Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…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
  • “…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 very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Monday, September 25, 2023

AI Summary. Survey data show average views in high-income countries have become 20% more zero-sum — the belief that people get rich only at others' expense — over the past century, with two rises in zero-sum attitudes coinciding with growth slowdowns in the 1970s and the past two decades.

John Burn-Murdoch Financial Times
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Americans and Britons have shifted from believing “wealth can grow so there’s enough for everyone” to “people can only get rich at the expense of others.” Democrats who voted for Trump in 2016 scored very high on zero-sum beliefs. @jburnmurdoch

Do slower growth periods make people more zero-sum in their thinking?

Core argument: Average responses in high-income countries on the World Values Survey's zero-sum-to-positive-sum wealth scale have become 20% more zero-sum over the last century.

Every five to 10 years, the World Values Survey asks people in dozens of countries where they would place themselves on a scale from the zero-sum belief that “people can only get rich at the expense of others”, to the positive-sum view that “wealth can grow so there’s enough for everyone”. The average response among those in high-income countries has become 20% more zero-sum over the last century. Moreover, two distinct rises in the prevalence of zero-sum attitudes have coincided with two slowdowns in gross domestic product growth, one in the 1970s and another in the past two decades. The same pattern holds within individual countries. Britons and Americans have become significantly more likely to believe that success is a matter of luck rather than effort precisely as income growth has slowed.

Takeaways by Macro Roundup® AI

  1. Average responses in high-income countries on the World Values Survey's zero-sum-to-positive-sum wealth scale have become 20% more zero-sum over the last century.
  2. Two distinct rises in zero-sum attitudes coincided with two slowdowns in GDP growth, one in the 1970s and another over the past two decades, a pattern that also holds within individual countries.
  3. Britons and Americans have become significantly more likely to believe success is a matter of luck rather than effort as income growth has slowed.

Related Articles:

  • Zero-Sum Thinking and the Roots of U.S. Political Divides — Zero-sum thinking — viewing gains for one group as losses for another — is associated with greater support for liberal economic policies, stronger alignment with the Democratic Party, and weaker alignment with the Republican Party. The authors also find it linked to believing the QAnon conspiracy theory holds some truth and to sympathy for the attack on the U.S. Capitol.
  • Is the Surge to the Left Among Young Voters a Trump Blip or the Real Deal? — Data from the Cooperative Election Study show millennials and Gen Z have voted increasingly for Democratic House candidates over time, contrary to the adage that voters grow more conservative as they age. One political scientist notes such generational shifts translate slowly into vote share and can be offset by Republican gains elsewhere.
  • Millennials are Shattering the Oldest Rule in Politics — British "silent generation" and baby boomers grew more conservative with age, and Gen X is following the same path, but millennials, born 1981-1996, diverged from that trajectory. The most likely explanation is a cohort effect, with US survey data showing millennials favoring greater redistribution from rich to poor than earlier generations.

AI Summary. Zero-sum thinking — viewing gains for one group as losses for another — is associated with greater support for liberal economic policies, stronger alignment with the Democratic Party, and weaker alignment with the Republican Party. The authors also find it linked to believing the QAnon conspiracy theory holds some truth and to sympathy for the attack on the U.S. Capitol.

Sahil Chinoy, Nathan Nunn, Sandra Sequeira and Stefanie Stantcheva National Bureau of Economic Research
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Zero-sum thinking in terms of political and policy views is strongly associated with lower levels of intergenerational upward mobility. @S_Stantcheva @DrNathanNunn

How does zero-sum thinking shape political views and party alignment?

Core argument: Zero-sum thinking is associated with greater preference for liberal economic policies, stronger alignment with the Democratic Party, and weaker alignment with the Republican Party.

Zero-sum thinking is associated with more preference for liberal economic policies in general and with stronger political alignment with the Democratic Party and weaker alignment with the Republican Party. We also find that zero-sum thinking is linked empirically to important political crises experienced in the United States. Specifically, we find that individuals who view the world in zero-sum terms are more likely to believe that the conspiracy theory QAnon holds some truth for U.S. politics. We also find that zero-sum thinking is linked with empathy and understanding for the January 6, 2021 attack on the U.S. Capitol Building, an act that is more justifiable and seen as being less harmful if one presumes the world is zero-sum (rather than positive/negative sum).

Takeaways by Macro Roundup® AI

  1. Zero-sum thinking is associated with greater preference for liberal economic policies, stronger alignment with the Democratic Party, and weaker alignment with the Republican Party.
  2. Individuals who view the world in zero-sum terms are more likely to believe the QAnon conspiracy theory holds some truth for U.S. politics.
  3. Zero-sum thinking is linked with empathy and understanding for the January 6, 2021 attack on the U.S. Capitol, an act seen as more justifiable and less harmful if one presumes the world is zero-sum.

Related Articles:

  • Are We Destined For A Zero-Sum Future? — Survey data show average views in high-income countries have become 20% more zero-sum — the belief that people get rich only at others' expense — over the past century, with two rises in zero-sum attitudes coinciding with growth slowdowns in the 1970s and the past two decades.
  • Is the Surge to the Left Among Young Voters a Trump Blip or the Real Deal? — Data from the Cooperative Election Study show millennials and Gen Z have voted increasingly for Democratic House candidates over time, contrary to the adage that voters grow more conservative as they age. One political scientist notes such generational shifts translate slowly into vote share and can be offset by Republican gains elsewhere.
  • Millennials are Shattering the Oldest Rule in Politics — British "silent generation" and baby boomers grew more conservative with age, and Gen X is following the same path, but millennials, born 1981-1996, diverged from that trajectory. The most likely explanation is a cohort effect, with US survey data showing millennials favoring greater redistribution from rich to poor than earlier generations.

AI Summary. The authors argue that persistent labor market conflict in the Rust Belt's main industries lowered investment and productivity growth, shifting employment to the rest of the country, and estimate it accounts for roughly half the decline in the region's share of US manufacturing employment. Rising foreign competition plays a more modest quantitative role.

Simeon Alder, David Lagakos, and Lee Ohanian Journal of Political Economy
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According to @lee_ohanian @AEIecon, labor market conflict explains half of the decline in the Rust Belt’s share of total manufacturing employment between 1950 and 2000.

How much of the Rust Belt's decline reflects labor conflict?

Core argument: Persistent labor market conflict in the Rust Belt's main industries accounts for around half of the decline in the region's share of manufacturing employment, according to the paper's quantitative model.

This paper hypothesizes that the decline of the Rust Belt was due in large part to the persistent labor market conflict that was prevalent throughout the region’s main industries. [Labor conflict] results in lower investment and productivity growth, which causes employment to move from the Rust Belt to the rest of the country. The model also features rising foreign competition as an alternative source of the Rust Belt’s decline. Quantitatively, labor conflict accounts for around half of the decline in the Rust Belt’s share of manufacturing employment. Consistent with the data, the model predicts that the Rust Belt’s employment share stabilizes by the mid 1980s, once labor conflict subsides. Rising foreign competition plays a more modest role quantitatively, and its effects are concentrated in the 1980s and 1990s, after most of the Rust Belt’s decline had already occurred.

Takeaways by Macro Roundup® AI

  1. Persistent labor market conflict in the Rust Belt's main industries accounts for around half of the decline in the region's share of manufacturing employment, according to the paper's quantitative model.
  2. In the model, labor conflict lowers investment and productivity growth in the Rust Belt, shifting employment to the rest of the country, with the region's employment share stabilizing by the mid-1980s once conflict subsides.
  3. Rising foreign competition plays a more modest quantitative role in the model, with effects concentrated in the 1980s and 1990s, after most of the Rust Belt's decline had already occurred.

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.
  • American Labor’s Real Problem: It Isn’t Productive Enough — U.S. manufacturing output per hour has grown about 0.2% a year since 2009, below the overall economy and peer economies in Europe and Asia except Japan, with motor vehicle manufacturing productivity falling 32% from 2012 through last year. Unlike warehouses and hospitals, manufacturers face foreign competition and cannot pass higher labor costs to customers.
  • 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. Manufacturing average hourly wages, once about 3% above private-sector wages, have grown more slowly than private-sector wages, erasing the manufacturing wage premium for most manufacturing jobs. The authors estimate that declining unionization accounts for more than 70% of that drop, an effect that remains significant after controlling for worker and sector characteristics.

Kimberly Bayard, Tomaz Cajner, Vivi Gregorich, and Maria Tito Federal Reserve Board
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A @federalreserve analysis from last year finds the manufacturing wage premium has disappeared for most manufacturing jobs as of April 2018. The decline in unionization is responsible for “more than 70% of the drop in the manufacturing wage premium.”

Has declining unionization erased the manufacturing wage premium?

Core argument: Manufacturing average hourly wages stood 3% above private-sector wages in 2006 in the CES data, but that manufacturing wage premium has disappeared for most manufacturing jobs.

As measured in the CES data, manufacturing average hourly wages for all employees were 3% above wages in the private sector in 2006, a difference commonly known as the manufacturing wage premium. Since then, manufacturing wages have averaged gains of 2.3% per year, while wages in the private sector have risen 2.6% per year. While manufacturing workers used to receive a premium relative to workers in other sectors, that premium has disappeared in recent years for most manufacturing jobs. Our results indicate that the decline in unionization rates is responsible for more than 70% of the drop in the manufacturing wage premium. Notably, the unionization effect remains significant even after accounting for a large set of worker and sectoral characteristics.

Takeaways by Macro Roundup® AI

  1. Manufacturing average hourly wages stood 3% above private-sector wages in 2006 in the CES data, but that manufacturing wage premium has disappeared for most manufacturing jobs.
  2. Manufacturing wages have gained an average 2.3% per year since 2006, trailing the 2.6% annual pace of private-sector wages.
  3. Declining unionization rates account for more than 70% of the drop in the manufacturing wage premium, according to the authors' results, with the unionization effect remaining significant after accounting for a large set of worker and sectoral characteristics.

Related Articles:

  • American Labor’s Real Problem: It Isn’t Productive Enough — U.S. manufacturing output per hour has grown about 0.2% a year since 2009, below the overall economy and peer economies in Europe and Asia except Japan, with motor vehicle manufacturing productivity falling 32% from 2012 through last year. Unlike warehouses and hospitals, manufacturers face foreign competition and cannot pass higher labor costs to customers.
  • The World Is In The Grip Of A Manufacturing Delusion — Manufacturing's share of global economic output has fallen from 19% in 1997 to 16%, with the steepest declines in rich countries, and industry's share has slipped in recent years even in China and India. Among OECD countries in recent decades, there has been next to no relationship between economic growth and manufacturing's share of the economy.
  • Unpacking the Boom in U.S. Construction of Manufacturing Facilities — The computer and electronics segment is the dominant component of U.S. manufacturing facility construction, and its boom has not come at the expense of other segments, with chemical, transportation, and food and beverage construction also up, though by much less. Roughly comparable data show no similar surge in other advanced economies.

AI Summary. Hedge funds became a major buyer of US Treasuries after the Federal Reserve and commercial banks stepped back, financing those purchases through dealer repurchase agreements that grew rapidly and then stalled. If these leveraged buyers are hitting financing limits set by dealer balance sheet costs, a new marginal buyer must emerge to absorb upcoming issuance.

Joseph Wang Fed Guy Blog
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.@FedGuy12 writes that the Treasury market is likely to be volatile going forward. He speculates that rates are likely to go higher, as major recent buyers of Treasuries all seem to have exhausted their capacity to take on more Treasuries.

Are leveraged buyers of Treasuries reaching their financing limits?

Core argument: Hedge funds stepped in as buyers of cash Treasuries in size after the Federal Reserve and commercial banks stepped away, using the cash-futures basis trade financed through dealer repo, which grew rapidly and then stalled.

The Treasury market may be entering a period of volatility as leveraged investors have stalled in their purchases and the next marginal buyer has not yet arrived. When the Fed and commercial banks stepped away from the Treasury market, hedge funds stepped in and bought cash Treasuries in size as part of a cash futures basis trade. The financing for that trade is sourced through dealer repo, which grew rapidly and then stalled. While dealers themselves have access to virtually unlimited financing from the Fed, the size of their activity is constrained by balance sheet costs. If the leveraged buyers are reaching financing limits, then a new marginal Treasury buyer must emerge to absorb the sizable upcoming issuance.

Takeaways by Macro Roundup® AI

  1. Hedge funds stepped in as buyers of cash Treasuries in size after the Federal Reserve and commercial banks stepped away, using the cash-futures basis trade financed through dealer repo, which grew rapidly and then stalled.
  2. Dealers have access to virtually unlimited financing from the Federal Reserve, but balance sheet costs constrain the size of their activity.
  3. If leveraged buyers are reaching financing limits, a new marginal Treasury buyer must emerge to absorb sizable upcoming issuance, and the Treasury market may enter a period of volatility.

Related Articles:

  • Resilience Redux in the US Treasury Market — The authors argue that large, persistent US federal deficits and limited dealer balance-sheet flexibility will cause outstanding Treasury debt to grow rapidly relative to the market's capacity to intermediate trades, absent significant changes in market structure. They contend broad central clearing, all-to-all trading, real-time post-trade reporting, capital-regulation changes, and transparent official purchase programs could strengthen market capacity and resilience.
  • Who Has Been Buying U.S. Treasury Debt? — Net purchases of U.S. Treasury securities by the "households and nonprofits" category have soared, more than offsetting sales and redemptions by money market funds, the Federal Reserve, and banks; much of this buying likely reflects hedge funds. The composition of Treasury financing has shifted dramatically as bond prices fell.
  • 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.

AI Summary. US equities make up nearly 70% of the MSCI World index, and its 10 largest constituents — all US companies — exceed the combined market capitalization of Japan, the UK, France, Canada, and Germany. That depth and liquidity attracts new listings from both US and overseas issuers.

Philip Augar Financial Times
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US equities account for nearly 70% of the MSCI World index, and the 10 largest US equities are larger than the combined market capitalization of Japan, the UK, France, Canada, and Germany. European-based firms are looking at listing on US exchanges.

US equities account for nearly 70% of the MSCI World index, and the 10 largest US equities are larger than the combined...

Are US markets drawing listings away from European exchanges?

Core argument: US equities account for nearly 70% of the MSCI World index, while the next five largest markets — Japan, the UK, France, Canada, and Germany — together total less than 20%.

US equities account for nearly 70% of the MSCI World index; the next five largest — in Japan, UK, France, Canada, and Germany — total less than 20%. The top 10 constituent equities of the MSCI World index, which are all US companies including Apple at number one and ExxonMobil at number 10, aggregate to more than 20%. To put it bluntly, the 10 most valuable US equities are larger than the market capitalisations of Japan, UK, France, Canada, and Germany combined. In effect, the US has scaled up the largest companies in the world in its own public markets, creating a colossal pool of recyclable equity capital residing in domestic and non-US investor portfolios. This has created a virtuous cycle of new listings from US and overseas issuers attracted by the depth and liquidity of that equity pool.

Takeaways by Macro Roundup® AI

  1. US equities account for nearly 70% of the MSCI World index, while the next five largest markets — Japan, the UK, France, Canada, and Germany — together total less than 20%.
  2. The top 10 constituents of the MSCI World index are all US companies, led by Apple at number one and ExxonMobil at number 10, and aggregate to more than 20% of the index, exceeding the combined market capitalisations of Japan, the UK, France, Canada, and Germany.
  3. By scaling up the world's largest companies in its own public markets, the US has created a pool of recyclable equity capital held by domestic and non-US investors, producing a virtuous cycle of new listings from US and overseas issuers drawn by that depth and liquidity.

Related Articles:

  • Europe Has Fallen Behind America and the Gap is Growing — The EU economy was somewhat larger than the US in 2008 ($16.2tn versus $14.7tn), but by 2022 the US had grown to $25tn while the EU and UK combined reached only $19.8tn. The dollar's status as the world's reserve currency allows the US to finance its ambitions without unsettling markets.
  • Why Europe’s Stock Markets Are Failing to Challenge the US — The value of European stock market listings fell to its lowest level in a decade, with a single €75bn carmaker listing in Frankfurt accounting for 60% of the total raised. US outperformance in listing numbers and valuations reflects Silicon Valley's technology scene and ultra-loose monetary policy that pushed cash into equities.
  • From Strength To Strength — The US produced $25.5tn in GDP, about 25% of the world total—roughly its 1990 share—while China's share stands at 18%; the US share of the G7's nominal GDP rose from 40% in 1990 to 58%. Income per person is now about 30% above western Europe and 54% above Japan, adjusted for purchasing power.

Tuesday, September 26, 2023

AI Summary. Inflows from official investors, including central banks adding to dollar holdings, came close to supplying about half the net inflows needed to fund the US current account deficit over four quarters of data. Much of that went into equities and bank deposits rather than Treasuries, drawing less attention than Treasury flows.

Brad Setser @Brad_Setser
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Over the past four quarters, inflows from official investors covered half of the US’s current account deficit. @Brad_Setser

How much of the US current account deficit do official investors fund?

Core argument: Total foreign demand for long-term U.S. bonds, official and private including corporate bonds, exceeded the U.S. current account deficit in Q1 2023, and central banks added to their dollar holdings in Q1.

Rather quietly, inflows from official investors came close to generating about half of the net inflows needed to sustain the United States' current account deficit (over the last 4qs of data, q3 23 may be different). A lot of the inflow over the last 4qs (q3 22 to q2 23) has gone into equities and bank deposits so it doesn't get the attention of Treasury flows. But q2 23 Treasury inflows were substantial as well. Total foreign demand for LT US bonds (official and private, including private demand for corporate bonds) exceeded the US current account deficit in q1 2023. The fall in reported foreign holdings last year though got a lot more attention. The IMF's data for global reserves isn't available (yet) for q2, but central banks added to their dollar holdings in q1 (and likely q2). They are getting a lot of coupon payments on their existing stock-- and reinvesting I assume.

Takeaways by Macro Roundup® AI

  1. Total foreign demand for long-term U.S. bonds, official and private including corporate bonds, exceeded the U.S. current account deficit in Q1 2023, and central banks added to their dollar holdings in Q1.

Related Articles:

  • Setser On Chinese “De-Dollarizing” — There is no good evidence that China has reduced its dollar exposure; accounting for the higher dollar share of its hidden reserves, China's dollar holdings have likely increased. Rather than shifting out of dollars, China has moved from US-custodied Treasuries to offshore custodians and risk assets such as agency bonds and equities.
  • Saudi Arabia’s PIF and the New Petrodollar Recycling — Saudi Arabia's Public Investment Fund appears to have taken over a significant portion of the foreign asset allocation previously handled by the Saudi Central Bank, making its balance sheet a window into a new form of petrodollar recycling. Of roughly $777bn in total assets, $305bn were current and $472bn non-current, with $225bn of the latter held as investment securities.
  • Shadow Reserves — How China Hides Trillions of Dollars of Hard Currency — Institutions reporting to China's central government likely hold closer to $6tn in foreign assets than the $3.12tn officially reported as reserves, with the state banking system the main vehicle for holding these uncounted foreign currency assets. China remains a massive global creditor whose foreign exchange accumulation is felt worldwide.

AI Summary. US equity valuations have risen despite muted earnings growth, with AI-linked stocks serving as the major catalyst. Optimism about artificial intelligence's impact on growth, profits and productivity has prompted analysts to compare large language models to 20th-century milestones such as farm electrification, the interstate highway system and the internet.

Michael Cembalest J.P. Morgan
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Michael Cembalest @jpmorgan argues that AI’s impact on equity prices “should be much more durable than other recent investment themes, but the productivity shock that its most vocal adherents expect seems exaggerated.”

Are AI expectations driving equity valuations higher despite weak earnings growth?

Core argument: Equities have been sustained by the anomaly of valuations rising alongside muted earnings growth, with AI-linked stocks serving as the major US equity catalyst this year.

Equities have been sustained by the anomaly of equity valuations rising at a time of muted earnings growth, and the AI catalyst. The major US equity catalyst this year has been the rise in AI-linked stocks. They’ve come off the boil since July, but there’s still a lot of optimism regarding AI’s impact on growth, profits and productivity. All of these use cases have created a frenzy of analysts comparing large language models and other generative AI to 20th century milestones such as the electrification of farms, the interstate highway system and the internet itself.

Takeaways by Macro Roundup® AI

  1. Equities have been sustained by the anomaly of valuations rising alongside muted earnings growth, with AI-linked stocks serving as the major US equity catalyst this year.
  2. AI-linked stocks have come off the boil since July, though optimism persists regarding AI's impact on growth, profits and productivity.
  3. Analysts are comparing large language models and other generative AI to 20th century milestones including the electrification of farms, the interstate highway system and the internet.

Related Articles:

  • Centaurs and Cyborgs on the Jagged Frontier — In a pre-registered experiment at Boston Consulting Group covering 18 realistic consulting tasks, consultants using ChatGPT-4 completed 12.2% more tasks, worked 25.1% faster, and produced 40% higher quality results than those without it. The tool acted as a skill leveler: the lowest-scoring consultants improved 43%, while top performers gained less.
  • Generative AI at Work — A study of 5,179 customer support agents finds that access to a generative AI conversational assistant raised issues resolved per hour by 14% on average, with the largest gains for novice and low-skilled workers and minimal effect on experienced, highly skilled ones. The authors also find AI assistance improved customer sentiment, reduced requests for managerial intervention, and improved employee retention.
  • AI, Mass Evolution, and Weickian Loops — Early consumer artificial intelligence applications have largely been wrappers around marketing copy, image generation, and office tasks like spreadsheets and presentations. In shared spaces such as the image generator Midjourney's Discord server, users can see each other's prompts and results and iterate on them in real time, producing rapid collective experimentation and greater sophistication.

AI Summary. Data reported to the US Equal Employment Opportunity Commission by 88 S&P 100 companies show these firms added 323,094 US jobs in a single year, with 302,570 of them — 94% of the headcount increase — going to people of color and 20,524 to White workers.

Jeff Green, David Ingold, Raeedah Wahid, Cedric Sam and Daniela Sirtori-Cortina Bloomberg
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A Bloomberg analysis found that, for 88 S&P 100 companies, 94% of job growth in 2021 went to non-white workers.

Did large companies keep their promises to hire more people of color?

Core argument: Bloomberg's analysis of 88 S&P 100 companies found they added 323,094 US jobs in 2021, of which 302,570 — 94% of the headcount increase — went to people of color and 20,524 to White workers.

The US Equal Employment Opportunity Commission requires companies with 100 or more employees to report their workforce demographics every year. Bloomberg obtained 2020 and 2021 data for 88 S&P 100 companies and calculated overall US job growth at those firms. In total, they increased their US workforces by 323,094 people in 2021, the first year after the Black Lives Matter protests — and the most recent year for which this data exists. The overall job growth included 20,524 White workers. The other 302,570 jobs — or 94% of the headcount increase — went to people of color. Many people just starting out in their career are from growing Black, Hispanic, and Asian populations, who are entering the workforce just as more tenured White employees retire. That, however, can’t fully account for changes, particularly at the top of the corporate ladder.

Takeaways by Macro Roundup® AI

  1. Bloomberg's analysis of 88 S&P 100 companies found they added 323,094 US jobs in 2021, of which 302,570 — 94% of the headcount increase — went to people of color and 20,524 to White workers.
  2. The data come from the US Equal Employment Opportunity Commission, which requires companies with 100 or more employees to report workforce demographics annually; 2021 is the most recent year available.
  3. Demographic turnover — workers from growing Black, Hispanic, and Asian populations entering the workforce as more tenured White employees retire — cannot fully account for the changes, particularly at the top of the corporate ladder.

Related Articles:

  • Biggest Pay Raises Went to Black Workers, Young People and Low-Wage Earners — An analysis of Labor Department data found median weekly earnings for all workers up 7.4% year-over-year, with the bottom 10th of earners—making about $570 a week—gaining nearly 10% and Black full-time workers receiving a median raise of 11.3%.
  • Rebound in Immigration Comes to Economy’s Aid — Goldman Sachs analysis found average monthly growth in the US foreign-born labor force is about 65,000 higher than in 2022, with that labor force nearing 32m people. Foreign-born workers' share of the labor force reached a record 18% in 2022 and has averaged 18.5% this year.
  • Immigrants & Their Kids Were 70% of U.S. Labor Force Growth Since 1995 — Goldman Sachs analysis found average monthly growth in the US foreign-born labor force is about 65,000 higher than in 2022, with that labor force nearing 32m people. Foreign-born workers' share of the labor force reached a record 18% in 2022 and has averaged 18.5% this year.

AI Summary. Professional economists' median one-year-ahead consumer price inflation forecast has become less sensitive to actual inflation: a regression slope of 0.71 from 1949 through 1998 fell to 0.18 from 1999 onward, implying forecasts now adjust very little in response to realized inflation.

Kevin Lansing and Federico Nucera Federal Reserve Bank of San Francisco
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Looking at postwar data, researchers at @sffed find that there was a regime shift around 1999 towards well-anchored inflation expectations that were not sensitive to incoming CPI data.

Have professional inflation forecasts become less responsive to actual inflation?

Core argument: Regressions of one-year-ahead expected CPI inflation on contemporaneous four-quarter CPI inflation yield a slope of 0.71 for 1949 through 1998, implying professional forecasters' median inflation forecast adjusted nearly one-for-one with actual inflation.

Figure 1 shows that the median forecast of professional economists for one-year-ahead consumer price index (CPI) inflation has become less sensitive to actual CPI inflation. The figure shows the results of regressions measuring the strength of the relationship between one-year-ahead expected CPI inflation (vertical axis) and the contemporaneous four-quarter CPI inflation rate (horizontal axis). For the period from 1949 through the end of 1998, the blue line indicates a strong relationship with a slope of 0.71, implying that the median inflation forecast adjusts nearly one-for-one with actual inflation. The regression yields a much smaller slope of 0.18 for the period from 1999 through the second quarter of 2023 (red line), implying very little forecast adjustment in response to actual inflation.

Takeaways by Macro Roundup® AI

  1. Regressions of one-year-ahead expected CPI inflation on contemporaneous four-quarter CPI inflation yield a slope of 0.71 for 1949 through 1998, implying professional forecasters' median inflation forecast adjusted nearly one-for-one with actual inflation.
  2. For 1999 through the second quarter of 2023, the same regression slope falls to 0.18, implying very little adjustment in the median professional forecast in response to actual CPI inflation.
  3. The median professional forecast of one-year-ahead CPI inflation has become less sensitive to actual CPI inflation, as shown by the decline in the regression slope between the 1949–1998 and 1999–2023 periods.

Related Articles:

  • What We’ve Learned About Inflation — 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.

AI Summary. Commercial real-estate insurance costs have risen 7.6% a year on average since 2017, according to Moody's Analytics, with rental-apartment insurance up 14.4% annually in Dallas, 13% in Los Angeles and 12.6% in Houston. Intensifying natural disasters, costlier reinsurance, and inflation in repair and rebuilding costs are cited as drivers.

Konrad Putzier Wall Street Journal
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Since 2017, commercial real estate insurance costs have grown at 7.6% per year. Developers report that new projects are sometimes seeing no insurance bids.

Are rising insurance costs squeezing commercial real estate owners?

Core argument: Commercial real-estate insurance costs have risen 7.6% annually on average since 2017, according to Moody's Analytics, which said some owners struggle to find anyone willing to insure their buildings.

Commercial real-estate insurance costs have risen 7.6% annually on average since 2017, according to Moody’s Analytics. Costs to insure rental-apartment buildings rose 14.4% annually on average in Dallas, 13% in Los Angeles and 12.6% in Houston. Some owners struggle to find anyone willing to insure their buildings, Moody’s said. Intensifying natural disasters are a big reason for the increase, particularly in cities vulnerable to wildfires, floods or storms. The cost of reinsurance has also increased, trickling down to higher property insurance rates. Meanwhile, inflation has pushed up the cost of repairing or rebuilding damaged properties.

Takeaways by Macro Roundup® AI

  1. Commercial real-estate insurance costs have risen 7.6% annually on average since 2017, according to Moody's Analytics, which said some owners struggle to find anyone willing to insure their buildings.
  2. Costs to insure rental-apartment buildings rose 14.4% annually on average in Dallas, 13% in Los Angeles and 12.6% in Houston, according to Moody's Analytics.
  3. Intensifying natural disasters in cities vulnerable to wildfires, floods or storms, higher reinsurance costs and inflation in repair and rebuilding expenses are cited as reasons for the increases.

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  • Analyzing State Resilience to Weather and Climate Disasters — The real annual cost of U.S. weather and climate disasters has risen from about $20bn per year in the 1980s to nearly $95bn per year in 2010–19, reaching roughly $153bn in one year. Property insurers absorbed 48% of these costs, uninsured or underinsured homeowners, businesses and farms 37%, the federal government 11%, and state and local governments 4%.
  • Rising Insurance Costs Start to Hit Home Sales — A survey of house builders found that 31% in Florida and 29% in Southern California said buyers' home insurance concerns were somewhat slowing sales, versus 9% nationally. Researchers estimate that pricing in flood risk would reduce U.S. residential property values by at least $121bn, including over $50bn of overvaluation in Florida flood zones.
  • How a Small Group of Firms Changed the Math for Insuring Against Natural Disasters — Reinsurance prices rose as much as 40% year over year, according to a report by brokerage Gallagher Re, prompting insurers to change where and what they cover. State Farm and Allstate cited reinsurance market conditions and costs in curtailing some California business, and agricultural reinsurers announced exits from Iowa.

AI Summary. An analysis attributes Georgia's 5.3 point Democratic shift between the 2016 and 2020 presidential elections to three factors: third-party voters switching, Black population growth alongside white population decline, and persuasion concentrated among high-income, high-education voters, with about 3.1 points from persuasion and 2.2 from electorate composition.

Patrick Ruffini The Intersection
Date Posted:
Is Database:
Database

.@PatrickRuffini finds the 5.3pp shift in Georgia towards the Democratic presidential candidate from 2016 to 2020 was driven by vote switching from third party or Trump to Biden by 3.1pp, and demographic change worth 2.2pp.

What drove a swing state's shift toward Democrats between two presidential elections?

Core argument: Georgia's 5.3 point shift from 2016 to 2020, enough to tilt the state to Biden, came from 2016 third-party voters switching to Biden, Black population growth alongside white population decline, and persuasion concentrated among high-income, high-education voters.

The 5.3 point shift between 2016 and 2020–just enough to tilt the state to Biden—was driven by three factors: 2016 third-party voters switching to Biden in 2020, Black population growth and white population decline, and persuasion, primarily among high-income, high-education voters. The total shift in Georgia due to persuasion is about 3.1 points—and 2.2 points comes from the changes in the composition of the electorate. Georgia as a whole is not demographically favorable to Donald Trump: unlike the upper Midwest, there are fewer white working-class voters left for him to flip, and a lot of cross pressured college-educated white Republicans. If Trump’s path with suburban whites is closed off, Trump has another option: continuing to chip away at Democratic margins among African Americans, as current polls suggest he might. Trump would likely need a bigger breakthrough with Black voters than he’s gotten to date to fully counteract the effect of the state’s Black population growth.

Takeaways by Macro Roundup® AI

  1. Georgia's 5.3 point shift from 2016 to 2020, enough to tilt the state to Biden, came from 2016 third-party voters switching to Biden, Black population growth alongside white population decline, and persuasion concentrated among high-income, high-education voters.
  2. Persuasion accounts for about 3.1 points of Georgia's shift, and changes in the composition of the electorate account for about 2.2 points.
  3. Georgia offers Trump fewer white working-class voters to flip than the upper Midwest and many cross-pressured college-educated white Republicans, leaving him the option of chipping away at Democratic margins among African American voters, as current polls suggest he might.

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  • The Road to A Political Realignment in American Politics — College-educated voters are now more likely to identify as Democrats while those without degrees back Republicans, with educational attainment increasingly correlated with views on abortion, LGBTQ+ rights, and religion's relationship to government. This sorting leaves most states politically uncompetitive, with eight states near the national average in education levels holding 97 electoral votes in play.
  • Consistent Signs of Erosion in Black and Hispanic Support for Biden — Polling shows the Democratic presidential candidate's support among nonwhite voters running well below his prior election standing across racial groups, with leads of 72-11 among Black voters, 47-35 among Hispanic registrants, and 40-39 among other nonwhite voters. About 5% of his former nonwhite voters now back the Republican candidate, including 8% of Hispanic voters.
  • How to Interpret Polling Showing Biden’s Loss of Nonwhite Support — Since 1980, the gap between white and Black voter turnout has been related to the share of Black registered voters backing Democrats in pre-election polls, meaning Black voters who don't support Democrats tend not to vote. Polls showing weaker Democratic support among Black voters may therefore signal a smaller Black share of the electorate.

AI Summary. The US Department of Defense aims to buy thousands of low-cost drones within as little as 18 months and up to 2,000 larger uncrewed jets, while one of its primary drone suppliers produced 38 aircraft last year. Booming commercial aerospace demand has left shortages of skilled labor, raw materials, and parts such as advanced electronics and fasteners.

Doug Cameron Wall Street Journal
Date Posted:

The U.S. Department of Defense wants to buy thousands of drones in the next 18 months and as many as 2,000 larger uncrewed jets, but is running into supply constraints of both material and skilled labor.

The U.S. Department of Defense wants to buy thousands of drones in the next 18 months and as many as 2,000 larger uncrewed...

Can drone makers scale to thousands amid labor and parts shortages?

Core argument: The Pentagon aims to buy thousands of cheap drones within as little as 18 months and as many as 2,000 larger uncrewed jets, while Shield AI, one of its primary drone suppliers, produced 38 aircraft last year.

The Pentagon’s goal must contend with booming demand in the commercial aerospace market that has left a shortage of skilled labor, raw materials, and parts such as advanced electronics and fasteners. The Pentagon wants to buy thousands of cheap drones in as little as 18 months, and as many as 2,000 larger uncrewed jets. By contrast, one of its primary drone suppliers, Shield AI, produced 38 of the aircraft last year. The emerging air taxi makers present another challenge. Roughly a dozen companies are vying to develop propeller-driven vehicles that can take off and land like helicopters, potentially cutting journey times in New York City, Los Angeles, and other big urban areas. Flush with cash from venture capital, stock offerings, and military contracts, the sector is moving closer to large-scale production.

Takeaways by Macro Roundup® AI

  1. The Pentagon aims to buy thousands of cheap drones within as little as 18 months and as many as 2,000 larger uncrewed jets, while Shield AI, one of its primary drone suppliers, produced 38 aircraft last year.
  2. Booming commercial aerospace demand has left shortages of skilled labor, raw materials, and parts including advanced electronics and fasteners, which the Pentagon's drone-buying goal must contend with.
  3. Roughly a dozen air taxi companies developing propeller-driven vehicles that take off and land like helicopters are moving closer to large-scale production, flush with cash from venture capital, stock offerings, and military contracts.

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  • Rocket Motor Shortage Curbs Weapons for Ukraine — A shortage of rocket motors is constraining U.S. missile production at makers including Lockheed Martin and Raytheon, with Northrop Grumman brought in to supplement former sole supplier Aerojet Rocketdyne. The Pentagon's acquisition chief says rebuilding and expanding munitions stocks for a potential conflict with China over Taiwan would take five or six years.
  • Military Briefing: Ukraine War Exposes ‘Hard Reality’ of West’s Weapons Capacity — NATO members' defense ministries are finding that dormant weapons production lines cannot be restarted quickly, and that expanding capacity requires investment that depends on securing long-term production contracts. These countries had cut military spending, downsized defense industries, and shifted to lean "just-in-time" production with low inventories of munitions and other equipment.