Edward Conard

Top Ten New York Times Bestselling Author

  • “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
  • “…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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “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
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “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
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, March 12, 2024

AI Summary. The authors estimate individual unemployment risk using employment status, demographic, job, and geographic characteristics, and find that before a recession this risk is concentrated: unemployment risk is below 5% for the vast majority of employed workers. Unemployed individuals, a small share of the population, average nearly 22% risk, about 10x the average for employed (2.7%) or out-of-the-labor-force (2.4%) individuals.

Brendan Chapuis and John Coglianese Federal Reserve Board
Date Posted:

An unemployment risk measure based on workers’ personal characteristics finds in 2007 unemployed workers made up 2.8% of the population but had an average unemployment risk of 22%, 10 times the 2.7% unemployment risk rate of employed workers.

How concentrated is unemployment risk across workers before a recession?

Core argument: Unemployed individuals in 2007, who made up 2.8% of the population, had an estimated average unemployment risk of nearly 22%, about ten times the 2.7% average for employed workers and 2.4% for those not in the labor force.

We estimate unemployment risk in our sample as a function of many individual-level characteristics. We include current employment status characteristics (employed/unemployed/not in the labor force, unemployment duration, work absence, reason for unemployment, reason for non-participation), demographic characteristics, job characteristics, and geographic characteristics. Before a recession, unemployment risk is relatively concentrated. The dashed lines in Figure 3 show the distribution of unemployment risk as of 2007 broken out separately for employed, unemployed, and not-in-the-labor-force individuals. Unemployment risk was below 5% for the vast majority of employed workers and below 10% for all but the extreme tail. Since the unemployment rate was low in 2007, unemployed workers made up only a small sliver of the population (2.8%), but this group had an average unemployment risk of nearly 22%, about ten times larger than either of the other categories (2.7% average for employed, 2.4% average for not in the labor force).

Takeaways by Macro Roundup® AI

  1. Unemployed individuals in 2007, who made up 2.8% of the population, had an estimated average unemployment risk of nearly 22%, about ten times the 2.7% average for employed workers and 2.4% for those not in the labor force.
  2. Estimated unemployment risk in 2007 was below 5% for the vast majority of employed workers and below 10% for all but the extreme tail, indicating risk was relatively concentrated before the recession.
  3. The authors estimate unemployment risk as a function of individual-level characteristics including employment status, unemployment duration, work absence, reason for unemployment or non-participation, demographics, job characteristics, and geography.

Related Articles:

  • The Dual U.S. Labor Market Uncovered — The authors identify a dual U.S. labor market in which a primary segment of about 55% of the population is almost always employed, while a secondary segment of about 14% absorbs most seasonal and business-cycle fluctuations. Workers in the secondary segment have 6x higher turnover and are 10x more likely to be unemployed than primary-segment workers.
  • The Active Role of the Natural Rate of Unemployment During Cyclical Recoveries — The authors conclude that the natural rate of unemployment declined during the expansion that began in 2009, when unemployment fell from 10% to 3.5% with near-constant inflation. Their reasoning is that with inflation anchored at the Federal Reserve's 2% target over such a long stable period, New Keynesian theory implies the observed unemployment rate equals the natural rate.

AI Summary. Consumer price inflation is running at annualized rates of 4.4% over one month, 4.2% over three months, 3.9% over six months, and 3.8% over twelve months, with the three-, six-, and twelve-month rates higher than at any point from 1992 to 2019. Shelter continues to drive inflation up, moderating less than optimists had hoped.

Jason Furman @jasonfurman
Date Posted:

.@jasonfurman notes “Core CPI came in high for the eighth month in a row,” running at 3.8% over the last 12 months, “higher than any time from 1992-2019.”

Is inflation running higher than at any point in recent decades?

Core argument: Jason Furman notes CPI inflation at annualized rates of 4.4% over 1 month, 4.2% over 3 months, 3.9% over 6 months, and 3.8% over 12 months, with the 3/6/12-month rates higher than any time from 1992–2019.

Annual rates: 1 month 4.4%. 3 months 4.2%. 6 months 3.9%. 12 months 3.8%. For perspective, the 3/6/12 month rates [are]higher than any time from 1992-2019. Inflation remains unusually high. Shelter continues to drive inflation up. It moderated from its extreme pace in January (which was a widely understood quirk) but is not moderating to nearly the extent the optimists had hoped. Optimistic take this is CPI, not PCE which the Fed targets, the later is running more slowly and elevation is mostly about shelter and that will fall. Pessimistic take dumps cold water on January being an anomaly, shelter won't slow and can't count on goods prices to keep falling.

Takeaways by Macro Roundup® AI

  1. Jason Furman notes CPI inflation at annualized rates of 4.4% over 1 month, 4.2% over 3 months, 3.9% over 6 months, and 3.8% over 12 months, with the 3/6/12-month rates higher than any time from 1992–2019.
  2. Furman identifies shelter as the continuing driver of inflation, moderating from its extreme January pace — a widely understood quirk — but not nearly to the extent optimists had hoped.
  3. Furman frames the optimistic reading as CPI running faster than the PCE measure the Fed targets, with elevation mostly shelter that will fall, against a pessimistic reading that January was no anomaly, shelter won't slow, and falling goods prices can't be relied on.

Related Articles:

  • 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.
  • The Big Picture: Back to the Future — The secular backdrop has shifted from disinflationary to more inflationary, with interest rates no longer near zero and real rates no longer negative. Household balance sheets are as healthy as they have been in 20 years, leaving room to borrow, while the public sector is as indebted as it has ever been.
  • 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.

AI Summary. Germany's trade surplus has returned to 8% of GDP, with the authors attributing the gain to higher traded-goods prices boosting nominal exports despite weak export volumes. A growing share of the surplus is bilateral with the rest of the Eurozone, Central Europe, and the US.

Chris Marsh Money: Inside and Out
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As energy prices have normalized Germany’s trade surplus is back, reaching a nominal record, though in real terms German exports continue to contract. @GeneralTheorist

Are higher goods prices driving a record trade surplus despite weak volumes?

Core argument: Germany's trade surplus returned to 8% of GDP in January, a level matched in only a few prior months, and the author expects it could increase further.

Our best guess here is that traditional German industries, while enjoying weak export volumes, have experienced a boost in nominal terms due to the post-pandemic surge in traded goods prices. As noted, now that energy prices have normalised this full effect is starting to show. We ought to scale this monthly surplus by GDP to put it in context. While there have been months when Germany’s trade balance surplus, relative to GDP, has been larger these are few. And the trade balance in January is back to 8% of GDP and could increase further from here! Moreover, a growing portion of this is bilateral with the rest of the Eurozone, as well as CEE-3 and the US. In a sense, we are returning to the pre-GFC decade when a large part of Germany’s current account surplus was intra-Eurozone.

Takeaways by Macro Roundup® AI

  1. Germany's trade surplus returned to 8% of GDP in January, a level matched in only a few prior months, and the author expects it could increase further.
  2. The author's best guess is that German traditional industries posted weak export volumes but gained in nominal terms from the post-pandemic surge in traded goods prices, an effect showing now that energy prices have normalised.
  3. A growing share of Germany's surplus is bilateral with the rest of the Eurozone, the CEE-3, and the US, resembling the pre-GFC decade when much of its current account surplus was intra-Eurozone.

Related Articles:

  • EU To Launch Anti-Subsidy Probe into Chinese Electric Vehicles — The European Union is opening an anti-subsidy investigation into Chinese electric vehicles it says are distorting the EU market, one of its largest trade cases. Manufacturers found in breach of trade rules could face punitive tariffs, as the EU seeks to avoid a repeat of the insolvencies in its solar panel industry caused by cheap Chinese imports.
  • Germany Is Losing Its Mojo. Finding It Again Won’t Be Easy — The International Monetary Fund projects Germany will be the only major economy to contract this year, while even sanctioned Russia grows. German exports long depended on a rapidly industrializing China buying its capital goods, but Chinese growth and import demand have faltered, and German industry still faces higher energy costs than U.S. and Asian competitors.
  • Germany’s Days as an Industrial Superpower Are Coming to an End — Germany's industrial base faces mounting pressure as the US competes with Europe for climate investment, China shifts from customer to rival, and cheap Russian natural gas has ended. In chemicals, nearly one in 10 companies plan to permanently halt production processes, according to an industry association survey, while BASF is cutting 2,600 jobs and Lanxess is reducing staff by 7%.

AI Summary. Mexico's export boom is largely genuine rather than a channel for tariff avoidance, since much of the growth comes from industries like motor vehicles where China has little presence in the North American market. Mexican manufacturing output has risen 5% since 2018, with computer output up nearly 25% and appliance and electrical equipment output up 15%.

Joseph Politano Apricitas Economics
Date Posted:

Citing an ongoing investment boom and rising manufacturing employment in Mexico, @JosephPolitano suggests that the Mexican export boom is more than Chinese re-exports.

Is Mexico's export boom genuine growth rather than tariff avoidance?

Core argument: Mexico's overall manufacturing output has risen 5% since 2018, with export-oriented industries stronger still: computer output up nearly 25% and appliance and electrical equipment output up 15%.

The majority of Mexico’s export boom is genuine—most tariff avoidance would go through countries elsewhere in Asia and many of the sources of rising Mexican exports are in industries where China has little presence in the North American market, like motor vehicles. It’s also obvious when you look at Mexican manufacturing output—overall production has risen by 5% since 2018 but has been even stronger in export-oriented industries—computer output is up nearly 25%, appliance, and electrical equipment output is up 15%, and motor vehicle production has more than recovered from the effects of the semiconductor shortage.

Takeaways by Macro Roundup® AI

  1. Mexico's overall manufacturing output has risen 5% since 2018, with export-oriented industries stronger still: computer output up nearly 25% and appliance and electrical equipment output up 15%.
  2. Most of Mexico's export boom is genuine rather than tariff avoidance, since such rerouting would largely run through other Asian countries and much of the export growth is in industries like motor vehicles where China has little presence in the North American market.
  3. Mexican motor vehicle production has more than recovered from the effects of the semiconductor shortage.

Related Articles:

  • 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.
  • China Circumvents US Tariffs By Shipping More Goods Via Mexico — An analysis of trade data indicates China is shipping more goods to the US via Mexico, circumventing US tariffs, with containers shipped from China to Mexico rising to 881,000 from 689,000 over comparable nine-month periods. Mexico has overtaken China as the largest exporter of goods to the US.
  • 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.

AI Summary. The United States has produced more crude oil than any nation at any time for six consecutive years, averaging 12.9m barrels per day in 2023 and surpassing the prior record of 12.3m barrels per day. Output fell to 5.0m barrels per day in 2008 before rising as producers applied hydraulic fracturing and horizontal drilling.

Erik Kreil Energy Information Administration
Date Posted:

US crude production set a record in December of last year with 13.3mm b/d; the US has been the world’s largest oil producer since 2018. @EIAgov

How did the US become the largest crude oil producer ever?

Core argument: U.S. crude oil production, including condensate, averaged 12.9 million b/d in 2023, breaking the previous U.S. and global record of 12.3 million b/d set in 2019, according to International Energy Statistics.

The United States produced more crude oil than any nation at any time, according to our International Energy Statistics, for the past six years in a row. Crude oil production in the United States, including condensate, averaged 12.9 million barrels per day (b/d) in 2023, breaking the previous U.S. and global record of 12.3 million b/d, set in 2019. Average monthly U.S. crude oil production established a monthly record high in December 2023 at more than 13.3 million b/d. After peaking at 9.6 million b/d in 1970, annual U.S. crude oil production flattened and then generally declined for decades to a low of 5.0 million b/d in 2008. Crude oil production in the United States began increasing again in 2009, as producers increasingly applied hydraulic fracturing and horizontal drilling techniques, and has increased steadily since.

Takeaways by Macro Roundup® AI

  1. U.S. crude oil production, including condensate, averaged 12.9 million b/d in 2023, breaking the previous U.S. and global record of 12.3 million b/d set in 2019, according to International Energy Statistics.
  2. The United States has produced more crude oil than any nation at any time for six consecutive years, with average monthly output reaching a record of more than 13.3 million b/d in December 2023.
  3. U.S. crude oil production peaked at 9.6 million b/d in 1970, generally declined for decades to a low of 5.0 million b/d in 2008, and began rising in 2009 as producers increasingly applied hydraulic fracturing and horizontal drilling.

Related Articles:

  • US Shale: The Marginal Supplier Matures — The responsiveness of US oil supply to prices has declined and is estimated to be much smaller for publicly traded producers than private ones, with a 10% price increase raising US liquids output by roughly 1%, or 200,000 barrels a day. That implies US supply would offset only about 20-25% of a geopolitical supply shock.
  • Oil Market Caught By Surprise As US Output Surges — US crude oil production reached an all-time high of 13.2mn barrels a day, more than any other country and about one in eight barrels of global output, outpacing official forecasts. The International Energy Agency attributes 80% of this year's growth in global oil supply to the US, complicating OPEC+ efforts to prop up prices through output cuts.
  • Electravision — The fossil fuel share of global primary energy is falling about 0.40% per year, matching the pace of decarbonization during the 1973–1988 nuclear buildout, though total carbon dioxide emissions have not declined because energy consumption keeps rising. Renewable energy is used almost exclusively for the electricity grid, with little penetration in industry and transport.

AI Summary. The U.S. stock market's cyclically adjusted price-to-earnings ratio of 34 ranks in the top 1% of history while corporate profits sit near record levels, a combination the author argues means long-run return prospects are as poor as at almost any time in history. No sustained rally has begun from such valuations or from full employment.

Jeremy Grantham GMO
Date Posted:

Jeremy Grantham cautions that the market’s current cyclically-adjusted price-to-earnings ratio (aka Shiller P/E) of 34 is in the top 1% historically and “There has never been a sustained rally starting from a 34 Shiller P/E.”

Jeremy Grantham cautions that the market’s current cyclically-adjusted price-to-earnings ratio (aka Shiller P/E) of 34...

Do record-high valuations and profit margins signal poor long-run returns?

Core argument: The U.S. Shiller P/E stood at 34 as of March 1st, in the top 1% of history, while total profits as a share of almost any measure sit at near-record levels.

The U.S. is enjoying itself if you go by stock prices. A Shiller P/E of 34 (as of March 1st) is in the top 1% of history. Total profits (as a percent of almost anything) are at near-record levels as well. Remember, if margins and multiples are both at record levels at the same time, it is double counting and double jeopardy – for waiting somewhere in the future is another July 1982 or March 2009 with simultaneous record low multiples and badly depressed margins. There has never been a sustained rally starting from a 34 Shiller P/E. The only bull markets that continued up from levels like this were the last 18 months in Japan until 1989, and the U.S. tech bubble of 1998 and 1999, and we know how those ended. Separately, there has also never been a sustained rally starting from full employment. If you double the price of an asset, you halve its future return. The long-run prospects for the broad U.S. stock market here look as poor as almost any other time in history.

Takeaways by Macro Roundup® AI

  1. The U.S. Shiller P/E stood at 34 as of March 1st, in the top 1% of history, while total profits as a share of almost any measure sit at near-record levels.
  2. Record margins and record multiples occurring together amount to double counting and double jeopardy, with another July 1982 or March 2009 waiting somewhere in the future, combining record-low multiples with badly depressed margins.
  3. There has never been a sustained rally starting from a 34 Shiller P/E or from full employment; the only bull markets that continued up from such levels were Japan's last 18 months until 1989 and the U.S. tech bubble of 1998 and 1999.

Related Articles:

  • The Concentration Conundrum; What To Do About Market Dominance — The largest US stocks make up a bigger share of the equity market than during the 2000 technology bubble, yet their valuations are lower than in earlier bubble episodes including the Nifty 50 of the early 1970s and Japan's late-1980s bubble. Today's dominant companies are also more profitable with stronger balance sheets.
  • 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 Big Picture: Back to the Future — The secular backdrop has shifted from disinflationary to more inflationary, with interest rates no longer near zero and real rates no longer negative. Household balance sheets are as healthy as they have been in 20 years, leaving room to borrow, while the public sector is as indebted as it has ever been.

AI Summary. Financial crises are costly, with average declines of 5.5% of real GDP and median fiscal costs of 16% of real GDP to resolve distressed banks. The authors identify four categories of causal factors: politically motivated risk subsidies such as government support for housing credit, shifts in investor risk preferences, investor learning, and fraud.

Charles Calomiris and Matthew Jaremski National Bureau of Economic Research
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Calomiris and Jaremski review ten famous financial crises from ancient Rome through the present and find four common factors: politically motivated subsidies, changes in investor preferences towards risk, unsophisticated investors, and fraud.

What causes financial crises to recur despite their large economic costs?

Core argument: Charles Calomiris and Matthew Jaremski find financial crises involve average declines of 5.5% of real GDP, with much larger declines when financial distress culminates in a full-scale crisis.

Charles Calomaris and Matthew Jaremski note that financial crises are very costly to the economy, involving average declines of 5.5% of real GDP and much larger declines when financial distress culminates into a full scale crisis, as well as median fiscal costs of 16% of real GDP associated with resolution of distressed banks. Why is it so hard for us to learn from the past and avoid the severe costs that attend these events? The authors find four broad categories of causal factors: 1) politically motivated risk subsidies that skew incentives such as government subsidizing risks related to housing credit. 2) changes in investor preferences towards risk. It may be that the financial system and economy as a whole benefit from taking the risks that sometimes lead to crises. 3) learning by more and less sophisticated investors and 4) fraud.

Takeaways by Macro Roundup® AI

  1. Charles Calomiris and Matthew Jaremski find financial crises involve average declines of 5.5% of real GDP, with much larger declines when financial distress culminates in a full-scale crisis.
  2. Median fiscal costs associated with resolving distressed banks amount to 16% of real GDP, according to Calomiris and Jaremski.
  3. Calomiris and Jaremski identify four categories of causal factors behind recurring crises: politically motivated risk subsidies such as government subsidies for housing credit, changes in investor risk preferences, learning by more and less sophisticated investors, and fraud.

Related Articles:

  • In Today’s Banking Crisis, Echoes of the ’80 — Unrealized securities losses at recently failed banks reflect the risk of borrowing short and lending long, echoing thrifts that became insolvent as the Federal Reserve raised rates; between 1980 and 1994, 1,617 banks and 1,295 thrifts closed or received government assistance. Uninsured depositors fled fast enough to limit losses, illustrating market discipline.
  • Credit Allocation and Macroeconomic Fluctuations — Credit expansions disproportionately channel credit to non-tradable sector firms and households, and the authors find that the sectoral allocation of credit predicts future GDP paths and the likelihood of systemic banking crises. Credit growth to non-tradable industries predicts boom-bust output patterns and elevated financial fragility, while credit to tradable industries is associated with higher future productivity growth.

Wednesday, March 13, 2024

AI Summary. Banks' Treasury holdings have fallen as a share of assets to historically low levels, with banks preferring loans, higher-yielding securities, reserves, and agency mortgage-backed securities to meet liquidity requirements. Revising bank capital rules to revamp the leverage calculation could boost market liquidity and make banks significant Treasury buyers.

Joseph Wang Fed Guy Blog
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.@FedGuy12 endorses a proposed adjustment to the Basel III leverage calculations that would increase demand for Treasuries from US banks as future issuances surge.

Would changing bank capital rules turn banks into major Treasury buyers?

Core argument: Banks' Treasury holdings as a share of bank assets remain historically low, having been steadily reduced from World War II levels even as Treasury issuance climbed.

Banks were huge investors in Treasuries during World War II, but steadily reduced their holdings even as Treasury issuance climbed. The share of bank assets in Treasuries remains historically low as banks have preferred to make loans or invest in higher yielding securities. While banks are required to hold high quality liquid assets, they have chosen to meet those requirements with reserves and Agency MBS rather than Treasuries. A revision to Basel in the form of a revamped leverage calculation would not only boost liquidity across markets, but also potentially make banks significant investors in Treasuries just in time to meet increased future issuance.

Takeaways by Macro Roundup® AI

  1. Banks' Treasury holdings as a share of bank assets remain historically low, having been steadily reduced from World War II levels even as Treasury issuance climbed.
  2. Banks have preferred making loans or buying higher yielding securities over Treasuries, and have satisfied their high quality liquid asset requirements with reserves and Agency mortgage-backed securities instead.
  3. A revamped leverage calculation under a Basel revision could boost liquidity across markets and potentially make banks significant investors in Treasuries in time to meet increased future issuance.

Related Articles:

  • Fiscal Dominance and the Return of Zero-Interest Bank Reserve Requirements — Fiscal dominance requires governments to fund deficits at the margin with non-interest-bearing debt, and the revenue from inflation taxation—both expected and unexpected—is limited. The authors argue a US fiscal dominance episode could end the payment of interest on bank reserves and restore requirements that banks hold large zero-interest reserves against deposits.
  • 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.
  • In 2023 Foreign Demand for Long Term Treasuries Exceed Net Issuances — Foreign demand for long-term US Treasuries, at just over $450bn, exceeded the Treasury's net long-term issuance of just over $400bn, with that demand not coming from China. Net long-term issuance lagged the fiscal deficit—roughly 1.5% of GDP versus 6%—leaving the increase in the stock of long-term "safe" US assets modest.

AI Summary. An analysis of American National Election Studies survey data finds homeowners are about twice as likely as renters to identify as strongly Republican (27% vs 13%), while renters more often identify as strongly Democratic (30% vs 20%) or independent (15% vs 9%). The 14-point owner/renter gap in strong Republican identification exceeds the 6-point gap between non-college and college-educated respondents.

Aziz Sunderji Home Economics
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Homeowners are 2x as likely as renters to identify as “strongly Republican:” 27% to 13%. This is larger than the gap based on education: 23% of non-college-educated people identify as “strongly Republican” vs. 17% of college-educated. @AzizSunderji.

Does homeownership divide voters more sharply than education does?

Core argument: Homeowners are twice as likely as renters to identify as strongly Republican, 27% versus 13%, in an analysis of American National Election Studies data covering over 68,000 households.

The American National Election Studies (ANES) has surveyed over 68,000 households every 2 years (since 2004, every 4 years). It’s a big and powerful dataset, with over 1000 variables. Here I looked at two—home tenure (owner/renter) and party affiliation (a scale from 1-7). My analysis shows that homeowners and renters are deeply polarized, with owners twice as likely to identify as strongly Republican than renters (27% vs 13%). Conversely, renters identify as strongly Democrat far more frequently than owners (30% vs 20%). A higher proportion of renters than owners also identify as independents (15% vs 9%). For context, the 14% gap between homeowners identifying as strongly Republican (27%) compared to renters (13%) is a far larger gap than between other demographics. Take education, for example: there is only a 6% gap between non-college-educated (23.2%) and college-educated people (17%) identifying as strongly Republican.

Takeaways by Macro Roundup® AI

  1. Homeowners are twice as likely as renters to identify as strongly Republican, 27% versus 13%, in an analysis of American National Election Studies data covering over 68,000 households.
  2. Renters identify as strongly Democratic more often than owners, 30% versus 20%, and also identify as independents more often, 15% versus 9%.
  3. The 14-point owner/renter gap in strong Republican identification exceeds the 6-point gap between non-college-educated respondents (23.2%) and college-educated respondents (17%).

Related Articles:

  • Canadian Conservatives Have Found A Way To Win Back Young Voters — Canada's Conservative Party has doubled its vote share and moved into the lead, which the author attributes to an explicitly pro-youth platform centered on housebuilding, including proposals to withhold funds from cities that don't build enough housing and reward those that do. Housing affordability ranks as the second most important issue in Canada, behind the broader cost-of-living crisis.
  • 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.
  • The US Housing Market Is Very Quickly Becoming Unaffordable — Home prices in Las Vegas, Phoenix, Orlando, and Tampa now stand at 6 to 7x incomes, exceeding the ratios reached at the peak of the early 2000s housing bubble in each of those metro areas. All four shifted from affordable, to unaffordable, back to affordable, and into unaffordable territory again.

AI Summary. In developed countries, men's income and education are now generally positively associated with fatherhood, with 70.1% of US men holding graduate or professional degrees having children versus 48.8% of those without a high school diploma. Among advanced economies, those where men take on more housework and child care have higher fertility rates.

Justin Fox Bloomberg
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In the US, the relationship between income/education and births is becoming U-shaped for white non-Hispanic women: those with bachelor’s degrees or higher are having more kids than those with just some college. @foxjust

Are higher-income, better-educated men now more likely to have children?

Core argument: In a 2014 US Census Bureau survey, 70.1% of men with graduate or professional degrees had children versus 48.8% of men without a high school diploma, part of a generally positive income/education–fatherhood relationship within developed countries.

Within developed countries, there’s now generally a positive relationship between men’s income and education level, and fatherhood. In a US Census Bureau survey conducted in 2014, 70.1% of men with graduate or professional degrees had children while only 48.8% of those without a high school diploma did. In the US, the overall relationship between income/education and births remains negative for women (for whom the most recent data are from 2022), but among White, non-Hispanic women the curve is becoming U-shaped, with those with bachelor’s degrees or higher having more kids than those with some college. While the growth in career and educational opportunities for women drove fertility declines in the past, there are signs that accommodating women’s career ambitions might be essential to staving off further declines. Among a sample of advanced economies, those where men take on more housework and child care responsibilities have higher fertility rates.

Takeaways by Macro Roundup® AI

  1. In a 2014 US Census Bureau survey, 70.1% of men with graduate or professional degrees had children versus 48.8% of men without a high school diploma, part of a generally positive income/education–fatherhood relationship within developed countries.
  2. In the US, the overall relationship between income or education and births remains negative for women, though among White, non-Hispanic women the curve is becoming U-shaped, with those holding bachelor's degrees or higher having more children than those with some college.
  3. Among a sample of advanced economies, those where men take on more housework and child care responsibilities have higher fertility rates.

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AI Summary. Using a new method to adjust survey incomes for underreporting, the authors estimate that global poverty and inequality declined substantially over recent decades and that inequality within countries is falling on average, having been largely constant since the 1990s.

Maxim Pinkovskiy, Xavier Sala-i-Martin, Kasey Chatterji-Len, and William Nober National Bureau of Economic Research
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A recent @NBERpubs paper confirms that global poverty and inequality declined dramatically between 1980 and 2019 and that “within-country inequality is falling on average, and has been largely constant since the 1990s” @XSalaimartin

Is inequality within countries falling on average?

Core argument: Adjusting survey incomes for underreporting, the authors find that within-country income inequality is falling on average and has been largely constant since the 1990s.

We propose a novel procedure to adjust reported survey incomes for underreporting. Underreporting of income by the bottom 50% of the world income distribution has become particularly important in recent decades. We reconfirm the findings of the literature that global poverty and inequality have declined dramatically between 1980 and 2019. Finally, we find that within-country inequality is falling on average, and has been largely constant since the 1990s.

Takeaways by Macro Roundup® AI

  1. Adjusting survey incomes for underreporting, the authors find that within-country income inequality is falling on average and has been largely constant since the 1990s.
  2. Applying a novel procedure to correct for income underreporting, the authors reconfirm that global poverty and inequality declined dramatically between 1980 and 2019.
  3. Underreporting of income by the bottom 50% of the world income distribution has become particularly important in recent decades.

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