Edward Conard

Top Ten New York Times Bestselling Author

  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…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
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “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
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, February 29, 2024

AI Summary. The authors estimate that the weighted average cost of capital for Russell 3000 companies averaged 6.9% during the 2009-21 era of easy money versus 7.5% in the prior period, while the aggregate return on invested capital averaged 9.5% versus 9.2%. The resulting spread between returns and the cost of capital averaged 2.6 percentage points versus 1.7 points earlier.

Michael Mauboussin and Dan Callahan Morgan Stanley
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Between 2009 and 2021 Russel 3000 firms didn’t respond to low interest rates and a lower weighted average cost of capital by raising their investment in capex, M&A, and investment SG&A relative to 1996-2008. @mjmauboussin

Did easy money widen the gap between corporate returns and capital costs?

Core argument: The weighted average cost of capital for Russell 3000 companies is estimated to have fallen to 6.9% during the easy-money period of 2009–21, from 7.5% in the prior period, based on annual averages.

We estimate that the weighted average cost of capital (WACC) for companies in the Russell 3000 dropped to 6.9% in the time of easy money [2009-21] from 7.5% in the prior period, based on annual averages. Standard corporate finance dictates that companies fund projects that have a positive net present value (NPV), defined as when the present value of the future cash flows from an investment exceeds the initial outlay. The aggregate return on invested capital (ROIC), defined as net operating profit after taxes divided by invested capital, averaged 9.5% in the easy money period and 9.2% in the preceding time. Companies earn an ROIC in the aggregate that is roughly 50-60% of the hurdle rate they use. That means a lot of investments fail to earn the hurdle rate. But, on average, companies in the U.S. do earn an ROIC in excess of the actual cost of capital. The average spread between the ROIC and WACC was 2.6 percentage points in the easy money era and 1.7 percentage points in the prior period.

Takeaways by Macro Roundup® AI

  1. The weighted average cost of capital for Russell 3000 companies is estimated to have fallen to 6.9% during the easy-money period of 2009–21, from 7.5% in the prior period, based on annual averages.
  2. Aggregate return on invested capital averaged 9.5% in the 2009–21 easy-money era versus 9.2% earlier, with the average ROIC–WACC spread at 2.6 percentage points versus 1.7 percentage points.
  3. Companies in aggregate earn an ROIC equal to roughly 50–60% of the hurdle rate they use, meaning many investments fail to earn that hurdle, though U.S. companies on average earn an ROIC above their actual cost of capital.

Related Articles:

  • 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%.
  • Cost of Capital — The average weighted average cost of capital for Russell 3000 companies, a proxy for the U.S. equity market, was 7.9% from 1985 to 2022, with an estimate of 8.8% at the end of 2022. Corporate finance executives rely on the capital asset pricing model, while quantitative investors use multifactor models.
  • The Corporate Debt Maturity Wall: Implications for Capex and Employment — The authors estimate the average interest rate on outstanding corporate debt will rise from 4.20% to 4.50%, lifting private sector interest expense as a share of gross output by 0.25 percentage points. They project this would reduce capital spending growth by up to 0.25 percentage points and labor cost growth by up to 0.15.

AI Summary. The global surplus of savings that helped hold down long-term interest rates has crested, with aging populations, a weakened Chinese economy, and a more fragmented global economy threatening to turn it into a shortfall. The International Monetary Fund projects China's savings will fall to 42.4% of its gross domestic product as its current account surplus shrinks.

Rich Miller Bloomberg
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Data compiled by Robert Dugger and @ChicagoFed researchers Robert Barsky and Matthew Easton suggest that the global savings glut plateaued just after the 2007-09 financial crisis.

Is the shrinking global savings surplus pushing long-term borrowing costs higher?

Core argument: The IMF projects China's savings will fall to 42.4% of GDP in 2028 from over 44% last year and 45.7% in 2022 as its current account surplus shrinks.

Ben Bernanke’s global savings glut is drying up. Long-term interest rates worldwide may be heading higher as a result. Aging populations, an embattled Chinese economy, and an increasingly fragmented global one are among the factors threatening to turn the surplus of savings into a shortfall. Data compiled by Hanover Provident founder Robert Dugger and Chicago Fed economists Robert Barsky and Matthew Easton suggest the glut crested some years ago. Its impact though was masked by the especially easy policies the Fed and other central banks hewed to coming out of the 2007-09 financial crisis. The pandemic subsequently triggered an even greater gusher of cash from the monetary and fiscal authorities as they fought to keep their economies afloat. China’s role as a big supplier of savings to the rest of the world may also diminish as it’s pressured by the US on a variety of trade and technological fronts. The International Monetary Fund projects China’s savings will fall to 42.4% of its gross domestic product in 2028 from over 44% last year and 45.7% in 2022 as its current account surplus shrinks.

Takeaways by Macro Roundup® AI

  1. The IMF projects China's savings will fall to 42.4% of GDP in 2028 from over 44% last year and 45.7% in 2022 as its current account surplus shrinks.
  2. Data compiled by Hanover Provident founder Robert Dugger and Chicago Fed economists Robert Barsky and Matthew Easton suggest Ben Bernanke's global savings glut crested some years ago, and long-term interest rates worldwide may head higher as a result.
  3. Aging populations, an embattled Chinese economy, and an increasingly fragmented global one threaten to turn the savings surplus into a shortfall, though the glut's waning impact was masked by easy Fed policy after the 2007-09 financial crisis and pandemic-era monetary and fiscal support.

Related Articles:

  • Japan, Germany and the Challenge of Excess Savings — Despite ultra-low interest rates intended to lift private investment and reduce private saving, Japan's private savings surplus—especially its corporate surplus—has remained large. Government deficits averaging 5% of GDP and net foreign asset purchases via current account surpluses averaging 3% of GDP absorbed those excess savings.
  • What Is the Ten-Year Real Rate Going to Be? I: How We Got Here — A return of bond yields to their 2010s lows is unlikely, though the author expects some mean reversion, guessing roughly 0.5 percentage points. Demand for US Treasuries from wealthy emerging-market investors, sovereign wealth funds, and exchange reserves continues to scale with global wealth, so the author argues the safe-asset shortage holding down Treasury rates is not over.
  • Why Fitch’s Downgrade Matters — The inflation-adjusted 10-year Treasury yield stands at 1.7%, near its highest since 2009, after being around zero a decade ago, indicating the global saving glut that once held yields down is gone. One estimate holds private investors will absorb government debt worth 7.7% of developed economies' GDP this year and 9.2% next, more than double 2011's 4.3%.

AI Summary. Analysis of national-accounts data finds that US corporate net profits grew about 2% a year in real terms from 1962 to 1989 and more than 4% a year from 1989 to 2019, a difference attributed entirely to declining interest and corporate tax rates. Similar patterns appear across wealthy countries, where underlying profits grew less impressively.

Economist Staff The Economist
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An Economist analysis argues “The surge in net profits is really an artifact of lower taxes and interest bills. Measures of underlying profits have grown less impressively.” This suggests lower returns going forward.

Did falling interest and tax rates drive decades of profit growth?

Core argument: Real net profits of American corporations grew 2% a year between 1962 and 1989, then accelerated to more than 4% a year between 1989 and 2019, according to national-accounts data analysed using Michael Smolyansky's methodology.

Rarely have corporate profits been valued so highly. And the outlook for the profits themselves is also challenging. To understand why, consider the fundamental sources of their long-term growth. We have employed Michael Smolyansky’s methodology to examine national-accounts data for American corporations. Between 1962 and 1989 net profits increased in real terms by 2% a year. After that, profits accelerated. Between 1989 and 2019 they increased by more than 4% a year. We find similar trends across the OECD as a share of GDP, corporate profits were steady from the 1970s to the 1990s, then doubled. Mirroring Mr. Smolyansky, we find that in America the difference in profit growth between the 1962-1989 period and the 1989-2019 period is “entirely due to the decline in interest and corporate-tax rates”. Extending this analysis to the rich world as a whole, we find similar trends. The surge in net profits is really an artifact of lower taxes and interest bills. Measures of underlying profits have grown less impressively.

Takeaways by Macro Roundup® AI

  1. Real net profits of American corporations grew 2% a year between 1962 and 1989, then accelerated to more than 4% a year between 1989 and 2019, according to national-accounts data analysed using Michael Smolyansky's methodology.
  2. Mirroring Smolyansky, the analysis finds the gap in American profit growth between 1962-1989 and 1989-2019 is "entirely due to the decline in interest and corporate-tax rates", with similar trends across the rich world.
  3. Corporate profits as a share of GDP across the OECD were steady from the 1970s to the 1990s and then doubled, while measures of underlying profits have grown less impressively.

Related Articles:

  • End of an Era: The Coming Long-Run Slowdown in Corporate Profit Growth and Stock Returns — The authors estimate that declining interest and corporate tax rates accounted for over 40% of real corporate profit growth from 1989 to 2019, while falling risk-free rates explain the entire expansion in price-to-earnings multiples. Real earnings before interest and taxes grew slightly more slowly than in 1962–1989, at 2.2% versus 2.4% per year.
  • The Curious Incident of the Elevated Profit Margins — The US fiscal deficit averaged just under 3% of gross national product from 1950 to 2011 but 6.6% from 2012 to 2022, driven mainly by health and social security spending, a pattern that holds excluding pandemic years. Even assuming permanently elevated profit margins, US equity valuations imply low long-run returns.
  • Five Easy Pieces — The rally in the seven largest US technology stocks has been driven by earnings rather than valuation: of the group's 28% return, 21 percentage points came from sales growth, 6 from margin expansion, and 1 from multiple expansion. Market concentration has reached its highest level since 1972, and large spikes in concentration have frequently coincided with or preceded prior recessions.

AI Summary. The share of US 12th graders socializing with friends almost daily fell from more than half in the late 1970s to 28% by 2017, and in-person socializing declined about 30% from 1976 to 2022. Teenage girls reporting persistent sadness or hopelessness rose from 36% to 57%.

Derek Thompson The Atlantic
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Citing @jean_twenge data @DKThomp highlights a 30% decline of teenage in-person socialization between 1976 and 2022; the majority of the trend, 17pp, was in the last decade.

How much has in-person socializing among American teens declined?

Core argument: The share of 12th graders who got together with friends almost daily fell from more than half in the late 1970s to 28% by 2017, and the number of socializers declined about 30% from 1976 to 2022.

In the late 1970s, more than half of 12th graders got together with their buddies almost every day. By 2017, only 28% did. “There’s very clearly been a striking decline in in-person socializing among teens and young adults, whether it’s going to parties, driving around in cars, going to the mall, or just about anything that has to do with getting together in person,” says Jean Twenge, a psychology professor at San Diego State University. From 1976 to 2022, the number of socializers fell by about 30%. For young people, all this seems to clearly correlate with actual depression. According to the CDC’s Youth Risk Behavior Surveillance System, the share of teenage girls who say they experience “persistent feelings of sadness or hopelessness” increased from 36 to 57%, and the share of girls who said they’ve contemplated suicide increased 50% in the same decade. The rise in teen depression coincides with the proliferation of smartphones and social media.

Takeaways by Macro Roundup® AI

  1. The share of 12th graders who got together with friends almost daily fell from more than half in the late 1970s to 28% by 2017, and the number of socializers declined about 30% from 1976 to 2022.
  2. Jean Twenge, a psychology professor at San Diego State University, describes a striking decline in in-person socializing among teens and young adults, spanning parties, driving around in cars, going to the mall, and other ways of getting together.
  3. The CDC's Youth Risk Behavior Surveillance System shows the share of teenage girls reporting persistent feelings of sadness or hopelessness rising from 36% to 57%, with those contemplating suicide up 50% in the same decade, a rise coinciding with the spread of smartphones and social media.

Related Articles:

Friday, March 1, 2024

AI Summary. The authors estimate that for every $1,000 per capita of federal pandemic aid committed to state and local governments, state revenues and expenditures each rose by roughly the same amount, with $379 going to general government spending and $72 to pension contributions. They find no statistically significant increases in healthcare, education, or infrastructure spending.

Stan Veuger, Jeffrey Clemens, Oliver Giesecke and Joshua Rauh American Enterprise Institute
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Of the almost $1T in Federal pandemic-era fiscal aid to states, 38% went to general government expenditures (excluding healthcare, education, and infrastructure) and 7% on employee pension funding. @stanveuger @joshrauh @jeffreypclemens @og_giesecke

How do states spend federal aid windfalls?

Core argument: For every $1,000 per capita of committed federal pandemic aid, state intergovernmental grant revenue rose $645 over 2020–2022, from which the authors infer roughly 64.5 cents per dollar of the nearly $1 trillion in aid reached state governments by the end of fiscal 2022.

In 2020 and 2021, federal lawmakers enacted nearly $1 trillion in financial aid for state and local governments. In general, funds were not intended to be used to offset tax reductions or as contributions to pension funds. For every $1000 of incremental committed federal aid per capita, $645 appears as increased intergovernmental grant revenue in states over the years 2020-2022, from which we infer that approximately $0.645 of every dollar of committed federal aid to state and local governments was disbursed to state governments by the end of fiscal year 2022. Second, total revenues of states increased by approximately as much, indicating that states did not offset the federal revenue windfall with other revenue sources. Third, total expenditures of states increased by $770 per capita for every $1000 of federal aid committed, statistically indistinguishable from the revenue estimate. Fourth, the spending categories in which expenditures increase most strongly and significantly are General Government Expenditures ($379 per $1000 of incremental federal aid, or 38 cents per dollar) and state and local pension contributions ($72 per $1000 of federal aid, or 7 cents per dollar). General government expenditures reflect spending on the non-healthcare, non-educational functions of government, and include expenditures on administrative services and various departments. This category accounted for nearly half of the $770 spending increase we document while accounting for less than 10% of total expenditures. We do not find any statistically significant evidence that aid increased expenditures in any one of the functional categories of healthcare, education, or infrastructure, nor are there statistically significant increases in these aggregated functional categories, although we cannot reject the hypothesis that they also increased.

Takeaways by Macro Roundup® AI

  1. For every $1,000 per capita of committed federal pandemic aid, state intergovernmental grant revenue rose $645 over 2020–2022, from which the authors infer roughly 64.5 cents per dollar of the nearly $1 trillion in aid reached state governments by the end of fiscal 2022.
  2. Total state revenues rose by approximately as much as the grant revenue increase, indicating states did not offset the federal windfall with other revenue sources, while total expenditures rose $770 per capita for every $1,000 of committed aid, statistically indistinguishable from the revenue estimate.
  3. General government expenditures — non-healthcare, non-educational functions including administrative services — rose $379 per $1,000 of aid, nearly half the $770 spending increase despite accounting for less than 10% of total expenditures, while pension contributions rose $72.

Related Articles:

AI Summary. A measure of underlying US inflation—personal consumption services excluding energy, housing, and imputed items—is running about 1.5 percentage points faster than before the pandemic, unchanged over the past year. A 1% monthly jump in pre-tax personal income was driven more by dividends than by wages and salaries, which matter most for consumer spending.

Matt Klein The Overshoot
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.@_C_Klein notes that as of Q3 2023, growth in the total cash compensation paid to workers had reverted to pre-pandemic norms, consistent with slowing underlying inflation in 2024, though PCE inflation remains 1.5pp over the pre-pandemic level.

Is underlying inflation still elevated while wage income growth softens?

Core argument: PCE services excluding energy, housing, and imputations was rising about 1.5 percentage points faster than its pre-pandemic pace in December 2023 and remains about 1.5pp faster as of January.

The measure of underlying inflation that Fed officials have highlighted in the past—PCE services excluding energy and housing (I modify it slightly by also excluding imputations)—was rising about 1.5 percentage points faster than it was before the pandemic in December 2023 and it is still rising about 1.5pp faster as of January. The latest personal income data would appear to support the argument that U.S. inflation has re-accelerated. Total pre-tax income jumped by 1% month on month! But there is less here than meets the eye. Of the total $19.5 billion/month increase in personal income, only $3.6 billion can be attributed to wages and salaries, which is what matters most for consumer spending. By contrast, $6.3 billion is due to a spike in dividends that may or may not be a one-off. Either way, those extra dividends are unlikely to finance purchases of goods and services in ways that boost jobs, incomes, and price pressures.

Takeaways by Macro Roundup® AI

  1. PCE services excluding energy, housing, and imputations was rising about 1.5 percentage points faster than its pre-pandemic pace in December 2023 and remains about 1.5pp faster as of January.
  2. U.S. total pre-tax personal income jumped 1% month on month, which would appear to support the argument that inflation has re-accelerated.
  3. Of the $19.5 billion monthly increase in U.S. personal income, only $3.6 billion came from wages and salaries, while $6.3 billion came from a spike in dividends that may or may not be a one-off.

Related Articles:

  • How Fast Can the Fed Ease? The Private Sector Response to Easier Conditions Will Be a Key Factor — US households have reduced debt over the past 20 years, leaving room to borrow more if incentives improve, while companies that issued debt at low rates hold large liquidity and healthy balance sheets. That gives businesses capacity to raise investment, and business surveys indicate capital-spending sentiment is already improving.
  • U.S. Inflation Surged in January. Is It a Fluke? — Quarterly growth in the Employment Cost Index has slowed continuously and now runs roughly 1 percentage point faster on an annualized basis than just before the pandemic, while hourly private-sector pay growth has stayed stable. Despite the normalization of job-market churn, both measures of pay gains remain much faster than pre-pandemic.
  • Macro Outlook 2024: The Hard Part Is Over — Goldman Sachs projects limited recession risk, holding a 15% US recession probability, and expects tailwinds to global growth including strong real household income growth, a smaller drag from monetary and fiscal tightening, recovering manufacturing, and central banks more willing to cut rates if growth slows. It projects core inflation falling to 2–2½%.

AI Summary. A bubble market can be identified by a combination of high prices relative to traditional value measures, unsustainable growth assumptions, an influx of naïve buyers, broad bullish sentiment, debt-financed purchases, and speculative forward buying. By these criteria the US stock market sits in the mid-range, at the 52nd percentile, levels not consistent with past bubbles.

Ray Dalio Linkedin
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.@RayDalio argues that the current US equity market “doesn’t look very bubbly. The market as a whole is in mid-range (52nd percentile). These levels are not consistent with past bubbles.”

Do standard bubble measures show the US stock market in a bubble?

Core argument: The US stock market as a whole sits in the mid-range 52nd percentile, a level not consistent with past bubbles.

I define a bubble market as one that has a combination of the following in high degrees: High prices relative to traditional measures of value (e.g., by taking the present value of their cash flows for the duration of the asset and comparing it with their interest rates). Unsustainable conditions (e.g., extrapolating past revenue and earnings growth rates late in the cycle when capacity limits mean that growth can’t be sustained). Many new and naïve buyers who were attracted in because the market has gone up a lot, so it’s perceived as a hot market. Broad bullish sentiment. A high percentage of purchases being financed by debt. A lot of forward and speculative purchases made to bet on price gains (e.g., inventories that are more than needed, contracted forward purchases, etc.). When I look at the US stock market using these criteria it—and even some of the parts that have rallied the most and gotten media attention—doesn’t look very bubbly. The market as a whole is in mid-range (52nd percentile). These levels are not consistent with past bubbles.

Takeaways by Macro Roundup® AI

  1. The US stock market as a whole sits in the mid-range 52nd percentile, a level not consistent with past bubbles.
  2. The bubble criteria include high prices relative to the present value of cash flows compared with interest rates, unsustainable extrapolation of past revenue and earnings growth late in the cycle, and many new and naïve buyers attracted by a rising market.
  3. Broad bullish sentiment, a high percentage of purchases financed by debt, and speculative forward purchases betting on price gains are further bubble markers, and even some of the US market segments that have rallied most and drawn media attention do not look very bubbly.

Related Articles:

  • The Current AI Bubble Is Bigger than the 1990s Tech Bubble — By median price-to-earnings ratio, the 10 largest companies in the S&P 500 stock index are more overvalued than the top 10 were during the 1990s technology stock bubble.
  • Five Easy Pieces — The rally in the seven largest US technology stocks has been driven by earnings rather than valuation: of the group's 28% return, 21 percentage points came from sales growth, 6 from margin expansion, and 1 from multiple expansion. Market concentration has reached its highest level since 1972, and large spikes in concentration have frequently coincided with or preceded prior recessions.
  • 2024 US Equity Outlook: “All You Had To Do Was Stay” — The seven largest US mega-cap technology stocks are projected to outperform the rest of the S&P 500, supported by faster expected sales growth, higher margins, greater reinvestment, and stronger balance sheets. Analysts expect these companies to grow sales at an 11% annual rate versus 3% for the other 493 companies, with net margins twice as high.

AI Summary. The author argues the Federal Reserve will not cut interest rates and rates will stay higher for longer, because the US economy is reaccelerating rather than slowing and underlying measures of trend inflation are moving higher. Growth expectations have been revised up, the labor market remains tight with wage inflation sticky at 4–5%, and financial conditions continue to ease.

Torsten Sløk Apollo
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Torsten Sløk argues the Fed will not cut rates in 2024 citing stronger growth expectations and rising measures of trend inflation.

Will a reaccelerating economy and rising trend inflation keep rates higher?

Core argument: Wage inflation remains sticky between 4% and 5%, with a tight labor market and very low jobless claims, supporting the argument that the Fed will not cut rates in 2024 and that rates stay higher for longer.

The Fed will not cut rates this year, and rates are going to stay higher for longer. The economy is not slowing down, it is reaccelerating. Growth expectations for 2024 saw a big jump following the Fed pivot in December and the associated easing in financial conditions. Growth expectations for the US continue to be revised higher. Underlying measures of trend inflation are moving higher. Supercore inflation, a measure of inflation preferred by Fed Chair Powell, is trending higher. Following the Fed pivot in December, the labor market remains tight, jobless claims are very low, and wage inflation is sticky between 4% and 5%. Surveys of small businesses show that more small businesses are planning to raise selling prices. Manufacturing surveys show a higher trend in prices paid, another leading indicator of inflation. ISM services prices paid is also trending higher. Surveys of small businesses show that more small businesses are planning to raise worker compensation. Asking rents are rising, and more cities are seeing rising rents, and home prices are rising. Financial conditions continue to ease following the Fed pivot in December with record-high IG issuance, high HY issuance, IPO activity rising, M&A activity rising, and tight credit spreads, and the stock market reaching new all-time highs.

Takeaways by Macro Roundup® AI

  1. Wage inflation remains sticky between 4% and 5%, with a tight labor market and very low jobless claims, supporting the argument that the Fed will not cut rates in 2024 and that rates stay higher for longer.
  2. The US economy is reaccelerating rather than slowing, with 2024 growth expectations jumping after the December Fed pivot and continuing to be revised higher.
  3. Financial conditions continue to ease following the December Fed pivot, with record-high investment-grade issuance, high high-yield issuance, rising IPO and M&A activity, tight credit spreads, and the stock market reaching new all-time highs.

Related Articles:

  • Inflation Is Still Hot, But Could Incomes Be Slowing? — A measure of underlying US inflation—personal consumption services excluding energy, housing, and imputed items—is running about 1.5 percentage points faster than before the pandemic, unchanged over the past year. A 1% monthly jump in pre-tax personal income was driven more by dividends than by wages and salaries, which matter most for consumer spending.
  • How Fast Can the Fed Ease? The Private Sector Response to Easier Conditions Will Be a Key Factor — US households have reduced debt over the past 20 years, leaving room to borrow more if incentives improve, while companies that issued debt at low rates hold large liquidity and healthy balance sheets. That gives businesses capacity to raise investment, and business surveys indicate capital-spending sentiment is already improving.
  • Macro Outlook 2024: The Hard Part Is Over — Goldman Sachs projects limited recession risk, holding a 15% US recession probability, and expects tailwinds to global growth including strong real household income growth, a smaller drag from monetary and fiscal tightening, recovering manufacturing, and central banks more willing to cut rates if growth slows. It projects core inflation falling to 2–2½%.

AI Summary. Fentanyl and other synthetic opioids kill roughly 75,000 Americans a year, more than double the 2019 figure, with annual overdose deaths rising 5% year-over-year after a decade of steep increases. Fentanyl killed more than a third of a million Americans over the prior decade, and border seizures nearly doubled in a year.

Economist Staff The Economist
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Drug overdoses in the US may be peaking: between 2021-2022 deaths rose just 5% to 75,000, which remains double the 2019 figure.

Are synthetic opioid deaths still rising after a decade of increases?

Core argument: Fentanyl and other synthetic opioids kill roughly 75,000 Americans a year, more than double the 2019 figure, with 2022 deaths just 5% above 2021 after a decade of steep increases.

After a decade of horrifying ascent, the yearly number of fatal overdoses appears at last to be slowing to a gentle climb. The figure for 2022 was just 5% higher than that of 2021. That still leaves fentanyl and other synthetic opioids like it killing some 75,000 people a year—more than double the figure of 2019. In 2013-22 fentanyl killed more than a third of a million Americans. But in the fight against the deadliest narcotic in American history, that is what passes for success. Seizures of fentanyl at the border almost doubled last year.

Takeaways by Macro Roundup® AI

  1. Fentanyl and other synthetic opioids kill roughly 75,000 Americans a year, more than double the 2019 figure, with 2022 deaths just 5% above 2021 after a decade of steep increases.
  2. Fentanyl, the deadliest narcotic in American history, killed more than a third of a million Americans in 2013-22.
  3. Seizures of fentanyl at the American border almost doubled last year, while the yearly rise in fatal overdoses slowed to a gentle climb.

Related Articles:

  • The Deaths-Of-Despair Narrative Is Out Of Date — An analysis of mortality and demographic data finds that deaths from alcohol, drugs and suicide have spread beyond predominantly white, working-class areas, with growth of 7% a year in the most diverse, educated counties versus 5.5% in counties with many high-school-educated whites. Such deaths are now as prevalent in Democratic-leaning as Republican-leaning counties.
  • How Fentanyl Changed The Game For Mexico’s Drug Cartels — Fentanyl causes most of the more than 85,000 annual opioid overdose deaths in the US and Canada, and has become the leading cause of death for young US adults. Researchers at Rand Corporation estimate a full year's US fentanyl supply weighs about 5 tonnes, versus roughly 125 tonnes for heroin.
  • The Rise in American Pain: The Importance of the Great Recession — The authors find that the rise in reported pain among Americans was almost entirely concentrated in the 2007–2010 recession period rather than following a smooth upward trend, with the disproportionate increase among the less educated also occurring primarily then. The authors state they find this jump difficult to explain.