Edward Conard

Top Ten New York Times Bestselling Author

  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “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 must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…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 fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “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
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “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 provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, March 26, 2024

AI Summary. Workers age 55 and older have not reversed the decline in labor force participation that began with the COVID-19 pandemic, unlike other age groups, amounting to roughly 2m workers by some estimates. The shortfall is concentrated among those without a college degree, while college-educated older workers' participation returned to its pre-pandemic trend.

Brandon Miskanic, Nicolas Petrosky-Nadeau and Cindy Zhao Federal Reserve Bank of San Francisco
Date Posted:
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The pandemic-era excess retirement surge was concentrated among non-college workers over age 55. Relative to the pre-pandemic trend about 2mm workers are missing. @Petrosky_Nadeau

Have older workers returned to the labor force after the pandemic?

Core argument: Workers age 55 and older have yet to reverse the decline in labor force participation that occurred with the onset of the COVID-19 pandemic, in contrast to other age groups.

A strong labor market is usually an engine that pulls and keeps people in the labor market, growing the pool of available workers. These forces have played out over the past three years for many groups of people, with one notable exception: workers age 55 and older. In contrast to other age groups, workers age 55 and older have yet to reverse the decline in labor market participation that occurred with the onset of the COVID-19 pandemic. By some estimates, this represents about 2 million workers who otherwise would have been in the labor force in 2023 absent the global pandemic. The drop in labor force participation for individuals without a college degree is a break from what would have been expected following the pre-COVID trend. This contrasts with the experience for college-educated workers, whose rate of participation in the labor market in 2023 returned to its pre-pandemic trend.

Takeaways by Macro Roundup® AI

  1. Workers age 55 and older have yet to reverse the decline in labor force participation that occurred with the onset of the COVID-19 pandemic, in contrast to other age groups.
  2. By some estimates, about 2 million workers age 55 and older would have been in the labor force in 2023 absent the pandemic.
  3. Labor force participation among individuals without a college degree broke from its pre-COVID trend, while college-educated workers' participation returned to its pre-pandemic trend in 2023.

Related Articles:

  • Why Is Prime-Age Labor Force Participation So High? — Labor force participation among 25-to-54-year-olds rose after the pandemic shock, with women's rate exceeding its pre-pandemic peak while men's returned to its pre-pandemic level but stayed below its historical high. The authors find this participation rise can ease wage and price pressures in hot labor markets, but appears to have ended.
  • “The Great Retirement Boom”: The Pandemic-Era Surge in Retirements and Implications for Future Labor Force Participation — An increase in the retired share of the working-age population of nearly 1.5 percentage points above pre-pandemic levels—more than 3.5m additional retirees—accounts for essentially all of the shortfall in the labor force participation rate, while other causes of non-participation such as caregiving have receded.
  • Post-Pandemic Recovery for America’s Prime Age Labor Force: A Tale of Two Sexes — Prime-age women's labor force participation climbed about 5 points above its pre-pandemic level over a decade, while prime-age men's rose barely a point, only just regaining pre-pandemic levels. Despite economic expansion and labor shortages, work rates for prime-age American men are barely as high as at the trough of the severe Reagan-era recession.

AI Summary. The authors estimate that U.S. counties receiving publicly financed World War II plants saw persistent local development and expanded higher-wage manufacturing employment, with men born there before the war earning $1,200 (2020 dollars), or 2.5%, more annually in adulthood than peers elsewhere. Gains were larger for children of lower-income parents.

Andrew Garin and Jonathan Rothbaum National Bureau of Economic Research
Date Posted:
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.@andy_garin et al. show that men born before WWII in counties chosen for large wartime plant construction earned 2.5% more per year in adulthood relative to those born in comparable regions, with benefits mainly to children born to low-income parents.

Does public industrial investment raise local development and economic mobility?

Core argument: Men born before World War II in U.S. counties where publicly financed war plants were built earned $1,200 (2020 dollars), or 2.5 percent, more per year in adulthood than those born in comparison regions.

Publicly financed plants were built in dispersed locations outside of major urban centers for security reasons during the United States' industrial mobilization for World War II. Such wartime plant construction had large and persistent impacts on local development, characterized by an expansion of relatively high-wage manufacturing employment throughout the postwar era. Men born before WWII in counties where plants were built earned $1,200 (in 2020 dollars) or 2.5 percent more per year in adulthood relative to those born in comparison regions, with larger benefits accruing to children of lower-income parents. The balance of evidence suggests that these individuals benefited primarily from the local expansion of higher-wage jobs to which they had access as adults.

Takeaways by Macro Roundup® AI

  1. Men born before World War II in U.S. counties where publicly financed war plants were built earned $1,200 (2020 dollars), or 2.5 percent, more per year in adulthood than those born in comparison regions.
  2. Wartime plant construction, sited in dispersed locations outside major urban centers for security reasons, had large and persistent effects on local development through an expansion of relatively high-wage manufacturing employment across the postwar era.
  3. The earnings gains from wartime plant siting were larger for children of lower-income parents, and the balance of evidence suggests these individuals benefited primarily from the local expansion of higher-wage jobs accessible to them as adults.

Related Articles:

  • ‘Transformational Change’: Biden’s Industrial Policy Begins to Bear Fruit — Financial Times research identified more than 75 large-scale US manufacturing announcements following the passage of American semiconductor and clean-energy subsidy laws, with companies committing roughly $204bn to boost semiconductor and clean-tech production and promising at least 82,000 jobs. That is almost double the capital spending commitments made in those sectors two years earlier.
  • Small Towns Chase America’s $3 Trillion Climate Gold Rush — About $1tn in US federal tax incentives and loans for green energy is drawing a flood of corporate investment into rural counties and reshaping local economies. Estimates of the total private and public spending driven over the next decade range from several hundred billion dollars to roughly $3tn.
  • Republican Districts Dominate US Clean Technology Investment Boom — A Financial Times analysis found that more than 80% of pledged investment in large-scale clean energy and semiconductor manufacturing is destined for Republican congressional districts. The analysis attributes this partly to those districts' available land and cheap labor, and to state-level tax breaks and subsidies in states such as Georgia and Ohio.

AI Summary. Incoming data — strong employment growth, low jobless claims, and upward pressure on consumer and producer price inflation — suggest monetary policy is not restrictive, a better guide than estimates of the neutral interest rate. Eased financial conditions, including record-high stock prices, tight credit spreads, and rising home prices, affect consumer spending immediately.

Torsten Sløk Apollo
Date Posted:

Torsten Sløk @apolloglobal argues that the impact of the tightening cycle on labor markets has been offset by a wealth effect from the 25% increase in the S&P 500 since November.

Does incoming data show monetary policy is not restrictive?

Core argument: January and February data showed strong employment growth, low jobless claims, and upward pressure on CPI and PPI inflation, which the author argues indicates monetary policy is not restrictive.

The best guide to whether monetary policy is restrictive is not r-star but the incoming data. The incoming data shows that after the Fed turned dovish and the stock market rallied, we have in January and February seen strong employment growth, low jobless claims, and upward pressure on CPI and PPI inflation. Maybe the lagged effects of Fed hikes work after 12 to 18 months through income in the consumption function. However, the effects of easy financial conditions on consumer spending are immediate. Given that financial conditions have eased significantly over the past five months, with record-high stock prices, tight credit spreads, and rising home prices, it is not surprising that the incoming economic data is strong. The bottom line is that the last mile is harder because of the immediate positive impact on the economy of record-high stock prices. In contrast, the long and variable lags work mainly through a rising unemployment rate.

Takeaways by Macro Roundup® AI

  1. January and February data showed strong employment growth, low jobless claims, and upward pressure on CPI and PPI inflation, which the author argues indicates monetary policy is not restrictive.
  2. Financial conditions have eased significantly over the past five months, with record-high stock prices, tight credit spreads, and rising home prices, making strong incoming economic data unsurprising in the author's view.
  3. The author argues easy financial conditions affect consumer spending immediately, while the long and variable lags of Fed hikes work mainly through a rising unemployment rate, making the last mile harder.

Related Articles:

  • The Fed’s Growth Optimism Puts a Floor Under Rates — Federal Reserve officials have marked up growth projections, with output growing 3.1% versus the 1% previously projected, and now expect short-term interest rates to fall by only 1.5pp after peaking rather than the 2.25pp once anticipated. Rising asset prices and the resilience of rate-sensitive sectors such as housing help explain upward revisions to "neutral" rate estimates.
  • Has the U.S. Economy Transitioned to a Higher Long-Run Real Interest Rate Regime? — Labor productivity growth in the U.S. nonfarm business sector has exceeded its longer-run average in three of the past five years, suggesting a possible shift to a faster productivity growth regime. Such a shift is one possible explanation for a long-run neutral real interest rate above 2%.
  • Measuring the Natural Rate of Interest After COVID-19 — Model estimates for the United States, Canada, and the Euro Area place the natural rate of interest within a few tenths of a percentage point of pre-pandemic estimates, with the main longer-term consequence of the pandemic a reduction in the natural rate of output. The authors find no evidence that the era of historically low natural rates has ended.

AI Summary. The Swiss National Bank has begun the developed-market rate-cutting cycle with other central banks expected to follow, while fiscal policy remains loose and longer-dated yields stable. With steady growth, low unemployment, and central banks no longer restraining markets, the backdrop remains benign for risk assets and speculative psychology appears to be taking hold.

Joseph Wang Fed Guy Blog
Date Posted:

As the global rate-cutting cycle gets underway in advanced economies @FedGuy12 expects risk assets to appreciate.

Does synchronized central bank easing create a benign backdrop for risk assets?

Core argument: The Swiss National Bank began the developed-market easing cycle with a surprise rate cut, with other central banks close behind.

The Swiss National Bank kicked off the developed market central bank cutting cycle with a surprise cut this week, but everyone else is right behind them. The macro backdrop remains benign for risk assets, where speculative psychology appears to be taking hold. Fiscal policy remains loose as the popular culture continues to demand more fiscal spending. Longer-dated yields appear to be stable, potentially responding to an imminent QT tapering. Economic growth remains steady, unemployment remains low, and most importantly the central banks are no longer standing in the way. While the declines in 2008 and 2020 understandably loom large in the memory of many speculators, that is not the only possible path for an upward price trend. There are also periods like the 1990s and 1920s where the market can rise longer and higher than anyone ever imagined.

Takeaways by Macro Roundup® AI

  1. The Swiss National Bank began the developed-market easing cycle with a surprise rate cut, with other central banks close behind.
  2. The macro backdrop remains benign for risk assets, with steady economic growth, low unemployment, loose fiscal policy, and central banks no longer standing in the way.
  3. Longer-dated yields appear stable, potentially responding to an imminent tapering of quantitative tightening, while speculative psychology appears to be taking hold in risk assets.

Related Articles:

  • The Fed and the Secular Decline in Interest Rates — The authors find that the long-run decline in US Treasury yields since 1980 is fully accounted for by movements in a narrow window around Federal Reserve policy meetings, while yield changes outside that window prove transitory. They suggest the Federal Reserve conveys information to markets about the long-run level of interest rates.
  • The Fed’s Growth Optimism Puts a Floor Under Rates — Federal Reserve officials have marked up growth projections, with output growing 3.1% versus the 1% previously projected, and now expect short-term interest rates to fall by only 1.5pp after peaking rather than the 2.25pp once anticipated. Rising asset prices and the resilience of rate-sensitive sectors such as housing help explain upward revisions to "neutral" rate estimates.
  • Has the U.S. Economy Transitioned to a Higher Long-Run Real Interest Rate Regime? — Labor productivity growth in the U.S. nonfarm business sector has exceeded its longer-run average in three of the past five years, suggesting a possible shift to a faster productivity growth regime. Such a shift is one possible explanation for a long-run neutral real interest rate above 2%.

AI Summary. A crisis in China's property sector is projected to materially weaken U.S. growth and trade while lowering U.S. inflation, with the largest effects in the first four quarters. In the authors' scenario, U.S. real GDP growth falls up to 2pp below baseline, export volumes up to 10pp, and consumer prices about 3pp.

Ozge Akinci, Hunter Clark, Jeff Dawson, Matthew Higgins, Silvia Miranda-Agrippino, Ethan Nourbash, and Ramya Nallamotu Federal Reserve Bank of New York
Date Posted:

A @NewYorkFed analysis argues the prospect of a hard landing in China is high given the ratio of nonfinancial sector debt to GDP is now over 300%. They forecast a further slowdown in China’s property sector will materially weaken US growth.

How would a Chinese property crash affect U.S. growth and inflation?

Core argument: In the authors' forecast of a Chinese hard landing, U.S. real GDP growth falls as much as 2 percentage points below baseline before beginning to recover, with the largest impacts occurring over the first four quarters following a crash.

A Chinese hard landing could result in materially weaker U.S. growth and trade performance and lower U.S. inflation, with the largest impacts occurring over the first four quarters following a crash. Real GDP growth [in their forecast] falls as much as 2pp below baseline before beginning to recover, while export volumes fall as much as 10pp below baseline. The PCE price index, for its part, falls some 3pp below baseline before crisis impacts begin to fade.

Takeaways by Macro Roundup® AI

  1. In the authors' forecast of a Chinese hard landing, U.S. real GDP growth falls as much as 2 percentage points below baseline before beginning to recover, with the largest impacts occurring over the first four quarters following a crash.
  2. U.S. export volumes fall as much as 10 percentage points below baseline in the Chinese hard landing scenario, amounting to materially weaker U.S. trade performance.
  3. The PCE price index falls some 3 percentage points below baseline in the Chinese hard landing scenario before crisis impacts begin to fade.

Related Articles:

  • The Neoclassical Growth of China — China's per capita GDP growth path closely tracks those of Japan, South Korea, and Taiwan from similar starting income levels, indicating nothing unusual about its growth rate. The authors' model projects China's per capita GDP will level off at about 41% of the US level, reflecting a slowdown in productivity catch-up.
  • Can China Catch Up with Greece? — Declining contributions from labor and capital are projected to hold China's income growth below 4% unless total factor productivity growth accelerates, which the authors argue is unlikely given that China's productivity growth has already averaged 1.8% since 2009. Only five of the 43 countries that previously reached China's income level sustained that pace over the following 13 years.
  • Why Are China’s Households in the Doldrums? — Chinese mortgage loans account for over 50% of total household debt, at $6tn and a third of GDP, and the stock of outstanding mortgage loans has declined for the first time as households prioritize repayment. Other forms of consumer credit have slowed sharply while new deposit growth has accelerated.

AI Summary. The Swiss Re Institute estimates global insured losses from natural catastrophes will rise 5%–7% a year over the next decade, roughly doubling in about 10 years, with climate change accounting for about one-eighth of the increase in damages. Only about 40% of global economic losses are insured.

Leslie Kaufman Bloomberg
Date Posted:

Swiss Re estimates that only one-eighth of the rise in insured damages is attributable to climate change and forecasts that claims will double in the next decade. 2023 was the fourth year in a row where insured losses topped $100B.

Swiss Re estimates that only one-eighth of the rise in insured damages is attributable to climate change and forecasts that...

How fast are insured losses from natural catastrophes rising?

Core argument: Insured losses from natural catastrophes topped $100 billion in 2023, the fourth consecutive year above that level, though below the totals recorded in 2021 and 2022.

Around the world, insured damages inflicted by natural catastrophes are climbing fast and set to double in roughly 10 years according to the Swiss Re Institute — the research arm of the giant reinsurance firm. Insured losses from natural catastrophes have been on a slow and steady rise. Although last year saw a drop from 2022 and 2021, it was the fourth year in a row when they topped $100 billion. Only about 40% of economic losses globally are insured, meaning the total economic losses are much higher. Swiss Re estimates that climate change was responsible for only a fraction of increase in damages, about one-eighth, although it expects that its contribution will rise. With factors like inflation, exposure, and rising natural perils combined, total insured losses will likely rise 5% to 7% a year over the next decade.

Takeaways by Macro Roundup® AI

  1. Insured losses from natural catastrophes topped $100 billion in 2023, the fourth consecutive year above that level, though below the totals recorded in 2021 and 2022.
  2. The Swiss Re Institute projects insured losses from natural catastrophes will rise 5% to 7% a year over the next decade and roughly double in about 10 years, with inflation, exposure, and rising natural perils combined.
  3. Swiss Re estimates climate change accounted for about one-eighth of the increase in damages and expects that contribution to rise, while only about 40% of global economic losses are insured.

Related Articles:

  • A Hidden Crisis In US Housing — State-run "last resort" home insurance programs, which cover properties the private market won't, have more than doubled their market share since 2018, with liabilities passing $1tn; Florida's plan faces potential losses of $525bn and California's at least $290bn, six times its 2018 level. Of 36 such plans covering natural catastrophes, 21 do not explicitly detail how they would pay deficits.
  • As Texas Burns, Property Insurance Costs Soar — Rising property insurance premiums are attributed to climate-related damage, higher rebuilding costs, and costlier reinsurance protection for insurers, which is passed on to homeowners. The insurance industry says rebuilding and replacement costs rose 55% over a three-year span, driven by raw materials, wages, supply-chain bottlenecks, and a rising share of larger homes.
  • The Uninsurable World: What Climate Change Is Costing Homeowners — Global insurance losses from natural catastrophes have topped $100bn for four straight years, a level once considered the mark of an exceptionally bad year, and US insurers have repriced risk with significant premium increases. Reinsurer Swiss Re predicts a growing number of areas where buying insurance becomes uneconomical.

Wednesday, March 27, 2024

AI Summary. The author argues that compound growth in energy use cannot continue indefinitely, noting that sustaining the past 250 years' 2.3% annual growth for another 450 years would generate enough waste heat alone to boil the oceans. Greenhouse gases account for 95% of the heating effect of human energy use and waste heat diffusion under 5%.

Jeremy Grantham GMO
Date Posted:

Jeremy Grantham argues that resource constraints make “eternal compound growth” impossible, particularly limitations on the ability of the environment to absorb greenhouse gasses. He forecasts declining GDP as labor forces shrink.

Can compound growth in energy use continue indefinitely?

Core argument: The author argues that sustaining the last 250 years' 2.3% compound growth in energy use for 450 more years would generate enough waste heat diffusion alone to boil the oceans.

Compound growth and long timescales do not go together. How about physics? Using energy of any kind means you have to diffuse the waste heat all energy produces, the “heat island” effect, if you will. This effect is currently dwarfed by the great effectiveness of carbon dioxide and methane as greenhouse gases – this year will be over 1.5°C above the old pre-industrial level and the warmest year ever – and that greenhouse effect represents 95% of the heating effect of human energy use, and the heat diffusion effect less than 5%. But if humanity were to keep up the last 250 years’ 2.3% compound growth in energy use for just 450 more years, the heat diffusion effect alone – this currently modest 5% – would be enough to boil the oceans! No, eternal growth will not work. The main point of my thesis is that whether measured GDP is slightly negative or positive is not the major issue. Overall, measured GDP is likely to shift over the rest of this century from growing, to flat, to slowly declining as labor forces shrink.

Takeaways by Macro Roundup® AI

  1. The author argues that sustaining the last 250 years' 2.3% compound growth in energy use for 450 more years would generate enough waste heat diffusion alone to boil the oceans.
  2. Greenhouse gases account for 95% of the heating effect of human energy use, with waste heat diffusion — the "heat island" effect — contributing less than 5%, according to the author.
  3. The author expects measured GDP to shift over the rest of this century from growing, to flat, to slowly declining as labor forces shrink.

Related Articles:

  • 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.
  • Not That 70’s Show — The US faces lower energy risk than in the 1970s: it is a net energy exporter rather than a net importer, the oil intensity of its economic growth is 65% lower, and annual global oil consumption growth has fallen from 8%-10% to 0%-2%. The Strategic Petroleum Reserve is down about 50% from its peak.
  • Global Clean Energy Spending Surges to $1.8 Trillion. It’s Not Enough — Global spending on the clean-energy transition rose 17% to a record $1.8tn, covering renewable power, electric vehicles, hydrogen production and other technologies, with total funding reaching about $2.8tn including supply chains and $900bn in financing. BloombergNEF reports this remains short of a net-zero emissions trajectory.

AI Summary. The authors argue that monetary policy and financial stability interact, and that proposals to give central banks additional mandates such as inequality and climate change may exceed what their limited tools can achieve. They argue such mandates could compromise monetary policy independence and the pursuit of price, economic, and financial stability.

Michael Kiley and Frederic Mishkin National Bureau of Economic Research
Date Posted:
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Kiley and Miskin argue that curbing threats to financial stability is essential to price and economic stability, but that pursuit of additional objectives like climate change and inequality is not feasible for monetary policy.

Should central banks take on mandates beyond price and financial stability?

Core argument: Strict adherence to a Taylor rule may have led to monetary policy mistakes, and there is now a strong argument that monetary policy and financial stability interact.

Monetary policy is difficult. Strict adherence to a Taylor rule may have led to policy mistakes. There is now a strong argument that there is an interaction between monetary policy and financial stability. Despite this, there has been some call for central banks to take on additional mandates, including issues such as inequality and climate change. These issues have important macroeconomic and financial implications, and as a result central bank analysis to understand these issues is part of promoting price, economic, and financial stability. However, the central banks have limited tools and additional mandates for central banks may not be achievable given their tools. Such additional mandates may also affect monetary policy independence in ways that affect the achievement of price, economic, and financial stability.

Takeaways by Macro Roundup® AI

  1. Strict adherence to a Taylor rule may have led to monetary policy mistakes, and there is now a strong argument that monetary policy and financial stability interact.
  2. Calls for central banks to take on additional mandates such as inequality and climate change confront central banks' limited tools, which may make those mandates unachievable.
  3. Because inequality and climate change carry macroeconomic and financial implications, central bank analysis of these issues forms part of promoting price, economic, and financial stability, though added mandates may affect monetary policy independence.

Related Articles:

  • In Search of Safe Havens: The Trust Deficit and Risk-free Investments! — Plotting US Treasury bond rates against a crude fundamental risk-free rate—actual inflation plus real GDP growth—undercuts the argument that central banks set interest rates. Central banks can nudge rates at the margin but cannot override the fundamentals of inflation and real growth.
  • The Fed and the Secular Decline in Interest Rates — The authors find that the long-run decline in US Treasury yields since 1980 is fully accounted for by movements in a narrow window around Federal Reserve policy meetings, while yield changes outside that window prove transitory. They suggest the Federal Reserve conveys information to markets about the long-run level of interest rates.

AI Summary. The most economically prosperous U.S. zip codes house 80.6m residents and averaged nearly 3x the job growth of "comfortable" zip codes and 10x that of "at-risk" ones. In several Southeast and Mountain West states, a much greater share of the population now lives in top-ranked prosperous zip codes than a decade earlier.

Daniel Newman and Kenan Fikri Economic Innovation Group
Date Posted:

Between 2017-2021 the share of Americans living in high-income zip codes increased the most in the mountain west and southeast. @kenanfikri @InnovateEconomy

Is U.S. economic prosperity shifting toward the Mountain West and Southeast?

Core argument: The most economically prosperous zip codes on the Distressed Communities Index, home to 80.6 million residents, form the most populous quintile in the country.

Today, the most economically prosperous communities (those landing in the top-performing quintile on the index) are also the most populous with 80.6 million residents across the country. Access to economic opportunity is a major benefit afforded to these residents, with these zip codes on average enjoying nearly triple the increase in jobs from 2017 to 2021 compared to comfortable ones and 10 times the increase observed in at-risk ones. A much greater share of the population in several states across the Southeast and Mountain West live in the DCI’s top-ranked prosperous zip codes than did a decade ago.

Takeaways by Macro Roundup® AI

  1. The most economically prosperous zip codes on the Distressed Communities Index, home to 80.6 million residents, form the most populous quintile in the country.
  2. Prosperous zip codes averaged nearly three times the job growth of comfortable zip codes and 10 times that of at-risk ones from 2017 to 2021.
  3. Several states across the Southeast and Mountain West have a much greater share of their population living in top-ranked prosperous zip codes than a decade ago.

Related Articles:

  • Southern Comforts — Migration into southern metropolitan areas such as Austin, San Antonio, Jacksonville, and Tampa has continued, and the South also has a higher birth rate than other census regions. Growth has been uneven: Florida's GDP rose 20% and Texas and Tennessee 15% against a US average of 11%, while Oklahoma and Louisiana contracted.
  • Movers And Money: Mapping the Flow of Income During the Pandemic — Manhattan recorded the largest county-level income outflow to other states at $16.5bn, with 27.7 cents of every dollar leaving—$4.6bn—going to Florida, including $2.9bn to Miami-Dade County and $1.1bn to Palm Beach County. California had the largest state-level losses, while Florida was the biggest beneficiary with a net gain of $39bn.
  • On The Move: West Side Story — The West's share of US population has flattened and appears to be falling, with relative housing affordability cited as a key part of the story. Metropolitan areas with median mortgage payments above the US average generally show negative or weakly positive population growth, and Pacific-state metros all have above-average mortgage payments.

AI Summary. World Bank data show investment has exceeded 40% of China's gross domestic product for two decades, against roughly 25% globally and 30–34% in other high-investing developing countries. Critics argue China's growth strategy built on advanced manufacturing requires expanding its share of global manufacturing, which the rest of the world is unlikely to accommodate.

Edward White and Cheng Leng Financial Times
Date Posted:

Xi’s vision of economic growth backed by advanced manufacturing implies a rise in China’s current 31% share of global manufacturing, which many nations view as an emerging threat to their manufacturing sectors.

Can a manufacturing-led growth strategy sustain China's economy?

Core argument: China's investment has held above 40% of GDP for two decades, compared with roughly 25% globally and 30–34% in high-investing countries, usually in the developing world, according to World Bank data.

According to World Bank data, investment as a percentage of global gross domestic product has for decades hovered around 25% In high-investing countries, usually in the developing world, it generally varies between 30 and 34%. In China, it has held above 40% for two decades. As Xi Jinping toured China’s central Hunan province last week, local officials were called forward to inform the nation’s powerful leader on their plans to accelerate the development of “new quality productive forces.” The slogan, rooted in 19th-century Marxist thinking, has in early 2024 become shorthand for Xi’s vision of economic growth underpinned by China’s increasingly advanced manufacturing industries. “For this to work, China must expand its share of global manufacturing. That needs to be accommodated by the rest of the world. The rest of the world is unlikely to do that,” says Michael Pettis.

Takeaways by Macro Roundup® AI

  1. China's investment has held above 40% of GDP for two decades, compared with roughly 25% globally and 30–34% in high-investing countries, usually in the developing world, according to World Bank data.
  2. Michael Pettis argues that Xi Jinping's manufacturing-led growth plan requires China to expand its share of global manufacturing, which the rest of the world is unlikely to accommodate.
  3. Xi Jinping's slogan "new quality productive forces," rooted in 19th-century Marxist thinking, became shorthand for growth underpinned by China's increasingly advanced manufacturing industries, and Hunan officials presented plans to accelerate its development during his tour of the province.

Related Articles:

  • China’s Record Manufacturing Surplus — China's manufacturing trade surplus has reached about 2% of world GDP, exceeding the peak surpluses of export powerhouses like Japan and Germany, and shows no signs of shrinking as policy continues to emphasize advanced manufacturing capacity. The main offsetting manufactured-goods deficit is in the United States rather than commodity exporters.
  • A Second Dose of Trump On Trade Would Differ From The First — 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.
  • China’s Excess Savings Are A Danger — China's current account surplus of 4% of GDP is larger in global terms than its 2007 peak of 10%, because its share of the world economy at market prices rose from 6% to 17%. Sustaining that surplus would require China to fund deficits in smaller developing countries.

AI Summary. Canada's population grew at a 3.2% annual rate, among the world's fastest, with only 2.4% of the increase from net births and the remainder from international migration, primarily foreign workers and students. Without temporary immigration, growth would have been 1.2%, and planned cuts to temporary residents and international students are expected to slow future gains.

Randy Thanthong-Knight Bloomberg
Date Posted:

Canada’s population growth of 3.2% in 2023 was among the world’s highest, behind only a few high-fertility African countries. Over 97% of this growth was driven by immigration.

Canada’s population growth of 3.2% in 2023 was among the world’s highest, behind only a few high-fertility African...

Is temporary immigration driving nearly all of Canada's population growth?

Core argument: Canada's population grew at a 3.2% annual rate, among the world's fastest and trailing only a few African countries with high fertility, adding roughly the equivalent of Estonia's population in a year.

At a 3.2% annual rate, Canada has among the world’s fastest population growth, only behind a few African countries with high fertility. The country added roughly the equivalent of Estonia’s populace last year. Only 2.4% of the increase came from net births, and the rest was driven by international migration, primarily foreign workers and students. Without temporary immigration, Canada’s population growth would have been 1.2%. But with plans to cut the numbers of temporary residents and international students already in place, 2023 will likely mark the peak of the immigration-driven population boom in Canada.

Takeaways by Macro Roundup® AI

  1. Canada's population grew at a 3.2% annual rate, among the world's fastest and trailing only a few African countries with high fertility, adding roughly the equivalent of Estonia's population in a year.
  2. Only 2.4% of Canada's population increase came from net births, with international migration — primarily foreign workers and students — driving the remainder; without temporary immigration, growth would have been 1.2%.
  3. With plans already in place to cut the numbers of temporary residents and international students, 2023 will likely mark the peak of Canada's immigration-driven population boom.

Related Articles:

  • Immigration Surge Fuels Male Population Boom in Canada — Canada's adult male population grew 3.4% over the past year versus 2.9% for women, the widest gap in nearly 50 years of records, as a higher share of male newcomers shifts the gender ratio. Among those aged 25 to 44, men outnumber women by 141,000, against a long-run average of zero.
  • Third-Country Effects of U.S. Immigration Policy — U.S. H-1B visa denial rates rose from about 6% to 16%, and the authors estimate a 10 percentage point rise in denials increases Canadian applications by 30%, roughly one Canadian application per four forgone visas. More exposed Canadian firms increased sales and hired about 0.5 native workers per immigrant.
  • Mass Immigration Experiment Gives Canada an Edge in Global Race for Labor — Nearly one in four people in Canada are immigrants, the largest share among the Group of Seven nations. At its current pace of population growth, Canada — the smallest G-7 country by population — would double its residents in about 26 years and exceed Italy, France, the UK and Germany.