Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…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
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…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 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
  • “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


Wednesday, February 7, 2024

AI Summary. Household income gains for Generation X and Millennials are not explained by working more hours, as their households log roughly the same working hours as Baby Boomers did in prime working years. The authors estimate that holding work hours constant, these younger generations saw a larger intergenerational increase in market income than Baby Boomers.

Jeremy Horpedahl Economist Writing Every Day
Date Posted:
Is Database:
Database

.@jmhorp argues the rise in both market and post-tax/transfer income by generation documented by @jefflarrimore @kevincorinth is not driven by the growth of dual-income families.

Are younger generations' income gains explained by working more hours?

Core argument: Holding work hours constant, the authors find that Generation X and Millennials experienced a larger intergenerational increase in market income than Baby Boomers.

One other great thing about this paper is that we can answer the question of whether rising median incomes are driven by the growth of dual-income families. The authors look at total working hours for the household (covering both spouses). The finding is interesting, because it’s the reverse of what you often hear: for the Silent Generation and Baby Boomers, part of the increase in household income is from working more hours. But for the more recent generations (Gen X and Millennials), that’s not the case: younger households have roughly the same number of working hours as Boomers did during prime working years. Again, here’s the authors on this point: “Holding work hours constant, we find that Generation X and Millennials experienced a larger intergenerational increase in market income than Baby Boomers.”

Takeaways by Macro Roundup® AI

  1. Holding work hours constant, the authors find that Generation X and Millennials experienced a larger intergenerational increase in market income than Baby Boomers.
  2. Generation X and Millennial households work roughly the same number of hours during prime working years as Baby Boomer households did, so their income gains are not attributable to added work hours.
  3. For the Silent Generation and Baby Boomers, part of the increase in household income came from working more total hours across both spouses.

Related Articles:

  • Has Intergenerational Progress Stalled? Income Growth Over Five Generations of Americans — Using post-tax, post-transfer income data, the authors find each of the past four US generations was better off than the prior one, with Millennials' real median household income at ages 36–40 18% above the previous generation's, versus 34% for the Silent Generation, 27% for Baby Boomers, and 16% for Generation X.
  • Young People Have a Lot More Wealth Than We Thought — 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.
  • 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.

AI Summary. Americans under 40 held just 4.9% of total U.S. wealth while making up 37% of the adult population, whereas those over 54 held 71.6% with a similar population share. These age gaps narrowed slightly afterward, with the real value of financial assets held by under-40s rising more than 50% versus about 20% for those over 54.

Rajashri Chakrabarti, Natalia Emanuel, and Ben Lahey Federal Reserve Bank of New York
Date Posted:

Prior to the pandemic Americans under the age of 40 who were 37% of the adult population had 4.9% of wealth; in Q3 of 2023 after the rise in asset prices during the pandemic period they held 6.6% of wealth.

Have wealth gaps between younger and older Americans narrowed?

Core argument: As of 2019, Americans under 40 held 4.9% of total U.S. wealth while making up 37% of the adult population, whereas those over 54 comprised a similar population share and held 71.6% of wealth.

As of 2019, individuals under 40 years old held just 4.9% of total U.S. wealth despite comprising 37% of the adult population. Conversely, individuals over age 54 made up a similar share of the population and held 71.6% of total wealth. Since 2019, we find a slight narrowing of these wealth disparities across age groups, likely driven by expanded ownership of financial assets among younger Americans. Financial asset prices rose through much of the COVID period. Those under 40 saw a greater than 50% increase in the real value of their financial assets between 2019 and 2023. Those who were 40-54 saw only a 3% increase, while those over 54 saw about a 20% increase.

Takeaways by Macro Roundup® AI

  1. As of 2019, Americans under 40 held 4.9% of total U.S. wealth while making up 37% of the adult population, whereas those over 54 comprised a similar population share and held 71.6% of wealth.
  2. Americans under 40 saw the real value of their financial assets rise more than 50% between 2019 and 2023, compared with 3% for those aged 40–54 and about 20% for those over 54.
  3. Wealth disparities across age groups narrowed slightly after 2019, likely driven by expanded ownership of financial assets among younger Americans, with financial asset prices rising through much of the COVID period.

Related Articles:

  • Has Intergenerational Progress Stalled? Income Growth Over Five Generations of Americans — Using post-tax, post-transfer income data, the authors find each of the past four US generations was better off than the prior one, with Millennials' real median household income at ages 36–40 18% above the previous generation's, versus 34% for the Silent Generation, 27% for Baby Boomers, and 16% for Generation X.
  • Young People Have a Lot More Wealth Than We Thought — 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.

AI Summary. China's import growth has been notably weaker than export growth over the past five years, and the correlation between GDP growth and import growth has run below that between GDP growth and export growth for about a decade, which could be an early sign of increasing self-reliance. China is reducing reliance on imported inputs while maintaining reliance on foreign demand.

Francois de Soyres and Dylan Moore Federal Reserve Board
Date Posted:

.@FSoyres notes that Xi Jinping’s goal of greater “self-reliance” is bearing fruit with slower import growth, but China’s economic growth continues to rely on foreign demand.

Is China reducing reliance on imported inputs while depending on foreign demand?

Core argument: China's import growth has been notably weaker than export growth over the past five years, after Xi Jinping told workers at a state-owned enterprise in November 2018 that current events were forcing China to "travel the road of self-reliance.".

In a November 2018 speech to workers at a state-owned enterprise, President Xi Jinping mentioned that current events were forcing China to "travel the road of self-reliance." Over the past 5 years, import growth has been notably weaker than export growth. To investigate this trend further, we use a 5-years rolling-window to compute the correlation between GDP, imports, and exports growth. The correlation between GDP growth and import growth has been systematically lower than the correlation with export growth for about a decade now. The reduced synchronization between GDP and imports could be an early sign of increasing self-reliance at work. While decreasing its reliance on imports, China has simultaneously scaled up exports in sectors like automotives, and exports have become more closely linked to the overall GDP growth. In a sense, China is decreasing its reliance on imported inputs, but continues to maintain its reliance on foreign demand. All told, a delinking of global production processes and consumption from China is not in sight.

Takeaways by Macro Roundup® AI

  1. China's import growth has been notably weaker than export growth over the past five years, after Xi Jinping told workers at a state-owned enterprise in November 2018 that current events were forcing China to "travel the road of self-reliance.".
  2. Using a five-year rolling window, the analysis finds China's GDP growth has correlated systematically less with import growth than with export growth for about a decade, which could be an early sign of increasing self-reliance.
  3. China has scaled up exports in sectors such as automotives while decreasing its reliance on imported inputs, continuing to rely on foreign demand, so a delinking of global production processes and consumption from China is not in sight.

Related Articles:

  • Can China Reduce Its Internal Balances Without Renewed External Imbalances? — China's headline goods trade surplus is about 5% of its GDP, with the underlying surplus in manufactured goods close to 10% of GDP. The author argues that if China relies on interest rate cuts, exchange rate liberalization, and a weak yuan to offset its property downturn, its trade surplus could reach record levels relative to trading partners' output.
  • 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 Press China On Industrial Overcapacity at Beijing Summit — European Union leaders are pressing China over its expansion of industrial capacity, particularly in renewable energy products, at a time of weak Chinese domestic demand and tightening access to markets such as the US, leaving Europe a target for excess exports. EU officials say the bloc's trade deficit with China is just below $400bn and has doubled within two years.

AI Summary. The People's Bank of China has increased its lending to the country's banking system by 50%, which may be a response to business deposits migrating out of smaller and mid-sized commercial banks. The available data do not explain whether those businesses face unusual stress or are worried about deposit safety outside the largest banks.

Matt Klein The Overshoot
Date Posted:

China’s small and medium-sized banks are increasingly relying on loans from the PBOC, as deposits are migrating to the biggest institutions. @M_C_Klein

Is China's central bank lending more as deposits leave smaller banks?

Core argument: The People's Bank of China has increased its lending to the country's banking system by 50% since mid-2022, a move that may respond to business deposits migrating out of smaller commercial banks.

The People’s Bank of China (PBOC) has ramped up its lending to the country’s banking system by 50% since mid-2022. This may be a response to the migration of business deposits out of smaller commercial banks. The data available to me are not yet sufficient to explain why these deposits are leaving. It could be that the businesses that banked with smaller and mid-sized banks are facing unusual amounts of stress, or it could be that those businesses are worried about the safety of deposits held outside of the biggest banks. Either way, it is a novel development that is worth tracking for understanding the evolution of the Chinese financial system.

Takeaways by Macro Roundup® AI

  1. The People's Bank of China has increased its lending to the country's banking system by 50% since mid-2022, a move that may respond to business deposits migrating out of smaller commercial banks.
  2. Available data are insufficient to explain why business deposits are leaving China's smaller and mid-sized banks, with possible causes including unusual stress among those banks' business clients or worries about the safety of deposits held outside the largest banks.
  3. The migration of business deposits away from China's smaller banks is a novel development worth tracking to understand the evolution of the Chinese financial system.

Related Articles:

  • Why Are China’s Households in the Doldrums? — Chinese mortgage loans account for over 50% of total household debt, at $6tn and a third of GDP, and the stock of outstanding mortgage loans has declined for the first time as households prioritize repayment. Other forms of consumer credit have slowed sharply while new deposit growth has accelerated.
  • China Economy Memo: Tempest in a Teapot or Crisis A-Brewing? — The authors argue China is heading into a protracted debt crisis in which about 40% of local government financing vehicles default, hitting regional banks most exposed to such lending. They estimate total losses for these creditors at roughly $5tn, or about 30% of China's GDP.
  • 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.

AI Summary. China's largest chipmaker, SMIC, has assembled new production lines in Shanghai to mass-produce 5-nanometre smartphone processors designed by Huawei, using its existing stock of US- and Dutch-made equipment. Though 5nm remains a generation behind cutting-edge 3nm chips, the move indicates China's semiconductor industry is still progressing despite US export controls.

Qianer Liu Financial Times
Date Posted:

SMIC is using its existing stock of US and Dutch-made equipment to produce 5nm chips for Huawei. While this is a generation behind cutting-edge 3nm chips, the PRC’s semiconductor industry is making “gradual progress” in the face of US export controls.

SMIC is using its existing stock of US and Dutch-made equipment to produce 5nm chips for Huawei. While this is a generation...

Is China's chip industry still advancing despite US export controls?

Core argument: SMIC aims to mass produce 5nm chips using its existing stock of US- and Dutch-made equipment, on new production lines assembled in Shanghai, according to two people familiar with the plans.

China’s national chip champions expect to make next-generation smartphone processors as early as this year, despite US efforts to restrict their development of advanced technologies. The country’s biggest chipmaker SMIC has put together new semiconductor production lines in Shanghai, according to two people familiar with the move, to mass produce the chips designed by technology giant Huawei. According to two people with knowledge of the plans, SMIC is aiming to use its existing stock of US and Dutch-made equipment to produce more-miniaturised 5-nanometre chips. The production line will make Kirin chips designed by Huawei’s HiSilicon unit and destined for new versions of its premium smartphones. While 5nm chips remain a generation behind the current cutting-edge 3nm ones, the move would show China’s semiconductor industry is still making gradual progress, despite US export controls.

Takeaways by Macro Roundup® AI

  1. SMIC aims to mass produce 5nm chips using its existing stock of US- and Dutch-made equipment, on new production lines assembled in Shanghai, according to two people familiar with the plans.
  2. The 5nm chips would be Kirin processors designed by Huawei's HiSilicon unit for new versions of Huawei's premium smartphones, with Chinese chip champions expecting production as early as this year.
  3. The 5nm chips remain a generation behind the current cutting-edge 3nm ones, though the move would show China's semiconductor industry making gradual progress despite US export controls.

Related Articles:

  • China AI & Semiconductors Rise: US Sanctions Have Failed — China's Kirin 9000S is a better-designed, leading-edge chip than the West realizes, developed without access to extreme ultraviolet lithography or cutting-edge US intellectual property, indicating existing export controls have not worked. The authors argue only decisive, full-scale measures—not half measures—could prevent China from mass-manufacturing chips needed for high-end military applications.
  • Huawei’s Breakthrough Still Shows China’s Limits in Tech Race — A teardown of Huawei's Mate 60 Pro smartphone found its main chip is made with technology comparable to a 7nm process, possibly by Chinese foundry SMIC, still generations behind leaders such as TSMC, which is mass-producing 3nm chips. SMIC lacks the most advanced lithography machines and likely used older equipment with multipatterning.
  • Chinese Scientists Create Chip That Can Perform AI Task 3,000 Times Faster Than Nvidia’s A100: Study — Chinese researchers report developing a chip that performs certain AI tasks, such as image recognition and autonomous driving, faster and more energy efficiently than current high-performance AI chips. The authors write that while it cannot replace chips in computers or smartphones, it may be used in wearable devices, electric cars, or smart factories.

Thursday, February 8, 2024

AI Summary. The Congressional Budget Office projects the federal budget deficit will grow from $1.6tn to $2.6tn over a decade, rising from 5.6% to 6.1% of gross domestic product. That end-point is well above the 3.7% average of the past 50 years, as outlays are projected to rise faster than revenues over most of the period.

CBO Staff Congressional Budget Office
Date Posted:

The new @USCBO forecast projects federal net interest costs of 3.1% of GDP in 2024 rising to 3.9% in 2034, vs a mean of 2.1% between 1974-2023.

Are federal deficits projected to far exceed their historical average?

Core argument: CBO projects the federal budget deficit will grow from $1.6 trillion in fiscal year 2024 to $2.6 trillion in 2034, rising from 5.6% of GDP to 6.1% of GDP.

In CBO’s projections, the federal budget deficit grows from $1.6 trillion in fiscal year 2024 to $2.6 trillion in 2034. Deficits also expand in relation to the size of the economy, from 5.6% of gross domestic product (GDP) in 2024, when the collection of certain postponed tax payments temporarily boosts revenues, to 6.1% of GDP in 2025. In 2026 and 2027, revenues increase faster than outlays, causing the deficit to shrink to 5.2% of GDP by 2027. Thereafter, outlays rise faster than revenues. By 2034, the deficit returns to 6.1% of GDP— significantly larger than the 3.7% that deficits have averaged over the past 50 years.

Takeaways by Macro Roundup® AI

  1. CBO projects the federal budget deficit will grow from $1.6 trillion in fiscal year 2024 to $2.6 trillion in 2034, rising from 5.6% of GDP to 6.1% of GDP.
  2. The 6.1% of GDP deficit CBO projects for 2034 is significantly larger than the 3.7% that deficits have averaged over the past 50 years.
  3. CBO projects that revenues will increase faster than outlays in 2026 and 2027, shrinking the deficit to 5.2% of GDP by 2027, after which outlays rise faster than revenues.

Related Articles:

  • Why We Should, but Won’t, Reduce the Budget Deficit — High interest rates will likely crowd out private investment and weaken long-term growth prospects. Because Social Security, health care, other safety-net programs, defense, and interest payments make up most federal spending, leaving only a small and already squeezed slice of nondefense discretionary spending, deficit reduction requires either cutting popular benefits or raising taxes.
  • Interest Expense: A Bigger Impact on Deficits than Debt — The US is running a primary deficit—excluding interest costs—much larger than its historical norm, at a point in the business cycle when deficits would normally be smaller than usual. The average interest rate on federal debt is projected to remain at or below the rate of nominal GDP growth over the next decade.
  • Living with High Public Debt — High public debt ratios are likely to persist because large sustained primary budget surpluses are politically unrealistic, real interest rates are already very low, faster global growth is hard to engineer, inflation is not a sustainable route to reducing debt, and financial repression is less feasible amid liberalized markets.

AI Summary. The Congressional Budget Office projects federal deficits will total $20tn, or 5.7% of GDP, over the next decade, growing to $2.6tn and 6.2% of GDP by 2034. That projected 2034 deficit share would be roughly 70% larger than the 50-year historical average of 3.7% of GDP.

CRFB Staff Committee for a Responsible Federal Budget
Date Posted:

An analysis of the new @USCBO forecast highlights that 2023’s Fiscal Responsibility Act drove $1.4T in less borrowing which implies debt will be 116% of GDP in 2033 as opposed to 119%. @BudgetHawks

How large will federal deficits grow over the next decade?

Core argument: CBO's baseline projects deficits totaling $20 trillion, or 5.7% of GDP, over the next decade, with the annual deficit falling from $1.7 trillion in FY 2023 to $1.5 trillion in 2024 before rising to $2.6 trillion by 2034.

Deficits will total $20T, or 5.7% of GDP, over the next decade under CBO’s baseline. After growing from $1.4T in FY 2022 to $1.7T in 2023, CBO projects deficits will fall to $1.5T in 2024. CBO projects deficits will then grow to $1.8T by 2025, breach $2T by 2031, and grow to $2.6 trillion by 2034. As a share of the economy, CBO projects deficits will fall from 6.3% of GDP in FY 2023 to 5.3% in 2024, and then grow again to 6.1% in 2025. Assuming large parts of the TCJA and other policies expire at the end of 2025, CBO projects deficits will decline to a low of 5% of GDP in 2029, before rising to 6.2% by 2034. These deficits are extremely high by historic standards. At 6.2%, the FY 2034 deficit as a share of GDP will be one-third larger than in the year prior to the pandemic and about 70% larger than the 50-year historical average of 3.7% of GDP. In nominal dollars, the $2.6T deficit will be 2.6 times as large as immediately before the pandemic.

Takeaways by Macro Roundup® AI

  1. CBO's baseline projects deficits totaling $20 trillion, or 5.7% of GDP, over the next decade, with the annual deficit falling from $1.7 trillion in FY 2023 to $1.5 trillion in 2024 before rising to $2.6 trillion by 2034.
  2. CBO projects the deficit will fall from 6.3% of GDP in FY 2023 to 5.3% in 2024, rise to 6.1% in 2025, decline to 5% in 2029 assuming large parts of the Tax Cuts and Jobs Act expire, then reach 6.2% by 2034.
  3. CBO's projected FY 2034 deficit of 6.2% of GDP is one-third larger than in the year before the pandemic and about 70% above the 50-year average of 3.7%, with the $2.6 trillion nominal figure 2.6 times the pre-pandemic level.

Related Articles:

  • The Budget and Economic Outlook: 2024 to 2034 — The Congressional Budget Office projects the federal budget deficit will grow from $1.6tn to $2.6tn over a decade, rising from 5.6% to 6.1% of gross domestic product. That end-point is well above the 3.7% average of the past 50 years, as outlays are projected to rise faster than revenues over most of the period.
  • 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.
  • Olivier Blanchard on Debt Explosions — The author argues that rising long-term US Treasury yields reflect a term premium driven by heavy bond supply and weaker demand, including the Federal Reserve shrinking its holdings, rather than a risk premium, since inflation-indexed yields have also risen. Risks include a failed auction or debt monetization producing high inflation.

AI Summary. The Congressional Budget Office projects slightly smaller deficits and debt over the next decade, with the projected primary deficit—non-interest spending minus revenue—as a share of GDP falling substantially, largely because of discretionary spending limits in the debt limit deal. Cutting the primary deficit by about 1.5% of GDP would stabilize debt near 125% of GDP.

Jason Furman @jasonfurman
Date Posted:

Noting the US fiscal outlook is on “an unsustainable course” @jasonfurman argues that cutting the primary deficit by 1.5% of GDP would stabilize the debt at ~125% of GDP, and “should be doable.”

How much deficit reduction would stabilize the debt?

Core argument: Furman notes that cutting the primary deficit by ~1.5% of GDP would stabilize U.S. debt at ~125% of GDP, an adjustment similar in size to those of 1990 or 1993 or what Social Security solvency requires.

The latest CBO outlook is projecting a slightly smaller deficit and debt over the next ten years. This despite the fact that the actual 2023 deficit was well above what CBO had forecast. The most fiscally favorable change is that the forecast for the primary deficit as a share of GDP (that is non-interest spending minus revenue) has fallen dramatically relative to recent forecasts. The biggest improvement is due to the discretionary limits in the debt limit deal. The budget is still on an unsustainable course. But the adjustment needed for sustainability is not especially daunting. In particular cutting the primary deficit by ~1.5% of GDP would stabilize the debt at ~125% of GDP. This is similar to the adjustment from 1990 or 1993 or what is needed for Social Security solvency. To be clear, getting Congress not to extend tax cuts (or worse, extending everything except the limit on the State & Local Tax deduction) could be hard. Another 1.5% of GDP on top of that is hard given the current political climate. Forecast could worsen. But should be doable.

Takeaways by Macro Roundup® AI

  1. Furman notes that cutting the primary deficit by ~1.5% of GDP would stabilize U.S. debt at ~125% of GDP, an adjustment similar in size to those of 1990 or 1993 or what Social Security solvency requires.
  2. CBO's outlook projects a slightly smaller deficit and debt over the next ten years, even though the actual 2023 deficit came in well above CBO's earlier forecast.
  3. The projected primary deficit as a share of GDP has fallen sharply relative to recent CBO forecasts, with the biggest improvement attributed to the discretionary limits in the debt limit deal, though Furman argues the budget remains on an unsustainable course.

Related Articles:

  • The Budget and Economic Outlook: 2024 to 2034 — The Congressional Budget Office projects the federal budget deficit will grow from $1.6tn to $2.6tn over a decade, rising from 5.6% to 6.1% of gross domestic product. That end-point is well above the 3.7% average of the past 50 years, as outlays are projected to rise faster than revenues over most of the period.
  • When Does Federal Debt Reach Unsustainable Levels? — The authors estimate that U.S. debt held by the public cannot exceed roughly 200% of GDP even under favorable market conditions, and that under current policy the ratio reaches 175–200% within about 20 years. After that point, they argue, no tax increases or spending cuts could avert default or inflationary debt monetization.
  • If Markets Are Right About Long Real Rates, Public Debt Ratios Will Increase For Some Time. We Must Make Sure That They Do Not Explode — Stabilizing public debt ratios would require cutting primary deficits to zero, which the author argues no government can do quickly without risking recession and boosting support for populist parties. With a US primary deficit around 4% and a dysfunctional budget process, the debt ratio is likely to keep rising for some time.

AI Summary. The US annual trade deficit narrowed nearly 19% to $773.4bn, the first decline in four years, as companies limited inventory buildup and consumer spending shifted toward services. The merchandise deficit with China shrank 27% to $279.4bn, while the gap with Mexico grew to a record $152.4bn.

Mark Niquette Bloomberg
Date Posted:

The US trade deficit fell 19% in 2023 driven by a decline in imports as firms limited the buildup in inventories and consumers shifted spending towards services.

Did the US trade deficit narrow as trade shifted away from China?

Core argument: The US annual trade deficit shrank nearly 19% to $773.4 billion from a record in 2022, the first narrowing in four years and the largest since 2009, according to Commerce Department data.

The annual trade shortfall shrank nearly 19% to $773.4 billion from a record in 2022, Commerce Department data showed Wednesday. The narrowing of the US trade gap was the first in four years and reflected efforts by companies to limit the buildup in inventories, restraining demand for imports. American consumers’ spending preferences continued to shift toward services and experiences after a pandemic-driven binge on merchandise. A more complex global trading system is showing through in US bilateral trade figures. The nation’s merchandise deficit with China last year shrank 27% to an unadjusted $279.4 billion, the smallest since 2010. The narrowing was the largest in data back to 2002. At the same time, the gap with Mexico grew to a record $152.4 billion.

Takeaways by Macro Roundup® AI

  1. The US annual trade deficit shrank nearly 19% to $773.4 billion from a record in 2022, the first narrowing in four years and the largest since 2009, according to Commerce Department data.
  2. The US merchandise deficit with China fell 27% to an unadjusted $279.4 billion, the smallest since 2010 and the largest narrowing in data back to 2002, while the gap with Mexico grew to a record $152.4 billion.
  3. Efforts by companies to limit the buildup in inventories restrained demand for imports, while American consumers' spending preferences continued shifting toward services and experiences after a pandemic-driven binge on merchandise.

Related Articles:

  • Can China Reduce Its Internal Balances Without Renewed External Imbalances? — China's headline goods trade surplus is about 5% of its GDP, with the underlying surplus in manufactured goods close to 10% of GDP. The author argues that if China relies on interest rate cuts, exchange rate liberalization, and a weak yuan to offset its property downturn, its trade surplus could reach record levels relative to trading partners' output.
  • China Set To Lose Crown As Top U.S. Exporter After 17 Years — U.S. goods imports from China fell more than 20% year over year, leaving China at 13.9% of total U.S. imports, its smallest share since 2004 after peaking above 21%. Mexico's share topped 15%, positioning it to become the top exporter to the U.S. for the first time since 2000.
  • 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.

AI Summary. Researchers at the Joint European Torus facility outside Oxford set a nuclear fusion energy record, generating 69 megajoules from a five-second sustained reaction, up from a previous record of 59 megajoules. The experiment consumed far more power than the reaction produced.

Tom Wilson Financial Times
Date Posted:

European scientists set a new nuclear fusion energy record generating 69 megajoules from a sustained fusion reaction lasting five seconds.

European scientists set a new nuclear fusion energy record generating 69 megajoules from a sustained fusion reaction lasting...

Are scientists increasing the energy produced by nuclear fusion reactions?

Core argument: Researchers at the Joint European Torus facility outside Oxford generated 69 megajoules from a fusion reaction sustained for five seconds, surpassing their previous record of 59 megajoules set in 2021.

European scientists have set a new record for the amount of energy generated from nuclear fusion. Researchers at the Joint European Torus facility outside Oxford generated 69 megajoules from a sustained fusion reaction lasting five seconds — enough energy to boil about 70 kettles — surpassing their previous record of 59 megajoules set in 2021. The JET experiment in December consumed far more power than the reaction produced.

Takeaways by Macro Roundup® AI

  1. Researchers at the Joint European Torus facility outside Oxford generated 69 megajoules from a fusion reaction sustained for five seconds, surpassing their previous record of 59 megajoules set in 2021.
  2. The 69 megajoules produced at the Joint European Torus is enough energy to boil about 70 kettles.
  3. The Joint European Torus experiment consumed far more power than the fusion reaction produced.

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  • Microsoft Bets That Fusion Power Is Closer Than Many Think — Microsoft has agreed to buy fusion-generated electricity from startup Helion Energy in what is believed to be the first commercial fusion power agreement, even as many experts view fusion as decades away. Helion committed to begin producing fusion electricity within about five years and to supply at least 50 megawatts or pay penalties.
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AI Summary. Scientists report that global warming exceeded 1.5C above pre-industrial levels over a 12-month period for the first time, alongside record global sea surface temperatures of 21.12C. The El Niño phenomenon, which warms the Pacific Ocean surface, has contributed to sea temperature rises on top of greenhouse gas–driven warming.

Attracta Mooney, Jana Tauschinski, and Steven Bernard Financial Times
Date Posted:

Mean sea surface temperatures are at a record high at the start of 2024 hitting 69.7F in January. The El Niño phenomenon is amplifying elevated sea surface temperatures.

Has global warming exceeded 1.5C over a 12-month period?

Core argument: Global sea surface temperature hit a record high of almost 20.97C for January, the second-hottest reading for any month, trailing only August 2023's 20.98C, according to scientists.

Scientists said the global sea surface temperature reached a record high of almost 20.97C for January. It was the second-hottest sea surface temperature recorded for any month ever, with only August 2023 surpassing it at 20.98C. The El Niño phenomenon, which heats the Pacific Ocean surface and exacerbates global warming caused by greenhouse gas emissions, has contributed to sea temperature rises in recent months. But they warned that sea surface temperatures had already reached “new absolute records”, with a level of 21.12C recorded on February 4 surpassing the previous high reached last August. Last May the World Meteorological Organization said there was a 66 percent chance that the mean global temperature would temporarily surpass 1.5C above pre-industrial levels in “at least” one year by 2027.

Takeaways by Macro Roundup® AI

  1. Global sea surface temperature hit a record high of almost 20.97C for January, the second-hottest reading for any month, trailing only August 2023's 20.98C, according to scientists.
  2. Scientists recorded a new absolute record sea surface temperature of 21.12C on February 4, surpassing the previous high set the prior August.
  3. The World Meteorological Organization put the chance that the mean global temperature would temporarily exceed 1.5C above pre-industrial levels in at least one year by 2027 at 66 percent.

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AI Summary. Chinese researchers have built a truck-mounted high-power microwave weapon powered by four compact Stirling engines, designed to emit electromagnetic waves capable of suppressing drones, military aircraft, and satellites. Preliminary tests by the project team indicate it uses one-fifth of the energy of current methods to generate a strong magnetic field and can run continuously for four hours without attenuation.

Stephen Chen South China Morning Post
Date Posted:

A Chinese team has developed a new direct-energy weapon that uses one-fifth of the energy required by previous methods. It can be fired from a moving truck and is powerful enough to suppress drones, military aircraft, and even satellites. @SCMPNews

A Chinese team has developed a new direct-energy weapon that uses one-fifth of the energy required by previous methods. It...

Can a truck-mounted microwave weapon suppress drones, aircraft, and satellites?

Core argument: A Chinese research team's high-power microwave weapon consumes only one-fifth of the energy required by current methods to generate a strong magnetic field and runs continuously for four hours without attenuation, according to the project team's preliminary tests.

A research team in China has developed a high-power microwave (HPM) weapon driven by four compact and efficient Stirling engines…to drive high-frequency electromagnetic waves that are powerful enough to suppress drones, military aircraft, and even satellites. The weapon system, which can easily fit into a truck, and boasts a significant reduction in energy consumption for generating a strong magnetic field compared with existing technologies. According to the project team’s preliminary tests, it consumes only one-fifth of the energy required by current methods and can operate continuously for four hours without attenuation.

Takeaways by Macro Roundup® AI

  1. A Chinese research team's high-power microwave weapon consumes only one-fifth of the energy required by current methods to generate a strong magnetic field and runs continuously for four hours without attenuation, according to the project team's preliminary tests.
  2. The weapon is driven by four compact Stirling engines that produce high-frequency electromagnetic waves the research team says are powerful enough to suppress drones, military aircraft, and satellites.
  3. The Chinese high-power microwave weapon system fits into a truck and can fire from a moving vehicle.

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