Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “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 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


Wednesday, December 13, 2023

AI Summary. More than 485,000 US workers went on strike in a year across an estimated 317 work stoppages, the most in two decades, according to a Bloomberg Law analysis. The United Auto Workers is organizing at over a dozen non-unionized carmakers and urging other unions to align contract expiration dates for broader strikes.

Claire Bushey and Taylor Nicole Rogers Financial Times
Date Posted:

The @UAW is following up on their recent deal with the Big Three by launching efforts to organize workers at Tesla, Toyota, and Volkswagen and attempting to coordinate labor activity with other unions.

Are US labor unions regaining strength?

Core argument: More than 485,000 US workers went on strike in 2023 across an estimated 317 work stoppages, more than any time in the past two decades, according to an analysis by Bloomberg Law.

More than 485,000 US workers went on strike in 2023 as unions launched an estimated 317 work stoppages, more than any time in the past two decades, according to an analysis by Bloomberg Law. Labour economists at Cornell University estimate that 310,000 workers were on strike in October alone. The UAW plans to use its wins at the bargaining table to recruit more union members. It has announced a sweeping effort to organise workers at the US plants of more than a dozen non-unionised carmakers, including Tesla, Toyota, and Volkswagen. The UAW is encouraging unions across the US, in every sector, to time their contract expiration dates to the UAW’s; in the US, most union contracts contain clauses that only allow workers to strike when the contract expires. By telling other unions to line up their contract expiration dates with the UAW’s, the autoworkers’ union is trying to lay the groundwork for sweeping industrial action that could extend beyond the auto industry.

Takeaways by Macro Roundup® AI

  1. More than 485,000 US workers went on strike in 2023 across an estimated 317 work stoppages, more than any time in the past two decades, according to an analysis by Bloomberg Law.
  2. The UAW has announced an effort to organise workers at the US plants of more than a dozen non-unionised carmakers, including Tesla, Toyota, and Volkswagen, while urging other unions to align contract expiration dates with its own.

Related Articles:

  • Labor Market Conflict and the Decline of the Rust Belt — 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.
  • 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.
  • Union Voters Could Be Decisive in 2024 — A declining union share of the electorate and weaker Democratic performance among union households have made Michigan, Pennsylvania, and Wisconsin more competitive, with white voters without college degrees making up majorities of the electorate in all three states. Unionized white non-college voters were less likely to back Trump than their non-union counterparts.

AI Summary. Strong labor unions are incompatible with a global trading system in which countries that subsidize domestic production externalize those costs through large, persistent trade surpluses, according to this argument. The US must either reform that system or unilaterally limit its economy's role in absorbing global savings and production imbalances.

Michael Pettis @michaelxpettis
Date Posted:

.@michaelxpettis notes labor unions in the tradable sector are not compatible with the current global trading system. Higher wages make American auto manufactures less competitive with their subsidized international competitors.

.@michaelxpettis notes labor unions in the tradable sector are not compatible with the current global trading system. Higher...

Can strong labor unions coexist with persistent foreign trade surpluses?

Core argument: Pettis argues that strong trade unions are incompatible with a global trading system in which countries subsidizing domestic production externalize those costs by running large, persistent trade surpluses.

If higher wages make American autos less competitive globally, the consequent reduction in auto manufacturing won't be matched by an increase in the manufacturing of some other US product. That means strong trade unions are incompatible with a global trading system in which countries that subsidize domestic production are able to externalize the cost of those subsidies by running large, persistent trade surpluses. The US (and other similar economies) gets to choose between either stronger labor unions or continued participation in a global trading system that allows and encourages mercantilist trading policies. What the US needs, instead, is either a transformation of the global trading system to the kind described by Keynes in 1944 or, if that doesn't happen, the US must unilaterally choose to implement policies that sharply limit the role of its economy in absorbing global savings and production imbalances. We can't have both labor unions and a distorted global trading system.

Takeaways by Macro Roundup® AI

  1. Pettis argues that strong trade unions are incompatible with a global trading system in which countries subsidizing domestic production externalize those costs by running large, persistent trade surpluses.
  2. If higher wages make American autos less globally competitive, Pettis contends the resulting drop in auto manufacturing would not be offset by increased US manufacturing of another product.
  3. Pettis holds that the US must either transform the global trading system along the lines Keynes described in 1944 or unilaterally adopt policies sharply limiting its economy's role in absorbing global savings and production imbalances.

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.
  • Detroit Is Paying Up to End the UAW Strike. Now Carmakers Will Live With the Costs — Tentative United Auto Workers agreements with Detroit automakers include a 25% general wage increase over four years, which with cost-of-living adjustments would lift top production-worker pay to about $42 an hour and most unionized workers' annual pay into the mid-$80,000s before overtime. Ford says the contract would add $850–$900 in costs per vehicle.
  • Union Workers Score Big Pay Gains As Labour Action Sweeps US — 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.

AI Summary. Agent-based models, in which simulated traders follow decision rules and trade an asset among themselves, find that asset prices rise as the diversity of trading strategies declines because similar strategies reinforce the price move. The relationship is non-linear: past a fragile point, a small further loss of diversity produces a sharp price plunge as buyers are exhausted.

Michael Mauboussin and Dan Callahan Morgan Stanley
Date Posted:

Human pattern recognition tends to fail in “domains where causality and feedback are limited” as humans tend to see patterns where they do not exist. @mjmauboussin

How does declining diversity of trading strategies affect asset prices?

Core argument: In economist Blake LeBaron's agent-based models, where in silico agents follow decision rules to trade an asset, asset prices rise as the diversity of those decision rules declines, because similar trading strategies reinforce the same price movement.

Humans are natural pattern seekers. Pattern recognition often fails in complex and evolving environments. The economist Blake LeBaron is a leader in the field of agent-based modeling. These are models that create agents in silico, provide them with decision rules, and let them trade an asset among themselves. He finds that the asset price rises even as the diversity of decision rules declines because the similar trading strategies reinforce the price movement. But at some point the market becomes fragile. At that critical juncture, a small incremental loss of diversity leads to a sharp plunge in the asset price because the buyers are exhausted. The relationship between diversity loss and asset price change is non-linear. Diversity breakdowns fit a pattern but measuring diversity is inherently difficult. Pattern recognition can also fail because of how our minds love to think in analogies. Steps include selection, mapping, evaluation, and learning. To understand a target topic we commonly start by selecting an analog, usually from memory.

Takeaways by Macro Roundup® AI

  1. In economist Blake LeBaron's agent-based models, where in silico agents follow decision rules to trade an asset, asset prices rise as the diversity of those decision rules declines, because similar trading strategies reinforce the same price movement.
  2. The relationship between diversity loss and asset price change is non-linear: at a critical juncture, a small further loss of diversity leads to a sharp price plunge because buyers are exhausted.
  3. Pattern recognition often fails in complex and evolving environments, including because minds think in analogies through selection, mapping, evaluation, and learning, usually selecting an analog from memory.

Related Articles:

  • Total Shareholder Return: Linking The Drivers of Total Returns to Fundamentals — The S&P 500 delivered an annualized total shareholder return of 16.6% over a ten-year period, composed of 14.3% price appreciation and 2.3% from dividends and dividend reinvestment. Earnings-per-share growth contributed 44% of the total, price-to-earnings multiple expansion 42%, and dividends 14%.
  • Long-Term Shareholder Returns: Evidence From 64,000 Global Stocks — A study of about 64,000 global stocks estimates net global stock market wealth creation of $75.7tn, with returns highly concentrated: the top 159 firms (0.25%) account for half of net wealth creation and the top 1,526 (2.39%) account for all of it. Fewer than half of stocks beat one-month US Treasury bills, 42.6% of non-US and 44.8% of US stocks.
  • Birth, Death, and Wealth Creation — The median age at which US companies went public rose from 7.9 years in 1976–2000 to 9.5 years in 2001–2022, implying that more wealth creation now occurs in private markets. Research on more than 28,000 US-listed companies since 1926 finds that just under 60% destroyed $9.1tn of wealth while about 2% created $50tn.

AI Summary. The economic scale of China and the US means a conflict between them would likely be protracted, lasting months, years, or decades rather than a single battle or limited campaign. Deterring war, particularly in Asia, would require a once-in-a-generation Western construction and procurement effort and strategic stockpiles of weapons and munitions far beyond current planning.

Max Hasting Bloomberg
Date Posted:

Citing @IskanderRehman research Max Hasting reports that to deter a Sino-American War the West “will need to launch a once-in-a-generation construction and procurement effort.”

Citing @IskanderRehman research Max Hasting reports that to deter a Sino-American War the West “will need to launch a...

Does deterring a protracted great-power war require a generational arms buildup?

Core argument: Iskander Rehman argues that the economic heft of China and the US would make any conflict between them protracted for months, years, or even decades, requiring the West to build strategic stocks of weapons and munitions on a scale planners have not imagined.

Iskander Rehman believes that the immense economic heft of China and the US would cause conflict between them to be protracted for many months, perhaps years and even decades. This makes it necessary for the West to build strategic stocks of weapons and munitions on a scale currently unimagined by planners. The current US mindset seems to confuse planning to win a mere battle or limited campaign with the demands of protracted conflict. Rehman’s book argues that if the West — which means principally the US — is to deter war, above all in Asia, “it will need to launch a once-in-a-generation construction and procurement effort, all the while encouraging the even more industrially atrophied allies in Europe and Asia to do the same.”

Takeaways by Macro Roundup® AI

  1. Iskander Rehman argues that the economic heft of China and the US would make any conflict between them protracted for months, years, or even decades, requiring the West to build strategic stocks of weapons and munitions on a scale planners have not imagined.
  2. Rehman contends that the current US mindset confuses planning to win a battle or limited campaign with the demands of protracted conflict.
  3. Rehman's book argues that deterring war, above all in Asia, will require the West, principally the US, to launch a once-in-a-generation construction and procurement effort while encouraging its more industrially atrophied allies in Europe and Asia to do the same.

Related Articles:

  • Japan Raises Military Spending To Counter China With More Missiles and Ships — Japan's defense budget rises 13% over the prior fiscal year's planned spending, part of a five-year, ¥43tn plan to lift military spending to roughly 2% of gross domestic product, versus the roughly 1% cap maintained since the 1960s. Purchases include Aegis-equipped destroyers and Tomahawk cruise missiles, with the largest share directed at the Self-Defense Forces' sustainability and resilience.
  • 2023 Chart Book Examines Spending, Taxes, and Deficits — The six largest US deficit reduction deals since 1983 were scored at enactment as saving between 0.52% and 1.72% of GDP, with the 1985 Gramm-Rudman-Hollings Act the largest. Many of the cuts were later reversed, and the 1985 law was invalidated by the Supreme Court and replaced in 1987.
  • The Age-Old Question: How Do Governments Pay For Wars? — Denmark abolished a centuries-old religious holiday, requiring people to work that day, partly to help pay for extra defence spending, a move 70% of Danes opposed in one poll. The Stockholm International Peace Research Institute calculates global defence spending rose 4% to a record $2.24tn and is set to keep rising even as higher interest rates raise governments' borrowing costs.

Thursday, December 14, 2023

AI Summary. Revised estimates put core personal consumption inflation at 1.9% annualized in the second half of the year, down from 4% annualized in the first half, with some measures of the trend already at or near 2%. This pace of deceleration runs counter to the widely expected "last mile" problem in returning inflation to the 2% target.

David Mericle Goldman Sachs
Date Posted:

Noting inflation is likely to return to target faster than their September forecast, @GoldmanSachs now anticipates 25bp cuts in March, May, and June.

Is inflation slowing to the 2% target faster than expected?

Core argument: Under a revised estimate, core PCE inflation appears to have slowed from 4% annualized in 2023H1 to 1.9% annualized in 2023H2, rather than facing the widely expected "last mile" problem.

The pace of deceleration is even more striking under our revised forecast path, and by some measures, the trend is already at or near 2%. Far from facing a widely expected “last mile” problem, core PCE inflation appears to have slowed from 4% annualized in 2023H1 to 1.9% annualized in 2023H2, according to our revised estimate. We have also made small revisions to our forecasts of future months based on details of this week’s inflation data. A firmer November used car print means more payback later, and a faster pace of shelter inflation now means that more of the gap between continuing tenant rents and market rates has closed, meaning less catch-up and a somewhat faster deceleration later.

Takeaways by Macro Roundup® AI

  1. Under a revised estimate, core PCE inflation appears to have slowed from 4% annualized in 2023H1 to 1.9% annualized in 2023H2, rather than facing the widely expected "last mile" problem.
  2. A faster return to the 2% inflation target means faster rate cuts, with some measures of the inflation trend already at or near 2%.
  3. A firmer November used car print means more payback later, while a faster pace of shelter inflation now means more of the gap between continuing tenant rents and market rates has closed, leaving less catch-up and a somewhat faster deceleration later.

Related Articles:

  • The Future Of r* — Long-run equilibrium interest rates are argued to stay low relative to recent decades' historical average but above pre-pandemic lows, implying rates only slightly below current levels, with a nominal neutral rate near 3.5% offered as illustration. Rising government debt, particularly in the US, is identified as the main risk to that view.
  • Reflexivity — A sharp decline in interest rates amid benign economic conditions could re-accelerate credit growth and economic activity, limiting the number of future Federal Reserve rate cuts. Despite a large rise in rates, credit quality measures show only modest deterioration to pre-2020 levels and households and corporations remain financially sound, leaving borrowers capacity to take on more debt.
  • The Grind Ahead — Higher short-term and long-term interest rates are flowing through to credit and interest costs, which the authors expect to produce "the grind" — a gradual decline in growth and in the health of corporate and household balance sheets — as a dominant driver of economies and markets over the next 12–18 months.

AI Summary. A critique argues that Auten and Splinter's methodology misallocates a large share of untaxed business and capital income to the bottom of the distribution, assuming the top 1% earns only about 15% of untaxed business income while tax data show they earn about 55% of business income overall.

Thomas Piketty, Emmanuel Saez, and Gabriel Zucman Working Paper
Date Posted:
Is Database:
Database
Is Important:
Important

Saez @PikettyWIL @gabriel_zucman respond to Auten and Splinter’s critique of their inequality findings. They claim AS underallocated a large share of untaxed business and capital income to the top 1%, singificantly understating the rise of inequality.

Does assuming untaxed business income is evenly distributed understate inequality?

Core argument: The comment argues that Auten and Splinter assume the top 1% of adult individuals earn only about 15% of untaxed business income, while tax data show the top 1% earns about 55% of business income.

In a nutshell: Auten and Splinter erroneously allocated a large and growing amount of untaxed business and capital income to the bottom of the distribution due to several clear and long-understood mistakes in their methodology. Business income is one of the most highly concentrated forms of income, and its concentration has sharply increased since the 1960s. The top 1% of adult individuals earn about 55% of it according to tax data today. But AS assume that untaxed business income is very equally distributed. According to them, the top 1% earns only around 15% of it (Figure 1). In other words, the observable income of doctors’ and dentist practices, retail chains, real estate firms, oil and gas partnerships, law firms, etc., might be extremely concentrated, but their untaxed income, according to AS, is much more equally distributed. Is this realistic? In recent years about 50%-60% of untaxed business income corresponds to tax evasion; the rest is due to provisions in the tax code that reduce taxable income below economic income. The key provisions are the full expensing of investment for certain investments and generous depreciation schedules for non-expensed assets. These provisions accrue overwhelmingly to the very top of the distribution – owners of capital-intensive closely held businesses. As for tax evasion, there is no evidence to support the assumption made by AS that it is concentrated at the bottom of the distribution.

Takeaways by Macro Roundup® AI

  1. The comment argues that Auten and Splinter assume the top 1% of adult individuals earn only about 15% of untaxed business income, while tax data show the top 1% earns about 55% of business income.
  2. About 50%–60% of untaxed business income corresponds to tax evasion, with the remainder arising from tax code provisions such as full expensing of certain investments and generous depreciation schedules, which the comment states accrue overwhelmingly to owners of capital-intensive closely held businesses.

Related Articles:

AI Summary. A new paper argues that persistent drought in southern California during the 1970s emptied swimming pools, turning them into de facto urban skateboard parks. The authors link this to the rise of skateboarding companies, skateboarding media, and a subculture that eventually became mainstream.

Paul Kedrosky Applied Complexity
Date Posted:

Describing how skateboarding evolved out of a prolonged southern California drought which emptied pools @pkedrosky theorizes “Humans are products of scarcity, not abundance….we are living in a world, one of abundance, to which we are poorly adapted.”

Did drought create skateboarding culture by emptying swimming pools?

Core argument: A paper argues that persistent drought in southern California during the 1970s emptied swimming pools, creating de facto urban skateboard parks that seeded skateboarding companies, skateboard media, and a subculture that later went mainstream.

There is a striking new paper on the origins of skateboarding. It shows how persistent drought in southern California in the 1970s caused the emptying of pools, giving rise to de facto urban skateboard parks. This, in turn, helped drive the rise of skateboarding companies, skateboard media, and an entire subculture that eventually became mainstream. You can see some of this in a graphic from the paper, where early skateboarding magazine covers showed pools as filled and part of the built urban environment, while later covers turned skateboarding into something that happened inside the objects formerly known as pools. Humans, it can be strongly argued, are products of scarcity, not abundance. We see this in everything from our metabolic response to fasting, to the rise of skateboarding in southern California. We are, to that way of thinking, living in a world, one of abundance, to which we are poorly adapted.

Takeaways by Macro Roundup® AI

  1. A paper argues that persistent drought in southern California during the 1970s emptied swimming pools, creating de facto urban skateboard parks that seeded skateboarding companies, skateboard media, and a subculture that later went mainstream.
  2. Early skateboarding magazine covers in the paper's graphic depicted pools as filled features of the built urban environment, while later covers depicted skateboarding taking place inside the objects formerly known as pools.
  3. Humans, on this argument, are products of scarcity rather than abundance, as seen in the metabolic response to fasting, and are poorly adapted to a world of abundance.

Related Articles:

  • Global Water Scarcity: H2O No! — Less than 1% of the planet's water is usable; water demand has risen about 40% over 40 years and is estimated to increase another 25% by 2050, while supply has more than halved since 1970. Some 57% of global freshwater aquifers are beyond their tipping point, and one-third of piped fresh water is lost to leakage.
  • Arizona Is Running Out of Cheap Water. Investors Saw It Coming — Phoenix-area suburbs are paying sharply higher prices for water rights from a basin west of the city, with one suburb approving $80m for 6,000 acre-feet — more than double the per-acre-foot price another suburb paid earlier. Arizona's groundwater replenishment assessments rose from $154 to $768 per acre-foot.
  • The Rapid Loss Of Antarctic Sea Ice Brings Grim Scenarios Into View — Unusual wind and wave patterns are a leading short-term explanation for the loss of Antarctic sea ice, which holds the continent's coastal ice shelves in place. If those shelves collapsed, continental ice could flow rapidly into the oceans; the West Antarctic ice sheet alone holds enough water to raise global sea level by 11 feet.

AI Summary. An analysis of value-added output in 10 strategically important advanced industries, together accounting for over $10tn in global production, found China was the leading producer in seven and produced more than all other nations outside the top 10 combined. The authors argue China's gains came at the expense of the US and other advanced economies.

Robert Atkinson and Ian Tufts Information Technology and Innovation Foundation
Date Posted:
Is Database:
Database

According to an @ITIFdc analysis of 10 strategic industries, including pharmaceuticals, transportation equipment, and IT, China is the leading producer in 7 of 10 industries and has 25% of global output vs. 21% for the US.

Is China the leading producer in most strategic advanced industries?

Core argument: As of 2020, China was the leading producer in 7 of the 10 strategic industries in ITIF's Hamilton Index, producing more than any other nation and more than all other nations outside the top 10 combined.

[We] examined changes in global shares of value-added output in 10 advanced industry sectors: pharmaceuticals; electrical equipment; machinery and equipment; motor vehicle equipment; other transport equipment; computer, electronic, and optical products; information technology and information services; chemicals (not including pharmaceuticals); basic metals; and fabricated metals. The 10 industries included in the Hamilton Index together accounted for more than $10 trillion in global production in 2020. As of 2020, China was the leading producer in seven of the ten strategically important industries in ITIF’s Hamilton Index. Overall, China was producing more than any other nation—and more than all other nations outside of the top 10 combined. Hamilton Index industries accounted for approximately the same share of the global economy in 2020 (11.8% ) as in 1995 (11.9% ), underscoring how the race for global advantage in these industries is a zero-sum competition. China’s gains have come at the expense of the United States and other G7 and OECD economies. From 1995 to 2020, China also captured more than 80% of non-OECD countries’ gains.

Takeaways by Macro Roundup® AI

  1. As of 2020, China was the leading producer in 7 of the 10 strategic industries in ITIF's Hamilton Index, producing more than any other nation and more than all other nations outside the top 10 combined.
  2. The 10 Hamilton Index industries accounted for more than $10 trillion in global production in 2020 and held roughly the same share of the global economy in 2020 (11.8%) as in 1995 (11.9%), which ITIF argues makes the race zero-sum.
  3. China's gains in the Hamilton Index industries came at the expense of the United States and other G7 and OECD economies, and from 1995 to 2020 China captured more than 80% of non-OECD countries' gains.

Related Articles:

  • China Notes, July ’23: On Technological Momentum — China's political environment poses a threat to its technological momentum, with Chinese undergraduates in the US reporting that their parents urge them not to return to the mainland. China retains strengths independent of slowing growth and demographic drags, chiefly an entrenched workforce that continues to advance manufacturing complexity.
  • Why Xi Can No Longer Brag About the Chinese Economy — China's shipyards build 46% of the world's ships, letting it produce several warships and submarines a year, while the U.S. holds under 1% of capacity and its Navy faces late, over-budget deliveries from a few yards lacking workers. China is also the largest drone producer.
  • 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.

AI Summary. South Korea's statistical office projects the number of babies per woman will fall to 0.65, down from the world's lowest rate of 0.78, and that the population will decline about 30% to 36.2m by 2072. Low fertility threatens to shrink the workforce, slow consumption, and reduce the pool of men available for military service.

Sam Kim Bloomberg
Date Posted:

South Korea’s current fertility rate implies the population will decline 30% over the next 50 years from 51.7mm to 36.2mm. Beyond the economic headwind, this will also significantly impact the South’s ability to counter a North Korean invasion.

Will the world's lowest fertility rate fall even further?

Core argument: Statistics Korea estimates South Korea's fertility rate fell to 0.72 births per woman this year and will drop to 0.65 in 2025, down from 0.78 in 2022, already the world's lowest.

The number of babies expected per woman probably dropped this year to 0.72 and will continue to fall through 2025, when it’s expected to reach 0.65, the statistical office said Thursday in its latest population forecasts. South Korea already has the world’s lowest fertility rate at 0.78 as of 2022. Low fertility threatens to undermine South Korea’s economic future by shrinking its workforce and slowing consumption. It also casts a long shadow over national security by reducing the pool of men available to join the military to counter threats from North Korea. The latest forecast by Statistics Korea puts the population in 2072 at 36.2 million, a 30% decline from the current 51.7 million, even though the fertility rate may recover a bit to 0.68 in 2026. The population is expected to fall every year starting in 2025.

Takeaways by Macro Roundup® AI

  1. Statistics Korea estimates South Korea's fertility rate fell to 0.72 births per woman this year and will drop to 0.65 in 2025, down from 0.78 in 2022, already the world's lowest.
  2. Statistics Korea projects South Korea's population will fall to 36.2 million by 2072, a 30% decline from 51.7 million, with annual declines beginning in 2025 even as the fertility rate may recover to 0.68 in 2026.
  3. Low fertility threatens to undermine South Korea's economic future by shrinking its workforce and slowing consumption, and casts a shadow over national security by reducing the pool of men available to join the military to counter North Korean threats.

Related Articles:

  • Korea Finance Nominee Likens Aging Demographics to Titanic Iceberg — South Korea's finance minister nominee argues the country's aging population requires immediate preparation, noting efforts to raise the world's lowest fertility rate would take at least 30 years to yield benefits. A shrinking workforce is a major cause of South Korea's declining potential growth rate, with births per woman at 0.78.
  • World’s Lowest Birthrate Sinks Further Despite Cash Payouts to Parents — South Korea's fertility rate fell to 0.78 from 0.81, the lowest among wealthy OECD countries where the average is 1.58, and no other OECD member is below 1. Its population has been declining as deaths exceed births, and military conscripts are expected to shrink by nearly half over two decades.
  • How a Vast Demographic Shift Will Reshape the World — In East Asia and Europe, growing numbers of retirees will depend on a shrinking working-age population, and some Asian countries are aging before becoming rich — China hit its peak working-age population at 20% of US income levels at the same point, Vietnam at 14%.

AI Summary. A CNN poll of Michigan shows Trump leading among working-class voters without college degrees by 21 points and Biden leading among college-educated voters by 10 points. Since projections put Michigan at roughly 71% working-class eligible voters, and Biden lost that group by only 2 points in 2020, this 19-point swing is an unfavorable pattern for Democrats.

Ruy Teixeira The Liberal Patriot
Date Posted:

Ruy Teixeira @AEI notes Trump is on track to win Michigan and the White House in 2024; Biden’s path to victory is improving his margins with non-college voters, with whom he currently has a 21pp deficit, 19pp worse than in 2020.

Ruy Teixeira @AEI notes Trump is on track to win Michigan and the White House in 2024; Biden’s path to victory is improving...

Are Democrats losing working-class voters in a key swing state?

Core argument: CNN's Michigan poll shows Trump leading by 21 points among working-class (noncollege) voters, a 19-point swing from 2020, when States of Change data show Biden lost those voters by 2 points.

In CNN’s Michigan poll, Trump is ahead by 21 points among working-class (noncollege) voters, while Biden is ahead by 10 points among college-educated voters. But Michigan is an overwhelmingly working-class state—according to States of Change projections, Michigan should be around 71 percent working-class eligible voters in 2024—so this a very unfavorable pattern for the Democrats. Compared to Biden’s successful effort in 2020, the fall off in working-class support suggested here is precipitous. According to States of Change data, Biden lost these voters by a mere 2 points in 2020, so the current deficit of 21 points represents a massive 19-point swing against him. In contrast, the college-educated swing against him in the CNN poll looks quite small: a 12-point advantage among these voters in 2020, compared to a 10-point advantage now.

Takeaways by Macro Roundup® AI

  1. CNN's Michigan poll shows Trump leading by 21 points among working-class (noncollege) voters, a 19-point swing from 2020, when States of Change data show Biden lost those voters by 2 points.
  2. Biden leads by 10 points among college-educated voters in CNN's Michigan poll, compared with a 12-point advantage with that group in 2020.
  3. States of Change projects Michigan will be about 71 percent working-class eligible voters in 2024.

Related Articles:

  • Why Biden Is Behind, and How He Could Come Back — Polling shows a broad decline in President Biden's standing across virtually every demographic group, with the steepest losses among young, Black, and Hispanic voters. Biden holds only a narrow lead among nonwhite voters under 45, a group that reported backing him by nearly 40 points in the prior election.
  • 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.
  • Why Trump Lost Georgia — 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.