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


Thursday, February 22, 2024

AI Summary. Prices for daycare and preschool have been rising faster than overall inflation, leaving families to choose between high costs, lower-quality care, fewer work hours, or leaving the workforce. Bank of America reports 16% of employees cut hours, 11% quit, and 9% turned down a promotion because of caregiving responsibilities.

Taylor Bowley and David Michael Tinsley Bank of America
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The average cost of childcare is up 32% from 2019, and the share of lower-income customers making childcare payments has dropped 13pp, suggesting the cost of childcare has forced lower-income mothers out of the labor force. @BankofAmerica

Are rising childcare costs pushing workers to cut hours or quit?

Core argument: Bank of America's 2023 Workplace Benefits Report found 16% of employees reduced work hours, 11% quit or left the workforce, and 9% turned down a promotion because of caregiving responsibilities.

A lack of affordable childcare has likely long been a key driver in the workforce gender gap, but inflationary pressures in the childcare sector are only adding fuel to the fire. The Consumer Price Index showed that prices for daycare and preschool have been rising faster than the general rate of inflation over the past year. Facing these escalating costs, many families are often torn between spending a large portion of their paychecks on such care, finding lower-quality options, reducing work hours, or leaving the workforce altogether to become full-time caregivers. According to Bank of America’s 2023 Workplace Benefits Report, 16% of employees reduced their work hours, 11% quit or left the workforce and 9% turned down a promotion due to caregiving responsibilities. Plus, according to the Bureau of Labor Statistics, in January 2024 nearly 3.7% of part-time workers cited “childcare responsibilities” as the reason for not working full-time, up from 3.2% in 2019.

Takeaways by Macro Roundup® AI

  1. Bank of America's 2023 Workplace Benefits Report found 16% of employees reduced work hours, 11% quit or left the workforce, and 9% turned down a promotion because of caregiving responsibilities.
  2. Bureau of Labor Statistics data show nearly 3.7% of part-time workers in January 2024 cited childcare responsibilities as the reason for not working full-time, up from 3.2% in 2019.
  3. Consumer Price Index data show daycare and preschool prices rising faster than the general inflation rate, leaving families choosing among costly care, lower-quality options, fewer work hours, or leaving the workforce.

Related Articles:

  • Birth Rates Are Falling In The Nordics. Are Family-Friendly Policies No Longer Enough? — 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.
  • Rising Childcare Costs Starting to Bite — Bank of America internal data show average monthly household childcare payments have risen steadily over three years to more than $700, 32% above the 2019 average, with prices potentially rising further after a federal program subsidizing childcare providers expired. Over 12% of US households pay for childcare regularly, according to the Department of Health & Human Services.
  • Are Higher Child Care Wages Affecting the Labor Supply? — The labor force participation rate of partnered women with children rose 1.06 percentage points in a six-month span, and the authors estimate that rising child care worker wages held back an even larger increase. They suggest the greater availability of telecommuting jobs, which this group strongly prefers, may explain the rise despite higher child care prices.

AI Summary. US venture capital investment totaled $170bn last year, half the 2021 level, and the number of new "unicorns"—private companies valued above $1bn—fell to 45 from 344 in 2021, according to PitchBook. Investors hold stakes in more than 700 unicorns worth a combined $2.4tn and are weighing how to sell them.

Economist Staff The Economist
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In 2021 344 unicorns were minted; in 2023 only 45 new firms met that threshold. There are 700 unicorns with a valuation of $2.4T that have yet to IPO or be acquired.

Has venture capital investment and unicorn creation fallen sharply since 2021?

Core argument: U.S. venture capital firms invested $170bn last year, down by half from 2021, according to PitchBook, with investors especially wary of signing cheques at lofty valuations apart from exceptions such as OpenAI.

Venture capital firms invested only $170bn in the country last year, down by half from 2021, according to PitchBook. Bar a few high-profile exceptions, such as Openai, investors have been especially wary of signing cheques at lofty valuations. Throughout the 2010s the number of unicorns—private companies with valuations above $1bn—soared in America. Fully 344 of them were minted in 2021. Last year’s figure was 45. Investors are mulling how to sell their stakes in the unicorns of yesteryear. With over 700 unicorns, at a combined valuation of $2.4trn, a sizeable amount of money is at stake.

Takeaways by Macro Roundup® AI

  1. U.S. venture capital firms invested $170bn last year, down by half from 2021, according to PitchBook, with investors especially wary of signing cheques at lofty valuations apart from exceptions such as OpenAI.
  2. The number of new American unicorns—private companies valued above $1bn—fell to 45 last year from 344 minted in 2021, after climbing through the 2010s.
  3. More than 700 existing unicorns carry a combined valuation of $2.4trn, and investors are weighing how to sell their stakes in them.

Related Articles:

  • 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.
  • 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%.
  • More Startups Throw in the Towel, Unable to Raise Money for Their Ideas — Venture firms' annual internal rate of return turned negative at -7%, the lowest since 2009, according to PitchBook Data, while U.S. startup funding fell 55% year over year to $37bn in a quarter. A prolonged depressed venture market pushes more startups toward shutting down.

AI Summary. Japan's economy grew an average of just 0.7% during the 2000s amid mild deflation, and the International Monetary Fund expects public debt to reach 256% of gross domestic product, up from 65% in 1989. Net profits at non-financial Japanese firms rose more than fourfold over that period, leaving ¥343tn in cash.

Kana Inagaki and Leo Lewis Financial Times
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The Nikkei 225 is back at its 1989 peak after 34 years. During that period Japan’s real per capita GDP fell to the lowest of its peers in the G7, and the mean age in Japan rose from 37.2 to 48.9.

How has Japan's economy changed since its stock market peak?

Core argument: Net profits of Japanese non-financial companies rose more than fourfold to ¥74tn ($493bn) from fiscal 1989 to fiscal 2022, while dividends paid to shareholders jumped eightfold to ¥32tn, according to finance ministry data.

The Japanese economy entered a long period of stagnation during the 2000s, when the economy grew on average only 0.7%. As mild deflation continued, people stopped believing that prices or wages would go up. Debt has also risen. The IMF expects Japan’s ratio of public debt to gross domestic product to reach 256% in 2024, compared with 65% in 1989. In 1989, six of the world’s 10 richest people were Japanese. Now, only three Japanese people are ranked among the world’s top 100 billionaires. In terms of earnings, Japanese companies have emerged from the period of low growth with healthy balance sheets. According to finance ministry data, net profits generated by Japanese non-financial companies increased more than fourfold to ¥74tn ($493bn) from fiscal 1989 to fiscal 2022, while the amount of dividends they paid to shareholders jumped eightfold to ¥32tn during the same period. Decades of deflation and economic stagnation, however, have also sapped the appetite for investment, leaving companies sitting on a massive cash pile of ¥343tn. Roughly half of the companies listed in the top tier of the Tokyo bourse have undervalued stocks, with price-to-book ratios below one.

Takeaways by Macro Roundup® AI

  1. Net profits of Japanese non-financial companies rose more than fourfold to ¥74tn ($493bn) from fiscal 1989 to fiscal 2022, while dividends paid to shareholders jumped eightfold to ¥32tn, according to finance ministry data.
  2. The IMF expects Japan's public debt to reach 256% of GDP in 2024, compared with 65% in 1989, after the economy grew on average only 0.7% during the 2000s amid mild deflation.
  3. Japanese companies hold a cash pile of ¥343tn after decades of deflation and stagnation sapped the appetite for investment, and roughly half of the firms listed in the Tokyo bourse's top tier have price-to-book ratios below one.

Related Articles:

  • Japan’s Foreign Worker Tally Tops Two Million For First Time — Japan's foreign worker count reached about 2.05 million, the most on record, a 12.4% increase from a year earlier, according to the Labor Ministry. About three in five of the roughly 319,000 establishments employing non-Japanese staff have no more than 30 employees in total.
  • More Than 40% of Japanese Women May Never Have Children — Japan's National Institute of Population and Social Security Research projects that up to 42% of Japanese women may never have children, with a midpoint estimate of one-third and a more optimistic scenario of a quarter of women born in 2005. The institute projects childlessness as high as 50% among men.
  • The Wealth of Working Nations — Because of population aging, growth in GDP per capita and GDP per working-age adult have diverged across advanced economies; from 1998 to 2019 Japan's accumulated growth per working-age adult was 31.9% versus 29.5% in the US. The authors find a standard neoclassical growth model calibrated to each country's working-age population tracks output per working-age adult in most economies.

AI Summary. Japan's Nikkei 225 stock index has reclaimed the record peak it set more than 34 years ago, closing at 39,098.68, as global investors bet the country has escaped deflation and is on a path of sustainable growth. Gains in technology and chip-equipment shares drove the advance, with the index up over 16% since the start of the year.

Hideyuki Sano, Yasufumi Saito, and Jin Wu Bloomberg
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Overseas investors are driving Japanese financial markets, accounting for 70% of trading in the Topix Prime Index of stocks. Despite a 12% YTD rally, 42% of Topix stocks trade below their book value vs 3% of stocks in the S&P 500.

Why have Japanese stocks reclaimed their record high after decades?

Core argument: Japan's Nikkei 225 closed at 39,098.68 on Thursday, breaching the record set more than 34 years ago in a recovery that took longer than Wall Street's rebound from the crash that sparked the Great Depression.

Japanese stocks have reclaimed the historic peak reached over 34 years ago as global investors pour money into a country they’re betting has finally escaped deflation and is headed on a path of sustainable growth. On Thursday, the Nikkei 225 closed at 39,098.68, finally breaching the previous record. The leap was driven by gains in technology shares and chip-gear producers after Nvidia’s blowout sales forecast. The epic come-back — it took even longer than Wall Street’s recovery from the crash that sparked the Great Depression — marks a rebirth for Japan’s share market. Warren Buffett boosted his holdings in Japan’s biggest companies, an endorsement that’s further increased the allure of Tokyo stocks. Since the start of 2024, the Nikkei has surged over 16%, beating most other major markets. The outperformance is even more striking over the past 12 months or so.

Takeaways by Macro Roundup® AI

  1. Japan's Nikkei 225 closed at 39,098.68 on Thursday, breaching the record set more than 34 years ago in a recovery that took longer than Wall Street's rebound from the crash that sparked the Great Depression.
  2. The Nikkei has surged over 16% since the start of 2024, beating most other major markets, with the latest leap driven by technology shares and chip-gear producers after Nvidia's blowout sales forecast.
  3. Global investors are pouring money into Japan on bets the country has escaped deflation and is headed toward sustainable growth, and Warren Buffett's increased holdings in Japan's biggest companies have added to the allure of Tokyo stocks.

Related Articles:

  • Japan: The Land of the Rising Profits — Japanese corporate ordinary profits as a share of GDP have roughly doubled compared with the "lost decades," with rising dividends and a further decline in household saving each accounting for about 40% of the improvement. The analysis attributes the fall in household saving to corporate deleveraging, which reduced firms' interest payments and thus household interest income.
  • One in 10 Japanese Now Aged Over 80, Population Report Shows — People aged over 80 account for more than 10% of Japan's population for the first time, and those over 65 reached a record 29.1%, making Japan the world's oldest country by that measure. The overall population fell by about half a million to 124.4m and is projected to drop below 109m by 2045.
  • US To Link Up With Taiwan and Japan Drone Fleets To Share Real-Time Data — The US, Taiwan and Japan plan to share real-time data from naval reconnaissance drones, with Taiwan's four MQ-9B Sea Guardian drones integrated into the same system used by US forces in the region and Japan's Self-Defense Force. The arrangement would let the US and its allies view the same drone-gathered information simultaneously.

AI Summary. Yale University will require standardized test scores for admission, becoming the second Ivy League school to abandon the test-optional policies widely adopted during the Covid pandemic. The number of students taking the SAT fell to 1.7m from 2.2m.

Stephanie Saul New York Times
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Joining Dartmouth and MIT Yale will again require applicants to submit standardized test scores for admission.

Joining Dartmouth and MIT Yale will again require applicants to submit standardized test scores for admission.

Are elite universities reinstating standardized testing requirements for admissions?

Core argument: Yale University will require standardized test scores from students applying to enter in the fall of 2025, becoming the second Ivy League university to abandon the test-optional policies widely embraced during the Covid pandemic.

Yale University will require standardized test scores for admission for students applying to enter in the fall of 2025, becoming the second Ivy League university to abandon test-optional policies that had been widely embraced during the Covid pandemic. The number of students taking the SAT dropped to 1.7 million in 2022, a decline from 2.2 million in 2020.

Takeaways by Macro Roundup® AI

  1. Yale University will require standardized test scores from students applying to enter in the fall of 2025, becoming the second Ivy League university to abandon the test-optional policies widely embraced during the Covid pandemic.
  2. The number of students taking the SAT fell to 1.7 million in 2022 from 2.2 million in 2020.

Related Articles:

  • Standardized Test Scores and Academic Performance at Ivy-Plus Colleges — Using admissions records and first-year grades at multiple Ivy-Plus colleges, the authors find SAT and ACT scores substantially predict college academic success even among students with the same high school grades, while high school grade point average does little to predict it. Conditional on test scores, students from lower- and higher-resourced high schools have virtually identical college grades.
  • Diversifying Society’s Leaders? The Determinants and Causal Effects of Admission to Highly Selective Private Colleges — Children from top-1% families are more than 2x as likely as middle-class students with comparable SAT/ACT scores to attend an Ivy-Plus college, with two-thirds of the gap attributable to higher admissions rates. The authors attribute this advantage to legacy preferences, weight on non-academic credentials, and athlete recruitment.
  • The Misguided War On The SAT — The National Assessment of Educational Progress, a nationwide test of elementary and middle school students with no test-prep industry around it, shows racial and economic gaps closely resembling those on the SAT and ACT. Researchers argue this indicates college admissions tests measure underlying learning, making score disparities a symptom rather than a cause of inequality.

Friday, February 23, 2024

AI Summary. Inflation-adjusted wages for US workers in the middle pay range, between the 40th and 60th percentiles, were 6.6% higher than before the pandemic, slightly above what 2015-19 trends would predict. The US is the only G7 country with substantial real wage gains, ranging elsewhere from a 0.2% rise in Canada to a 9% decline in Italy.

Arindrajit Dube Project Syndicate
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As of December 2023, real wages for the US middle quintile are 6.6% higher than they were in 2019 and above the level implied by the 2015-2019 trend. The US is the only G7 country that experienced substantial real wage gains in recent years. @ArinduB

Have US middle-wage workers gained more real pay than other advanced economies?

Core argument: Inflation-adjusted wages for US workers between the 40th and 60th percentiles were 3.9% higher in December 2023 than a year earlier and 6.6% higher than in December 2019, with similar gains in establishment data.

Wage growth for most American workers has outpaced the spike in the cost of living since the beginning of the pandemic. Updated data show that in the middle pay range, between the 40th and 60th percentiles, inflation-adjusted wages in December 2023 were 3.9% higher than in December 2022, and 6.6% higher than in December 2019. Similar real wage gains can also be observed in establishment data. Importantly, the real wages of the middle quintile are not only higher today than they were before the pandemic but slightly higher than we would expect based on 2015-19 trends. The wage boom was not inevitable. In fact, the US is the only G7 country that experienced substantial real wage gains in recent years. While American workers’ wages have increased by 2.8% since late 2019, workers in other major economies have faced stagnant or even negative wage growth, ranging from a 0.2% increase in Canada to a 9% decline in Italy.

Takeaways by Macro Roundup® AI

  1. Inflation-adjusted wages for US workers between the 40th and 60th percentiles were 3.9% higher in December 2023 than a year earlier and 6.6% higher than in December 2019, with similar gains in establishment data.
  2. Real wages of the US middle quintile stand slightly above what 2015-19 trends would predict, in addition to exceeding pre-pandemic levels.
  3. The US is the only G7 country with substantial real wage gains, up 2.8% since late 2019, versus stagnant or negative growth elsewhere ranging from a 0.2% increase in Canada to a 9% decline in Italy.

Related Articles:

  • 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.
  • Just How Bad Is the US Cost-of-Living Squeeze? We Did the Math — It now takes $119.27 to buy what $100 purchased before the pandemic, with prices rising about as much since early 2020 as in the preceding decade. Groceries and electricity are each up 25% since January 2020, used cars 35%, auto insurance 33%, and rents roughly 20%.
  • Why Americans Dislike the Economy — The Employment Cost Index, which adjusts for shifts in the mix of jobs and industries, shows inflation-adjusted wages have fallen 3.7% since the end of 2020, erasing the gains of the late 2010s. Real wages stand at 2015 levels, so American paychecks buy no more than they did eight years earlier.

AI Summary. A study classifying college graduates as underemployed when their occupation does not typically require a bachelor's degree finds that of every 100 graduates with a terminal bachelor's degree, 48 hold college-level jobs one year after graduation and 55 do at both five and 10 years. Graduates who start underemployed largely remain so.

Andrew Hanson, Carlo Salerno, Matt Sigelman, Mels de Zeeuw, and Stephen Moret Burning Glass Institute and Strada Institute for the Future of Work
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10 years after graduation 45% of four-year college graduates are working in jobs that don’t require a bachelor’s degree, as measured by the share of workers in the field required to have a degree.

How many college graduates hold college-level jobs after graduating?

Core argument: For every 100 college graduates with a terminal bachelor's degree, 48 hold college-level jobs one year after graduation, 55 at five years, and still 55 ten years after completion.

Underemployment is a concept that refers to individuals who are employed in jobs that do not fully utilize their skills, education, or availability. In this study, workers with a bachelor’s degree are classified as underemployed based on whether the majority of workers in an occupation have or are required to have a bachelor’s degree. For every 100 college graduates with a terminal bachelor’s degree, 48 are employed in college-level jobs one year after graduation and 55 five years after graduation; 10 years after completing, that number is still only 55. Approximately 27% of underemployed graduates escape underemployment between one and 10 years after graduation, and 21% of graduates employed in college-level jobs fall into underemployment. However, the vast majority of graduates who start in college-level jobs stay in them over time, while underemployed graduates largely remain underemployed.

Takeaways by Macro Roundup® AI

  1. For every 100 college graduates with a terminal bachelor's degree, 48 hold college-level jobs one year after graduation, 55 at five years, and still 55 ten years after completion.
  2. About 27% of underemployed graduates escape underemployment between one and 10 years after graduation, while 21% of those starting in college-level jobs fall into underemployment.
  3. The study classifies bachelor's-degree holders as underemployed when most workers in their occupation neither hold nor are required to hold a bachelor's degree, and finds underemployed graduates largely remain underemployed.

Related Articles:

  • Why Do Wages Grow Faster for Educated Workers? — College graduates sort into professional, non-routine occupations where wages rise much more with job tenure, and the author estimates this occupational sorting explains at least half of the life-cycle growth in the college wage premium. That premium is estimated at 22% at age 26, 49% at age 40, and 56% at age 60.
  • 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.
  • Britain’s Graduates Are Being Short-Changed While America’s Are Rich — British graduates' median hourly pay of £21 (just over $26) trails the almost $36 earned by US graduates, a 27% gap that has widened from 8% roughly 15 years earlier, while non-graduates in both countries earn similar amounts. Across most of Britain, more than a third of graduates work in jobs that do not require a degree.

AI Summary. A second Trump administration would pair a 10 percentage point tariff increase on all US trading partners with a tariff of at least 60% on Chinese imports, with advisers arguing a broad import tax addresses America's persistent pattern of trade deficits rather than bilateral imbalances. Researchers estimate China's manufacturing goods surplus reached a record of almost 2% of world GDP.

Soumaya Keynes Financial Times
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China’s surplus in manufacturing goods is now almost 2% of global GDP. The country’s growth model will put increasing economic and political stress on the global trading system. @Brad_Setser @BaurVolk @SoumayaKeynes

How would a second round of US tariffs differ from the first?

Core argument: Donald Trump, in his bid for a second term, is promising a 10 percentage point tariff increase on all of America's trading partners and dangling a tariff of at least 60% on Chinese imports.

Donald Trump still likes tariffs. In his bid for a second term, he is promising a 10 percentage point tariff increase on all America’s trading partners, and dangling a tariff on Chinese imports of at least 60%. The discussion around a 10% tariff should be interesting, though controversial. Former US trade representative Robert Lighthizer, who seems likely to serve in the next administration, has argued that America’s problem is not necessarily bilateral trade deficits (absent unfair practices), nor even a trade deficit in any single year. Rather, a broader import tax is supposed to tackle America’s pattern of consistent trade deficits, year after year. Brad Setser’s work with Volkmar Baur of Union Investment, an asset manager, suggests that in 2022 China’s surplus in manufacturing goods grew to record highs, of almost 2% of world gross domestic product.

Takeaways by Macro Roundup® AI

  1. Donald Trump, in his bid for a second term, is promising a 10 percentage point tariff increase on all of America's trading partners and dangling a tariff of at least 60% on Chinese imports.
  2. Former US trade representative Robert Lighthizer argues that America's problem is not bilateral trade deficits absent unfair practices, nor a deficit in any single year, but its pattern of consistent trade deficits year after year, which a broader import tax is meant to tackle.
  3. Brad Setser's work with Volkmar Baur of the asset manager Union Investment suggests China's surplus in manufacturing goods grew in 2022 to a record high of almost 2% of world GDP.

Related Articles:

  • US Warns China Against Dumping Goods on Global Markets — The US has warned China that it and its allies will respond if Beijing addresses its industrial overcapacity by dumping goods on international markets. US Treasury officials say Chinese industrial support and macroeconomic policies focused on supply rather than demand risk pushing excess capacity onto world markets.
  • 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.
  • 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.

AI Summary. China accounts for over 31% of global manufacturing but under 13% of global consumption, while the United States accounts for under 17% of manufacturing and nearly 27% of consumption. The author argues persistent surpluses reflect household subsidies to producers, and that the US could counter them with tariffs or taxes on capital inflows.

Michael Pettis China Financial Markets
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As long as the chronic surplus countries balance their trade with American assets the US has “no choice” but to run deficits. The most likely response to beggar-thy-neighbor trade policies will be additional tariffs or capital controls. @michaelxpettis

As long as the chronic surplus countries balance their trade with American assets the US has “no choice” but to...

Can trade intervention counter persistent surpluses and lead to freer trade?

Core argument: China accounts for less than 18% of global GDP but over 31% of global manufacturing and less than 13% of global consumption, while the United States has 24% of global GDP, under 17% of manufacturing, and nearly 27% of consumption.

China comprises less than 18% of global GDP, it accounts for over 31% of global manufacturing and less than 13% of global consumption. The United States, which accounts for 24% of global GDP, accounts for less than 17% of global manufacturing and nearly 27% of global consumption. In persistent surplus economies, weak domestic demand is simply the flip side of policies that result in manufacturing competitiveness. The manufacturing sector is subsidized directly or indirectly by households, which leaves them more competitive and leaves households less able to purchase a substantial share of what they produce. In order to balance these surpluses, the opposite transfers must occur in the deficit countries. Just as consumers are forced to subsidize producers in the surplus countries through various explicit and implicit transfers, producers are effectively forced to subsidize consumers in the deficit countries. Probably the best response for the United States and the world in the medium and long term would be for the United States to intervene to reverse the beggar-thy-neighbor policies of the surplus nations. This could be done either with restrictions on the ability of surplus countries to dump goods into the U.S. economy or with restrictions on the ability of surplus countries to dump excess savings into the U.S. financial system. The most obvious of the former policies are tariffs, and the most obvious of the latter are taxes on capital inflows.

Takeaways by Macro Roundup® AI

  1. China accounts for less than 18% of global GDP but over 31% of global manufacturing and less than 13% of global consumption, while the United States has 24% of global GDP, under 17% of manufacturing, and nearly 27% of consumption.
  2. In persistent surplus economies, weak domestic demand is the flip side of policies that subsidize manufacturing directly or indirectly through households, leaving producers more competitive and households less able to buy a substantial share of what they produce.
  3. Probably the best medium- and long-term response, the author argues, is for the United States to intervene against surplus nations' beggar-thy-neighbor policies through tariffs on dumped goods or taxes on capital inflows.

Related Articles:

  • Managing Economic and Financial Entanglements With China — China's surplus in manufactured goods net of commodity imports has kept growing relative to trade partners' output and relative to China's own economic output, alongside weak consumer spending and falling homebuilding. U.S. federal spending financed largely by borrowing has supported private balance sheets and demand, muting attention to that surplus.
  • China Set to Overtake Japan as World’s Biggest Car Exporter — China is set to overtake Japan as the world's biggest car exporter, driven in part by a mismatch between factory output and domestic demand. Analysts attribute the overcapacity to misjudged forecasts of declining internal combustion engine sales, surging electric vehicle demand, and reduced need for privately owned cars as shared mobility grows.
  • 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. Texan cities have cheap homes and growing populations because the state makes urban development easy, while planning systems in California, New York, and London constrain supply. A 1998 Houston rule change let landowners subdivide one home into three, with an opt-out for neighborhoods wishing to preserve existing rules.

John Burn-Murdoch Financial Times
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Removing artificial constraints to building lowers housing costs argues @jburnmurdoch: “Homes in Texan cities are cheap and their populations soaring because the state has made urban development easy.”

Do easier subdivision rules make housing cheaper and cities denser?

Core argument: Houston's 1998 planning change let landowners convert one home into three, creating space for new families in the heart of the city while generating a profit for the owners who subdivided.

Homes in Texan cities are cheap and their populations soaring because the state has made urban development easy. California, New York, and London are overheating and squeezing out young families because their planning systems place artificial constraints on supply, making urban development extremely difficult. It’s not just that Texas simply has more space to build on: its cities aren’t merely adding sprawl at the periphery, they’re densifying the existing city, and doing so by allowing existing homeowners to expand and subdivide their property. In Houston, a 1998 change to planning laws empowered landowners to turn one home into three — instantly creating space for new families in the heart of the city, while generating a tidy profit for themselves. A crucial detail was the inclusion of an opt-out for individual neighbourhoods whose residents wished to keep things as they were, increasing the scheme’s durability.

Takeaways by Macro Roundup® AI

  1. Houston's 1998 planning change let landowners convert one home into three, creating space for new families in the heart of the city while generating a profit for the owners who subdivided.
  2. Texan cities keep homes cheap and populations rising by making urban development easy, densifying existing neighbourhoods through homeowner expansion and subdivision rather than only adding sprawl at the periphery.
  3. California, New York, and London are overheating and squeezing out young families because their planning systems place artificial constraints on housing supply, making urban development extremely difficult.

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  • The Determinants Of Declining Internal Migration — A 10% increase in wages where people live is associated with 3.5% less migration, while a 10% increase in destination wages is associated with 7.8% more migration; a 10% rise in destination home prices is associated with 2.6% less migration. The authors find wage responses alone would have raised migration rates, but housing-related factors more than offset them.
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AI Summary. An American-made lander became the first private spacecraft to reach the lunar surface intact, the first US lander on the moon since the Apollo era. The mission supports Intuitive Machines' aim of building a business ferrying payloads and experiments to the moon, and it holds NASA contracts to deliver two additional landers.

Loren Grush Bloomberg
Date Posted:

A lander made by a private American firm, Intuitive Machines, touched down safely on the moon Thursday, in the first successful private moon landing.

A lander made by a private American firm, Intuitive Machines, touched down safely on the moon Thursday, in the first...

Can private spacecraft land on the moon intact?

Core argument: An American-made lander touched down on the moon for the first time since the Apollo era, becoming the first private spacecraft to reach the lunar surface intact after a series of failed attempts by private groups.

An American-made lander touched down on the moon for the first time since the Apollo era, ending a string of failures and making it the first private spacecraft to ever reach the lunar surface intact. The success follows a series of missteps by private groups looking to land on the moon and bodes well for Intuitive Machine’s aim of creating a business ferrying payloads and experiments there. It’s hoped the landing will provide an up-close look at the moon’s south pole region and offer NASA new information as it aims to return humans to the lunar surface. Intuitive Machines holds contracts with NASA to deliver two additional landers to the moon’s surface in the coming years.

Takeaways by Macro Roundup® AI

  1. An American-made lander touched down on the moon for the first time since the Apollo era, becoming the first private spacecraft to reach the lunar surface intact after a series of failed attempts by private groups.
  2. The landing supports Intuitive Machines' aim of building a business ferrying payloads and experiments to the moon, and the company holds NASA contracts to deliver two additional landers in the coming years.
  3. The mission is hoped to provide an up-close look at the moon's south pole region and offer NASA new information as it aims to return humans to the lunar surface.

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  • Space: The Missing Element of Your Strategy — Private-sector funding of space-related companies has topped $10bn, close to a tenfold rise over the past decade, though the US government remains the largest source of space funding. If current momentum continues, commercial funding for space ventures could surpass government funding within 20 years.
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