Edward Conard

Top Ten New York Times Bestselling Author

  • “…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 fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “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
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Monday, January 29, 2024

AI Summary. The authors find that the combined effect of U.S.-China trade war import tariffs, retaliatory tariffs, and farm subsidies on employment in exposed U.S. locations was at best a wash and possibly mildly negative, while residents of tariff-protected areas became less likely to identify as Democrats and more likely to vote Republican.

David Autor, Anne Beck, David Dorn, and Gordon Hanson National Bureau of Economic Research
Date Posted:
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Tariffs implemented during the 2018-2019 trade war were “at best a wash, and may have been mildly negative” in terms of employment, but increased political support for Trump in the 2020 election. @davidautor

Do tariffs boost employment and political support in protected areas?

Core argument: The authors estimate the combined predicted employment effect of import tariffs, retaliatory tariffs, and farm subsidies from the 2018–2019 U.S.-China trade war ranged from a 0.2% loss to a 0.2% gain in the employment rate across most commuting zones.

We evaluate whether the U.S.-China tariff war of 2018–2019 succeeded in meeting then-President Trump’s stated goal of bringing back jobs to America and generating support for Trump and the Republican party. We find consistent evidence on both questions. The net effect of import tariffs, retaliatory tariffs, and farm subsidies on employment in locations exposed to the trade war was at best a wash, and it may have been mildly negative. Conversely, the trade war appears to have been successful in strengthening support for the Republican party. Residents of tariff-protected locations became less likely to identify as Democrats and more likely to vote for President Trump. Figure 4 plots the predicted employment effects of tariffs and subsidy variables against their predicted impacts for the GOP vote share in the presidential election, with commuting zones (CZ) aggregated into 40 bins based on their x-axis values. The figure indicates that the combined predicted employment effect of import tariffs, retaliatory tariffs and agricultural subsidies is small, ranging from a 0.2% loss to a 0.2% gain in the employment rate in most CZs. Conversely, predicted Republican vote share gains are more sizable, reaching values of 0.5% to 1.0% for most CZs. A striking pattern in Figure 4 is that local exposure to the trade war appears to have benefited the Republican party even in regions where the combined effect of tariffs and subsidies predicts no employment gain or even a modest employment loss. Voters thus appear to have responded favorably to the extension of tariff protections to local industries, even though the ensuing retaliatory measures were economically damaging.

Takeaways by Macro Roundup® AI

  1. The authors estimate the combined predicted employment effect of import tariffs, retaliatory tariffs, and farm subsidies from the 2018–2019 U.S.-China trade war ranged from a 0.2% loss to a 0.2% gain in the employment rate across most commuting zones.
  2. Predicted Republican presidential vote share gains reached 0.5% to 1.0% for most commuting zones, and residents of tariff-protected locations became less likely to identify as Democrats and more likely to vote for Trump.
  3. The authors find that trade-war exposure appears to have benefited the Republican party even in regions where tariffs and subsidies predict no employment gain or a modest employment loss, suggesting voters responded favorably to tariff protections for local industries.

Related Articles:

  • The World’s Rust Belts: The Heterogeneous Effects of Deindustrialization on 1,993 Cities in Six Countries — A study of 1,993 cities in France, Germany, Italy, Japan, the UK and the US finds former manufacturing hubs lost employment on average after each country's manufacturing peak, though a large share fully recovered. After the peak, hubs with a higher initial share of college-educated workers grew significantly faster.
  • Labor Market Conflict and the Decline of the Rust Belt — The authors argue that persistent labor market conflict in the Rust Belt's main industries lowered investment and productivity growth, shifting employment to the rest of the country, and estimate it accounts for roughly half the decline in the region's share of US manufacturing employment. Rising foreign competition plays a more modest quantitative role.
  • Are Manufacturing Jobs Still Good Jobs? An Exploration of the Manufacturing Wage Premium — Manufacturing average hourly wages, once about 3% above private-sector wages, have grown more slowly than private-sector wages, erasing the manufacturing wage premium for most manufacturing jobs. The authors estimate that declining unionization accounts for more than 70% of that drop, an effect that remains significant after controlling for worker and sector characteristics.

AI Summary. US manufacturers' investment in plants and production facilities rose almost 63% in a year, the largest annual advance since 1951, reflecting federal incentives and spending deferred during the pandemic. Purchasing and supply executives expect outlays to increase almost 12% this year after rising nearly 15%.

Mark Niquette Bloomberg
Date Posted:

The pace of capex expansion by American manufacturers will likely cool this year after surging 63% y/y in 2023 the largest annual increase since 1951.

Will manufacturing investment keep growing after its largest annual advance since 1951?

Core argument: US manufacturers' investment in plants and other production facilities surged almost 63% in 2023, the largest annual advance since 1951, according to the government's latest GDP report.

Investment by manufacturers in plants and other production facilities surged almost 63% in 2023, the largest annual advance since 1951, according to the government’s latest report on gross domestic product. The increase has its roots in companies taking advantage of federal incentives and making up for deferred spending during the pandemic when supply chains were in disarray. Purchasing and supply executives expect outlays to increase almost 12% this year after rising by nearly 15% in 2023, according to the Institute for Supply Management’s latest semiannual economic forecast. While factories are dialing back the pace of investment, S&P Global Market Intelligence sees spending in the sector still climbing $54 billion after an estimated $50.6 billion last year.

Takeaways by Macro Roundup® AI

  1. US manufacturers' investment in plants and other production facilities surged almost 63% in 2023, the largest annual advance since 1951, according to the government's latest GDP report.
  2. The Institute for Supply Management's semiannual forecast has purchasing and supply executives expecting outlays to rise almost 12% this year, after an increase of nearly 15% in 2023.
  3. S&P Global Market Intelligence sees manufacturing sector spending climbing $54 billion, following an estimated $50.6 billion last year, with the increase rooted in companies using federal incentives and making up for spending deferred during the pandemic.

Related Articles:

  • American Labor’s Real Problem: It Isn’t Productive Enough — U.S. manufacturing output per hour has grown about 0.2% a year since 2009, below the overall economy and peer economies in Europe and Asia except Japan, with motor vehicle manufacturing productivity falling 32% from 2012 through last year. Unlike warehouses and hospitals, manufacturers face foreign competition and cannot pass higher labor costs to customers.
  • Why American Manufacturing is Increasingly Inefficient — Labor productivity in U.S. manufacturing has been in secular decline since 2011, the first decade-long fall in the available data, even as services drove overall output growth. More than a third of the manufacturing slowdown since 2011 is accounted for by computers and electronics, a sector whose gains had soared in the 1990s and 2000s.
  • One of Biden’s Favorite Chip Projects Is Facing New Delays — 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.

AI Summary. Traders and Federal Reserve officials expect short-term interest rates to fall sharply on the assumption the economy resembles its pre-pandemic state, but the data suggest a period of structurally faster growth more like the late 1990s, with inflation-adjusted U.S. output up more than 3% in 2023 versus 0.7% the prior year.

Matt Klein The Overshoot
Date Posted:

Real growth was over 3% last year with nominal income growth running 6-7%. @M_C_Klein notes short-term rates ranged between 5-6% during the late 1990s and argues that the pre-pandemic period might be the wrong baseline for calibrating interest rates.

Does faster structural growth undercut expectations for sharply lower interest rates?

Core argument: U.S. inflation-adjusted output grew more than 3% in 2023 versus 0.7% in 2022, which the author argues points to a period of structurally faster growth resembling the second half of the 1990s rather than a return to 2019 conditions.

Traders are still betting that short-term interest rates will fall sharply in the next few years because they believe—along with Federal Reserve officials and many other analysts—that the post-pandemic economy will more or less resemble the world of 2019. While that may prove correct, the data so far continue to suggest that we remain in a period of structurally faster growth more akin to the second half of the 1990s. The inflation-adjusted value of goods and services produced in the U.S. grew more than 3% in 2023 vs. 0.7% in 2022. There is evidence that businesses are more likely to invest in productivity improvements during sustained periods of full employment and high capacity utilization (like now). In that world, sustained nominal growth around 6% would continue to translate into rapid real growth alongside modest inflation. More speculatively, it is possible that large language models and weight loss drugs could also have sustained productivity benefits, but it might take a while before the impact is visible in the data.

Takeaways by Macro Roundup® AI

  1. U.S. inflation-adjusted output grew more than 3% in 2023 versus 0.7% in 2022, which the author argues points to a period of structurally faster growth resembling the second half of the 1990s rather than a return to 2019 conditions.
  2. Traders are betting short-term interest rates will fall sharply over the next few years, sharing a belief with Federal Reserve officials and many analysts that the post-pandemic economy will broadly resemble 2019.
  3. Sustained nominal growth around 6% would continue to translate into rapid real growth alongside modest inflation, and there is evidence that businesses invest more in productivity improvements during sustained periods of full employment and high capacity utilization.

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.
  • Will A.I. Transform the Economy, and if So, How? — During the 1995-2005 information technology boom, productivity ended about 12% above the trend implied by growth from 1973 to 1995, and a comparable or larger gain of around 15% from artificial intelligence is plausible. If such optimistic estimates hold, growth would exceed conventional long-run estimates such as the Federal Reserve's roughly 1.8%, lifting revenue and easing debt concerns.
  • The Outlook for Long-Term Economic Growth — Growth theory holds that long-run growth in living standards is determined by growth in the worldwide number of people searching for ideas, and growth accounting for the US suggests temporary boosts from rising educational attainment and idea investment could fade. Potential offsets include China and India, better talent allocation, and artificial intelligence.

AI Summary. Across a universe of 47,698 companies, the median cost of capital for a US company is estimated at 7.9%, down from 9.6% a year earlier entirely because of declines in the price of risk, namely equity risk premiums and default spreads, though still above a historic low of 5.8%.

Aswath Damodaran Musings On Markets
Date Posted:

At the start of 2024, the median cost of capital for an American firm is 7.9% down from 9.6% at the start of 2023 but up from 5.8% at the start of 2022. @AswathDamodaran

Why did the median cost of capital for US companies fall?

Core argument: Damodaran computes a median cost of capital of 7.9% for US companies at the start of 2024, down from 9.6% at the start of 2023, entirely because of declines in the price of risk.

I computed the cost of capital for the 47,698 companies in my data universe at the start of 2024. I provide a distribution of corporate costs of capital, for US and global companies, in US dollars. At the start of 2024, the median cost of capital is 7.9% for a US company, lower than the 9.6% at the start of 2023, entirely because of declines in the price of risk (equity risk premiums and default spreads). The 2024 costs of capital are higher than the historic lows of 5.8% for US stocks at the start of 2022. In short, if you are a company or an investor who works with fixed hurdle rates over time, you may be using a rationale that you are just normalizing, but you have about as much chance of being right as a broken clock.

Takeaways by Macro Roundup® AI

  1. Damodaran computes a median cost of capital of 7.9% for US companies at the start of 2024, down from 9.6% at the start of 2023, entirely because of declines in the price of risk.
  2. Declines in equity risk premiums and default spreads drove the drop in US corporate costs of capital, which at 7.9% remain above the historic low of 5.8% for US stocks at the start of 2022.
  3. Damodaran computed costs of capital in US dollars for the 47,698 companies in his data universe, arguing that companies and investors using fixed hurdle rates over time have about as much chance of being right as a broken clock.

Related Articles:

  • Data Update 3 for 2024: A Rule-breaking Year for Interest Rates — Central bank influence on interest rates is strongest at the shortest maturities and decays at longer ones, so long-term rates are better understood through the Fisher decomposition of a nominal rate into expected inflation plus an expected real rate. Assuming the expected real rate converges on real economic growth yields an "intrinsic risk-free rate" estimated as inflation plus real growth.
  • Mr. Toad’s Wild Ride: The Impact Of Underperforming 2020 and 2021 US IPOs — Between 40% and 60% of US initial public offerings generate negative returns even in favorable periods, so average IPO returns far exceed median returns and depend on a small set of large winners. Excluding just the top 3% of IPOs turns average net returns negative and cuts average absolute returns by more than half.
  • Market Bipolarity: Exuberance versus Exhaustion — The equity risk premium fell over the first half of the year and then held relatively steady, leaving the expected return on equities higher as risk-free rates rose. The author argues that quarterly moves in stock and corporate bond prices came largely from rising interest rates rather than a heightened fear of risk.

AI Summary. U.S. venture funding for startups peaked above $300bn—more than double the prior year—before a series of steep interest-rate increases, the fastest in four decades, curbed appetite for risky startup bets and pushed funding down for a second straight year to $167bn.

Berber Jin and Nate Rattner Wall Street Journal
Date Posted:

American venture capital funding dropped from over $300B in 2021 to $167B in 2023, the lowest level since 2020.

Do higher interest rates reduce venture funding for startups?

Core argument: U.S. startup funding topped $300 billion in 2021, more than double the prior year, pumping up valuations, before dropping for a second consecutive year to $167 billion last year.

Funding for U.S. startups topped $300 billion in 2021—more than double the prior year—pumping up valuations. But a series of steep rate increases beginning in 2022—the fastest pace in four decades—sapped desire to chase returns in the riskier world of startups. Venture funding dropped for a second year in a row to $167 billion last year. Venture capitalists like to say that the best companies can weather any macroeconomic storm. Take OpenAI, which is set to roughly triple its valuation to almost $90 billion. But for most of startup-land, the era of cheap money was over.

Takeaways by Macro Roundup® AI

  1. U.S. startup funding topped $300 billion in 2021, more than double the prior year, pumping up valuations, before dropping for a second consecutive year to $167 billion last year.
  2. Steep interest rate increases beginning in 2022, the fastest pace in four decades, sapped desire to chase returns in the riskier world of startups.
  3. OpenAI is set to roughly triple its valuation to almost $90 billion, while for most of startup-land the era of cheap money was over.

Related Articles:

  • Monetary Policy and Innovation — The authors estimate that a 100bps monetary tightening reduces investment in intellectual property by about 1%, research and development spending at public firms by about 3%, venture capital investment by up to 25%, and patenting in important technologies by up to 9%.
  • It’s Mostly a Paper Moon: Alternative Investments Review — Venture capital financing has tightened: the median time between funding rounds has lengthened, more startups have shut down through bankruptcy, and the share of "down rounds" — new financing at a lower valuation — rose from 8% to nearly 20%, with those rounds cutting post-money valuations by more than 50%.

AI Summary. China's chipmakers are expanding production capacity despite warnings of a global supply glut, with one consultancy projecting the country's chip capacity will grow 60% over three years and potentially double over five. Because Western export restrictions bar China from making the most advanced processors, much of this output will be foundational chips used in cars, household goods, and consumer devices.

Chris Miller Financial Times
Date Posted:

US, European, and Japanese governments are debating potential responses to Chinese chip overcapacity, as Chinese capacity for “foundational” semiconductors used in cars and household goods is forecast to grow by 60% over the next three years. @crmiller

US, European, and Japanese governments are debating potential responses to Chinese chip overcapacity, as Chinese capacity...

Are China's chipmakers expanding capacity into a foreseeable global chip glut?

Core argument: One consultancy projects that China's chip production capacity will grow by 60% over the next three years and could double over five.

On a recent quarterly earnings call, the chief executive of Semiconductor Manufacturing International Corporation, China’s leading chipmaker, predicted a “global supply glut” in the types of semiconductors his company produces. Simultaneously, he announced a $7.5bn increase in capital expenditure. It may defy business logic but, helped by generous subsidies, China’s chipmakers are ramping up production capacity despite concerns about oversupply. According to one consultancy, the country’s chip production capacity will grow by 60% in the next three years and could double over the next five. Since Western restrictions on the exports of chipmaking equipment to China mean that it can’t produce the most advanced processor chips, much of this production will be of foundational processor chips, which are widely used in cars, household goods, and consumer devices.

Takeaways by Macro Roundup® AI

  1. One consultancy projects that China's chip production capacity will grow by 60% over the next three years and could double over five.
  2. The chief executive of Semiconductor Manufacturing International Corporation predicted a "global supply glut" in the semiconductor types his company produces while announcing a $7.5bn increase in capital expenditure on the same quarterly earnings call.

Related Articles:

  • Pettis On China’s Export Strategy — China is shifting investment from its weakened property sector toward manufacturing, which already accounts for 27% of Chinese GDP versus 14% elsewhere and is constrained by weak demand rather than scarce capital. Since China holds about 18% of global GDP but 30% of global manufacturing, added output must be absorbed abroad absent higher consumption.
  • EU To Launch Anti-Subsidy Probe into Chinese Electric Vehicles — The European Union is opening an anti-subsidy investigation into Chinese electric vehicles it says are distorting the EU market, one of its largest trade cases. Manufacturers found in breach of trade rules could face punitive tariffs, as the EU seeks to avoid a repeat of the insolvencies in its solar panel industry caused by cheap Chinese imports.
  • 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 authors argue the US-led international order faces three linked regional challenges — China's military buildup in the western Pacific, Russia's war in Ukraine, and Iran and its proxies in the Middle East — united by autocratic governance and grievance. They contend larger defense spending is essential but politically difficult and slow to take effect.

Hal Brands Foreign Affairs
Date Posted:

.@HalBrands notes that the global situation closely resembles that of the 1930s as three different revanchist powers find their goals in alignment, and argues that the US “would have great difficulty mobilizing for a protracted conflict.”

.@HalBrands notes that the global situation closely resembles that of the 1930s as three different revanchist powers find...

Are three linked regional challenges threatening the US-led international order?

Core argument: The revisionist states are linked by autocratic governance and geopolitical grievance—a desire to break a U.S.-led order that deprives them of the greatness they seek.

The international system is facing three sharp regional challenges. China is rapidly amassing military might as part of its campaign to eject the United States from the western Pacific. Russia’s war in Ukraine is the centerpiece of its long-standing effort to reclaim primacy in eastern Europe and the former Soviet space. In the Middle East, Iran and its coterie of proxies are waging a bloody struggle for regional dominance against Israel, the Gulf monarchies, and the United States. The fundamental commonalities linking the revisionist states are autocratic governance and geopolitical grievance; in this case, a desire to break a U.S.-led order that deprives them of the greatness they desire. Although dramatically ramping up military spending to drive down global risk is strategically essential, it seems politically inexpedient, at least until the United States suffers a more jarring geopolitical shock. In any case, it would take time—time Washington and its friends might not have—for even sizable increases in defense outlays to have a tangible military effect.

Takeaways by Macro Roundup® AI

  1. The revisionist states are linked by autocratic governance and geopolitical grievance—a desire to break a U.S.-led order that deprives them of the greatness they seek.
  2. Dramatically ramping up military spending is strategically essential to drive down global risk but appears politically inexpedient absent a more jarring geopolitical shock, and even sizable increases in defense outlays would take time to produce a tangible military effect.

Related Articles:

  • U.S. Weapons Industry Unprepared for a China Conflict, Report Says — A Center for Strategic and International Studies report argues the U.S. defense industrial base is not prepared for the current security environment and operates in a manner better suited to peacetime. The study recommends reassessing total munitions requirements and stockpile replenishment needs, creating a strategic munitions reserve, and setting a sustainable procurement plan.
  • Why Xi Can No Longer Brag About the Chinese Economy — China's shipyards build 46% of the world's ships, letting it produce several warships and submarines a year, while the U.S. holds under 1% of capacity and its Navy faces late, over-budget deliveries from a few yards lacking workers. China is also the largest drone producer.
  • 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.

Tuesday, January 30, 2024

AI Summary. Falling Nordic birth rates are now driven by childlessness rather than smaller families, with roughly three-quarters of Finland's recent fertility decline attributable to people who have no children. Nearly 40% of Finnish men with low education are childless at 45, and most have no partners.

Henry Mance Financial Times
Date Posted:

Despite aggressive pro-natal policies such as world-class maternity care, generous parental leave, and a right to preschool childcare, Finland’s fertility rate was 1.27 in 2023, down 1/3 since 2010.

Despite aggressive pro-natal policies such as world-class maternity care, generous parental leave, and a right to preschool...

Is rising childlessness, not smaller families, driving falling birth rates?

Core argument: In Finland, three-quarters of the recent decline in fertility is attributable to people who have no children, with childlessness rather than smaller families now the key dynamic.

Anna Rotkirch, research director at the Family Federation of Finland’s Population Research Institute [noted] "The strange thing with fertility is nobody really knows what’s going on. The policy responses are untried because it’s a new situation. It’s not primarily driven by economics or family policies. It’s something cultural, psychological, biological, cognitive." Until recently, fertility decline was driven by families having fewer children than their parents and grandparents. Now the key dynamic is childlessness. In Finland, 3/4 of the recent decline in fertility is attributable to people who have no children. In the family barometer surveys, among Finns born in the late 1970s and 1980s, fewer than one in twenty said at the age of 25 that they didn’t want to have children. Among those born in the late 1980s and early 1990s, that proportion rose to nearly one in four. Nearly 40% of Finnish men with low education are now childless at the age of 45 (and probably for life): a “huge” proportion. Most have no partners. Men are as likely as women to say they want children but are more likely to be childless.

Takeaways by Macro Roundup® AI

  1. In Finland, three-quarters of the recent decline in fertility is attributable to people who have no children, with childlessness rather than smaller families now the key dynamic.
  2. Among Finns born in the late 1970s and 1980s, fewer than one in twenty said at age 25 that they did not want children, rising to nearly one in four among those born in the late 1980s and early 1990s.
  3. Nearly 40% of Finnish men with low education are childless at age 45, most of them without partners, and Anna Rotkirch of the Family Federation of Finland argues the decline is cultural, psychological, biological and cognitive rather than driven by economics or family policies.

Related Articles:

  • The World Is Becoming More African — United Nations forecasts project Africans will rise from 8% of the world's people in 1950 to one-quarter by 2100, with the continent holding the world's largest workforce within a decade. McKinsey & Company estimates Africa's per-person economic growth has averaged 1% annually since 1990, against India's 5% and China's 9%.
  • Korea Finance Nominee Likens Aging Demographics to Titanic Iceberg — South Korea's finance minister nominee argues the country's aging population requires immediate preparation, noting efforts to raise the world's lowest fertility rate would take at least 30 years to yield benefits. A shrinking workforce is a major cause of South Korea's declining potential growth rate, with births per woman at 0.78.
  • Thoughts and Comments on Demographic Aging and Shrinking — As an arithmetic matter, the greying of societies is driven much more by smaller families than by longer lives, which the author attributes to a withering away of the family. Demographic simulations project that by 2040 couples in their 60s in China will likely have at least one living parent to care for, and many will have two or three.

AI Summary. Walmart store managers can earn up to about $404,000 a year by combining an average salary of $128,000, up from $117,000, with bonuses of as much as 200% of base salary and maximum stock grants. About 75% of its managers started as hourly employees, taking about five years on average to reach management.

Jaewon Kang Bloomberg
Date Posted:

Walmart is offering store managers bonuses of up to 200% of base salary plus stock grants that allow top performers to earn over $400,000/year; 75% of Walmart’s managers started as hourly employees.

Walmart is offering store managers bonuses of up to 200% of base salary plus stock grants that allow top performers to earn...

How much can retail store managers earn with stock grants?

Core argument: A Walmart store manager earning the new average salary, hitting the top end of the bonus range, and receiving the maximum stock grant could make $404,000 a year.

Stock grants are the company’s latest effort to boost compensation for managers. It said in January that the average store manager’s salary will increase to $128,000 from $117,000. Walmart is also redesigning its bonus program so that store profits play a bigger role in determining awards. Managers can now receive as much as 200% of their base salary in bonuses if targets are met. About 75% of Walmart’s managers started as hourly employees and on average took about five years to land a management role, according to the company. A manager making the new average salary and hitting the top end of the bonus range could make $404,000 a year with the maximum stock grant.

Takeaways by Macro Roundup® AI

  1. A Walmart store manager earning the new average salary, hitting the top end of the bonus range, and receiving the maximum stock grant could make $404,000 a year.
  2. Walmart said in January that the average store manager's salary will rise to $128,000 from $117,000, and managers can now receive as much as 200% of base salary in bonuses if targets are met.
  3. About 75% of Walmart's managers started as hourly employees and on average took about five years to reach a management role, according to the company.

Related Articles:

  • Everyone Wants to Work at UPS After Teamsters Deal — UPS lowered its full-year profit forecast, citing the volume impact from labor negotiations and costs tied to its tentative labor agreement. Under the five-year contract, full-time drivers are set to earn about $170,000 in annual pay and benefits by its end, while part-time union employees earn at least $25.75 an hour plus full health care and pension benefits.
  • Falling College Wage Premiums by Race and Ethnicity — The college wage premium is largest for Asian workers, whose college graduates earn more than twice what high school graduates earn — about a 120% premium versus roughly 70–80% for Black, Hispanic, and White workers. The premium has edged down slightly for all groups except Hispanic workers since the pandemic recession.
  • The Unexpected Compression: Competition at Work in the Low Wage Labor Market — Labor market tightness produced an unexpected compression in the US wage distribution, with disproportionate wage growth at the bottom reducing the college wage premium and reversing nearly 40% of the rise in 90-10 wage inequality since 1980. The authors attribute this in part to increased competition for low-wage workers.

AI Summary. Real business fixed investment continues to expand, with manufacturing construction reaching an all-time high alongside rising semiconductor fabrication building. Manufacturing construction contributed more than 0.3% to overall US growth over the past year, its largest contribution in postwar history, while real electric power infrastructure investment rose more than 13.3%.

Joseph Politano Apricitas Economics
Date Posted:

Real investment in electric power infrastructure was up 13.3% y/y in 2023. Overall manufacturing construction contributed more than 0.3% to US GDP growth, its largest contribution since the Second World War. @JosephPolitano

Is manufacturing construction driving stronger-than-expected US growth?

Core argument: Manufacturing construction has contributed more than 0.3% to U.S. GDP growth over the last year, its largest contribution in postwar American history, as semiconductor fabricator construction rises in the wake of the CHIPS Act.

Real nonresidential fixed investment continues to boom thanks to manufacturing construction, which grew to another all-time high amidst the ongoing rise in semiconductor fabricator construction in the wake of the CHIPS Act. Over the last year, manufacturing construction has contributed more than 0.3% to overall GDP growth, its largest contribution in postwar American history. Real investments in electric power infrastructure have also risen more than 13.3% over the last year, and even real construction within the remote-work-battered office sector is up 2.7%.

Takeaways by Macro Roundup® AI

  1. Manufacturing construction has contributed more than 0.3% to U.S. GDP growth over the last year, its largest contribution in postwar American history, as semiconductor fabricator construction rises in the wake of the CHIPS Act.
  2. Real nonresidential fixed investment continues to boom on manufacturing construction, which grew to another all-time high.
  3. Real investment in electric power infrastructure rose more than 13.3% over the last year, and real construction in the remote-work-battered office sector is up 2.7%.

Related Articles:

  • US Manufacturers to Temper Investment Pace After Vibrant 2023 — US manufacturers' investment in plants and production facilities rose almost 63% in a year, the largest annual advance since 1951, reflecting federal incentives and spending deferred during the pandemic. Purchasing and supply executives expect outlays to increase almost 12% this year after rising nearly 15%.
  • Electricity 2024 — 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.
  • 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.

AI Summary. Global spending on the clean-energy transition rose 17% to a record $1.8tn, covering renewable power, electric vehicles, hydrogen production and other technologies, with total funding reaching about $2.8tn including supply chains and $900bn in financing. BloombergNEF reports this remains short of a net-zero emissions trajectory.

Will Wade Bloomberg
Date Posted:

A Bloomberg analysis finds global spending on the clean-energy transition was up 17% in 2023 to $1.8T; including supply chain spending funding was about $2.8T.

Is record clean-energy spending enough to reach net-zero emissions?

Core argument: Global spending on the clean-energy transition rose 17% to a record $1.8 trillion last year, according to BloombergNEF, covering renewable energy installation, electric vehicle purchases, hydrogen production systems, and other technologies.

Global spending on the clean-energy transition hit record highs as the world moves to rein in climate change, but it’s still not enough to get on track to net-zero emissions. Total spending surged 17% last year to $1.8 trillion, according to a report Tuesday from BloombergNEF. These include investments to install renewable energy, buy electric vehicles, build hydrogen production systems, and deploy other technologies. Add in the investments in building out clean-energy supply chains, as well as $900 billion in financing, and the total funding in 2023 reached about $2.8 trillion.

Takeaways by Macro Roundup® AI

  1. Global spending on the clean-energy transition rose 17% to a record $1.8 trillion last year, according to BloombergNEF, covering renewable energy installation, electric vehicle purchases, hydrogen production systems, and other technologies.
  2. Including clean-energy supply chain investment and $900 billion in financing, total funding reached about $2.8 trillion in 2023, according to BloombergNEF.
  3. Record clean-energy spending remains insufficient to put the world on track for net-zero emissions, according to BloombergNEF.

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  • Copper Producers Warn of Lack of Mines to Meet Demand for Metal — Copper producers warn that existing and planned mines are insufficient to meet expected demand, which is projected to climb as the world electrifies and as living standards rise in India and other developing nations. Anglo American estimates Western living standards require 200-250kg of copper per person, versus a global average of 60kg.
  • What Have We Learned About the Neutral Rate? — Analysts estimate that if inflation is brought down without a recession, the Federal Reserve's policy rate will stabilize nearer 3–3.25% than the 2.5% longer-run median projection of Federal Reserve officials. Projected shifts in government debt and demographics imply a roughly 0.5 percentage point net increase in the neutral rate over the next decade.

AI Summary. US venture capital firms hold $311bn in unspent cash, having deployed only about half of a record $435bn raised from investors between 2020 and 2022, according to private markets data company PitchBook. Investors in these funds are pressing them to return capital rather than make risky start-up bets.

George Hammond and Tabby Kinder Financial Times
Date Posted:

US VC firms have invested just half of the $435B they raised between 2020-2022 according to PitchBook data. VC firms currently have $311B of “dry powder” and are coming under pressure from LPs to cut their fund sizes and forgive commitments.

Are venture capital firms holding back cash instead of funding start-ups?

Core argument: US venture capital firms hold $311bn in unspent cash, having deployed only half of the record $435bn they raised from investors during the pandemic-era boom of 2020–2022, according to PitchBook.

US venture capitalists are sitting on $311bn in unspent cash, as they shy away from risky bets on Silicon Valley start-ups and concentrate on finding ways to return capital to their own backers. American VC groups have deployed just half of a record $435bn they raised from investors during the pandemic-era boom between 2020 and 2022, according to private markets data company PitchBook. VCs are coming under increasing pressure to return capital to their own backers — institutional investors, foundations, and pension funds, known as “limited partners”. “LPs don’t usually like to put pressure on VCs to spend money, but if you’re entering your third year of not doing anything, they’re starting to ask what are my fees for,” said a Silicon Valley venture capital investor. “In the first tech bubble crash [in 2000] there were a number of funds who downsized their funds significantly,” he said. “I would hope that we do see that, venture firms cutting their fund size and forgiving commitments to their investors and resizing. That would be a really good outcome.”

Takeaways by Macro Roundup® AI

  1. US venture capital firms hold $311bn in unspent cash, having deployed only half of the record $435bn they raised from investors during the pandemic-era boom of 2020–2022, according to PitchBook.
  2. US venture capitalists are shying away from risky bets on Silicon Valley start-ups and concentrating on returning capital to their limited partners, which include institutional investors, foundations, and pension funds.
  3. A Silicon Valley venture capital investor said limited partners facing a third year of inactivity are starting to ask what their fees are for, and expressed hope that firms cut fund sizes and forgive investor commitments, as a number of funds downsized after the 2000 crash.

Related Articles:

  • It’s Mostly a Paper Moon: Alternative Investments Review — Venture capital financing has tightened: the median time between funding rounds has lengthened, more startups have shut down through bankruptcy, and the share of "down rounds" — new financing at a lower valuation — rose from 8% to nearly 20%, with those rounds cutting post-money valuations by more than 50%.
  • High Interest Rates Crushed Startup Investment. Here Is What Could Revive It — U.S. venture funding for startups peaked above $300bn—more than double the prior year—before a series of steep interest-rate increases, the fastest in four decades, curbed appetite for risky startup bets and pushed funding down for a second straight year to $167bn.
  • Data Update 4 for 2024: Risk enters the Equation — Across a universe of 47,698 companies, the median cost of capital for a US company is estimated at 7.9%, down from 9.6% a year earlier entirely because of declines in the price of risk, namely equity risk premiums and default spreads, though still above a historic low of 5.8%.

AI Summary. The European Commission is set to conclude an anti-subsidy investigation into Chinese electric vehicle production that could raise tariffs, and is weighing emergency support and an anti-dumping probe for solar panel manufacturing. Western critics argue China's policymaking has been mercantilist for decades, methodically targeting domestic supply-chain self-reliance.

Joe Leahy, James Kynge, and Sun Yu Financial Times
Date Posted:

The European Commission is completing an anti-subsidy investigation that could lead to higher tariffs for Chinese EV imports. There is also concern over the potential dumping of Chinese batteries and wind and solar components as Chinese output soars.

Will China's industrial subsidies trigger new Western trade barriers?

Core argument: The European Commission is set to conclude an anti-subsidy investigation into Chinese electric vehicle production that could result in higher tariffs on Chinese imports.

Later this year, the European Commission is set to conclude an anti-subsidy investigation into Chinese EV production that could lead to higher tariffs for Chinese imports. Brussels is also considering emergency support measures for its solar panel manufacturing industry, including an anti-dumping investigation. The US, meanwhile, has slapped export controls on high-technology shipments to China. Beijing has attacked the EU anti-subsidy investigation into EVs as “naked protectionism” and has criticised “de-risking”. But western critics argue China’s policymaking has been mercantilist for decades, with the methodical setting of targets to increase domestic supply chain self-reliance. Foreign companies complain they are facing growing obstacles to accessing the Chinese market.

Takeaways by Macro Roundup® AI

  1. The European Commission is set to conclude an anti-subsidy investigation into Chinese electric vehicle production that could result in higher tariffs on Chinese imports.
  2. Brussels is weighing emergency support measures for European solar panel manufacturing, including an anti-dumping investigation, while the US has imposed export controls on high-technology shipments to China.
  3. Beijing calls the EU electric vehicle anti-subsidy investigation "naked protectionism" and criticises "de-risking," while western critics argue China has pursued mercantilist policy for decades by methodically setting targets for domestic supply chain self-reliance.

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  • Mexico Targets Chinese Steel Imports With Increased Tariff Of Nearly 80% — Mexico imposed a tariff of nearly 80% on some steel imports, including certain Vietnamese exports of cold-rolled steel sheets, after local producers said Chinese steelmakers had strangled their production. Exporters that prove the steel originates outside China are exempt.
  • How the U.S. and EU Could Harmonize Their Approaches to Trade in EVs and Steel — European-made batteries and cars do not straightforwardly qualify for U.S. consumer electric-vehicle subsidies, and U.S. national security tariffs apply even to close security allies, while the European Union prefers responding to Chinese trade distortions only through measures clearly permitted by the World Trade Organization. These competing approaches have fractured transatlantic markets for clean energy goods and steel.