Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, December 6, 2023

AI Summary. The official U.S. poverty measure has barely changed in over 50 years because most social benefits aren't counted as recipient income, even as benefits to the average household in the bottom 20% rose from $9,700 to $45,000 in inflation-adjusted dollars; counting all benefits puts poverty at 2.5%.

Phil Gramm and John Early Wall Street Journal
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Between 2019 and 2021 government spending on social benefits rose by 47% but the official poverty rate rose from 10.5% to 11.6%. Phil Gramm and John Early note that 88 social benefits are excluded from poverty measures.

Between 2019 and 2021 government spending on social benefits rose by 47% but the official poverty rate rose from 10.5% to...

Does counting all social benefits as income sharply lower measured poverty?

Core argument: Social benefit payments to the average household in the bottom 20% of income earners have risen from $9,700 to $45,000 in inflation-adjusted dollars, yet the official poverty measure has hardly changed in more than 50 years because most of those payments aren't counted as income.

The official poverty measure has hardly changed for more than 50 years, even as social benefit payments to the average household in the bottom 20% of income earners have risen from $9,700 to $45,000 in inflation-adjusted dollars, because most of these payments simply aren’t counted as income to the recipients. When all benefits are counted, the percentage of Americans living in poverty falls to only 2.5%. Bruce Meyer of the University of Chicago and James Sullivan of the University of Notre Dame arrived at a similar figure by comparing the actual goods and services consumed by poor households in 1980 with the actual level of consumption of households that were being counted as poor in 2017. They found that only 2.8% of households in 2017 were consuming at or below the actual poverty consumption level.

Takeaways by Macro Roundup® AI

  1. Social benefit payments to the average household in the bottom 20% of income earners have risen from $9,700 to $45,000 in inflation-adjusted dollars, yet the official poverty measure has hardly changed in more than 50 years because most of those payments aren't counted as income.
  2. Counting all benefits as income lowers the share of Americans living in poverty to 2.5%.
  3. Bruce Meyer of the University of Chicago and James Sullivan of the University of Notre Dame found that only 2.8% of households in 2017 consumed at or below the consumption level of households counted as poor in 1980.

Related Articles:

AI Summary. The authors estimate that inflation's drag on consumer sentiment decays about 50% per year, with a 10% inflation shock cutting sentiment by 35 index points in the current year, 16 the next, and 8 the year after. On these estimates, inflation over the prior three years is holding sentiment down by 16 index points.

Ryan Cummings and Neale Mahoney Briefing Book
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The recent relationship between inflation and consumer sentiment implies that, if inflation slows to 2.5%, consumer sentiment will improve by 8pp, putting it at the level of mid-2021 by Election Day. @weakinstrument @NealeMahoney

How quickly does inflation's drag on consumer sentiment fade?

Core argument: A 10% inflation shock is estimated to reduce consumer sentiment by 35 index points in the current year, 16 points the following year, and 8 points the year after, a decay rate of about 50% per year.

We find that the impact of inflation on consumer sentiment fades out with a decay rate of about 50% per year, with a 10% inflation shock reducing sentiment by 35 index points in the current year, 16 index points the following year, and 8 index points the year after. The estimates imply that current sentiment is being dragged down by 16 index points by the inflation we have experienced over the last 3 years, down 40 percent from the peak negative impact of 27 index points in June 2022. If inflation next year slows to 2.5%, the negative impact on consumer sentiment from inflation would decline by another 50% relative to the current value.

Takeaways by Macro Roundup® AI

  1. A 10% inflation shock is estimated to reduce consumer sentiment by 35 index points in the current year, 16 points the following year, and 8 points the year after, a decay rate of about 50% per year.
  2. Inflation over the prior three years is estimated to be dragging consumer sentiment down by 16 index points, 40% below the peak negative impact of 27 index points in June 2022.
  3. If inflation slows to 2.5% next year, the estimates imply the negative impact of inflation on consumer sentiment would fall by another 50% from its current level.

Related Articles:

  • Asymmetric Amplification and the Consumer Sentiment Gap — Consumer sentiment surveys show Republican respondents' views swing about ±15 index points relative to predicted levels depending on which party holds the presidency, while Democrats' views swing only about ±6 points. The authors estimate that adjusting for this asymmetric amplification shrinks the gap between observed and predicted consumer sentiment by 30%.
  • The Economy Is Great. Why Are Americans in Such a Rotten Mood? — Consumer sentiment has been more depressed than historic correlations with the "misery index"—the sum of inflation and unemployment—would predict, even as consumer-price inflation fell from a 9.1% peak to 3.7%. The author argues much of this pessimism is "referred pain," reflecting dissatisfaction with the country as a whole rather than the economy.
  • The Pandemic Has Broken a Closely Followed Survey of Sentiment — A statistical model using 13 economic variables including inflation, unemployment, and petrol prices explained 86% of the variation in the monthly US consumer-sentiment index between 1980 and 2016, but the correlation between sentiment and both current and future spending has vanished since the pandemic began. The same variables retain their power to forecast consumer spending.

AI Summary. Warnings that the large US pandemic-era spending bill would be inflationary appeared vindicated by the subsequent inflation surge, but inflation rose in almost every country, not only in the US. That pattern suggests inflation had less to do with excess government spending than with pandemic-related disruptions.

Paul Krugman Krugman Wonks Out
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.@paulkrugman argues the uptick in inflation was mostly a story of the pandemic-related supply-side disruptions. He cites data on the surge of inflation globally to argue the American Rescue Plan was not the cause of inflation.

Was the inflation surge driven by government spending or pandemic disruptions?

Core argument: Economists who warned that the American Rescue Plan would be inflationary appeared vindicated by the 2021–22 inflation surge, though they may have been right for the wrong reasons.

Several economists had warned that the American Rescue Plan, the large spending bill passed early in the Biden administration, would be inflationary, warnings that appeared to be vindicated by the inflation surge of 2021-22. In retrospect, these economists may have been right for the wrong reasons, since inflation eventually surged, not only in America but almost everywhere. This suggests that inflation may have had less to do with overspending than it did with pandemic-related disruptions.

Takeaways by Macro Roundup® AI

  1. Economists who warned that the American Rescue Plan would be inflationary appeared vindicated by the 2021–22 inflation surge, though they may have been right for the wrong reasons.
  2. Inflation surged not only in the United States but almost everywhere, suggesting the episode had less to do with overspending than with pandemic-related disruptions.

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.
  • Fiscal Influences on Inflation in OECD Countries, 2020-2022 — Across 21 economies, the authors find that headline and core inflation responded positively to a measure of government spending increases scaled by pre-pandemic debt-to-GDP and average debt duration. Estimated coefficients of 0.4–0.5 suggest 40–50% of the extra spending was financed through inflation, with the rest through conventional public finance.
  • Fiscal Arithmetic and the Global Inflation Outlook — Across advanced economies, core inflation is significantly positively associated with growth in government debt since the start of the pandemic, and the authors expect this decade's fiscal expansions to shift price levels permanently higher. They argue this differs from permanently higher inflation, projecting inflation to diminish as temporary deficits normalize, with medium-term inflation expectations still anchored near central bank targets.

AI Summary. On the international PISA student assessments, American Asian and White students ranked at the top, American Hispanic students outscored Hispanic students elsewhere, and American Black students performed well. In reading, American Asian students placed first and American White students third.

Crémieux @cremieuxrecueil
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Breaking down the 2022 PISA math results by subpopulation, @cremieuxrecueil finds that US Asians and whites topped the charts, scoring on par with top international performers.

Do US students rank at the top by subgroup?

Core argument: In PISA results broken out by subpopulation, American Asians and Whites topped the charts, American Hispanics outscored all other Hispanic groups, and American Blacks performed well, which the author argues shows the US has one of the smartest populations.

With the latest PISA results, America has proven once again that it has one of the smartest populations and, perhaps, the best education systems. American Asians and Whites topped the charts; American Hispanics beat all other Hispanics; American Blacks did well. Some people think the most important scale is mathematics, while others think it's reading, and a select few think it's science. They all indicate g, so there's no a priori rationale for favoring any particular scale. Regardless, look at how America did in mathematics! America's reading performance is perhaps its most laudable this year. American Asians came in first in this test, and American Whites came in third.

Takeaways by Macro Roundup® AI

  1. In PISA results broken out by subpopulation, American Asians and Whites topped the charts, American Hispanics outscored all other Hispanic groups, and American Blacks performed well, which the author argues shows the US has one of the smartest populations.
  2. On the PISA reading scale, American Asians ranked first and American Whites ranked third, a performance the author calls America's most laudable.
  3. The author contends that mathematics, reading, and science scales all indicate g, leaving no a priori rationale for favoring any particular scale.

Related Articles:

AI Summary. Two official Chinese data series—one measuring gross foreign direct investment inflows and one measuring inflows minus outflows—both show foreign direct investment exiting China. The author attributes most of the $113bn gap between the two measures to net sales of direct investment assets by foreign investors.

Nicholas Lardy Peterson Institute For International Economics
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.@PIIE estimates that at least $100B in FDI flowed out of China in 2023, as foreign firms are no longer reinvesting earnings, and are also selling their Chinese operations to local firms and repatriating the proceeds.

Is foreign direct investment leaving China?

Core argument: China's two official FDI series differed by $113 billion in the first three quarters of 2023, and most of that gap must result from the net sale of direct investment assets by foreign investors.

Two different official time series from the Ministry of Commerce (MOFCOM) and the State Administration of Foreign Exchange (SAFE) [show the same dynamic]. There are multiple differences between the two series, but the main one is that SAFE measures FDI on a net basis, i.e., FDI inflows minus FDI outflows, while MOFCOM only measures gross FDI inflows. Both agencies include greenfield investment and mergers and acquisitions (M&A) by foreign firms in their FDI data while SAFE also includes several other items. While these additional items were large a few years ago, as explained below, they are now likely quite small. Most of the $113 billion difference between the two numbers in the first three quarters of 2023 must result from the net sale of direct investment assets by foreign investors.

Takeaways by Macro Roundup® AI

  1. China's two official FDI series differed by $113 billion in the first three quarters of 2023, and most of that gap must result from the net sale of direct investment assets by foreign investors.
  2. SAFE measures FDI net of outflows while MOFCOM measures only gross inflows; both include greenfield investment and M&A by foreign firms, with SAFE adding several other items that are now likely quite small.
  3. The MOFCOM and SAFE time series show the same dynamic of foreign direct investment exiting China.

Related Articles:

  • China Suffers Plunging Foreign Direct Investment Amid Geopolitical Tensions — Foreign direct investment into China is falling across multiple measures, with one month showing a 34% year-on-year drop to Rmb72.8bn ($10bn), the steepest decline since monthly figures became available in 2014. After rising 15% year on year early in the year, inflows have posted double-digit percentage declines each month since.
  • The Rise & Fall of Foreign Direct Investment in China — Net foreign direct investment into China has been negative for four consecutive quarters, as foreign investors shifted from reinvesting earnings from their Chinese operations to repatriating them. Whether this reflects cash management or signals a future slowdown in foreign direct investment is unclear, but the repatriation of profits is negative for China's currency.
  • The Global Economy Enters an Era of Upheaval — Bloomberg Economics finds that the global share of new-project foreign direct investment going to countries that declined to condemn Russia's invasion of Ukraine averaged 15%, down from 30% in the decade to 2019, with China and Hong Kong's share falling below 2% from nearly 11%.

AI Summary. European Union leaders are pressing China over its expansion of industrial capacity, particularly in renewable energy products, at a time of weak Chinese domestic demand and tightening access to markets such as the US, leaving Europe a target for excess exports. EU officials say the bloc's trade deficit with China is just below $400bn and has doubled within two years.

Joe Leahy, Henry Foy, Andy Bounds, and Andy Lin Financial Times
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The EU is increasingly concerned about Chinese industrial overcapacity and the growing Sino-EU trade deficit, which has doubled in two years to just under $400B.

Is Europe becoming the main destination for China's excess exports?

Core argument: A senior EU official said the trade deficit with China is just below $400bn and has doubled within two years, calling its sustainability a matter of great concern.

EU leaders will stress their rising concerns about Chinese industrial overcapacity when they meet President Xi Jinping for a summit in Beijing on Thursday, amid signs China is pumping more funding into manufacturing. The EU is worried China is increasing its industrial capacity, particularly in renewable energy products, at a time when domestic demand is weak and other trading partners such as the US are limiting access to their markets. This leaves Europe as an important target for an overflow of China’s exports. “China’s trade deficit with us is growing. It’s just below $400bn at present. And as you can imagine, the doubling of the trade deficit within a matter of two years is a matter of great concern . . . particularly over its sustainability,” said a senior EU official ahead of the summit.

Takeaways by Macro Roundup® AI

  1. A senior EU official said the trade deficit with China is just below $400bn and has doubled within two years, calling its sustainability a matter of great concern.
  2. EU leaders will stress concerns about Chinese industrial overcapacity when they meet President Xi Jinping in Beijing, amid signs China is pumping more funding into manufacturing.
  3. The EU is worried China is increasing industrial capacity, particularly in renewable energy products, while domestic demand is weak and trading partners such as the US limit market access, leaving Europe an important target for an overflow of Chinese exports.

Related Articles:

  • What Will It Take for China’s GDP to Grow at 4–5 Percent Over the Next Decade? — China accounts for 18% of global GDP, 13% of global consumption, and 31% of global manufacturing. The author estimates that if China grew 4–5% annually for a decade while keeping manufacturing's role in its economy, its share of global manufacturing would reach 36–39%, requiring the rest of the world to let manufacturing's share of its output fall by 0.5–1.0pp.
  • EU To Launch Anti-Subsidy Probe into Chinese Electric Vehicles — The European Union is opening an anti-subsidy investigation into Chinese electric vehicles it says are distorting the EU market, one of its largest trade cases. Manufacturers found in breach of trade rules could face punitive tariffs, as the EU seeks to avoid a repeat of the insolvencies in its solar panel industry caused by cheap Chinese imports.
  • Pettis On China’s Export Strategy — China is shifting investment from its weakened property sector toward manufacturing, which already accounts for 27% of Chinese GDP versus 14% elsewhere and is constrained by weak demand rather than scarce capital. Since China holds about 18% of global GDP but 30% of global manufacturing, added output must be absorbed abroad absent higher consumption.

Thursday, December 7, 2023

AI Summary. If artificial intelligence can perform economically valuable cognitive tasks at very low marginal cost, consumers would buy far more of the cheapened goods and spend the savings in other categories, expanding activity and employment in sectors facing new demand. Where supply is inherently limited, such as real estate, those savings could bid up prices and produce inflation.

Greg Jensen, Lauren Simon, and Josh Moriarty Bridgewater Associates
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Bridgewater forecasts that AI productivity will have a “Model T Effect” where consumers buy more of previously-unaffordable cognitive services, and shift spending to other forms of consumption.

How would cheap AI cognitive work reshape spending, employment, and prices?

Core argument: If AI performs economically valuable cognitive tasks at very little marginal cost, it could produce a "Model T effect" in which slashed prices drive consumers to buy much more of previously unaffordable items and spawn entire new industries.

If AI can perform economically valuable cognitive tasks at very little marginal cost, it could similarly open up new horizons for spending and economic activity. In some cases, we will see a “Model T effect”: consumers buying a lot more when the price of a previously unaffordable item is slashed, causing entire new industries to spring up. Lower prices in one sector also often lead to higher spending in unrelated discretionary sectors because people effectively have more to spend elsewhere. A similar phenomenon (though not productivity-driven) happens over shorter time horizons when energy prices fall and consumers shift wallet share toward more discretionary categories of spending. Over longer periods, this dynamic generally leads to rising activity and employment in sectors facing increased demand. When supply in those sectors is inherently limited—such as in real estate—it can also produce inflation, as cost savings in one area are used to bid up the price of truly scarce resources in another. We’ll likely see a mix of the two dynamics as AI lowers production costs: customers will buy more at the new lower price but will also spend some of their savings in other categories.

Takeaways by Macro Roundup® AI

  1. If AI performs economically valuable cognitive tasks at very little marginal cost, it could produce a "Model T effect" in which slashed prices drive consumers to buy much more of previously unaffordable items and spawn entire new industries.
  2. Lower prices in one sector often raise spending in unrelated discretionary sectors, a dynamic also seen over shorter horizons when falling energy prices shift consumer wallet share toward discretionary categories.
  3. Rising demand generally lifts activity and employment in the affected sectors, but where supply is inherently limited, such as real estate, cost savings elsewhere can bid up scarce resources and produce inflation.

Related Articles:

  • Will A.I. Transform the Economy, and if So, How? — During the 1995-2005 information technology boom, productivity ended about 12% above the trend implied by growth from 1973 to 1995, and a comparable or larger gain of around 15% from artificial intelligence is plausible. If such optimistic estimates hold, growth would exceed conventional long-run estimates such as the Federal Reserve's roughly 1.8%, lifting revenue and easing debt concerns.
  • Integrating the Goldman AI Report Into Our Views — Goldman Sachs estimates generative AI productivity gains based on how easily the technology applies to each occupation rather than where the largest untapped economic opportunities lie. The author argues gains in producing documents and emails are overstated, while gains in software production are far larger than Goldman anticipates.
  • The Outlook for Long-Term Economic Growth — Growth theory holds that long-run growth in living standards is determined by growth in the worldwide number of people searching for ideas, and growth accounting for the US suggests temporary boosts from rising educational attainment and idea investment could fade. Potential offsets include China and India, better talent allocation, and artificial intelligence.

AI Summary. Using gasoline and food microdata, the author finds commodity cost pass-through that looks incomplete in percentage terms is complete in levels, so a $1 cost increase raises retail prices by $1. Because low-margin products then show larger percentage price increases, unequal pass-through accounts for two-thirds of the food-at-home inflation gap between low- and high-income households.

Kunal Sangani Working Paper
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As prices rise, lower-income households are disproportionately impacted as they generally buy products with lower prices and margins which are more sensitive to inflationary episodes. @ksangani8

Do commodity cost increases raise inflation more for low-income households?

Core argument: Using gasoline and food microdata, the author finds that commodity cost pass-through is complete in levels — a $1/unit cost increase raises retail prices $1/unit — even though it appears incomplete in percentages because of an additive margin between marginal costs and prices.

Empirical studies of commodity cost pass-through typically find that pass-through is incomplete: even at long horizons, a 10% increase in costs causes retail prices to rise less than 10%. Using microdata from gasoline and food products, Incomplete pass-through in percentages often disguises complete pass-through in levels: a $1/unit increase in commodity costs leads to $1/unit higher retail prices. Pass-through appears incomplete in percentages due to an additive margin between marginal costs and prices. An implication of complete pass-through in levels is that rising commodity costs lead to higher inflation rates for low-margin products in a category, though absolute price changes are similar across products. This generates cyclical inflation inequality. I find that food-at-home inflation for the lowest income quintile is 10% more sensitive to upstream commodity costs. From 2020–2023, unequal commodity cost pass-through is responsible for two-thirds of the gap in food-at-home inflation rates experienced by low- and high-income households.

Takeaways by Macro Roundup® AI

  1. Using gasoline and food microdata, the author finds that commodity cost pass-through is complete in levels — a $1/unit cost increase raises retail prices $1/unit — even though it appears incomplete in percentages because of an additive margin between marginal costs and prices.
  2. The author estimates food-at-home inflation for the lowest income quintile is 10% more sensitive to upstream commodity costs, since similar absolute price changes translate into higher inflation rates for low-margin products.
  3. Unequal commodity cost pass-through accounts for two-thirds of the 2020–2023 gap in food-at-home inflation rates between low- and high-income households.

Related Articles:

  • Powerful CPI — A US consumer price report showed core inflation held down by monthly declines in reopening-related items (used cars and trucks -0.8%, airfares -0.9%, hotels -2.9%), with commodities excluding used vehicles essentially flat. Services excluding housing, medical care, hotels, and airfares slowed to +0.39% monthly from +0.52%, which the author calls the report's most important signal.
  • Fiscal Influences on Inflation in OECD Countries, 2020-2022 — Across 21 economies, the authors find that headline and core inflation responded positively to a measure of government spending increases scaled by pre-pandemic debt-to-GDP and average debt duration. Estimated coefficients of 0.4–0.5 suggest 40–50% of the extra spending was financed through inflation, with the rest through conventional public finance.
  • Digesting Inflation — The authors estimate that inflation's drag on consumer sentiment decays about 50% per year, with a 10% inflation shock cutting sentiment by 35 index points in the current year, 16 the next, and 8 the year after. On these estimates, inflation over the prior three years is holding sentiment down by 16 index points.

AI Summary. Migration into southern metropolitan areas such as Austin, San Antonio, Jacksonville, and Tampa has continued, and the South also has a higher birth rate than other census regions. Growth has been uneven: Florida's GDP rose 20% and Texas and Tennessee 15% against a US average of 11%, while Oklahoma and Louisiana contracted.

David Michael Tinsley Bank of America
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The US South (16 states plus DC) has 39% of the population and 1/3 of GDP. Growth in the region is uneven with seven states led by FL, TN, and TX outpacing US GDP growth between 2017-2022 while OK and LA shrank. @BankofAmerica

Is growth across southern states as uneven as migration is strong?

Core argument: Florida's GDP rose 20% between 2017 and 2022, ahead of Texas and Tennessee at 15% each, against an average US increase of 11%, while Oklahoma and Louisiana posted negative growth over the same period.

People have been moving to the South over a long period, with the pace accelerating during the pandemic. In recent internal data, covering 2023 Q3, we see a continued strong inflow into southern Metropolitan Statistical Areas (MSAs), such as Austin, San Antonio, Jacksonville, and Tampa. And, on top of the migration story the South has a higher birth rate than other census regions, too. But GDP growth across the South has not been even. Between 2017 and 2022, seven southern states had a larger increase than the average US rise of 11%. Of these, Florida showed the biggest jump in GDP, by 20%, followed by Texas and Tennessee, growing by 15%. However, over the same period, nine others and D.C. expanded more slowly, with Oklahoma and Louisiana showing negative growth.

Takeaways by Macro Roundup® AI

  1. Florida's GDP rose 20% between 2017 and 2022, ahead of Texas and Tennessee at 15% each, against an average US increase of 11%, while Oklahoma and Louisiana posted negative growth over the same period.
  2. Internal data for 2023 Q3 show continued strong inflows into southern Metropolitan Statistical Areas including Austin, San Antonio, Jacksonville, and Tampa, extending a long-running migration to the South that accelerated during the pandemic.
  3. The South has a higher birth rate than other US census regions, though GDP growth across the region has been uneven, with nine southern states and D.C. expanding more slowly than the national average between 2017 and 2022.

Related Articles:

  • 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.
  • 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.
  • What’s the Matter With Miami? — A significant share of Florida's population inflow is retirees, and while the overall U.S. population grew 7.4% from 2010 to 2020, the population aged 65 and older grew 38.6%. Because retirees spend money on local services, the influx of seniors creates jobs for younger adults as well.

AI Summary. US crude oil production reached an all-time high of 13.2mn barrels a day, more than any other country and about one in eight barrels of global output, outpacing official forecasts. The International Energy Agency attributes 80% of this year's growth in global oil supply to the US, complicating OPEC+ efforts to prop up prices through output cuts.

Myles McCormick and Jamie Smyth Financial Times
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The US is the world’s largest oil producer, currently producing 1 in 8 barrels of global output. According to an International Energy Agency forecast the US drove 80% of the expansion of global oil supply in 2023.

Is record US oil production undercutting OPEC+ efforts to lift prices?

Core argument: US crude oil production hit an all-time high of 13.2mn barrels a day in September, more than any other country and about one in eight barrels of global output.

American crude oil production reached a fresh all-time high of 13.2mn barrels a day in September, according to figures released last week, more than any other country and accounting for about one in eight barrels of global output. The added volumes have outpaced official forecasts and called into question claims of a US oil industry constricted by Wall Street or environmental regulations. They are causing difficulties for the OPEC+ oil cartel, which last week agreed to deepen cuts to its members’ own volumes in a bid to prop up faltering prices. The US accounts for 80% of the expansion in global oil supply this year, according to the International Energy Agency. Its production is set to grow by 850,000 b/d, the US Energy Information Administration estimates, well below the pace reached earlier in the shale revolution but much faster than analysts had anticipated.

Takeaways by Macro Roundup® AI

  1. US crude oil production hit an all-time high of 13.2mn barrels a day in September, more than any other country and about one in eight barrels of global output.
  2. The US accounts for 80% of this year's expansion in global oil supply, according to the International Energy Agency, with output set to grow by 850,000 b/d per EIA estimates.
  3. The added US volumes have outpaced official forecasts and caused difficulties for OPEC+, which agreed to deepen cuts to members' volumes in a bid to prop up faltering prices.

Related Articles:

  • An Unruly OPEC is Causing Problems for Russia and Saudi Arabia — Saudi Arabia and Russia are cutting oil output by 1m and 300,000 barrels a day respectively, with the rest of the OPEC+ group contributing another 3.7m b/d in cuts. Falling oil prices reflect expectations of slowing global demand tied to concerns about China's economy, reduced geopolitical risk, and higher output from the US, Brazil, and Guyana.
  • US Shale: The Marginal Supplier Matures — The responsiveness of US oil supply to prices has declined and is estimated to be much smaller for publicly traded producers than private ones, with a 10% price increase raising US liquids output by roughly 1%, or 200,000 barrels a day. That implies US supply would offset only about 20-25% of a geopolitical supply shock.
  • The Changing Nexus Between Commodity Prices and the Dollar: Causes and Implications — The shale boom turned the United States into a net exporter of natural gas and of oil, altering how commodity prices relate to US trade. Where higher oil prices were historically associated with a deterioration in US terms of trade, they now correspond to an improvement.

AI Summary. China's Ministry of Education projects the number of college graduates will reach a record 11.79m, up 210,000 from the prior year. The figure adds to pressure on Beijing to create enough jobs amid an uneven recovery weighed down by a protracted property slump and a weak private sector.

Mia Nulimaimaiti South China Morning Post
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A record 11.8mm Chinese will graduate from college in 2024 putting additional stress on the Chinese labor market. The jobless rate for 16-24 was 21.3% in June before Beijing stopped publishing the data. @SCMPNews

Are record numbers of college graduates straining China's job market?

Core argument: China's Ministry of Education expects college graduates to reach a record 11.79 million next year, an increase of 210,000 from this year.

The number of college graduates is expected to reach 11.79 million next year, the Ministry of Education said on Tuesday, up by 210,000 from this year. Beijing has been under pressure to create enough jobs amid an uneven post-Covid recovery, which has been dragged down by the protracted slump in the property market and a weak private sector. China’s college graduates exceeded 10 million for the first time in 2022.

Takeaways by Macro Roundup® AI

  1. China's Ministry of Education expects college graduates to reach a record 11.79 million next year, an increase of 210,000 from this year.
  2. China's college graduate cohort first exceeded 10 million in 2022, and the 11.79 million projection extends that increase.
  3. Beijing faces pressure to create enough jobs amid an uneven post-Covid recovery weighed down by a protracted property market slump and a weak private sector.

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AI Summary. Italy has formally notified China of its withdrawal from the Belt and Road Initiative, an infrastructure and investment program whose membership had irritated Italy's Western allies. Without the notification, Italy's participation would have renewed automatically for another five years.

Amy Kazmin Financial Times
Date Posted:

Italy has officially pulled out of China’s Belt and Road Initiative.

Italy has officially pulled out of China’s Belt and Road Initiative.

Is Italy withdrawing from China's Belt and Road Initiative?

Core argument: Italy has formally notified Beijing that it is withdrawing from China's Belt and Road Initiative, a deal that would otherwise have renewed automatically for another five years in early 2024.

Italy has officially informed Beijing of its decision to withdraw from President Xi Jinping’s flagship Belt and Road Initiative, ending months of speculation over a relationship that had irritated Rome’s western allies. The formal decision comes three months after Prime Minister Giorgia Meloni — who in the past had called Rome’s participation in the BRI a “mistake” — publicly confirmed that her rightwing government was considering a pullout while affirming her determination to maintain “mutually beneficial” relations with Beijing. A senior Italian official, who asked not to be identified, confirmed on Wednesday that Rome had formally notified Beijing of its intent to withdraw from the deal, which would have been otherwise renewed automatically for another five years in early 2024. Meloni’s office declined to comment.

Takeaways by Macro Roundup® AI

  1. Italy has formally notified Beijing that it is withdrawing from China's Belt and Road Initiative, a deal that would otherwise have renewed automatically for another five years in early 2024.
  2. Italy's participation in the Belt and Road Initiative had irritated Rome's western allies, and Prime Minister Giorgia Meloni previously called the country's involvement a "mistake.".
  3. Giorgia Meloni publicly confirmed three months before the formal notification that her rightwing government was considering a pullout while affirming her determination to maintain "mutually beneficial" relations with Beijing.

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