Edward Conard

Top Ten New York Times Bestselling Author

  • “…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
  • “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
  • “…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
  • “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
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, January 23, 2024

AI Summary. A model forecasts no statistically significant additional wage pressure on prices if year-over-year employment cost growth runs between 3.78% and 4.25%, a range above the Federal Reserve's 2% inflation target plus average productivity growth. Because inflation has outpaced productivity-adjusted wages, wages have room to catch up without adding inflation.

Philippe Andrade, Falk Bräuning, José Fillat, and Gustavo Joaquim Federal Reserve Bank of Boston
Date Posted:

Current wage growth is consistent with target inflation. A @BostonFed model argues that as inflation has outpaced wages over the past three years wage growth can “catch up” without creating inflationary pressure. @phil_andrade @gpgjoaquim

Can wages grow faster than inflation without adding price pressure?

Core argument: The authors' model forecasts no statistically significant additional wage pressure on prices if year-over-year Employment Cost Index growth in 2023:Q4 falls within 3.78 to 4.25%, and only a moderate effect on one-year-ahead inflation slightly above that range.

Our model forecasts no statistically significant additional pressures from wages on prices if year-over-year ECI growth in the fourth quarter lands within the dashed vertical lines, that is, 3.78 to 4.25%. Even for values slightly above this range but in line with recent realizations, our model predicts only a moderate effect of ECI growth on one-year-ahead inflation. Note that our results imply there will be no additional impact on inflation dynamics from the labor market for a range of year-over-year ECI growth for 2023:Q4 that is clearly higher than the sum of the Federal Reserve’s inflation target of 2% and historic average productivity growth. The key economic force behind this result is the catch-up effect referred to above. Because inflation has, on average, grown faster than productivity-adjusted wages in the last three years, there is room for wage growth to surpass inflation for some time so that it aligns with the historic relationships among the growth rates of prices, wages, and productivity.

Takeaways by Macro Roundup® AI

  1. The authors' model forecasts no statistically significant additional wage pressure on prices if year-over-year Employment Cost Index growth in 2023:Q4 falls within 3.78 to 4.25%, and only a moderate effect on one-year-ahead inflation slightly above that range.
  2. The range of year-over-year ECI growth implying no additional inflation impact from the labor market is clearly higher than the sum of the Federal Reserve's 2% inflation target and historic average productivity growth.
  3. A catch-up effect underlies the result: because inflation has on average grown faster than productivity-adjusted wages in the last three years, wage growth has room to surpass inflation for some time before aligning with historic relationships among prices, wages, and productivity.

Related Articles:

  • The Labor Market Is Primed For a Soft Landing — Elevated wage growth can threaten a strong labor market if it raises inflation concerns and leads the Federal Reserve to hold monetary policy tighter, though productivity growth eases that concern. After wage growth exceeded a sustainable benchmark of productivity growth plus the Federal Reserve's 2% inflation target, rebounding productivity and moderating wage growth have narrowed the gap.
  • The U.S. Economy Refuses to Slow Down — 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.
  • Are You Better Off Than You Were Four Years Ago? — Inflation-adjusted wages rose over the past four years, including when measured from just before the pandemic, at roughly the same pace as in the preceding years: about 3% cumulative growth adjusted by the consumer price index versus about 4% in 2015-2019, and about 5% growth adjusted by personal consumption prices.

AI Summary. The main risk to risk assets is a renewed rise in longer-dated bond yields driven by re-emerging inflation and a longer-than-expected runoff of the Federal Reserve's balance sheet, which forces private investors to hold more Treasuries. Proposed bank regulations encouraging routine discount-window borrowing could extend that runoff, adding a few hundred billion dollars of Treasury supply.

Joseph Wang Fed Guy Blog
Date Posted:

Persistent QT could lead to a rise in longer-dated yields as the market digests “a few hundred billion more Treasuries” over the next two years. @FedGuy12

Do rising long-term yields pose the main risk to risk assets?

Core argument: An extended quantitative tightening program could add a few hundred billion dollars more Treasuries for private investors to absorb over two years, as QT increases the stock of Treasuries private holders must hold.

The potential stumbling block for risk assets is likely not the Fed, but a renewed rise in longer-dated bond yields from a re-emergence of inflation and an extended QT. The supply of Treasuries to private investors may be larger than expected due to a longer-than-expected QT. Recall, QT increases the amount of Treasuries private investors must hold. While QT is expected to be tapered this year, bank regulators are proposing regulatory changes that could further extend QT. Regulators are forcing banks to regularly borrow from the discount window in an attempt to destigmatize the facility. This would provide all banks with easy access to reserves and largely remove the Fed’s concern of shrinking its balance sheet too much and creating market disruptions. A longer QT could translate into a few hundred billion more Treasuries for the market to digest over the next two years.

Takeaways by Macro Roundup® AI

  1. An extended quantitative tightening program could add a few hundred billion dollars more Treasuries for private investors to absorb over two years, as QT increases the stock of Treasuries private holders must hold.
  2. The likelier stumbling block for risk assets is a renewed rise in longer-dated bond yields driven by re-emerging inflation and an extended QT, rather than the Federal Reserve.
  3. Bank regulators are pushing banks to borrow regularly from the discount window to destigmatize the facility, which would give all banks easy access to reserves and largely remove the Fed's concern about shrinking its balance sheet too much.

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.
  • The Fed Is Tightening More Than It Says — The authors estimate that the Federal Reserve's balance-sheet runoff makes its current policy rate of 5.375% equivalent in its effect on financial conditions to a rate of 5.763% without runoff, a gap of 39 basis points. They project that gap to widen to a full percentage point as assets continue rolling off at $95bn a month.
  • 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%.

AI Summary. The Congressional Budget Office calculates that the top-earning 20% of U.S. households received 58% of income and paid 69% of federal taxes, while the top 1% earned 18% and paid 25%. U.S. top income, capital-gains, corporate, and estate tax rates exceed typical OECD levels; the revenue gap reflects value-added taxes.

Brian Riedl Wall Street Journal
Date Posted:
Is Database:
Database

As deficits surge towards 10% of GDP, @Brian_Riedl argues there is limited space to increase revenue by taxing the rich, which at most could raise an additional 2% of GDP over the long term.

As deficits surge towards 10% of GDP, @Brian_Riedl argues there is limited space to increase revenue by taxing the rich,...

Can higher taxes on top earners close the federal revenue gap?

Core argument: The CBO calculates that the top-earning quintile earned 58% of U.S. income but paid 69% of all federal taxes in 2019, while the top 1% made 18% of income and paid 25% of federal taxes.

The CBO calculates that the top-earning quintile, which accounts for 58% of all income in the U.S., paid 69% of all federal taxes in 2019. The top-earning 1%, which makes 18% of all income, paid 25% of all federal taxes. The bottom-earning 60% earned 23% of income but paid 13% of federal taxes. America’s top tax rates often exceed international norms. Our top income-tax bracket of 43.7%—including typical state taxes—exceeds that of the standard OECD nation (40.4%). Our top capital-gains tax rate is 10 points above the OECD average, and our corporate tax rate exceeds not only the OECD mean but that of every Scandinavian nation. America’s effective corporate tax rate is also above average, as are its estate and inheritance taxes. How, then, does the typical OECD nation collect 7.5% of its GDP more than Washington? OECD nations collect an average of 7.2% of GDP in VAT revenues with rates as high as 27%. In other words, the revenue gap isn’t driven by tax-the-rich policies.

Takeaways by Macro Roundup® AI

  1. The CBO calculates that the top-earning quintile earned 58% of U.S. income but paid 69% of all federal taxes in 2019, while the top 1% made 18% of income and paid 25% of federal taxes.
  2. The bottom-earning 60% of Americans earned 23% of income and paid 13% of federal taxes, according to the CBO.
  3. The typical OECD nation collects 7.5% of GDP more in revenue than Washington and averages 7.2% of GDP from value-added taxes with rates as high as 27%, even as U.S. top income, capital-gains, corporate and estate tax rates exceed OECD norms.

Related Articles:

  • The Limits of Taxing the Rich — Stabilizing US federal debt at 100% of GDP would require non-interest savings starting at 2% of GDP and rising to 5% of GDP over three decades, assuming no new spending, tax cuts, or crises. Taxing the rich cannot close more than a small fraction of this gap.
  • From Riches to Rags: Causes of Fiscal Deterioration Since 2001 — 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.
  • Taxing Billionaires: Estate Taxes and the Geographical Location of the Ultra-Wealthy — The authors estimate that US billionaires move to states without estate taxes as they age, with $80.7bn of Forbes 400 wealth escaping estate taxation as a result. They find that for the average state the added estate tax revenue exceeds forgone income tax revenue by 31%, with California a notable exception.

AI Summary. The Congressional Budget Office projects the US population will grow from 342mm in 2024 to 383mm in 2054, an average 0.4% a year — less than half the 0.9% pace of the prior five decades. Immigration accounts for about 70% of growth over the next decade and for all population growth beginning in 2040.

Daniel Crown Congressional Budget Office
Date Posted:

A @USCBO analysis finds that after 2040 net immigration will account for all American population growth. Net immigration to the US was 2.6mm in 2022, and 3.3mm in 2023, well above the 2010-2019 mean of 900,000.

How much of projected US population growth comes from immigration?

Core argument: CBO projects the U.S. population will rise from 342mm in 2024 to 383mm in 2054, growing 0.4% per year on average, less than half the 0.9% annual pace from 1974 to 2023.

In CBO’s projections, the American population will increase from 342mm people in 2024 to 383mm people in 2054, growing by 0.4% per year, on average, or by less than one-half the pace experienced from 1974 to 2023 (0.9% per year). Over the next decade, immigration accounts for about 70% of the overall increase in the size of the population, and the greater number of births than deaths accounts for the remaining 30%. After 2034, net immigration increasingly drives population growth, accounting for all population growth beginning in 2040. In CBO’s projections, total net immigration from 2024 to 2026 is larger than it was in the past, primarily reflecting the agency’s assessment that net immigration of people in the other-foreign-national category in 2024 will be similar to what CBO estimates it was in 2023 and then will decline in 2025 and 2026 as the immigration system adjusts (without new legislation) to the increase in immigration.

Takeaways by Macro Roundup® AI

  1. CBO projects the U.S. population will rise from 342mm in 2024 to 383mm in 2054, growing 0.4% per year on average, less than half the 0.9% annual pace from 1974 to 2023.
  2. CBO projects immigration will account for about 70% of U.S. population growth over the next decade, with births exceeding deaths supplying the remaining 30%, and net immigration accounting for all population growth beginning in 2040.
  3. CBO projects total net immigration from 2024 to 2026 will exceed past levels, primarily reflecting its assessment that net immigration of other foreign nationals in 2024 will be similar to 2023 before declining in 2025 and 2026 as the immigration system adjusts without new legislation.

Related Articles:

  • Illegal Immigration Is a Bigger Problem Than Ever. These Five Charts Explain Why — Government data show border agents made 2.05m arrests in a single federal fiscal year, the second consecutive year above 2m, after figures never previously exceeded 1.7m or stayed elevated for as long. A growing share of migrants are families with children, who are difficult to deport to their home countries, rather than single adults from Mexico seeking work.
  • Growth in Working-Age Population Ends. That’s Not All Bad — Immigration is the only factor keeping the US working-age population from shrinking, as about 4 million baby boomers turn 65 each year and more than 820,000 Americans aged 15–64 died last year. Forecasts project immigration will hold the US 15-to-64 population roughly constant through 2100, versus projected declines of 20% across high-income countries and 62% in China.
  • 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.

AI Summary. Apprehensions at the southern border are the best available measure of illegal immigration into the US, though the figures are hard to interpret: they tend to rise when the economy is strong, and a pandemic-era public-health expulsion policy prompted repeat crossing attempts that partly explain a spike in encounters.

Economist Staff The Economist
Date Posted:
Is Database:
Database

Comparing illegal immigration encounters at the south-western border under Trump and Biden the Economist argues “This is a clear win for Mr. Trump.”

How reliable are border apprehensions as a measure of illegal immigration?

Core argument: Apprehensions at the southern border are the best available measure of illegal migration into the United States, but the figures tend to rise when the economy is strong, and illegal migration surged in 2019 under Donald Trump.

The best measure America has of undocumented, or illegal, migration is apprehensions at the southern border. These numbers are tricky to handle. They tend to go up when the economy is hot (it is generally under-appreciated that illegal migration surged in 2019 when Mr Trump was president). Covid-19 allowed the federal government to quickly expel migrants who crossed the south-western border under a public-health measure called Title 42, which stayed in place until long after the worst of the pandemic was over. But those who were deposited on the Mexican side of the border often attempted to cross again. This partly explains the spike in encounters. Democrats who do not live in border states tend not to realise that the “border chaos” that Republicans talk about is real. That was until Republican politicians in those border states began shipping migrants to big Democratic cities such as New York and Chicago.

Takeaways by Macro Roundup® AI

  1. Apprehensions at the southern border are the best available measure of illegal migration into the United States, but the figures tend to rise when the economy is strong, and illegal migration surged in 2019 under Donald Trump.
  2. Title 42, the public-health measure allowing rapid expulsion of migrants crossing the south-western border, remained in place long after the worst of the pandemic, and repeat crossing attempts by those expelled to Mexico partly explain the spike in border encounters.
  3. Democrats outside border states tended not to recognise the "border chaos" that Republicans describe until Republican politicians in those states began shipping migrants to big Democratic cities such as New York and Chicago.

Related Articles:

  • America’s Southern Border Has Become A Global Crossroads — Migrants from countries other than Mexico, El Salvador, Guatemala, and Honduras made up more than half of all people apprehended at the US southern border for the first time, with Venezuelans the largest share. Crossings included 43,000 Russians, 42,000 Indians, and 24,000 Chinese, up from 4,100, 2,600, and 450 two years earlier.
  • Why Is the Labor Market so Tight? — US foreign-born employment has returned to its pre-pandemic trend while native-born employment remains about 6m jobs below trend, leaving roughly 5m native-born workers missing even after accounting for about 1m Covid deaths. The author argues these missing workers explain the tight labor market and that wage inflation is likely to remain elevated.
  • Immigrants & Their Kids Were 70% of U.S. Labor Force Growth Since 1995 — U.S. labor force data show immigrants accounted for 49% of labor force growth over roughly the past three decades and their children another 21%, together about 70% of an increase of nearly 32.8m workers. Immigrants rose from about 10% to 18% of the labor force, and immigrants plus their children from 18% to 29%.

AI Summary. Total US housing completions and placements, including manufactured homes, reached 1.543m, the most since 2007, even as total housing starts fell 9.0% year over year. Excluding manufactured homes, completions were 1.453m, up 4.5%, with construction delays leaving a near-record number of units still under construction.

Bill McBride Calculated Risk
Date Posted:
Is Database:
Database

There were 1.54mm housing completions in 2023, the highest level since 2007. While housing starts were down 9% y/y in 2023, @calculatedrisk forecasts that completions will increase this year.

Are housing completions rising even as starts decline?

Core argument: Total U.S. housing completions and placements reached 1.543 million in 2023, including manufactured homes, the most since 2007.

Although total housing starts decreased 9.0% in 2023 compared to 2022, completions increased year-over-year. Construction delays impacted completions in 2023, and that left a near-record number of housing units under construction. However, there still were 1.543 million total completions and placements in 2023, the most since 2007. Not counting Manufactured homes, there are 1.453 million completions in 2023, up 4.5% from 1.390 million in 2022, and also the most since 2007. The graph shows total housing completions and placements since 1968 through 2023. Note that the net addition to the housing stock is less because of demolitions and destruction of older housing units.

Takeaways by Macro Roundup® AI

  1. Total U.S. housing completions and placements reached 1.543 million in 2023, including manufactured homes, the most since 2007.
  2. Excluding manufactured homes, housing completions totaled 1.453 million in 2023, up 4.5% from 1.390 million in 2022, and also the most since 2007.
  3. Total housing starts fell 9.0% in 2023 from 2022, while construction delays held back completions and left a near-record number of housing units under construction.

Related Articles:

  • Higher For Longer and The 2024 Housing Outlook — Sustained higher mortgage rates are expected to weigh most on housing turnover, since nearly all borrowers hold rates below market levels, discouraging moves; the authors project existing home sales of 3.8mn, the fewest annual sales since the early 1990s. Housing starts are projected to fall 4% to 1.34mn.
  • America’s Housing Rebound — Pandemic-era house price gains tracked the plunge in mortgage rates, and the initial post-pandemic price dip tracked their rise, but the rebound since early 2023 breaks that relationship and instead matches faster U.S. growth and rising risk asset prices. If mortgage rates stay near current levels, housing activity should increase further.
  • America’s Missing Empty Homes — Restoring the pre-pandemic 12% vacancy rate would require 2.7m new housing units left entirely empty, or more than 18m additional units if 75% of new units are filled on net. Construction of 1.4m units in the first half of 2023 failed to keep up with demand, pushing unoccupied housing rates lower.

Wednesday, January 24, 2024

AI Summary. Wealth data for young people comes from the Federal Reserve's quarterly Distributional Financial Accounts, which project forward results from the Survey of Consumer Finances conducted every three years. When newer survey results were released, young people turned out to hold considerably more wealth than the projections based on the prior survey had indicated.

Jeremy Horpedahl Economist Writing Every Day
Date Posted:

Based on new Federal Reserve data, 2023 wealth per capita for 30-year-old Millennials is outpacing their Gen X counterparts when they were 30 years old. @jmhorp

Do young people hold more wealth than earlier projections showed?

Core argument: The Federal Reserve's 2022 Survey of Consumer Finances showed that young people held more wealth than estimates derived from projecting 2019 survey data forward had indicated.

The two dollar figures I highlighted are at the median age of 30 for Millennials & Gen Z and Generation X age cohorts (unfortunately we don’t have data for Boomers at that age). The data I have always used in this chart comes from the Fed’s DFA which is updated quarterly. But that data is based on another Fed survey called the Survey of Consumer Finances (SCF), which is a large survey done every 3 years. The DFA data just projects the SCF data forward based on some assumptions. It turns out that when the 2022 survey data was released, young people had a lot more wealth than we thought based on just projecting the 2019 data forward.

Takeaways by Macro Roundup® AI

  1. The Federal Reserve's 2022 Survey of Consumer Finances showed that young people held more wealth than estimates derived from projecting 2019 survey data forward had indicated.
  2. The Fed's Distributional Financial Accounts, updated quarterly, projects Survey of Consumer Finances data forward using assumptions, with the underlying survey conducted every three years.
  3. Wealth comparisons between the Millennial and Gen Z cohort and Generation X are drawn at the median age of 30, with no comparable data available for Boomers at that age.

Related Articles:

  • With Housing, Millennials Have Much to Complain About — The Census Bureau's customary homeownership rate is measured by household, showing 52.7% of 25-to-34-year-old household heads own homes, but only 32.6% of all Americans in that age group do — down 20 percentage points from the late 1970s and nearly 10 points since the mid-2000s. Young-adult homeownership has seen a modest resurgence since 2016.
  • Young Adults in the U.S. Are Reaching Key Life Milestones Later Than in the Past — Pew Research Center analysis of Census Bureau data finds 21-year-olds in the US are less likely than their counterparts four decades earlier to have a full-time job, be financially independent, live on their own, be married, or have a child. Among 21-year-olds, 39% worked full time versus 64% four decades earlier, and a quarter were financially independent versus 42%.
  • Nearly Half of All Young Adults Live With Mom and Dad — and They Like It — About 45% of Americans ages 18 to 29, roughly 23m people, live with family, a share comparable to the 1940s. A Harris Poll survey of 4,106 US adults found nearly 90% say people shouldn't be judged for moving back home, viewing it as a pragmatic way to get ahead.

AI Summary. More than 8,000 data centers operate globally, with about 33% in the United States, 16% in Europe, and close to 10% in China. US data center electricity use is projected to rise from roughly 200 TWh in 2022, about 4% of US electricity demand, to almost 260 TWh, or 6% of total demand.

Eren Çam, Zoe Hungerford, Niklas Schoch, Francys Pinto Miranda and Carlos David Yáñez de León International Energy Agency
Date Posted:
Is Database:
Database

Rising electrical consumption from data centers, in part driven by AI demand, will be almost 6% of US electricity demand by 2026 according to @IEA forecast.

How much US electricity will data centers consume?

Core argument: US data center electricity consumption is projected to rise from about 200 TWh in 2022, roughly 4% of US electricity demand, to almost 260 TWh in 2026, or 6% of total demand.

There are currently more than 8,000 data centers globally, with about 33% of these located in the United States, 16% in Europe, and close to 10% in China. US data center electricity consumption is expected to grow at a rapid pace in the coming years, increasing from around 200 TWh in 2022 (~4% of US electricity demand), to almost 260 TWh in 2026 to account for 6% of total electricity demand. Growth will be driven by increased adoption of 5G networks and cloud-based services [including AI], as well as competitive state tax incentives.

Takeaways by Macro Roundup® AI

  1. US data center electricity consumption is projected to rise from about 200 TWh in 2022, roughly 4% of US electricity demand, to almost 260 TWh in 2026, or 6% of total demand.
  2. Of the more than 8,000 data centers globally, about 33% are located in the United States, 16% in Europe, and close to 10% in China.
  3. Growth in US data center electricity demand is attributed to increased adoption of 5G networks and cloud-based services, including AI, alongside competitive state tax incentives.

Related Articles:

  • 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.
  • 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.
  • Resurgent US Electricity Demand Sparks Power Grid Warnings — US electricity demand is growing after years of stagnation, driven by artificial intelligence, electric vehicles, and announced industrial projects, prompting warnings about power grid stability. Nationwide forecasts for five-year electricity demand growth rose from 2.6% to 4.7%, based on utility filings to federal regulators, with retail sales projected at a record.

AI Summary. Protection against serious Covid illness from the original vaccines and Omicron boosters declined as the virus mutated, falling to levels not much different from that of unvaccinated people with prior infection. With 99% of people having been vaccinated, infected, or both, the XBB booster remains highly effective against serious disease and reduces long Covid risk.

Michael Cembalest J.P. Morgan
Date Posted:

Michael Cembalest @jpmorgan notes that ongoing hospitalizations are much lower than in prior Covid waves as both “vaccine-induced and acquired immunity from prior infection are holding up well.”

Does vaccine protection against serious Covid illness decline as the virus mutates?

Core argument: By the end of 2023, protection against serious illness from the original Covid vaccines and Omicron boosters had declined to a level not much different from that of unvaccinated people with prior infection.

Original Covid vaccines and Omicron boosters were highly effective in preventing serious illness in 2021 and 2022, but protection waned over time as the virus mutated. At the end of 2023, the protection against serious illness from the original vaccine and Omicron boosters had declined and was not much different from protection present in unvaccinated, previously infected people. But this framing may overstate the risks to public health. At this point, 99% of people have had at least one vaccine dose, have been infected, or have had both an infection and a vaccine; and so far, both vaccine-induced and acquired immunity from prior infection are holding up well. While the latest XBB booster is not protective against infection it is still highly effective at preventing serious disease, and more protective than being unboosted and Covid vaccines/boosters also reduce risks of long Covid, which you do not want to get.

Takeaways by Macro Roundup® AI

  1. By the end of 2023, protection against serious illness from the original Covid vaccines and Omicron boosters had declined to a level not much different from that of unvaccinated people with prior infection.
  2. About 99% of people have had at least one vaccine dose, a prior infection, or both, and both vaccine-induced and infection-acquired immunity are holding up well.
  3. The XBB booster does not protect against infection but remains highly effective at preventing serious disease and more protective than being unboosted, and Covid vaccines and boosters also reduce the risk of long Covid.

Related Articles:

  • Why Is the Labor Market so Tight? — US foreign-born employment has returned to its pre-pandemic trend while native-born employment remains about 6m jobs below trend, leaving roughly 5m native-born workers missing even after accounting for about 1m Covid deaths. The author argues these missing workers explain the tight labor market and that wage inflation is likely to remain elevated.
  • NAEP Long-Term Trend Assessment Results: Reading and Mathematics — U.S. national assessment scores for 13-year-olds declined 4 points in reading and 9 points in mathematics from the prior assessment, and 7 and 14 points respectively compared with a decade earlier. Mathematics declines were larger for lower-performing students (12–14 points) than for middle- and higher-performing students (6–8 points).
  • ACT Scores Fell for Class of 2023, Sixth Consecutive Decline — The average ACT college admissions test score fell to 19.5 out of 36, a 30-year low and a sixth consecutive annual decline, with scores down across English, math, reading and science. The testing organization says the results indicate fewer high-school seniors are ready for college.

AI Summary. Chinese authorities are tightening limits on capital outflows by restricting retail access to funds that invest in offshore securities, a channel that bypasses strict capital controls. About a third of such funds have announced suspensions or caps on sales to retail investors, citing stable operations and investor protection.

Cheng Leng, Sun Yu and Thomas Hale Financial Times
Date Posted:

China is tightening limits on capital outflows by further constraining domestic investors’ ability to buy foreign equities “as the country battles a brutal market rout.”

Is China restricting retail investors' access to offshore investment funds?

Core argument: About a third of Chinese funds investing in foreign securities under a scheme that bypasses strict capital controls have announced in stock exchange notices that they suspended or capped sales to retail investors.

Chinese authorities are tightening limits on capital outflows by restricting access to funds that invest in offshore securities as the country battles a brutal market rout. About a third of Chinese funds that invest in foreign securities under a scheme that bypasses strict capital controls have announced in stock exchange notices they have suspended or capped sales to retail investors “to maintain stable operations and protect investors’ interests.” The Beijing-based manager of one fund that focuses on US stocks said they had received informal instructions from the Shanghai Stock Exchange to reduce sales of such products targeting overseas markets after demand went “through the roof.”

Takeaways by Macro Roundup® AI

  1. About a third of Chinese funds investing in foreign securities under a scheme that bypasses strict capital controls have announced in stock exchange notices that they suspended or capped sales to retail investors.
  2. Chinese authorities are restricting access to funds that invest in offshore securities, tightening limits on capital outflows as the country battles a market rout.
  3. The Beijing-based manager of a fund focused on US stocks said it received informal instructions from the Shanghai Stock Exchange to reduce sales of such products targeting overseas markets after demand went "through the roof.".

Related Articles:

  • Foreign Investors Unwind $33bn Bet On China Growth Rebound — Net foreign investment in China-listed shares has fallen 87% from its peak of Rmb235bn ($33bn) to Rmb30.7bn, according to Financial Times calculations using Hong Kong Stock Connect data. The exit has been absorbed by corporate share buybacks and purchases from domestic funds and state-run financial institutions under government pressure to support valuations.
  • The Threat From China’s Capital Flight — Oddities in China's official balance of payments statistics suggest its actual current account surplus may be nearly 3x the reported figure, which would make it about as large relative to world output as it has ever been. The likeliest explanation for simultaneous downward pressure on the yuan is capital flight of roughly $500bn a year.
  • The Rise & Fall of Foreign Direct Investment in China — Net foreign direct investment into China has been negative for four consecutive quarters, as foreign investors shifted from reinvesting earnings from their Chinese operations to repatriating them. Whether this reflects cash management or signals a future slowdown in foreign direct investment is unclear, but the repatriation of profits is negative for China's currency.

AI Summary. Rising numbers of Chinese nationals are being apprehended at the US-Mexico border, with US officers encountering around 1,000 in one month early in the year and nearly 5,000 by November. Most Chinese emigrants leave through legal means, going primarily to Singapore, Japan, and Thailand.

Dan Wang The Secure Transport Of Light
Date Posted:

.@danwwang notes that for China 2023 was “a year of disappearing ministers, disappearing generals, disappearing entrepreneurs, disappearing economic data, and disappearing business for the firms that have counted on blistering economic growth.”

.@danwwang notes that for China 2023 was “a year of disappearing ministers, disappearing generals, disappearing...

Are more Chinese nationals leaving China for other countries?

Core argument: US officers encountered roughly 1,000 Chinese nationals at the southwest border in January, with numbers rising to nearly 5,000 by November.

Many Chinese are now talking about rùn. Chinese youths have in recent years appropriated this word in its English meaning to express a desire to flee. Over the three years of zero-Covid, after the state enforced protracted lockdowns, rùn evolved to mean emigrating from China altogether. One of the most incredible trends I’ve been watching this year is that rising numbers of Chinese nationals are being apprehended at the US-Mexico border. In January, US officers encountered around 1,000 Chinese at the southwest border; the numbers kept rising, and by November they encountered nearly 5,000. The Chinese who rùn to the American border are still a tiny set of the people who leave. Most emigrés are departing through legal means. People who can find a way to go to Europe or an Anglophone country would do so, but most are going, as best as I can tell, to three Asian countries. Those who have ambition and entrepreneurial energy are going to Singapore. Those who have money and means are going to Japan. And those who have none of these things — the slackers, the free spirits, kids who want to chill — are hanging out in Thailand.

Takeaways by Macro Roundup® AI

  1. US officers encountered roughly 1,000 Chinese nationals at the southwest border in January, with numbers rising to nearly 5,000 by November.
  2. Chinese youths have appropriated the word rùn in its English meaning to express a desire to flee, and over three years of zero-Covid lockdowns it came to mean emigrating from China altogether.
  3. Most Chinese emigrés depart through legal means, and by the author's estimate most go to three Asian countries: the entrepreneurial to Singapore, those with money and means to Japan, and free spirits to Thailand.

Related Articles:

  • America’s Southern Border Has Become A Global Crossroads — Migrants from countries other than Mexico, El Salvador, Guatemala, and Honduras made up more than half of all people apprehended at the US southern border for the first time, with Venezuelans the largest share. Crossings included 43,000 Russians, 42,000 Indians, and 24,000 Chinese, up from 4,100, 2,600, and 450 two years earlier.
  • China’s Age Of Malaise — More than 300,000 Chinese people emigrated in a single year, more than double the pace of a decade earlier, with some traveling overland through a half-dozen countries to reach the US. US authorities at the southern border recorded 17,894 encounters with Chinese migrants over ten months, a thirteenfold increase from the prior year.
  • The Rise & Fall of Foreign Direct Investment in China — Net foreign direct investment into China has been negative for four consecutive quarters, as foreign investors shifted from reinvesting earnings from their Chinese operations to repatriating them. Whether this reflects cash management or signals a future slowdown in foreign direct investment is unclear, but the repatriation of profits is negative for China's currency.