Edward Conard

Top Ten New York Times Bestselling Author

  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, October 26, 2023

AI Summary. Within the same metropolitan-area income quartile, denser neighborhoods have a higher share of jobs that can be done remotely. The authors argue this pattern suggests increased telework raises willingness to pay for housing in high-density places, where leisure amenities and nonwork social interaction are more available.

Leah Brooks, Philip Hoxie, and Stan Veuger American Enterprise Institute
Date Posted:

Remote work is more prevalent in denser neighborhoods according to new research by @stanveuger @phoxie58 @AEIecon.

Does remote work increase demand for housing in dense neighborhoods?

Core argument: Among neighborhoods within the same metropolitan-area income quartile, denser block groups have a higher share of teleworkable jobs, a finding the authors describe as surprising.

We find that, for neighborhoods in the same metropolitan-area income quartile, the denser the block group, the higher the share of teleworkable jobs. This surprising finding could arise for a number of reasons. First, if workers in industries with greater telework potential enjoy more leisure time in equilibrium, their willingness to pay for amenities that complement leisure increases, and such amenities may not be available in lower-density areas. Second, if workers value social interactions and interactions at work are less frequent, they may seek out social interactions in nonwork settings. Nonwork social interactions are more readily found in population dense areas. Third, and similarly, if in-person contact drives agglomeration effects, a shift to remote work makes such contact outside the workplace more valuable. Again, in-person contact is easier in more population dense areas. All these explanations point toward increased telework leading to a greater willingness to pay for housing in high-density places.

Takeaways by Macro Roundup® AI

  1. Among neighborhoods within the same metropolitan-area income quartile, denser block groups have a higher share of teleworkable jobs, a finding the authors describe as surprising.
  2. One proposed explanation holds that workers in industries with greater telework potential enjoy more leisure in equilibrium, raising their willingness to pay for leisure-complementing amenities that may be unavailable in lower-density areas.
  3. The authors argue that if workers seek social interaction and in-person contact outside the workplace, increased telework would raise willingness to pay for housing in high-density places.

Related Articles:

  • Remote Work Is Less Common Than We Thought — New Bureau of Labor Statistics estimates show hybrid remote work is substantially less common than other surveys indicated, while fully remote work matches other estimates at about one in ten workers, making fully remote slightly more common than hybrid. Nearly one in five college-educated workers are fully remote, and nearly 40% of advanced-degree holders work hybrid or fully remote.
  • Remote Work, Three Years Later — Remote work has reduced office utilization but not yet office occupancy, because most firms are locked into long-duration leases. Baseline estimates suggest remote work will exert 0.8 percentage points of upward pressure on the office vacancy rate near-term, 2.3 more over the following five years, and 1.8 thereafter.
  • The Geography of Working From Home Begins to Shift Again — Areas with the highest shares of people working from home are mostly central cities of metropolitan areas or places hosting large corporate headquarters, including Cupertino, California and Redmond, Washington, home to Apple and Microsoft. Working from home appears most popular in places close to concentrations of offices and other workplaces.

AI Summary. The Census Bureau's customary homeownership rate is measured by household, showing 52.7% of 25-to-34-year-old household heads own homes, but only 32.6% of all Americans in that age group do — down 20 percentage points from the late 1970s and nearly 10 points since the mid-2000s. Young-adult homeownership has seen a modest resurgence since 2016.

Justin Fox Bloomberg
Date Posted:

.@foxjust writes that after accounting for the increasing percentage of young people who live at home, the homeownership rate of young Americans has been in almost continuous decline for 50 years.

Has young-adult homeownership fallen since the late 1970s?

Core argument: Only 32.6% of all US 25-to-34-year-olds own their homes, down 20 percentage points from the late 1970s and nearly 10 points since the mid-2000s.

The homeownership rate as customarily reported by the Census Bureau is measured by household. Of the 25-to-34-year-olds who are heads of a household, 52.7% own their own homes. But of all the 25-to-34-year-olds in the US, only 32.6% do, down 20 percentage points from the late 1970s and almost 10 points since the mid-2000s. However you measure or slice it, there has been a modest resurgence in young-adult homeownership since 2016. It appears to have stalled earlier this year amid rising interest rates. A recession would almost certainly throw it into reverse. Let’s hope that doesn’t happen.

Takeaways by Macro Roundup® AI

  1. Only 32.6% of all US 25-to-34-year-olds own their homes, down 20 percentage points from the late 1970s and nearly 10 points since the mid-2000s.
  2. The Census Bureau's customary household-based measure puts homeownership at 52.7% among 25-to-34-year-olds who head a household, well above the 32.6% share of all Americans in that age group who own homes.
  3. Young-adult homeownership has seen a modest resurgence since 2016 that appears to have stalled amid rising interest rates, and a recession would almost certainly throw it into reverse.

Related Articles:

  • Young Adults in the U.S. Are Reaching Key Life Milestones Later Than in the Past — Pew Research Center analysis of Census Bureau data finds 21-year-olds in the US are less likely than their counterparts four decades earlier to have a full-time job, be financially independent, live on their own, be married, or have a child. Among 21-year-olds, 39% worked full time versus 64% four decades earlier, and a quarter were financially independent versus 42%.
  • Higher For Longer and The 2024 Housing Outlook — Sustained higher mortgage rates are expected to weigh most on housing turnover, since nearly all borrowers hold rates below market levels, discouraging moves; the authors project existing home sales of 3.8mn, the fewest annual sales since the early 1990s. Housing starts are projected to fall 4% to 1.34mn.
  • There’s Never Been a Worse Time to Buy Instead of Rent — The average monthly new mortgage payment is 52% higher than the average apartment rent, the widest gap since at least 1996, according to CBRE analysis, versus rough parity from 1996 to mid-2003. The ownership premium reflects 30-year mortgage rates reaching 8% alongside high house prices.

AI Summary. The United Auto Workers reached a tentative agreement with Ford in which the carmaker agreed to a 25% hourly wage increase over a contract lasting more than four years. Including cost-of-living allowances, the union says the top wage rate is expected to rise 33% to over $40 an hour.

Keith Naughton, David Welch, Gabrielle Coppola, and Josh Eidelson Bloomberg
Date Posted:

The UAW and Ford have a tentative deal that will see a 25% hourly wage increase over 4 years; including cost-of-living allowances, the rate will increase by 33%. Ford’s labor costs will rise by $900mm in the first year of the deal.

The UAW and Ford have a tentative deal that will see a 25% hourly wage increase over 4 years; including cost-of-living...

Did an autoworkers strike end with a 25% wage increase?

Core argument: Ford agreed to a record 25% hourly wage increase over a contract life exceeding four years in a tentative deal with the United Auto Workers to end the strike.

The United Auto Workers reached a tentative labor agreement with Ford Motor Co., putting pressure on the carmaker’s two chief rivals to end a protracted strike that has cost the industry billions of dollars. Ford agreed to a record 25% hourly wage hike over the life of the contract, which exceeds four years. With cost-of-living allowances, the top wage rate is expected to increase by 33%. The top pay will be over $40 an hour, the union said.

Takeaways by Macro Roundup® AI

  1. Ford agreed to a record 25% hourly wage increase over a contract life exceeding four years in a tentative deal with the United Auto Workers to end the strike.
  2. With cost-of-living allowances, Ford's top wage rate is expected to rise by 33%, bringing top pay to over $40 an hour, according to the union.
  3. The Ford tentative agreement puts pressure on the carmaker's two chief rivals to end a protracted strike that has cost the auto industry billions of dollars.

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.
  • Auto Union Boss Wants 46% Raise, 32-Hour Work Week in ‘War’ Against Detroit — The United Auto Workers union has demanded a 46% raise, a return to traditional pensions, and a 32-hour work week from the three Detroit automakers. The companies say meeting those demands would raise labor costs by $80bn and lift total pay and benefit expenses to more than $150 an hour from about $64.
  • Kaiser Workers Launch Largest-Ever US Health Care Strike — Kaiser Permanente health care workers launched the largest health care strike in US history, a three-day walkout that could stall services for nearly 13mm people across at least six states. The strike is one of several high-profile US labor disputes attributed to a tight labor market, high inflation, and record corporate profits.

AI Summary. Copper producers warn that existing and planned mines are insufficient to meet expected demand, which is projected to climb as the world electrifies and as living standards rise in India and other developing nations. Anglo American estimates Western living standards require 200-250kg of copper per person, versus a global average of 60kg.

Harry Dempsey and Euan Healy Financial Times
Date Posted:

S&P Global forecasts that copper demand will double to 50mm metric tons by 2035 compared with 2021 levels, and predicts a “chronic gap” between supply and demand.

Will existing and planned copper mines meet rising global demand?

Core argument: Copper prices have fallen 4% this year to about $8,000 a tonne, down from more than $10,000 at last year's peak, as world economic growth cooled and output rose at new mines in Peru and Chile.

Copper prices have dropped 4% this year to about $8,000 a tonne, down from more than $10,000 at their peak last year, as the growth in the world economy has cooled off and production at new mines in Peru and Chile has been increasing. Yet demand for the commodity is expected to take off to supply the green economy, as well as to support the economic rise of India and other developing nations. The living standards of the average westerner requires 200-250 kilogrammes of copper per person, versus 60kg on average globally, according to Anglo American, one of the world’s largest miners. It is used in everything from electrical wiring and household appliances to infrastructure such as trains. Its use will become ever greater as the world goes green, resulting in it being dubbed the “metal of electrification.”

Takeaways by Macro Roundup® AI

  1. Copper prices have fallen 4% this year to about $8,000 a tonne, down from more than $10,000 at last year's peak, as world economic growth cooled and output rose at new mines in Peru and Chile.
  2. Anglo American estimates that western living standards require 200–250 kg of copper per person, versus a global average of 60 kg, with demand expected to take off as India and other developing nations grow richer.
  3. Copper producers warn that too few mines exist to meet expected demand for the metal, whose use in wiring, appliances and infrastructure such as trains has earned it the label "metal of electrification.".

Related Articles:

  • How to Avoid a Green-Metals Crunch — 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.
  • Copper Is Unexpectedly Getting Cheaper — Financial investors have shifted away from copper toward cash-generating assets as interest rates rise, with futures positioning implying more bets on falling prices than recovery. Prices remain about $2,500 a tonne above marginal production costs, suggesting the correction removed froth rather than pushing prices too low.
  • Glencore Says This Time Is Different for Coming Copper Shortage — Glencore estimates a cumulative gap between projected copper demand and supply of 50m tons through 2030, against current world demand of about 25m tons a year, and argues the industry will not lift supply as it has in previous cycles. The company says copper prices do not yet reflect the coming deficit.

AI Summary. The authors estimate US-China trade is likely to expand to around $855bn under a scenario where trade grows at the same rate as nominal GDP. They argue that despite US efforts to shift supply chains toward friendly countries, aggregate US imports from alternative sources are unlikely to increase dramatically.

Megan Hogan and Gary Clyde Hufbauer Peterson Institute for International Economics
Date Posted:

Megan Hogan and Gary Hufbauer @PIIE note that the US-China trade relationship has always faced challenges, and, although the challenges are more severe this time, there are few signs that US imports from China will decrease between now and 2025.

Will US-China trade keep growing despite efforts to shift supply chains?

Core argument: The authors estimate US-China trade will expand to roughly $855 billion by 2025 under a scenario in which trade grows at the same rate as nominal GDP, noting trade growth has historically outpaced GDP growth.

We first survey the pattern of trade changes between 2019 and 2022 (skipping the acute pandemic years of 2020 and 2021) and then define assumptions to estimate potential trade changes and decoupling between 2022 and 2025 under two scenarios: (1) no real trade growth and (2) trade growth at the same rate as nominal GDP growth. As trade growth has historically outpaced GDP growth, we estimate that US-China trade will likely expand between now and 2025, to around $855 billion (under the second scenario). Despite potential US “friendshoring”—reducing investments and supply dependencies in China and channeling them instead to “friendly” countries—it is not likely that aggregate US imports from alternative sources will increase dramatically over the next three years.

Takeaways by Macro Roundup® AI

  1. The authors estimate US-China trade will expand to roughly $855 billion by 2025 under a scenario in which trade grows at the same rate as nominal GDP, noting trade growth has historically outpaced GDP growth.
  2. The analysis surveys US-China trade changes between 2019 and 2022, skipping the acute pandemic years of 2020 and 2021, and estimates trade changes and decoupling from 2022 to 2025 under two scenarios: no real trade growth and growth at the pace of nominal GDP.
  3. Despite US "friendshoring"—reducing investments and supply dependencies in China and channeling them to friendly countries—the authors judge that aggregate US imports from alternative sources are not likely to increase dramatically over the next three years.

Related Articles:

  • Can China Reduce Its Internal Balances Without Renewed External Imbalances? — China's headline goods trade surplus is about 5% of its GDP, with the underlying surplus in manufactured goods close to 10% of GDP. The author argues that if China relies on interest rate cuts, exchange rate liberalization, and a weak yuan to offset its property downturn, its trade surplus could reach record levels relative to trading partners' output.
  • Breaking Down China’s Manufacturing — About 40–45% of China's manufacturing output comes from exports and 55–60% from domestic demand, making the sector mainly domestically oriented while still relying substantially on external demand. Estimates extending the data beyond the available database suggest the export share has picked up, reflecting a pandemic-era export boom.
  • 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.

AI Summary. US trade policy actions have had no significant effect on China's overall trade, which runs substantial surpluses with every large economic region, including North America. China's share of world exports has stopped rising but remains far above that of the US or the European Union excluding internal trade.

Martin Wolf Financial Times
Date Posted:

Martin Wolf points out that China’s share of global exports is up over the past five years despite restrictive US trade policies. He argues that the greatest threat to Chinese prosperity is the CCP’s increasing intolerance of markets.

Have US trade policy actions significantly reduced China's exports?

Core argument: Trade policy actions introduced under Donald Trump and continued under Joe Biden have had no significant effect on China's overall trade, which ran substantial surpluses with every big economic region in 2022, including North America.

The trade policy actions introduced under Donald Trump and continued under Joe Biden have had no significant effect on China’s overall trade. In 2022, it ran substantial trade surpluses with every big economic region, including North America. Its ratio of trade to GDP has fallen, but is still high for such a large economy. Its share of world exports has stopped rising. But it is still far higher than those of the EU (excluding internal trade) or the US. Lack of export earnings will not stop China from buying what it needs.

Takeaways by Macro Roundup® AI

  1. Trade policy actions introduced under Donald Trump and continued under Joe Biden have had no significant effect on China's overall trade, which ran substantial surpluses with every big economic region in 2022, including North America.
  2. China's share of world exports has stopped rising but remains far higher than that of the EU, excluding internal trade, or the US.
  3. China's ratio of trade to GDP has fallen yet stays high for an economy of its size, and a lack of export earnings will not stop China from buying what it needs.

Related Articles:

  • Can China Reduce Its Internal Balances Without Renewed External Imbalances? — China's headline goods trade surplus is about 5% of its GDP, with the underlying surplus in manufactured goods close to 10% of GDP. The author argues that if China relies on interest rate cuts, exchange rate liberalization, and a weak yuan to offset its property downturn, its trade surplus could reach record levels relative to trading partners' output.
  • China’s Surplus Again Topped 10% Of GDP — China's manufacturing trade surplus again exceeded 10% of its GDP, with its overall goods surplus approaching its pre-global-financial-crisis peak and far larger in dollar terms. Net of processing imports, exports run about 14% of GDP while manufactured imports are under 4%, meaning the rest of the world supplies China with net demand.
  • China’s Age Of Malaise — More than 300,000 Chinese people emigrated in a single year, more than double the pace of a decade earlier, with some traveling overland through a half-dozen countries to reach the US. US authorities at the southern border recorded 17,894 encounters with Chinese migrants over ten months, a thirteenfold increase from the prior year.

AI Summary. China's Semiconductor Manufacturing International Corp. used ASML immersion deep ultraviolet machines, combined with tools from other companies, to produce an advanced Huawei smartphone processor that alarmed the US, according to people familiar with the matter. There is no suggestion the equipment sales violated export restrictions.

Cagan Koc and Diederik Baazil Bloomberg
Date Posted:

ASML‘s Chinese sales have yet to be significantly impacted by the sanctions regime, however, stricter American restrictions will increasingly have an impact.

Can China make advanced chips with legally purchased Western equipment?

Core argument: China's Semiconductor Manufacturing International Corp. used ASML immersion deep ultraviolet machines, combined with tools from other companies, to produce the advanced Huawei Technologies Co. smartphone processor that alarmed the US, according to people familiar with the matter.

China’s Semiconductor Manufacturing International Corp. used equipment from ASML to manufacture an advanced processor for a Chinese smartphone that alarmed the US, according to people familiar with the matter. In a suggestion that export restrictions on Europe’s most valuable tech company may have come too late to stem China’s advances in chipmaking, ASML’s so-called immersion deep ultraviolet machines were used in combination with tools from other companies to make the Huawei Technologies Co. chip, the people said, asking not to be identified discussing information that’s not public. ASML declined to comment. There is no suggestion that their sales violated export restrictions.

Takeaways by Macro Roundup® AI

  1. China's Semiconductor Manufacturing International Corp. used ASML immersion deep ultraviolet machines, combined with tools from other companies, to produce the advanced Huawei Technologies Co. smartphone processor that alarmed the US, according to people familiar with the matter.
  2. The use of ASML equipment in the Huawei chip suggests export restrictions on Europe's most valuable technology company may have come too late to stem China's advances in chipmaking, with no suggestion that the sales violated those restrictions.

Related Articles:

  • China AI & Semiconductors Rise: US Sanctions Have Failed — 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.
  • 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.
  • 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.

Friday, October 27, 2023

AI Summary. Real median US household net worth rose 37% over a recent three-year period, surpassing pre-2008-recession levels, while wealth inequality, though still very high, fell to among its lowest levels in a decade. Housing drove the gains: the median homeowner's real net worth rose about $101k, $63k of it from home price appreciation, versus roughly $3.1k for the median renter.

Joseph Politano Apricitas Economics
Date Posted:
Is Database:
Database

Driven by housing appreciation, real median family net worth hit a record high in 2022. @JosephPolitano

Has rising home prices driven record median household wealth gains?

Core argument: Real median US net worth rose 37% over the last three years, leaving middle-class Americans richer than ever and finally recovering from the 2008 recession.

Middle-class Americans are richer than ever before, with real median US net worth rising a staggering 37% over the last three years and finally recovering from the 2008 recession. Wealth inequality, while still extremely high, fell to some of the lowest levels in the last decade. It is actually hard to oversell just how central the housing market has been to rising middle-class wealth—the median renter saw their real net worth increase by about $3.1k since 2019 while the median homeowner saw their real net worth increase by $101k, of which $63k came directly from home price appreciation.

Takeaways by Macro Roundup® AI

  1. Real median US net worth rose 37% over the last three years, leaving middle-class Americans richer than ever and finally recovering from the 2008 recession.
  2. The median homeowner's real net worth rose about $101k since 2019, of which $63k came from home price appreciation, while the median renter gained about $3.1k.
  3. Wealth inequality, while still extremely high, fell to some of the lowest levels of the last decade.

Related Articles:

  • Median Income Is Down Again. Are There Any Silver Linings in the Data? — 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.
  • Unlike Others, the Top Earners See Strong Pay Growth Beyond Age 35 — At age 25, workers in the top lifetime-earnings bracket average about $39,000 versus roughly $12,000 for the bottom bracket, a gap of about 3.25x. Top earners' pay rises 435% between ages 25 and 35 and over 150% between 35 and 45, exceeding $500,000 annually by age 45, while bottom earners gain about 15-16% per decade.
  • Income Ladder Is Difficult to Climb for US Metro Areas — Only three of the 15 most affluent US metro areas in 1949 remain in the top 15, while several former leaders now rank among the least affluent, indicating more persistence at the bottom than the top. Regional incomes converged from 1929 into the 1970s, then stopped, leaving the Southeast and Southwest poorest.

AI Summary. The Bureau of Labor Statistics reports year-on-year wage growth for union members reached 4.6%, catching up with the larger pay rises non-union workers had been receiving. Analysis of 425 newly ratified union contracts by Bloomberg Law found first-year pay increases of 7% and 6.1%, against a 3% average over the preceding 10 years.

Eva Xiao and Taylor Nicole Rogers Financial Times
Date Posted:

Recent labor activity has resulted in unionized private-sector wage gains outpacing non-union workers, reversing a post-pandemic trend where non-union labor had seen larger wage gains.

Are union wage gains catching up with non-union pay increases?

Core argument: Union members' wages rose 4.6% year-on-year in the second quarter, according to the Bureau of Labor Statistics, catching up with the faster pay increases non-union workers had enjoyed since 2021.

Year-on-year wage growth for union members reached 4.6% in the second quarter, according to the Bureau of Labor Statistics, catching up with higher pay rises that non-union workers had enjoyed since 2021. For union contracts ratified in the first two quarters of this year, first-year pay increases were especially strong at 7 and 6.1%, respectively, according to Bloomberg Law. The average increase over the preceding 10 years was 3%, records compiled by the legal research platform showed. The data, based on wage information from 425 contracts analysed by Bloomberg Law, provide an incomplete picture as companies are not required to make their agreements public. But they offer a snapshot of how workers have been able to command higher wages in the US’s post-pandemic economy.

Takeaways by Macro Roundup® AI

  1. Union members' wages rose 4.6% year-on-year in the second quarter, according to the Bureau of Labor Statistics, catching up with the faster pay increases non-union workers had enjoyed since 2021.
  2. First-year pay increases in union contracts ratified in the first two quarters of this year reached 7% and 6.1%, according to Bloomberg Law, against an average of 3% over the preceding 10 years.
  3. Bloomberg Law's figures draw on wage information from 425 contracts and give an incomplete picture, as companies are not required to make their agreements public.

Related Articles:

  • American Air Pilots Approve Record Contract With Higher Pay — American Airlines pilots approved a four-year contract providing 46% in cumulative pay raises and retirement contributions plus bonuses and improved scheduling, sick leave, and insurance benefits. The Allied Pilots Association says it will add about $9.6bn in incremental costs, making it the most expensive labor contract for a US carrier, above the $7.2bn Delta Air Lines pilot accord.
  • Ford Agrees to 25% Wage Hike in Tentative Deal to End UAW Strike — The United Auto Workers reached a tentative agreement with Ford in which the carmaker agreed to a 25% hourly wage increase over a contract lasting more than four years. Including cost-of-living allowances, the union says the top wage rate is expected to rise 33% to over $40 an hour.
  • 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. Bank of America internal data show average monthly household childcare payments have risen steadily over three years to more than $700, 32% above the 2019 average, with prices potentially rising further after a federal program subsidizing childcare providers expired. Over 12% of US households pay for childcare regularly, according to the Department of Health & Human Services.

Anna Zhou and Jonathan Kaplan Bank of America
Date Posted:

According to @BankofAmerica microtransaction data, the mean childcare payment per household has risen over 30% since 2019. Middle and upper-middle-income households ($100-$250k) have been most impacted.

How much are household childcare costs rising?

Core argument: Bank of America internal data show the average family spent over $700 per month on childcare as of September, 32% above the 2019 average, with monthly payments per household rising steadily over the past three years.

According to Bank of America internal data, average monthly childcare payments per household have increased steadily over the past three years. As of September, an average family spent over $700 per month, 32% higher than the 2019 average. Moreover, prices could rise further as the Child Care Stabilization program, which subsidized childcare providers and was part of the American Rescue Plan in 2021, expired on September 30. This could have a meaningful impact on consumers because over 12% of US households pay for childcare on a regular basis, according to the Department of Health & Human Services, and any further increase in prices would disproportionally weigh on families with young children. According to a recent survey by Care.com, for parents that pay for childcare, 67% are already spending 20% or more of their annual household income on such services.

Takeaways by Macro Roundup® AI

  1. Bank of America internal data show the average family spent over $700 per month on childcare as of September, 32% above the 2019 average, with monthly payments per household rising steadily over the past three years.
  2. The Child Care Stabilization program, which subsidized childcare providers under the 2021 American Rescue Plan, expired on September 30, and childcare prices could rise further as a result.
  3. Over 12% of US households pay for childcare regularly, according to the Department of Health & Human Services, and 67% of parents paying for childcare already spend 20% or more of annual household income on it, per a Care.com survey.

Related Articles:

  • How Child Care Impacts Parents’ Labor Force Participation — The number of U.S. child care workers was about 6% below pre-pandemic levels while child care costs were up 14%, and the share of parents of young children citing child care as the main reason for low work hours rose from about 15% to 18%. Even so, labor force participation among partnered women with young children surpassed its pre-pandemic level.
  • Understanding The Missing Millions — A combined 7% of US survey respondents who were not working cited caregiving as the reason — 5% caring for children and 2% for elderly relatives. Daycare and preschool costs have risen more than 10% since the start of the pandemic, and Bank of America internal data show 7% fewer customers making childcare payments than at the start of 2020.
  • Why Americans Are Having Fewer Babies — Sociologists find that US women born in the late 1980s had, on average, about one child fewer by their early 30s than they had intended, roughly double the shortfall for women born two decades earlier. The median age at which women give birth is 30, three years older than in 1990.

AI Summary. Private credit emerged as an alternative to banks as regulators tightened rules on risky lending by deposit-taking institutions, and now competes with mainstream lenders across businesses from real estate firms to tech startups. Closed-end private debt funds held roughly $1.6tn in assets globally, up from about $500bn at the end of 2015.

Katharine Hidalgo Bloomberg
Date Posted:
Is Database:
Database

Assets in closed-end private debt funds have risen from $0.5 trillion at the end of 2015 to $1.6 trillion in March of 2023.

How has private credit grown into a rival to banks?

Core argument: Preqin reported that closed-end private debt funds across five lending strategies held roughly $1.6 trillion of assets under management globally as of March 2023, up from about $500 billion at the end of 2015.

Private credit came of age after the 2008 financial crisis as an alternative to banks at a time when regulators were clamping down on risky lending by deposit-taking institutions. Today it’s become a serious rival to mainstream lending for all kinds of businesses, from real estate firms to tech startups. Data company Preqin said closed-end private debt funds using the five lending strategies [Direct lending, Distressed debt, Venture debt, Mezzanine finance, and Special situations] had around $1.6 trillion of assets under management globally as of March 2023, up from around $500 billion at the end of 2015.

Takeaways by Macro Roundup® AI

  1. Preqin reported that closed-end private debt funds across five lending strategies held roughly $1.6 trillion of assets under management globally as of March 2023, up from about $500 billion at the end of 2015.
  2. Private credit emerged as an alternative to banks after the 2008 financial crisis, when regulators were clamping down on risky lending by deposit-taking institutions.
  3. Private credit has become a serious rival to mainstream lending for businesses ranging from real estate firms to tech startups, spanning direct lending, distressed debt, venture debt, mezzanine finance, and special situations.

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  • Higher Cost of Capital Continues — Higher costs of capital following Federal Reserve rate increases have pushed more companies into bankruptcy, as some firms cannot obtain new loans or refinance existing debt. The author argues this rise in bankruptcies will continue as long as interest rates stay high, which is the intended mechanism for slowing the economy to return inflation to 2%.
  • Credit Normalization — Excluding Treasury securities, more than $30tn of debt securities are outstanding, and credit spreads, while wider than their 2021 lows, remain within historical ranges. The recent slight deterioration in credit-quality metrics and the rise in bankruptcy filings from historically low levels most likely reflect normalization rather than emerging financial distress.

AI Summary. European Union output per hour worked has risen from about 72% of the US level in the early 2000s to about 82%. The EU's 28% shortfall in GDP per capita versus the US is roughly two-thirds attributable to lower output per hour and one-third to fewer hours worked; Germany's shortfall reflects fewer hours alone.

Tim Taylor Conversable Economist
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Overall GDP per hour worked in Europe is about 82% of US levels. German productivity per hour worked is on par with the US, and lower per capita GDP is “entirely due to fewer hours worked” according to @TimothyTTaylor.

How much of the EU's income gap with America reflects productivity?

Core argument: EU GDP per hour worked has risen from about 72% of the US level in the early 2000s to about 82%.

For the EU as a whole, GDP per hour worked has risen from about 72% of US levels back in the early 2000s to about 82% of US levels (blue dashed line). For Germany, with its very low level of average hours worked, GDP per hour worked was roughly equal to the US level back in the mid-1990s, then dropped off, and has now caught up again. For the EU as a whole, the lower per capita GDP–28% below the US level–is roughly two-thirds due to the fact that GDP per hour worked is below US levels, and one-third due to fewer hours worked. But for Germany (and for some other western and northern EU economies), the lower per capita GDP compared to the US level is entirely due to fewer hours worked.

Takeaways by Macro Roundup® AI

  1. EU GDP per hour worked has risen from about 72% of the US level in the early 2000s to about 82%.
  2. EU per capita GDP sits 28% below the US level, roughly two-thirds of which stems from lower GDP per hour worked and one-third from fewer hours worked.
  3. Germany's GDP per hour worked roughly matched the US level in the mid-1990s, then dropped off and has since caught up again, leaving its lower per capita GDP entirely attributable to fewer hours worked.

Related Articles:

  • The Slowdown in Europe via Human Capital — Europe's slowdown in GDP per capita growth reflects weaker productivity growth and aging, partly offset by rising labor force participation and hours worked. Gross changes in these growth components between 1979–1999 and 1999–2019 were large but largely offsetting, leaving a net decline of roughly 1 percentage point for most of Europe.
  • Productivity Has Grown Faster in Western Europe than in America — Adjusted for purchasing power, the EU's GDP is roughly 95% of America's, the same share as a decade earlier, while at market exchange rates US prices went from 5.4% above EU levels to 46% higher, largely because of a strong dollar. GDP per person has still grown faster in America than in most of Western Europe.
  • 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.