation-adjusted incomes under $35,000 fell from half in 1967 to one quarter in 2022, the lowest on record and below 2019, a drop of 10 percentage points from a decade earlier.

The chart shows the % of Black families that are in three income groups, using total money income data. The data is adjusted for inflation. The progress is dramatic. In 1967, the first year available, half of Black families had incomes under $35,000. By 2022 that number had been cut in half to just one quarter of families (the 2022 number is the lowest on record, even beating 2019). Twenty-five percent is still very high, especially when compared to White, Non-Hispanics (it’s about 12 percent), but it’s still massive progress. It’s even a 10-percentage point drop from just 10 years ago. And Black families haven’t just moved up a little bit: the “middle class” group (between $35,000 and $100,000) has been pretty stable in the mid-40 percentages, while the number of rich (over $100,000) Black families has grown dramatically, from just 5% to over 30%.

Takeaways by Macro Roundup® AI

  1. The share of Black families with inflation-adjusted incomes under $35,000 fell from half in 1967 to one quarter in 2022, the lowest on record and below 2019, a drop of 10 percentage points from a decade earlier.
  2. The share of Black families with incomes above $100,000 grew from 5% to over 30%, while the $35,000–$100,000 group held steady in the mid-40% range.
  3. The 25% of Black families with incomes under $35,000 compares with about 12% among White, non-Hispanic families.

Related Articles:

  • U.S. Incomes Fall for Third Straight Year — The Census Bureau reported that US inflation-adjusted median household income fell 2.3% to $74,580, a 4.7% decline from its peak. Wage growth for the typical worker subsequently outstripped inflation, with inflation-adjusted wages rising about 3%, according to Atlanta Federal Reserve and Labor Department data.
  • Who Won the Cold War? Part I — The Federal Reserve puts American households' net worth at nearly $140tn, an average of over $400,000 per person and over $1m per household of 2.5 people. Estimates of median wealth per adult in current US dollars across 170 countries and places allow this record to be compared with America's Cold War treaty allies in Europe and Asia.

AI Summary. A teardown of Huawei's Mate 60 Pro smartphone found its main chip is made with technology comparable to a 7nm process, possibly by Chinese foundry SMIC, still generations behind leaders such as TSMC, which is mass-producing 3nm chips. SMIC lacks the most advanced lithography machines and likely used older equipment with multipatterning.

Jacky Wong Wall Street Journal
Date Posted:

Huawei’s new G5 phone demonstrates that the Chinese semiconductor industry can deliver advanced chips even without access to US, Dutch, and Japanese technologies blocked by sanctions, potentially enabling Huawei to regain lost market share.

Does a domestic chip breakthrough close China's gap with leading chipmakers?

Core argument: A TechInsights teardown found the main chip in Huawei's Mate 60 Pro, a smartphone that apparently has 5G capabilities, is made using technology comparable to a 7nm process, possibly by Chinese foundry SMIC.

Last week Huawei quietly unveiled the Mate 60 Pro—its new smartphone that apparently comes with 5G capabilities. According to a teardown by industry research firm TechInsights, the main chip inside this new phone is made using technology comparable to the so-called 7nm process. It is possibly made by China’s leading chip foundry Semiconductor Manufacturing International (SMIC). That is still generations behind the market leaders. For example, TSMC has already been mass-producing more advanced 3nm chips. But that nonetheless is still a big step forward, especially given the limitations China’s chip makers are facing. While SMIC has no access to the most cutting-edge extreme ultraviolet lithography machines, it could use some older equipment to make advanced chips, likely using a process called multipatterning.

Takeaways by Macro Roundup® AI

  1. A TechInsights teardown found the main chip in Huawei's Mate 60 Pro, a smartphone that apparently has 5G capabilities, is made using technology comparable to a 7nm process, possibly by Chinese foundry SMIC.
  2. The 7nm-comparable chip remains generations behind market leaders, with TSMC already mass-producing more advanced 3nm chips.
  3. SMIC lacks access to the most cutting-edge extreme ultraviolet lithography machines but could make advanced chips with older equipment, likely using a process called multipatterning.

Related Articles:

  • China Imports Record Amount of Chipmaking Equipment — Chinese customs data show semiconductor production tool imports reached nearly $5bn over two months, up 70% from $2.9bn a year earlier, a record high. Most of the equipment came from the Netherlands and Japan, which have imposed export restrictions on chipmaking equipment alongside the US.
  • Japan to Join US Effort to Tighten Chip Exports to China — Japan and the Netherlands agreed in principle to join the US in restricting exports of advanced chipmaking equipment to China, creating what would amount to a near-total blockade on China's ability to buy the tools needed for leading-edge chips. Japan's Tokyo Electron and Dutch lithography maker ASML are critical suppliers alongside US firms Applied Materials, Lam Research and KLA.

AI Summary. China's Kirin 9000S is a better-designed, leading-edge chip than the West realizes, developed without access to extreme ultraviolet lithography or cutting-edge US intellectual property, indicating existing export controls have not worked. The authors argue only decisive, full-scale measures—not half measures—could prevent China from mass-manufacturing chips needed for high-end military applications.

Dylan Patel, Afzal Ahmad, and Myron Xie Semi Analysis
Date Posted:

Citing Huawei’s new flagship chip, @dylan522p argues that US export controls on China’s semiconductor sector are failing and suggests several steps the US could take that “could stop the Chinese semiconductor industry in its tracks.”

Have export controls failed to stop China's advanced chip development?

Core argument: The Kirin 9000S is a better-designed chip than the West realizes, with solid power and performance that would have placed it near the front of the pack in 2021, according to the authors' assessment.

Put simply, Kirin 9000S is a better-designed chip than the West realizes. It has solid power and performance. Even with the lackluster export controls, this is a leading-edge chip that would be near the front of the pack in 2021, yet was done with no access to EUV, no access to cutting-edge US IP, and intentionally hampered. We cannot overstate how scary this is. There are steps that could be taken to ensure that China does not develop the ability to mass-manufacture the sorts of chips needed for high-end military applications in the coming year. Half measures will not work, but a full-scale assault will make it so the cost of replicating the semiconductor supply chain domestically is neigh on impossible. While we aren’t advocating for any of these specifically, it is clear the West can still stop China’s rise if decisive action is taken.

Takeaways by Macro Roundup® AI

  1. The Kirin 9000S is a better-designed chip than the West realizes, with solid power and performance that would have placed it near the front of the pack in 2021, according to the authors' assessment.
  2. The authors note the Kirin 9000S was produced with no access to EUV and no access to cutting-edge US intellectual property, and describe existing export controls as lackluster.
  3. The authors argue that half measures will not prevent China from mass-manufacturing chips needed for high-end military applications, and that the West can still stop China's rise if decisive action is taken.

Related Articles:

  • Huawei Building Secret Network for Chips, Trade Group Warns — Huawei has entered chip production, acquiring at least two existing plants and building at least three more, part of at least 23 fabrication facilities underway in China with planned investments of more than $100bn by 2030, according to the Semiconductor Industry Association. China is on track to hold more than half of global capacity in older-generation semiconductors by around 2030.
  • China Imports Record Amount of Chipmaking Equipment — Chinese customs data show semiconductor production tool imports reached nearly $5bn over two months, up 70% from $2.9bn a year earlier, a record high. Most of the equipment came from the Netherlands and Japan, which have imposed export restrictions on chipmaking equipment alongside the US.
  • Japan to Join US Effort to Tighten Chip Exports to China — Japan and the Netherlands agreed in principle to join the US in restricting exports of advanced chipmaking equipment to China, creating what would amount to a near-total blockade on China's ability to buy the tools needed for leading-edge chips. Japan's Tokyo Electron and Dutch lithography maker ASML are critical suppliers alongside US firms Applied Materials, Lam Research and KLA.

Friday, September 15, 2023

AI Summary. Spending at stores, restaurants, and online excluding grocery stores and gas stations has been rising at an average annual rate of 7%, versus 4% a year before the pandemic. That pace is consistent with underlying wage growth still running about 2 percentage points faster than pre-pandemic, despite normalized job-market churn and slower growth in posted wages.

Matt Klein The Overshoot
Date Posted:

Underlying wage growth is rising 2pp faster than before the pandemic which is inconsistent with the Fed’s target. @M_C_Klein

Does strong consumer spending signal wage growth above pre-pandemic rates?

Core argument: Spending at stores, restaurants, and online excluding grocery stores and gas stations has risen at a 7% yearly rate each month on average since the spring, compared with 4% a year in 2017–2019.

Meanwhile, spending at stores, restaurants, and online excluding grocery stores and gas stations has been rising at a yearly rate of 7% each month on average since the spring, compared to 4% a year in 2017-2019. That is consistent with underlying wage growth, which is still rising about 2 percentage points faster than before the pandemic, despite the normalization in job market churn, the declining wage bump for people switching jobs, and the slowdown in the growth of posted wages on job boards.

Takeaways by Macro Roundup® AI

  1. Spending at stores, restaurants, and online excluding grocery stores and gas stations has risen at a 7% yearly rate each month on average since the spring, compared with 4% a year in 2017–2019.
  2. Underlying wage growth is still rising about 2 percentage points faster than before the pandemic, a pace consistent with that spending growth.
  3. The faster underlying wage growth persists despite normalization in job market churn, a declining wage bump for job switchers, and slower growth in posted wages on job boards.

Related Articles:

  • Breaking Down the Sources of US Economic Resilience — The US government has funded essentially all of its increased deficit by issuing short-term Treasury bills and drawing down cash reserves rather than selling longer-dated debt, limiting the effect on market liquidity so far. The authors expect that pressure is delayed rather than eliminated, with issuance shifting toward longer maturities as the deficit stays elevated.
  • Soft Landing Summer — The estimated 12-month US recession probability has been cut to 15%, matching the postwar unconditional average implied by a recession occurring roughly once every seven years, and far below the 60% Bloomberg consensus. The authors expect interest rates to fluctuate in a higher range than in the post-2008 period.
  • The Unresolved Tension Between Prices and Incomes — Persistent per-worker income growth of about 5% a year is difficult to reconcile with forecasts of 2% inflation, since inflation reflects the gap between nominal spending growth and real production, and wages are the largest source of financing for consumer spending. Interest rates may therefore fall more slowly than market prices imply.

AI Summary. The United Auto Workers union struck all three Detroit automakers simultaneously for the first time, with about 12,700 workers walking out in targeted stoppages at plants in Michigan, Ohio, and Missouri. The targeted approach preserves the union's $825m strike fund relative to a full walkout of all 146,000 workers while disrupting production planning.

Nora Eckert and Ryan Felton Wall Street Journal
Date Posted:

The United Auto Workers strike against the Big Three is underway. The firms had offered 17.5-20% wage increases over four years, less than the UAW’s mid-30% demand.

Does a targeted strike strategy strengthen the auto union's leverage?

Core argument: About 12,700 United Auto Workers members walked out shortly after midnight Friday at plants in Michigan, Ohio, and Missouri, the union's first simultaneous strike against General Motors, Ford, and Stellantis.

The United Auto Workers union for the first time ever went on strike at all three Detroit car companies, with about 12,700 workers hitting the picket lines shortly after midnight Friday in targeted work stoppages at plants in Michigan, Ohio, and Missouri. The UAW’s plans for targeted work stoppages would bring only a fraction of the overall workforce off assembly lines. That strategy would help preserve the union’s $825 million fund more than a full strike of all 146,000 workers, but stymie output and disrupt automakers’ production planning. It also could prove risky, because employees who remain on the job likely would be working without a contract, a prospect that has sparked concern among some members.

Takeaways by Macro Roundup® AI

  1. About 12,700 United Auto Workers members walked out shortly after midnight Friday at plants in Michigan, Ohio, and Missouri, the union's first simultaneous strike against General Motors, Ford, and Stellantis.
  2. The UAW's targeted work stoppages idle only a fraction of its 146,000 workers, preserving more of the union's $825 million strike fund than a full walkout while stymieing output and disrupting automakers' production planning.
  3. Workers who remain on the job under the UAW's targeted strategy likely would be working without a contract, a prospect that has sparked concern among some members.

Related Articles:

  • Autoworkers Have Good Reason to Demand a Big Raise — Inflation-adjusted average hourly pay for US production and nonsupervisory workers has risen 13% over 20 years, about 0.6% a year, while the average hourly wage for auto production-line workers has fallen 30%. General Motors, Ford and Stellantis earned a combined $42bn in net income over 12 months.
  • The Q4 Pothole: Student Loans, Shutdown, and Strikes — The authors estimate that resuming student loan payments will subtract 0.5 percentage point from quarterly annualized GDP growth, with a government shutdown cutting roughly 0.2pp and an auto workers' strike 0.05–0.10pp for each week it lasts. They project growth slowing to +1.3% before rebounding to +1.9% as these temporary drags fade and income growth reaccelerates.
  • EV Boom Remakes Rural Towns in the American South — Automakers have announced more than $110bn in electric-vehicle investments in the US, with about half directed to Southern states and most of the remainder to Great Lakes states including Michigan, Ohio and Indiana. Great Lakes auto employment, though still nearly double the South's, has fallen 34% over two decades to 382,000 workers.

AI Summary. A declining union share of the electorate and weaker Democratic performance among union households have made Michigan, Pennsylvania, and Wisconsin more competitive, with white voters without college degrees making up majorities of the electorate in all three states. Unionized white non-college voters were less likely to back Trump than their non-union counterparts.

Michael Baharaeen The Liberal Patriot
Date Posted:

As the UAW strike gets underway @mbaharaeen notes that union households will play a significant role in the 2024 election. In 2020 union households made up 21% of the electorate in MI, 18% in PA, and 14% in WI.

How does union membership shape swing-state voting among white non-college voters?

Core argument: White, non-college voters made up a majority of the 2020 electorate in Michigan (54%), Pennsylvania (53%), and Wisconsin (58%), and unionized members of this group were less likely to back Trump than their non-union counterparts.

Unions’ declining vote share combined with less dominant Democratic performances with union household voters have made all three Blue Wall states more competitive: after voting reliably Democratic from 1992 to 2012, each narrowly broke for Trump in 2016. Although Biden won all of them back in 2020, he did so by far smaller margins than Obama earned in 2012. In 2020, white, non-college voters constituted a majority of the electorate in Michigan (54%), Pennsylvania (53%), and Wisconsin (58%). While this demographic is still likelier than not to vote Republican, non-college white voters who are unionized were less likely to back Trump in 2020 compared to those who were not. And while these voters are often more culturally moderate or even conservative, many embrace economic populism and highly approve of unions, giving Biden and Democrats an opportunity to make greater inroads.

Takeaways by Macro Roundup® AI

  1. White, non-college voters made up a majority of the 2020 electorate in Michigan (54%), Pennsylvania (53%), and Wisconsin (58%), and unionized members of this group were less likely to back Trump than their non-union counterparts.
  2. Unions' declining vote share and weaker Democratic margins among union households have made all three Blue Wall states more competitive, each breaking narrowly for Trump in 2016 after voting Democratic from 1992 to 2012.
  3. Biden won Michigan, Pennsylvania, and Wisconsin in 2020 by far smaller margins than Obama earned in 2012, and economic populism and high approval of unions among non-college white voters offers Democrats an opportunity for greater inroads.

Related Articles:

  • Flanked by Union Allies, Biden Touts $36 Billion Pension Bailout — The U.S. government allocated $36bn to the Central States Pension Fund, one of the country's largest multi-employer plans, aiding 350,000 union workers and retirees who otherwise faced benefit cuts estimated at 60%.
  • The ‘Summer of Strikes’ Isn’t Living Up to the Hype — 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.

AI Summary. The International Energy Agency projects a carbon-neutral world in 2050 will need 35m tonnes of green metals annually, with demand by 2030 rising 50-70% for copper and nickel, 150% for cobalt and neodymium, and six- to sevenfold for graphite and lithium. Industry forecasters anticipate copper supply gaps of 2m-4m tonnes and a lithium shortfall of 50,000-100,000 tonnes by 2030.

Economist Staff The Economist
Date Posted:

Meeting decarbonization goals will require significant investments in mining and refining. Industry leaders estimate a copper supply gap of 2m-4m tonnes, 6-12% of demand by 2030.

How large will green-metals demand and supply shortfalls be by 2030?

Core argument: The International Energy Agency predicts a carbon-neutral world in 2050 will need 35m tonnes of green metals a year, with copper and nickel demand rising 50–70% by 2030, cobalt and neodymium 150%, and graphite and lithium six- to seven-fold.

By 2030 copper and nickel demand could rise by 50-70%, cobalt and neodymium by 150%, and graphite and lithium six- to seven-fold. All told, a carbon-neutral world in 2050 will need 35m tonnes of green metals a year, predicts the International Energy Agency. Industry oracles asked by The Economist predict copper-supply gaps of 2m-4m tonnes, or 6-12% of potential demand, by 2030. They also foresee a shortfall of lithium of 50,000-100,000 tonnes, a 2-4% deficit. Nickel and graphite—plentiful in theory—could cause problems because batteries require pure material. There are too few smelters to refine bauxite into aluminum. Outside China, next to no one produces neodymium.

Takeaways by Macro Roundup® AI

  1. The International Energy Agency predicts a carbon-neutral world in 2050 will need 35m tonnes of green metals a year, with copper and nickel demand rising 50–70% by 2030, cobalt and neodymium 150%, and graphite and lithium six- to seven-fold.
  2. Industry oracles surveyed by The Economist predict copper-supply gaps of 2m–4m tonnes by 2030, or 6–12% of potential demand, plus a lithium shortfall of 50,000–100,000 tonnes, a 2–4% deficit.
  3. Nickel and graphite, plentiful in theory, could cause problems because batteries require pure material, while too few smelters exist to refine bauxite into aluminium and next to no one outside China produces neodymium.

Related Articles:

  • 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.
  • Lithium Discovery in US Volcano Could be Biggest Deposit Ever Found — An estimated 20–40m tonnes of lithium metal lie within a volcanic crater in the US, larger than the deposits beneath a Bolivian salt flat previously considered the world's largest. Planned extraction would remove clay with water, centrifuge out lithium-bearing grains, and leach the clay in sulfuric acid.
  • What Have We Learned About the Neutral Rate? — Analysts estimate that if inflation is brought down without a recession, the Federal Reserve's policy rate will stabilize nearer 3–3.25% than the 2.5% longer-run median projection of Federal Reserve officials. Projected shifts in government debt and demographics imply a roughly 0.5 percentage point net increase in the neutral rate over the next decade.

AI Summary. Studies from the US, Sweden, and Finland find that new market-rate housing triggers chains of moves that free up homes for lower-income residents, with 100 new US units associated with up to 70 people leaving below-median-income neighborhoods, regardless of the new units' price point.

John Burn-Murdoch Financial Times
Date Posted:
Is Database:
Database

Recent studies in the US, Sweden, and Finland demonstrate that new unsubsidized housing construction enhances overall affordability by freeing up housing for people with lower incomes. @jburnmurdoch

Does building market-rate housing lower costs for lower-income residents too?

Core argument: A US study finds that building 100 new market-rate dwellings ultimately leads to up to 70 people moving out of below-median income neighbourhoods and up to 40 out of the poorest fifth, with those figures unchanged when the new housing is priced at the top end.

Recent studies from the US, Sweden, and Finland all demonstrate that although most people who move directly into new unsubsidised housing may come from the top half of earners, the chain of moves triggered by their purchase frees up housing in the same cities for people on lower incomes. The US study found that building 100 new market-rate dwellings ultimately leads to up to 70 people moving out of below-median income neighbourhoods, and up to 40 moving out of the poorest fifth. Those numbers don’t budge even if the new housing is priced towards the top end of the market. It’s a similar story in the American Midwest, where Minneapolis has been building more housing than any other large city in the region for years, and has abolished zones that limited construction to single-family housing. Adjusted for local earnings, average rents in the city are down more than 20% since 2017, while rising in the five other similarly large and growing cities.

Takeaways by Macro Roundup® AI

  1. A US study finds that building 100 new market-rate dwellings ultimately leads to up to 70 people moving out of below-median income neighbourhoods and up to 40 out of the poorest fifth, with those figures unchanged when the new housing is priced at the top end.
  2. Studies from the US, Sweden, and Finland find that although most people moving directly into new unsubsidised housing come from the top half of earners, the resulting chain of moves frees up housing in the same cities for people on lower incomes.
  3. Minneapolis, which has built more housing than any other large Midwestern city for years and abolished zones restricting construction to single-family housing, has seen average rents adjusted for local earnings fall more than 20% since 2017, while rents rose in five comparable cities.

Related Articles:

  • On the Move: Which Cities Have The Biggest Housing Shortage? — An analysis finds San Antonio, Dallas, and Orlando have the most constrained housing supply as strong labor markets attract residents, while St. Louis, Detroit, and Miami have the highest housing stock relative to population. Cities with lower housing supply are already seeing higher construction trends.
  • 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.
  • 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.