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


Tuesday, January 9, 2024

AI Summary. The wealthiest person on the Forbes 400 list held about 85,000x median family income in 1982 versus roughly 2,500,000x in 2023, a roughly 30x increase in that ratio. The author argues this is hard to reconcile with research finding little change in after-tax top income shares since 1980, and presumes those figures contain errors.

Brad DeLong Brad DeLong's Grasping Reality
Date Posted:
Is Database:
Database

.@delong noting the 30X increase from 1982 to 2023 in the ratio of top wealth to median family income argues “the chances are 99% that there are big things wrong in the numbers in Auten/Splinter” that show stable after-tax top income shares since 1960.

Does top wealth growth contradict findings of stable top income shares?

Core argument: The ratio of the top Forbes 400 fortune to median family income rose roughly 30-fold between 1982 and 2023, from 85,000 times to 2,500,000 times.

In the US in 1982, the top of the first Forbes 400 list was Daniel Ludwig with nominal $2 billion. That was 85,000 times the then-median nominal family income of $23,430. In 2023, the top of the Forbes 400 was Elon Musk with nominal $251 billion. That was 2,500,000 times the now-median nominal family income of $98,705. Now: ($251B/$99K)/($2B/$23K) = 29.8 How the f*** is the ratio of the top to the median to explode by a factor of 30 while the Auten/Splinter measures show “little change in after-tax top income shares”? Until someone comes up with an explanation for how this could be—how a 30x multiplication since 1982 of the ratio of the top of the Forbes 400 to median household income is consistent with “top income shares are lower and have increased less since 1980 than other studies… increasing government transfers and tax progressivity have resulted in… little change in after-tax top income shares…”—I am going to presume the chances are 99% that there are big things wrong in the numbers in Auten/Splinter.

Takeaways by Macro Roundup® AI

  1. The ratio of the top Forbes 400 fortune to median family income rose roughly 30-fold between 1982 and 2023, from 85,000 times to 2,500,000 times.
  2. In 1982 Daniel Ludwig topped the first Forbes 400 with a nominal $2 billion against a median nominal family income of $23,430, while in 2023 Elon Musk topped the list with $251 billion against a median of $98,705.
  3. The author puts 99% odds that big things are wrong in the Auten/Splinter numbers, arguing their finding of "little change in after-tax top income shares" cannot be reconciled with the 30x rise in the top-to-median ratio since 1982.

Related Articles:

  • Income Inequality in the United States: Using Tax Data to Measure Long-Term Trends — Using administrative tax data with the Survey of Consumer Finances, the authors estimate the top 1% pre-tax income share fell from 11.1% in 1962 to 9.4% in 1979, then rose to 13.8% by 2019, a 3 percentage point rise over the full period. Their after-tax measure shows increases of only 1.4 points since 1979 and 0.2 points since 1962.
  • Comment on Auten and Splinter (2023) — 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.
  • Short Reply: Comment on Auten and Splinter (2023) — The assumption that top wealth and capital income shares move in parallel over the long run is problematic, since falling interest rates reduce interest income relative to bond wealth and widen the gap. Fully counting passthrough business income, the authors' top 1% capital income share rose 5 percentage points.

AI Summary. Bloomberg Economics estimates a war over Taiwan would cost around $10tn, roughly 10% of global GDP, based on models of the hit to semiconductor supply, regional shipping, trade sanctions and tariffs, and financial markets. The largest estimated hit comes from missing Taiwanese chips, which would stall production of laptops, tablets, smartphones, and autos.

Jennifer Welch, Jenny Leonard, Maeva Cousin, Gerard DiPippo, and Tom Orlik Bloomberg
Date Posted:
Is Database:
Database

Bloomberg estimates that a Sino-American War over Taiwan would reduce global GDP by 10.2% or $10T almost 2x the impact of the Covid-19 pandemic. US GDP would drop 6.7% and the PRC would face a 16.7% loss.

How much of global GDP would a war over Taiwan cost?

Core argument: Bloomberg Economics estimates a war over Taiwan would cost roughly $10 trillion, equal to about 10% of global GDP, using a suite of models covering semiconductor supply, regional shipping disruption, trade sanctions and tariffs, and financial markets.

Bloomberg Economics estimate the price tag [of a War over Taiwan] would be around $10 trillion, equal to about 10% of global GDP. A suite of models is used to estimate the impact on GDP, taking account of the blow to semiconductor supply, disruption to shipping in the region, trade sanctions and tariffs, and the impact on financial markets. For the main protagonists, other major economies, and the world as a whole, the biggest hit comes from the missing semiconductors. Factory lines producing laptops, tablets, and smartphones — where Taiwan’s high-end chips are the irreplaceable “golden screw” — would stall. Autos and other sectors that use lower-end chips would also take a significant hit. Barriers to trade and a significant risk-off shock in financial markets add to the costs.

Takeaways by Macro Roundup® AI

  1. Bloomberg Economics estimates a war over Taiwan would cost roughly $10 trillion, equal to about 10% of global GDP, using a suite of models covering semiconductor supply, regional shipping disruption, trade sanctions and tariffs, and financial markets.
  2. The biggest hit for the main protagonists, other major economies, and the world as a whole comes from missing semiconductors, as factory lines for laptops, tablets, and smartphones stall without Taiwan's irreplaceable high-end "golden screw" chips.
  3. Autos and other sectors using lower-end chips would also take a significant hit, with trade barriers and a significant risk-off shock in financial markets adding to the costs, according to Bloomberg Economics.

Related Articles:

  • US To Link Up With Taiwan and Japan Drone Fleets To Share Real-Time Data — The US, Taiwan and Japan plan to share real-time data from naval reconnaissance drones, with Taiwan's four MQ-9B Sea Guardian drones integrated into the same system used by US forces in the region and Japan's Self-Defense Force. The arrangement would let the US and its allies view the same drone-gathered information simultaneously.
  • US To Provide Taiwan With Weapons From Its Stockpiles For First Time — The US will provide Taiwan with $345mn in weapons drawn directly from American military stockpiles, the first such transfer under an annual $1bn presidential drawdown authority approved by Congress. Previous US support for Taiwan came through approved arms sales rather than direct provision from US stocks.
  • 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.

AI Summary. Global private capital assets under management total $13tn, less than 5% of global financing markets, against $103tn in outstanding fixed income, $101tn in equity market capitalization, and $98tn in banking sector balance sheets. Over the past decade private capital grew by $8tn, far less in absolute terms than fixed income ($42tn), equities ($35tn), and banking ($34tn).

Torsten Sløk, Jyoti Agarwal, and Rajvi Shah Apollo
Date Posted:
Is Database:
Database

Torsten Sløk @apolloglobal notes that since 2010 private credit assets under management (AUM) have increased by $800B, more than the $500B growth in high-yield debt.

How large are private markets relative to global financing markets?

Core argument: Global private capital AUM stands at $13trn, less than 5% of global financing markets, which comprise $103trn of fixed income outstanding, $101trn of equity market cap, and $98trn of banking sector balance sheets.

Global private capital AUM: $13trn. Global fixed income outstanding: $103T. Global equity market cap: $101T. Global size of banking sector balance sheets: $98T. Private capital makes up less than 5% of global financing markets. Increase in the size of global private markets AUM over the past decade: $8T. Increase in the size of global fixed income markets over the past decade: $42T. Increase in the size of global equity market cap over the past decade: $35T. Increase in the size of global banking sector balance sheets over the past decade: $34T. Private capital has over the past decade grown much slower than global financing markets.

Takeaways by Macro Roundup® AI

  1. Global private capital AUM stands at $13trn, less than 5% of global financing markets, which comprise $103trn of fixed income outstanding, $101trn of equity market cap, and $98trn of banking sector balance sheets.
  2. Global private markets AUM grew by $8trn over the past decade, less than the $42trn increase in global fixed income, the $35trn increase in global equity market cap, and the $34trn increase in banking sector balance sheets.

Related Articles:

  • How Private Credit Gives Banks a Run for Their Money — 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.
  • Where Are All the Defaults? — One explanation for subdued high-yield bond spreads is that the lowest-quality borrowers, those most likely to default, have migrated from high-yield markets into private credit. Moody's reports the number of issuers with its lowest speculative-grade ratings has fallen, and that 62% of its rated universe is rated single-B or below.
  • 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. The European Union's Copernicus climate change service reported the world's hottest year on record, with the global average temperature reaching almost 1.5C above pre-industrial levels and every day at least 1C warmer than pre-industrial levels for the first time since records began.

Attracta Mooney, Steven Bernard, and Kenza Bryan Financial Times
Date Posted:

2023 was the hottest year on record. 2024 is likely to break records due to the naturally occurring El Niño effect which is associated with higher temperatures.

Has the world recorded its hottest year on record?

Core argument: The global average temperature in 2023 reached almost 1.5C above pre-industrial levels, the world's hottest year, according to the European earth observation agency.

The world experienced its hottest year in 2023, with “climate records tumbling like dominoes” as the global average temperature reached almost 1.5C above pre-industrial levels, the European earth observation agency has said. Scientists from the Copernicus climate change service said that last year marked the first since records began in which every day was at least 1C warmer than pre-industrial levels before human-induced climate change began to take effect. Nick Dunstone, a climate scientist at the UK Met Office, said 2024 would be “another record-breaking year”, as a result of the continued strength of the naturally occurring El Niño effect, which heats the Pacific Ocean surface and exacerbates global warming caused by greenhouse gases.

Takeaways by Macro Roundup® AI

  1. The global average temperature in 2023 reached almost 1.5C above pre-industrial levels, the world's hottest year, according to the European earth observation agency.
  2. Copernicus climate change service scientists said 2023 was the first year since records began in which every day was at least 1C warmer than pre-industrial levels.
  3. Nick Dunstone of the UK Met Office said 2024 would be "another record-breaking year" because of the continued strength of El Niño, which heats the Pacific Ocean surface and exacerbates greenhouse-gas-driven warming.

Related Articles:

  • 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.
  • What Happens in Antarctica, Doesn’t Stay in Antarctica — Antarctic sea-ice extent reached a level three times further from the average than any previously recorded in July, and only 0.2–0.4% of the continent is currently exposed above the ice. Further warming is likely to expose more land, reducing the surface's reflectivity and increasing the heat the planet absorbs.
  • Long-term Surface Impact of Hunga Tonga-Hunga Ha’apai-like Stratospheric Water Vapor Injection — A volcanic eruption that injected large amounts of water vapor — a strong greenhouse gas — into the stratosphere is estimated to have raised surface temperatures by more than 1.5°C across large regions for several years, while cooling some areas by close to 1°C. The authors suggest a possible link to tropical Pacific sea surface temperatures that warrants further investigation.

Wednesday, January 10, 2024

AI Summary. Federal debt held by the public rose from 32% to 98% of GDP over roughly two decades, despite earlier Congressional Budget Office projections that the debt would be paid off. The authors attribute 37 percentage points to major tax cuts, 33 to discretionary spending and Medicare expansions, and 28 to recession and pandemic responses.

Marc Goldwein Committee for a Responsible Federal Budget
Date Posted:
Is Database:
Database
Is Important:
Important

A @budgethawks analysis finds rising new spending relative to GDP drove about 2/3 of the growth in annual budget deficits since 2001 while declining revenue explains 1/3. Absent these policy choices debt would have been fully paid off.

What drove federal debt from 32% to 98% of GDP?

Core argument: Federal debt held by the public rose from 32% of GDP at the end of FY 2001 to 98% at the end of FY 2023, after CBO projected in 2001 that the debt would be effectively paid off by the end of FY 2009.

In 2001, the Congressional Budget Office (CBO) projected that the national debt would effectively be paid off in full by the end of Fiscal Year (FY) 2009. Instead, federal debt held by the public grew from 32% of Gross Domestic Product (GDP) at the end of FY 2001 to 98% of GDP at the end of FY 2023. Reviewing major deficit-increasing legislation and executive actions over the past 22 years, we find that major tax cuts are responsible for 37 percentage points of debt-to-GDP, net discretionary spending increases and major Medicare expansions are responsible for 33 percentage points, and response measures to the Great Recession and the COVID-19 pandemic and recession – before accounting for economic feedback – explain 28 percentage points. Absent any two of these sets of policies, the debt-to-GDP ratio would be near the FY 2001 level. Debt would be fully paid off without tax cuts, spending increases, and recession responses.

Takeaways by Macro Roundup® AI

  1. Federal debt held by the public rose from 32% of GDP at the end of FY 2001 to 98% at the end of FY 2023, after CBO projected in 2001 that the debt would be effectively paid off by the end of FY 2009.
  2. The analysis attributes 37 percentage points of the debt-to-GDP increase to major tax cuts, 33 points to net discretionary spending increases and major Medicare expansions, and 28 points to Great Recession and COVID-19 response measures before economic feedback.
  3. The analysis finds that absent any two of these three sets of policies, the debt-to-GDP ratio would be near its FY 2001 level, and absent all three the debt would be fully paid off.

Related Articles:

  • Olivier Blanchard on Debt Explosions — The author argues that rising long-term US Treasury yields reflect a term premium driven by heavy bond supply and weaker demand, including the Federal Reserve shrinking its holdings, rather than a risk premium, since inflation-indexed yields have also risen. Risks include a failed auction or debt monetization producing high inflation.
  • Living with High Public Debt — High public debt ratios are likely to persist because large sustained primary budget surpluses are politically unrealistic, real interest rates are already very low, faster global growth is hard to engineer, inflation is not a sustainable route to reducing debt, and financial repression is less feasible amid liberalized markets.
  • Did the U.S. Grow Out of Its World War II Debt? — Decomposing U.S. debt-to-GDP movements, the authors find the post-World War II decline from 106% to a trough of 23% was explained mostly by primary budget surpluses and interest-rate distortions from surprise inflation and pegged nominal rates; absent those, the ratio would have fallen only to 74%.

AI Summary. Fiscal theory attributes the deflation of the deep recession to a fall in real interest rates that lowered real interest costs on government debt, an effect that outweighed large deficits. The predicted deflation spiral and the hyperinflation forecast from quantitative easing both failed to materialize.

John Cochrane The Grumpy Economist
Date Posted:
Is Database:
Database

.@JohnHCochrane revisits 2008-2020 and argues the Fiscal theory of the price level has been more consistent with inflation’s behavior than Keynesians’ warnings about deflation spirals or monetarist’s predictions of hyperinflation.

How can falling real interest costs on government debt produce deflation?

Core argument: U.S. inflation fell to -2% during the 2008 recession, yet the "deflation spiral" many commenters predicted at the zero bound, in which deflation raises real interest rates and causes further deflation, never materialized.

In 2008, with a huge recession, inflation went down, hitting -2%. Why did inflation decline? Once started, why didn’t it keep going down? Many commenters, armed with standard models, predicted a “deflation spiral” at the zero bound. Deflation means high real interest rates, which causes more deflation. It didn’t happen. Fiscal theory explains. Why was there deflation? Why, especially given the large deficits, which superficially look like they ought to cause inflation? In the recession, though deficits rose, the real interest rate fell. Real interest costs on the debt fell. This “discount rate” effect overwhelmed the deficits to make government debt more valuable. A decade of 2% lower real interest costs has, with 100% debt/GDP, exactly the same disinflationary force as a decade of 2% higher surplus to GDP ratio. Throughout the zero bound era, Keynesian economists warned of the incipient deflation spiral, Monetarists warned of hyperinflation from massive quantitative easing. None of these predictions happened. Fiscal theory is the only theory transparently consistent with steady quiet inflation at a pegged interest rate, including the zero bound, and in which immense open market operations have no effect on inflation.

Takeaways by Macro Roundup® AI

  1. U.S. inflation fell to -2% during the 2008 recession, yet the "deflation spiral" many commenters predicted at the zero bound, in which deflation raises real interest rates and causes further deflation, never materialized.
  2. Fiscal theory attributes the 2008 deflation to a decline in real interest rates that cut real interest costs on government debt, a discount-rate effect that overwhelmed rising deficits and made government debt more valuable.
  3. In the fiscal theory account, a decade of 2% lower real interest costs on debt at 100% debt/GDP exerts the same disinflationary force as a decade of a 2% higher surplus-to-GDP ratio.

Related Articles:

  • 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.
  • What We’ve Learned About Inflation — Fiscal theory holds that a one-time $5tn fiscal expansion produces a one-time rise in the price level sufficient to inflate away $5tn of debt value, after which inflation stops even if the Federal Reserve does nothing. Raising interest rates lowers current inflation at the cost of more-persistent inflation, a beneficial smoothing.

AI Summary. Views of the economy have become increasingly partisan, and the partisanship is asymmetric: Republicans are much more likely than Democrats to rate the economy as good when their party holds the White House and bad when it does not. Survey data do not clearly show the overall price level as an explanation.

Paul Krugman Krugman Wonks Out
Date Posted:

.@paulkrugman argues that overall negative economic sentiment is largely a function of GOP voters’ negative feelings when a Democrat is in the White House.

Is partisanship, not prices, driving negative views of the economy?

Core argument: Civiqs charts show Republicans rated the economy more favorably during the pandemic recession, when unemployment rose to almost 15%, than they did during the Obama years.

It has been obvious for a while that views of the economy have become increasingly partisan. It’s also clear that this partisanship is asymmetric: Republicans are much more likely than Democrats to say that the economy is good when their party holds the White House and bad when it doesn’t. Civiqs charts show this asymmetric partisanship especially clearly. Republican assessments of the economy soared when Donald Trump took office. Even during the pandemic recession, when unemployment rose to almost 15%, Republicans had a more favorable view of the economy than they did in the Obama years. And when Joe Biden came in, almost all Republicans declared that the economy was bad — a view that has barely budged in the face of good macroeconomic news. I’m not prepared to completely dismiss the issue of the overall price level, which is backed by academic research as well as anecdotes. But as I said, it’s not obvious in the survey data.

Takeaways by Macro Roundup® AI

  1. Civiqs charts show Republicans rated the economy more favorably during the pandemic recession, when unemployment rose to almost 15%, than they did during the Obama years.
  2. Republican assessments of the economy soared when Donald Trump took office and turned almost uniformly negative when Joe Biden came in, barely budging in the face of good macroeconomic news.
  3. Partisanship in economic views is asymmetric, with Republicans much more likely than Democrats to say the economy is good when their party holds the White House and bad when it does not.

Related Articles:

  • 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.
  • 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%.
  • What’s Behind the Recent Slump in Consumer Sentiment? — Since 1980, annual real income growth and consumer sentiment have generally peaked and troughed in step, and real personal income growth has run below its long-term average since early 2020, which may have weighed on sentiment. As inflation slowed and real income growth picked up, sentiment showed signs of improving.

AI Summary. Higher returns are drawing capital into reinsurance, which is likely to ease pressure on coverage pricing. Catastrophe bond issuance hit a record $15bn, global property catastrophe reinsurance pricing rose about 5% at January renewals versus closer to 30% a year earlier, and risk-adjusted prices for reinsurance bought by reinsurers fell as much as 15%.

Telis Demos Wall Street Journal
Date Posted:

Global reinsurers saw a return on equity of 21% in the first 9 months of 2023. The return is attracting capital leading some investors to project slowing pressure on insurance premiums.

Global reinsurers saw a return on equity of 21% in the first 9 months of 2023. The return is attracting capital leading...

Is new capital flowing into reinsurance easing coverage prices?

Core argument: Global property catastrophe reinsurance pricing rose about 5% at the Jan. 1 renewals, as measured by Guy Carpenter's Global Rate on Line Index, down from an increase closer to 30% a year earlier.

As higher returns draw in more capital to reinsurance, it will likely take some pressure off the pricing of coverage. Already, a surge in returns for catastrophe bonds—or securities that pay premium interest rates, but can lose their principal in the event of a stated event or loss—helped spur issuance last year, which hit a record $15 billion. Overall, pricing for global property catastrophe reinsurance, as measured by Guy Carpenter’s Global Rate on Line Index, was up about 5% for the Jan. 1 renewals. That was down from a jump closer to 30% this time last year. Some of the capital coming back into the market is in the form of reinsurance for reinsurers. This is known as retrocession, or “retro.” The risk-adjusted prices for retro declined by as much as 15% for the January 1 renewals.

Takeaways by Macro Roundup® AI

  1. Global property catastrophe reinsurance pricing rose about 5% at the Jan. 1 renewals, as measured by Guy Carpenter's Global Rate on Line Index, down from an increase closer to 30% a year earlier.
  2. Catastrophe bond issuance hit a record $15 billion last year, spurred by a surge in returns on securities that pay premium interest rates but can lose principal upon a stated event or loss.
  3. Risk-adjusted prices for retrocession, or reinsurance for reinsurers, fell by as much as 15% at the Jan. 1 renewals.

Related Articles:

  • Buying Home and Auto Insurance Is Becoming Impossible — Car insurance premiums rose 19.2% over 12 months, about six times the rise in overall consumer prices, marking the 15th consecutive month of double-digit year-over-year increases and the longest such stretch since the mid-1980s. Reinsurance prices rose 30%–50%, leaving home insurers to absorb more risk themselves.
  • Parts of America are Becoming Uninsurable — Florida's average home insurance premium reached about $6,000, over 3x the national average and up 42% year-on-year, yet insurers are exiting, leaving the state-backed insurer of last resort with the largest market share and $608bn of insured assets. In California, consumer-protection rules prevent premiums from covering rising wildfire and reinsurance costs.
  • Analyzing State Resilience to Weather and Climate Disasters — The real annual cost of U.S. weather and climate disasters has risen from about $20bn per year in the 1980s to nearly $95bn per year in 2010–19, reaching roughly $153bn in one year. Property insurers absorbed 48% of these costs, uninsured or underinsured homeowners, businesses and farms 37%, the federal government 11%, and state and local governments 4%.

AI Summary. Industrial robot repeatability improved little between 1972 and 1984, with a typical 1-meter reach, 10kg payload arm accurate to about 1 mm in both years, but a comparable 2023 robot achieves roughly 0.01–0.02 mm, 50 to 100x more precise. Such a robot cost 2 to 3x more in the 1980s than today, before accounting for cheap Chinese robot arms.

Brian Potter Construction Physics
Date Posted:

Since the 1980s industrial robot costs have fallen substantially while their precision has increased; controlling for size robot cost has decreased by 50-66% while simultaneously getting 50-100x more precise. @_brianpotter

How much have industrial robots improved in precision and cost?

Core argument: A 1-meter reach, 10kg payload robot averaged roughly 1 mm repeatability in both 1972 and 1984, with wide variation, as some 1984 models evidently achieved 0.1 mm.

The 1984 robots are not that much more repeatable than the 1972 robots. Our 1-meter reach, 10kg payload robot would on average have a repeatability of around 1 mm in both years (with a lot of variation, as some 1984 robots could evidently achieve 0.1mm of repeatability). But since then, there’s been a huge improvement. Our 2023 1-meter reach, 10kg payload robot will have a repeatability closer to 0.01 or 0.02 millimeters, or 50 to 100 times more precise than the robots in the 70s and 80s. Overall, robots have fallen substantially in cost since the 1980s, while simultaneously getting more precise. A robot with a 1-meter reach and 10 kg payload capacity would cost anywhere from 2 to 3 times as much in the 1980s as it does today, even before considering the rise of cheap Chinese robot arms, which seem poised to make prices fall even more.

Takeaways by Macro Roundup® AI

  1. A 1-meter reach, 10kg payload robot averaged roughly 1 mm repeatability in both 1972 and 1984, with wide variation, as some 1984 models evidently achieved 0.1 mm.
  2. A 1-meter reach, 10kg payload robot cost 2 to 3 times as much in the 1980s as it does today, before accounting for cheap Chinese robot arms that seem poised to push prices lower.

Related Articles:

  • The Characteristics and Geographic Distribution of Robot Hubs in U.S. Manufacturing Establishments — Establishment-level U.S. Census data on roughly 35,000 manufacturing plants show that those using robots tend to be larger, pay higher earnings per worker, employ a larger share of production workers, and spend more on capital including information technology. Robots are highly concentrated geographically even after accounting for industry mix.
  • Making Manufacturing Great Again — US manufacturing construction spending has more than doubled over the past year and risen as a share of gross domestic product, a surge attributed to two laws: the Inflation Reduction Act, whose core is green energy subsidies, and the CHIPS Act, which promotes domestic semiconductor production.
  • Factory Boom Sweeps US With Construction at Record $190 Billion — US manufacturers' construction spending has more than doubled over the past year to an annual rate of nearly $190bn, according to the Census Bureau. Manufacturing now makes up about 13% of all non-government construction, the highest share in a data series going back to the early 1990s.

AI Summary. U.S. battery storage capacity is projected to rise 89%, to more than 30 gigawatts, if developers bring all planned energy storage systems online as scheduled — a total that would exceed capacity from petroleum liquids, geothermal, wood waste, or landfill gas. California leads all states with 7.3 gigawatts installed, followed by Texas with 3.2 gigawatts.

Katherine Antonio and Alex Mey Energy Information Administration
Date Posted:

The @EIAgov forecasts that American battery storage capacity will almost double in 2024 largely driven by California and Texas.

Is U.S. battery storage capacity on track to nearly double?

Core argument: U.S. battery storage capacity could rise 89% by the end of 2024 if developers bring all planned energy storage systems on line by their intended commercial operation dates, continuing growth underway since 2021.

U.S. battery storage capacity has been growing since 2021 and could increase by 89% by the end of 2024 if developers bring all of the energy storage systems they have planned on line by their intended commercial operation dates. Developers currently plan to expand U.S. battery capacity to more than 30 gigawatts (GW) by the end of 2024, a capacity that would exceed those of petroleum liquids, geothermal, wood and wood waste, or landfill gas. Two states with rapidly growing wind and solar generating fleets account for the bulk of the capacity additions. California has the most installed battery storage capacity of any state, with 7.3 GW, followed by Texas with 3.2 GW.

Takeaways by Macro Roundup® AI

  1. U.S. battery storage capacity could rise 89% by the end of 2024 if developers bring all planned energy storage systems on line by their intended commercial operation dates, continuing growth underway since 2021.
  2. Developers plan to expand U.S. battery capacity to more than 30 GW by the end of 2024, exceeding the capacity of petroleum liquids, geothermal, wood and wood waste, or landfill gas.
  3. California holds the most installed battery storage capacity of any state at 7.3 GW, followed by Texas at 3.2 GW, and two states with rapidly growing wind and solar fleets account for the bulk of capacity additions.

Related Articles:

  • Elon Musk’s Latest Mission: Rev Up the Electricity Industry — U.S. electricity demand has grown at an average of 1% a year over the past 20 years, but McKinsey projects it will double by 2050 and PG&E expects a 70% rise over the next 20 years. Deloitte estimates the largest U.S. electric companies will together spend as much as $1.8tn by 2030.
  • Electricity Grids and Secure Energy Transitions — Under a scenario based on announced government pledges, global electricity demand is projected to grow 2.7% per year, more than doubling from just under 25,000 terawatt-hours to nearly 54,000 terawatt-hours by 2050. Hydrogen production via electrolysis and electric vehicles account for more than half of that projected growth.
  • Gridlock: How a Lack of Power Lines Will Delay the Age of Renewables — A study led by Lawrence Berkeley National Laboratory found nearly 2,000GW of solar, wind and storage projects waiting in queues to connect to US long-distance transmission grids, more than the installed capacity of the entire US power plant fleet. The authors find only about a fifth of such requested projects are typically built.