Edward Conard

Top Ten New York Times Bestselling Author

  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “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 must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “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 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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, January 18, 2024

AI Summary. Wages for most U.S. private-sector workers are rising slightly faster than 4.5% a year, even as job-market churn measures such as the quits rate and detrended job openings rate have returned to or fallen below pre-pandemic norms. That income growth coincides with nominal retail spending rising about 6–7% a year.

Matt Klein The Overshoot
Date Posted:

.@M_C_Klein writes that 6% annual nominal GDP growth and 4.5% wage growth are likely inconsistent with the Fed’s target of 2% inflation.

Is wage growth staying strong even as job-market churn normalizes?

Core argument: Wages for most U.S. private-sector workers are still rising slightly faster than 4.5% a year, a stability in nominal pay growth that contrasts with the normalization of job market churn measures that previously tracked wage pressures.

For most workers in the U.S. private sector, wages are still rising slightly faster than 4.5% a year. This remarkable stability in nominal pay growth stands in stark contrast to the ongoing normalization of measures of job market churn that had previously been good indicators of wage pressures. The share of workers quitting their jobs for better prospects elsewhere is now lower than on the eve of the pandemic, while the detrended job openings rate is in line with pre-pandemic norms. Yet wage growth remains several percentage points faster. Unsurprisingly, the sustained income growth has been translating into robust spending growth. As of now, retail spending is rising about 6-7% a year in nominal terms.

Takeaways by Macro Roundup® AI

  1. Wages for most U.S. private-sector workers are still rising slightly faster than 4.5% a year, a stability in nominal pay growth that contrasts with the normalization of job market churn measures that previously tracked wage pressures.
  2. The share of U.S. workers quitting for better prospects is now lower than just before the pandemic and the detrended job openings rate matches pre-pandemic norms, yet wage growth runs several percentage points faster.
  3. U.S. retail spending is rising about 6–7% a year in nominal terms, as sustained income growth translates into spending growth.

Related Articles:

  • The Big Picture: Back to the Future — The secular backdrop has shifted from disinflationary to more inflationary, with interest rates no longer near zero and real rates no longer negative. Household balance sheets are as healthy as they have been in 20 years, leaving room to borrow, while the public sector is as indebted as it has ever been.
  • Macro Outlook 2024: The Hard Part Is Over — Goldman Sachs projects limited recession risk, holding a 15% US recession probability, and expects tailwinds to global growth including strong real household income growth, a smaller drag from monetary and fiscal tightening, recovering manufacturing, and central banks more willing to cut rates if growth slows. It projects core inflation falling to 2–2½%.
  • Global Natural Rates in the Long Run: Postwar Macro Trends and the Market-Implied r* in 10 Advanced Economies — Estimates for 10 advanced economies show natural interest rates have declined over the long run, though not steadily: as recently as the 1990s they ranged from 100 to 600 basis points, while by the end of the sample 4 of 10 countries had a negative natural rate and most others fell between 0 and 50 basis points.

AI Summary. Global core inflation across the G10 excluding Japan plus early-hiking emerging markets is estimated at a 2.6% 1-month annualized rate, up from 1.2%, while the 3-month annualized rate fell to an estimated 2.0%. The authors expect disinflation to continue and project 5 rate cuts this year, fewer than the 6–7 priced by markets.

Jan Hatzius Goldman Sachs
Date Posted:

Noting softening US Core PCE and inflation expectations that are back at pre-pandemic levels, Jan Hatzius @GoldmanSachs argues the Fed will likely cut in March.

Will global disinflation continue despite a monthly uptick in core inflation?

Core argument: Global core inflation across the G10 ex Japan plus emerging-market early hikers is estimated to have accelerated to a 1-month annualized 2.6% in December from 1.2% in November, renewing concerns that 2023's disinflation will not last.

Global core inflation—averaged across the G10 ex Japan plus the EM early hikers—picked up to an estimated 1-month annualized rate of 2.6% in December from the rock-bottom 1.2% reading in November. This has triggered a renewed round of concerns that the disinflation of 2023 may not last, with some arguing that it was due to a one-off improvement in goods supply—and thus a one-off decline in the level of goods prices—alongside entrenched service inflation. We continue to take a more optimistic view. First, the trend is still improving, as the 3-month annualized rate fell further to an estimated 2.0% in December. Second, the adjustment in core goods prices is far from complete—for example, US used cars have only unwound 31% of their covid-related price increase. And third, we expect both service inflation and wage growth to continue slowing gradually in a lagged response to the improved supply/demand balance across the global economy. We expect “only” 5 cuts this year, below the 6-7 cuts now discounted in market pricing, and we view the chance of 50bp steps as low.

Takeaways by Macro Roundup® AI

  1. Global core inflation across the G10 ex Japan plus emerging-market early hikers is estimated to have accelerated to a 1-month annualized 2.6% in December from 1.2% in November, renewing concerns that 2023's disinflation will not last.
  2. The 3-month annualized global core inflation rate is estimated to have fallen further to 2.0% in December, and US used car prices have unwound only 31% of their covid-related increase, supporting the view that core goods adjustment is incomplete.
  3. Goldman Sachs expects 5 rate cuts this year, below the 6–7 cuts discounted in market pricing, views the chance of 50bp steps as low, and expects service inflation and wage growth to slow gradually.

Related Articles:

  • The Case For A Mistake — Because monetary policy affects inflation with long and variable lags, much recent tightening has yet to have its full effect, and the collapse in global credit creation points to weak money growth ahead. The author argues central banks over-tightened by reacting to incoming inflation rather than looking through a one-off pandemic price-level adjustment, shifting the risk toward undershooting inflation targets.
  • The Fed Prepares for Rate Cuts. But Why? — Consumer borrowing and bank lending showed signs of stabilizing or modest acceleration, which is not what one would expect if monetary policy were actually restrictive. Setting interest rates based on past inflation readings risks shifting policy from neutral to unnecessarily stimulative, since market-implied inflation expectations have not moved in over a year.
  • The Big Picture: Back to the Future — The secular backdrop has shifted from disinflationary to more inflationary, with interest rates no longer near zero and real rates no longer negative. Household balance sheets are as healthy as they have been in 20 years, leaving room to borrow, while the public sector is as indebted as it has ever been.

AI Summary. The authors estimate that the effects of monetary policy vary with the underlying level of inflation: when US inflation is below 5.5%, monetary policy has no meaningful effects on labor markets, while at inflation between 5.5% and 11% its effects on unemployment are sizable and longer-lasting.

Valeria Gargiulo, Christian Matthes, and Katerina Petrova Federal Reserve Bank of New York
Date Posted:

.@cmatthes_econ reviews data from 1970-2007 and finds when inflation is running < 5.5% per year, monetary policy has a short-lived impact on prices but no impact on labor markets, “consistent with the recent “soft landing” of the U.S. economy.”

Does the impact of monetary policy depend on the inflation level?

Core argument: When U.S. inflation is below 5.5% — the case for most of the post-WWII sample — the authors' model identifies no meaningful effects of monetary policy on labor markets, a result they say is consistent with the U.S. economy's recent "soft landing.".

We find that the effects of monetary policy vary substantially with the underlying level of inflation in the economy. For most of our post-WWII sample, inflation has been less than 5.5% in the U.S., which our model identifies as a period during which monetary policy has no meaningful effects on labor markets. Even though our sample ends in 2007 due to the availability of the instrument series used to identify the effects of monetary policy, our results are consistent with the recent “soft landing” of the U.S. economy. On the other hand, when inflation is between 5.5 and 11%, the effects of monetary policy are larger and longer-lasting, since variables are much more persistent in this regime, and the effects of monetary policy on unemployment are sizable and significant.

Takeaways by Macro Roundup® AI

  1. When U.S. inflation is below 5.5% — the case for most of the post-WWII sample — the authors' model identifies no meaningful effects of monetary policy on labor markets, a result they say is consistent with the U.S. economy's recent "soft landing.".
  2. When inflation runs between 5.5% and 11%, the authors find the effects of monetary policy larger and longer-lasting because variables are much more persistent in that regime, with sizable and significant effects on unemployment.
  3. The authors' sample ends in 2007 because of the availability of the instrument series used to identify the effects of monetary policy.

Related Articles:

  • In Search of Safe Havens: The Trust Deficit and Risk-free Investments! — Plotting US Treasury bond rates against a crude fundamental risk-free rate—actual inflation plus real GDP growth—undercuts the argument that central banks set interest rates. Central banks can nudge rates at the margin but cannot override the fundamentals of inflation and real growth.
  • The Fed and the Secular Decline in Interest Rates — The authors find that the long-run decline in US Treasury yields since 1980 is fully accounted for by movements in a narrow window around Federal Reserve policy meetings, while yield changes outside that window prove transitory. They suggest the Federal Reserve conveys information to markets about the long-run level of interest rates.
  • 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.

AI Summary. Survey data show Gen Z'ers, particularly those born since 2000, are less likely than Boomers and Gen X'ers to support free speech rights for groups with controversial views. Among Silents, Boomers, and Gen X'ers, liberals were more supportive than conservatives of free speech for racists, a pattern that reverses among Millennials and Gen Z.

Jean Twenge Generation Tech
Date Posted:

Americans born after 2000 are less likely to support free speech than previous generations; this shift is more pronounced among liberals. @jean_twenge

Have younger liberals become less supportive of free speech than conservatives?

Core argument: Gen Z'ers, particularly those born since 2000, are less likely than Boomers and Gen X'ers to support free speech rights for three groups holding controversial views.

Gen Z’ers – particularly those born since 2000 – are less likely to support free speech rights for three groups with controversial views than Boomers and Gen X’ers. Support of free speech rights for all four viewpoints steadily increased from the Greatest Generation (born 1900-1924) to the Silent Generation (1925-1945) to the Boomers. It then fell for racists but continued an upward trajectory for communists and militarists. Among Silents, Boomers, and Gen X’ers, liberals -- not conservatives – were more likely to support free speech rights for racists. Then, beginning with Millennials and accelerating for Gen Z, the lines cross, with liberals becoming much less supportive of free speech rights for racists. Boomer and Silent liberals involved in the free speech movement at UC Berkeley in the 1960s fought for more free speech. Their Gen Z liberal grandchildren are fighting for less.

Takeaways by Macro Roundup® AI

  1. Gen Z'ers, particularly those born since 2000, are less likely than Boomers and Gen X'ers to support free speech rights for three groups holding controversial views.
  2. Support for free speech rights across all four viewpoints rose steadily from the Greatest Generation (born 1900–1924) to the Silent Generation (1925–1945) to the Boomers, then fell for racists while continuing to rise for communists and militarists.
  3. Among Silents, Boomers, and Gen X'ers, liberals rather than conservatives were more likely to back free speech rights for racists, but the lines cross beginning with Millennials, with Gen Z liberals much less supportive.

Related Articles:

  • Generation Z and the Transformation of American Adolescence: How Gen Z’s Formative Experiences Shape Its Politics, Priorities, and Future — Survey data show 56% of Generation Z adults had a boyfriend or girlfriend as a teenager, compared with 69% of millennials, 76% of Generation X, and 78% of baby boomers. Similarly, 58% of Generation Z adults held a teenage part-time job, versus 70% of millennials, 79% of Generation X, and 82% of baby boomers.
  • Gen Z Really Does Have a Work Ethic Problem — Long-running nationally representative surveys of U.S. 12th graders show the share saying they want to do their best at a job "even if this sometimes means working overtime" fell from 54% to 36%, a relative drop of 33% in two years, after work ethic measures had recovered among Gen Z in the 2010s.
  • Teens, Social Media and Technology 2023 — About nine-in-ten U.S. teens ages 13 to 17 say they use YouTube, making it the most widely used platform in Pew Research Center's survey, followed by TikTok (63%), Snapchat (60%), and Instagram (59%). Facebook use among teens fell from 71% in 2014-2015 to 33%, and Twitter's teen user base also shrank over the past decade.

Friday, January 19, 2024

AI Summary. The Penn Wharton Budget Model projects that exempting employment-based green cards from statutory limits for applicants with U.S. STEM doctoral or master's degrees and their families would cut federal deficits by $129bn over a decade, while a conventional estimate that omits added tax revenue from a larger population shows a $4bn deficit increase.

Douglas Elmendorf and Heidi Williams University of Pennsylvania
Date Posted:

Douglas Elmendorf and Heidi Williams argue that expanding the number of employment-based green cards for applicants with graduate STEM degrees would reduce the deficit by $129 billion between 2025 and 2034 relative to current accounting.

How does counting population growth change immigration policy's budget estimates?

Core argument: The Penn Wharton Budget Model forecasts that exempting STEM doctoral and master's degree holders and their families from statutory employment-based green card limits would reduce federal deficits by $129 billion from 2025 to 2034.

The Penn Wharton Budget Model (PWBM) forecasts that exempting employment-based green cards from statutory limits for applicants (and their families) who have earned a doctoral or master’s degree in a STEM field---similar to Section 80303 in H.R. 4521---would reduce federal budget deficits by $129 billion from 2025 to 2034. In contrast, a conventional budget estimate, which would include projected increases in federal spending but not the effect of a larger population on federal tax revenues, shows an increase in federal deficits of $4 billion. Over the following decade, the difference between estimates under the conventional approach and the population-change approach is even larger, from a $74 billion increase in the budget deficit under the conventional approach to a $634 billion decrease under the population-change approach.

Takeaways by Macro Roundup® AI

  1. The Penn Wharton Budget Model forecasts that exempting STEM doctoral and master's degree holders and their families from statutory employment-based green card limits would reduce federal deficits by $129 billion from 2025 to 2034.
  2. A conventional budget estimate of the same policy, which counts projected higher federal spending but not the tax revenues from a larger population, shows federal deficits rising by $4 billion from 2025 to 2034.
  3. Over the decade after 2034, the Penn Wharton Budget Model puts the gap between approaches at a $74 billion deficit increase under the conventional estimate versus a $634 billion deficit decrease under the population-change estimate.

Related Articles:

  • Third-Country Effects of U.S. Immigration Policy — U.S. H-1B visa denial rates rose from about 6% to 16%, and the authors estimate a 10 percentage point rise in denials increases Canadian applications by 30%, roughly one Canadian application per four forgone visas. More exposed Canadian firms increased sales and hired about 0.5 native workers per immigrant.
  • Top Talent, Elite Colleges, and Migration: Evidence from the Indian Institutes of Technology — Among top scorers on India's Joint Entrance Exam for the Indian Institutes of Technology, 62% of the top 100 and 36% of the top 1,000 migrated abroad within eight years, primarily to the U.S. for graduate school. The authors argue elite schools shape migration by signaling ability and providing access to networks.
  • New U.S. Immigration Rules Spur More Visa Approvals For STEM Workers — U.S. Citizenship and Immigration Services data show that after the agency revised its guidance for two visa categories open to science, technology, engineering, and math workers, approvals of O-1A "extraordinary ability" visas rose nearly 30% to 4,570 and STEM green cards granted under a "national interest" waiver rose 55% to 70,240, with both holding at those levels the following year.

AI Summary. Health spending as a share of state economic output is highest in West Virginia, at more than one-fourth, and lowest in Washington State and Washington D.C., at less than one-ninth. Poorer states such as Arkansas, Alabama, and Mississippi rank far higher by share of output than by dollars spent per person.

James Bailey Economist Writing Every Day
Date Posted:

Health care spending is supporting the economies of less dynamic states, making up 26% of WV GDP in 2019 vs. 16% for the average state, and 12% in California, 13% in Texas, and 14% in NY. @1ArmedEconomist

Does health care take up a bigger share of poorer states' economies?

Core argument: Health spending accounts for more than a fourth of West Virginia's economy, the highest share measured, while in Washington State and Washington D.C. it makes up less than one ninth.

I wanted to know the states where health care takes up the largest and smallest share of the economy, so I got the data. Health spending is highest in West Virginia, where it makes up more than a fourth of the economy; and lowest in Washington State and Washington D.C., where it makes up less than one ninth of the economy. Many other states that spend a lot in $ also fall a lot in the rankings due to high GDP per capita, including Alaska, New York, and Massachusetts. The states that rise the most in this ranking are poor states like Arkansas, Alabama, and Mississippi. Mississippi rises the most, gaining 37 spots in the rankings of highest-spending states when we go from $ per capita to share of GDP.

Takeaways by Macro Roundup® AI

  1. Health spending accounts for more than a fourth of West Virginia's economy, the highest share measured, while in Washington State and Washington D.C. it makes up less than one ninth.
  2. States with high GDP per capita, including Alaska, New York, and Massachusetts, fall in the rankings when health spending is measured as a share of GDP rather than dollars per capita.
  3. Poorer states rise the most on a share-of-GDP basis, with Mississippi gaining 37 spots among the highest health spenders and Arkansas and Alabama also moving up.

Related Articles:

  • U.S. Health Spending is Slowing Down — U.S. health spending fell to 17.1% of GDP from 17.5% a year earlier and 17.9% the year before, the smallest share since 2014 and below the pre-pandemic level. Adjusted for overall and medical inflation the share was largely unchanged, with the decline driven by higher inflation outside health and lagging medical inflation.
  • A Huge Threat to the U.S. Budget Has Receded. And No One Is Sure Why — Spending per Medicare beneficiary in the US has nearly leveled off over more than a decade, though total enrollment has grown as baby boomers age. Policy changes including cuts to hospital and private plan payments explain some savings, but the Congressional Budget Office attributes most of its lowered forecasts to "technical adjustments" in public health and medical practice.
  • A Unified Long-Run Macroeconomic Projection of Health Care Spending, the Federal Budget, and Benefit Programs in the US — The authors project US debt to reach 134% of national income in 2032 and 263% in 2052, above Congressional Budget Office estimates of 115% and 189%. They attribute higher projected health spending, 29.6% of national income by 2072, to labor shortages in an aging economy's low-productivity healthcare sector.

AI Summary. Meta says it will have 350,000 Nvidia H100 graphics processing units and nearly 600,000 H100-equivalent units of computing power by year's end. At a roughly $25,000 per-unit price implied by an earlier company presentation, 350,000 H100s would cost close to $9bn, though Meta's actual purchase price is unknown.

Tae Kim Barrons
Date Posted:
Is Database:
Database

Meta is spending $9B on 350,000 NvidiaH100 GPUs and buying another 250,000 H100 equivalents this year as the AI-driven capex cycle ramps up.

Meta is spending $9B on 350,000 NvidiaH100 GPUs and buying another 250,000 H100 equivalents this year as the AI-driven capex...

How much are big tech firms spending to stockpile AI chips?

Core argument: Mark Zuckerberg said Meta will hold 350,000 Nvidia H100 GPUs, and almost 600,000 H100 compute equivalent GPUs overall, by the end of this year.

Mark Zuckerberg said the company will have 350,000 NvidiaH100 graphics processing units and overall almost 600,000 H100 compute equivalent GPUs by the end of this year. The H100 is Nvidia’s current top-of-line data center GPU and costs roughly $25,000 per GPU, according to a slide in an earlier company presentation that showed a 16 H100 GPU system costs $400,000. Though, it is unknown at what price Meta can purchase the H100, a quantity of 350,000 at $25,000 per GPU comes to nearly $9 billion.

Takeaways by Macro Roundup® AI

  1. Mark Zuckerberg said Meta will hold 350,000 Nvidia H100 GPUs, and almost 600,000 H100 compute equivalent GPUs overall, by the end of this year.
  2. At roughly $25,000 per H100 — implied by an earlier company slide showing a 16-GPU system priced at $400,000 — 350,000 units would total nearly $9 billion, though Meta's actual purchase price is unknown.
  3. The H100 is Nvidia's current top-of-line data center GPU.

Related Articles:

  • Microsoft Infrastructure – AI & CPU Custom Silicon Maia 100, Athena, Cobalt 100 — Microsoft has planned annual datacenter spending of more than $50bn, which exceeds the annual spend of megaprojects such as nationwide rail networks, dams, and the Apollo moon program. The buildout is aimed at accelerating artificial general intelligence and extending generative AI from productivity applications to leisure.
  • Top 10 Charts of 2023 — Goldman Sachs projects that artificial intelligence could drive a capital investment cycle reaching almost 2.5% of US GDP by 2032, up from 0.5% of GDP.
  • What Happened To The Artificial-Intelligence Investment Boom? — Business capital expenditure is weak worldwide despite artificial intelligence enthusiasm: excluding firms such as Microsoft and Nvidia, S&P 500 companies plan to lift capital spending only about 2.5% in 2024, roughly in line with inflation. A Goldman Sachs tracker of American business outlays is falling 4% year on year.

AI Summary. Taiwanese chip maker TSMC said volume production at the second of its two Arizona semiconductor plants, part of a $40bn project central to U.S. efforts to rebuild domestic chip manufacturing, is now expected in 2027 or 2028 rather than 2026, with the chip type still undetermined.

Yang Jie and Yuka Hayashi Wall Street Journal
Date Posted:

TSMC has delayed the start of production from 2026 to 2027-8 at their $40B fab in Arizona, citing labor shortages and ongoing negotiations over federal subsidies.

TSMC has delayed the start of production from 2026 to 2027-8 at their $40B fab in Arizona, citing labor shortages and...

Are efforts to rebuild domestic chip manufacturing facing new delays?

Core argument: TSMC expects volume production at the second of its two Arizona plants in 2027 or 2028, rather than the scheduled 2026, a setback for a $40 billion project central to Washington's effort to rebuild U.S. chip manufacturing.

Taiwanese chip maker TSMC said it expected to delay production at the second of two semiconductor plants it is building in Arizona, the latest setback for a $40 billion project at the core of Washington’s effort to rebuild U.S. chip manufacturing. The second factory had been scheduled to begin production of 3-nanometer chips in 2026. TSMC Chairman Mark Liu revised that schedule saying that while construction continues, TSMC now is looking at 2027 or 2028 as the timeline for volume production. He also said the specific chip type wasn’t yet determined. Customer demand and government incentives will play a role in deciding whether the second factory makes 3-nanometer chips, he said. The nanometer figure reflects the size of transistors that can be packed onto a chip, with a lower figure designating more advanced technology. Chips labeled 3-nanometer would be among the most advanced manufactured today.

Takeaways by Macro Roundup® AI

  1. TSMC expects volume production at the second of its two Arizona plants in 2027 or 2028, rather than the scheduled 2026, a setback for a $40 billion project central to Washington's effort to rebuild U.S. chip manufacturing.
  2. TSMC Chairman Mark Liu said construction of the second Arizona factory continues but the specific chip type is not yet determined, with customer demand and government incentives shaping whether it makes 3-nanometer chips.
  3. Chips labeled 3-nanometer, the type originally scheduled for TSMC's second Arizona plant, are among the most advanced manufactured today, as a lower nanometer figure designates more advanced technology.

Related Articles:

  • How Real is America’s Chipmaking Renaissance? — Chipmakers have announced more than $200bn of investments in America, including $40bn from TSMC in Arizona, $17bn from Samsung in Texas, and $40bn from Intel in Arizona and Ohio. Even if all planned investments materialize, American output of cutting-edge chips would meet barely a third of domestic demand.
  • TSMC Delays Start of First Arizona Chip Factory, Citing Worker Shortage — Taiwan Semiconductor Manufacturing Company said a shortage of skilled workers is hampering construction of its first Arizona chip factory, pushing mass production of 4-nanometer chips to 2025 from a previously stated 2024, and may require temporarily bringing in experienced technicians from Taiwan. The company expects to invest $40bn in Arizona.
  • The Extreme Shortage of High IQ Workers — Semiconductor manufacturing requires workers of above-average intelligence, with the most demanding roles needing IQs in the top 1 in 1,000 — a pool of about 164,000 people in the US, of whom perhaps 100,000 can be placed in such professions. The author argues this scarcity explains reliance on high-IQ workers abroad and on smarter tools and non-human intelligence.

AI Summary. The most plausible path for the world economy is a messy status quo in which trade remains relatively open by historical standards and grows roughly in line with global output. Some direct US-China links would decouple, but shifting to other suppliers would leave indirect dependence on Chinese inputs.

Martin Wolf Financial Times
Date Posted:

Martin Wolf notes that trade is now growing roughly in line with global output, and argues that concerns about “deglobalization” are overstated.

Is the world economy still on a path of integration?

Core argument: The most plausible path for the world economy is a continuation of a messy status quo in which trade remains relatively open by historical standards and grows roughly in line with world output.

Continuation of a messy status quo seems the most plausible answer. The world economy would remain relatively open by historical standards with trade growing more or less in line with world output. Some decoupling of direct links between the US and China would occur. But the attempted shift by the US (and others) towards other suppliers would leave indirect dependence on inputs imported from China. A large number of countries would continue to maintain trade with the US and its close allies, on the one hand, and China, on the other.

Takeaways by Macro Roundup® AI

  1. The most plausible path for the world economy is a continuation of a messy status quo in which trade remains relatively open by historical standards and grows roughly in line with world output.
  2. Some decoupling of direct US–China links would occur, but the shift by the US and others toward alternative suppliers would leave indirect dependence on inputs imported from China.
  3. A large number of countries would continue to maintain trade with the US and its close allies on one side and with China on the other.

Related Articles:

  • Trade Hyperglobalization is Dead. Long Live…? — Between 1992 and 2008, global exports grew near 10% a year in nominal terms versus 6% GDP growth, lifting exports from under 20% to over 30% of national economies before flattening. Afterward, China's trade-to-GDP ratio fell from 71% to about 35% even as its share of global exports kept rising.
  • How America Is Failing To Break Up With China — Research finds that countries with the strongest existing trade ties to China in a given industry have gained the most as direct Chinese exports to the US are redirected, suggesting Chinese supply chains remain central to American imports even in advanced-manufacturing goods officials most want to shield from China.
  • Danish Weight Loss Drugs vs. Chinese Cars: Two Models of Export Booms — Denmark's weight-loss drug exports illustrate a positive-sum export boom in which new products create both supply and demand, while Chinese car exports reflect firms with persistent overcapacity fighting for market share. The US preempted Chinese electric vehicles through legislation that boosts demand while reserving a share for local producers; Europe remains more exposed.

AI Summary. The private sector's share of China's 100 largest listed companies by market capitalization fell to 36.8% from 38.1% six months earlier, extending a continuous decline from a peak of 55.4%. The state sector's share, counting both majority state-owned firms and those with 10–50% state ownership, rose above 63%.

Tianlei Huang and Nicolas Véron Peterson Institute for International Economics
Date Posted:

Among China’s 100 largest listed firms, private company share of total market capitalization dropped to 36.8% at the end of 2023, from a peak of 55.4% in mid-2021. @PIIE

Is China's private sector losing ground among its largest listed companies?

Core argument: The private sector's share of China's 100 largest listed companies by aggregate market capitalization fell from 38.1% in mid-2023 to 36.8% at end-2023 in the half-yearly PIIE tracker.

The share of China’s private sector among the country’s 100 largest listed companies, measured by aggregate market capitalization in the half-yearly PIIE tracker, continued to decline through 2023. It dropped from 38.1% in mid-2023 to 36.8% at the end of 2023, extending a nonstop slide since its mid-2021 peak of 55.4%. The private sector is defined restrictively as firms with less than 10 percent state ownership. Meanwhile, the share of the state sector, including both mixed-ownership enterprises (MOEs), in which the state owns between 10 and 50% and majority-owned state-owned enterprises (SOEs), continued to advance in 2023, rising from less than 60% a year ago to more than 63% at the end of 2023.

Takeaways by Macro Roundup® AI

  1. The private sector's share of China's 100 largest listed companies by aggregate market capitalization fell from 38.1% in mid-2023 to 36.8% at end-2023 in the half-yearly PIIE tracker.
  2. China's private-sector share among its top 100 listed firms, defined as firms with less than 10% state ownership, has declined without interruption since its mid-2021 peak of 55.4%, according to the PIIE tracker.
  3. The state sector's share, comprising mixed-ownership enterprises with 10–50% state ownership and majority state-owned enterprises, rose from below 60% a year earlier to above 63% at end-2023.

Related Articles:

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