Edward Conard

Top Ten New York Times Bestselling Author

  • “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
  • “…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 very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…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
  • “…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 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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


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.

Thursday, March 28, 2024

AI Summary. The authors model automation of human tasks and find that if the complexity of human tasks is unbounded with a sufficiently thick tail, wages can rise indefinitely, but with a thinner tail automation outpaces capital accumulation and wages collapse. If task complexity is bounded, wages first surge, then collapse.

Anton Korinek and Donghyun Suh National Bureau of Economic Research
Date Posted:
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.@akorinek et al discuss two scenarios where AI leads to a wage collapse: if AI eventually automates all human tasks, or if capital investment fails to support automation that could potentially augment human productivity.

Does task complexity determine whether automation raises or collapses wages?

Core argument: Under a bounded distribution of task complexity, reflecting the finite computational capacity of the human brain, full automation arrives within finite time once the frontier of automation crosses the maximum complexity of tasks humans perform.

First, we consider the possibility that human tasks are of unbounded complexity [left-hand panel of Figure 1]. In this case, advances in the automation index imply that more and more tasks are automated over time, but that there always remain tasks that cannot be automated. Second, we consider a bounded distribution of task complexity, which reflects that the computational capabilities of the human brain are finite. Bounded distributions result in full automation within finite time when the frontier of automation crosses the maximum complexity of tasks performed by humans. [In the first case] we show that wages can rise indefinitely if the tail is sufficiently thick, as capital accumulation automates ever more complex tasks but there always remains enough for human labor. However, if the tail is too thin, then automation ultimately outpaces capital accumulation and causes a collapse in wages. [In the second case,] we demonstrate that wages would at first surge as machines displace more and more human labor, but would eventually collapse, even before full AGI is reached.

Takeaways by Macro Roundup® AI

  1. Under a bounded distribution of task complexity, reflecting the finite computational capacity of the human brain, full automation arrives within finite time once the frontier of automation crosses the maximum complexity of tasks humans perform.
  2. In the bounded case, wages would at first surge as machines displace more and more human labor, but would eventually collapse, even before artificial general intelligence is reached.
  3. If human tasks are of unbounded complexity, wages can rise indefinitely when the tail of the complexity distribution is sufficiently thick, but collapse if the tail is too thin and automation outpaces capital accumulation.

Related Articles:

  • Assessing the Implications of a Productivity Miracle — If artificial intelligence can perform economically valuable cognitive tasks at very low marginal cost, consumers would buy far more of the cheapened goods and spend the savings in other categories, expanding activity and employment in sectors facing new demand. Where supply is inherently limited, such as real estate, those savings could bid up prices and produce inflation.
  • Generative AI at Work — A study of 5,179 customer support agents finds that access to a generative AI conversational assistant raised issues resolved per hour by 14% on average, with the largest gains for novice and low-skilled workers and minimal effect on experienced, highly skilled ones. The authors also find AI assistance improved customer sentiment, reduced requests for managerial intervention, and improved employee retention.
  • The Short-Term Effects of Generative Artificial Intelligence on Employment: Evidence from an Online Labor Market — Freelancers in occupations most exposed to generative AI saw employment and earnings decline, with the authors estimating a 2% drop in jobs and a 5.2% drop in monthly earnings on an online labor platform. Offering high-quality service did not mitigate the effect, and top-rated freelancers appear disproportionately hurt.

AI Summary. Amazon has committed roughly $148bn over two years to build and operate data centers worldwide, expanding hubs in northern Virginia and Oregon while entering new locations including Mississippi, Saudi Arabia, and Malaysia. The buildout targets demand for corporate services like file storage and databases, as well as the computing power for expected growth in generative artificial intelligence.

Matt Day Bloomberg
Date Posted:

Amazon is planning on spending at least $148B over the next 15 years to build and operate data centers. @markets

Is Amazon spending nearly $150 billion on global data centers?

Core argument: Amazon has committed $148 billion to build and operate data centers worldwide, according to a Bloomberg tally.

Over the past two years, according to a Bloomberg tally, Amazon has committed to spending $148 billion to build and operate data centers around the world. The company plans to expand existing server farm hubs in northern Virginia and Oregon as well as push into new precincts, including Mississippi, Saudi Arabia, and Malaysia. Much of Amazon’s data center expansion is geared toward meeting a rise in demand for corporate services like file storage and databases. But the facilities, along with advanced and expensive chips, will also provide the massive computing power required for an expected boom in generative artificial intelligence.

Takeaways by Macro Roundup® AI

  1. Amazon has committed $148 billion to build and operate data centers worldwide, according to a Bloomberg tally.
  2. Amazon plans to expand existing server farm hubs in northern Virginia and Oregon while pushing into new precincts including Mississippi, Saudi Arabia, and Malaysia.
  3. Much of Amazon's data center expansion targets rising demand for corporate services such as file storage and databases, with the facilities and advanced, expensive chips also supplying computing power for an expected generative AI boom.

Related Articles:

  • AI Datacenter Energy Dilemma – Race for AI Datacenter Space — Artificial intelligence is projected to push datacenters to 4.5% of global electricity generation by 2030, with datacenter power capacity growth accelerating from a 12-15% annual rate to 25%. Global datacenter critical IT power demand is projected to rise from 49 gigawatts to 96 gigawatts, about 40 gigawatts of it for AI.
  • Microsoft Infrastructure – AI & CPU Custom Silicon Maia 100, Athena, Cobalt 100 — Microsoft has planned annual datacenter spending of more than $50bn, which exceeds the annual spend of megaprojects such as nationwide rail networks, dams, and the Apollo moon program. The buildout is aimed at accelerating artificial general intelligence and extending generative AI from productivity applications to leisure.
  • Electricity 2024 — More than 8,000 data centers operate globally, with about 33% in the United States, 16% in Europe, and close to 10% in China. US data center electricity use is projected to rise from roughly 200 TWh in 2022, about 4% of US electricity demand, to almost 260 TWh, or 6% of total demand.

AI Summary. Immigrants accounted for 36% of new U.S. business launches last year, up from 25% in 2019, driven by a rise in Latino entrepreneurship, while business creation by white and native-born Americans has slowed. Hispanic-owned startups tend to be smaller, with 46% reporting over $100,000 in annual revenue versus 62% of white-owned firms.

Ruth Simon Wall Street Journal
Date Posted:

Immigrants from Latin America accounted for 36% of new firm creation in 2023 and started businesses at twice the rate of the U.S. population as a whole. @WSJ

Are immigrants accounting for a growing share of new U.S. businesses?

Core argument: Immigrants accounted for 36% of new U.S. business launches last year, up from 25% in 2019, a rise driven by increased Latino entrepreneurship, according to an analysis of Census Bureau data.

The jump in Latino entrepreneurship has driven up the overall share of new businesses owned by immigrants, who accounted for 36% of launches last year compared with 25% in 2019, according to a new analysis of Census Bureau data. New-business creation by white and native-born Americans has slowed in the past two years, following a broad surge early in the pandemic. Hispanic startups tend to be smaller according to the 2022 Federal Reserve Small Business Credit Survey, with 46% reporting more than $100,000 in annual revenue compared with 62% of white-owned firms, according to the analysis, which looked at firms in operation for five years or less.

Takeaways by Macro Roundup® AI

  1. Immigrants accounted for 36% of new U.S. business launches last year, up from 25% in 2019, a rise driven by increased Latino entrepreneurship, according to an analysis of Census Bureau data.
  2. New-business creation by white and native-born Americans has slowed over the past two years, following a broad surge early in the pandemic.
  3. Among firms operating five years or less, 46% of Hispanic-owned startups reported more than $100,000 in annual revenue, compared with 62% of white-owned firms, according to the 2022 Federal Reserve Small Business Credit Survey.

Related Articles:

  • America’s New Business Boom — The share of US workers employed by young firms is rising for the first time in decades, with 11.3% of jobs at firms less than 5 years old and 8.6% at firms 6–10 years old. Gains in the share of jobs at firms under 5 years old were larger in transportation and warehousing, management and information, and manufacturing.
  • Business Applications Eked Out a New Record in 2023 — Americans filed 5.5m applications to start new businesses in a single year, nearly 1.8m of them highly likely to hire employees — both series highs in U.S. Census Bureau Business Formation Statistics. Likely-employer applications ran 37% above pre-pandemic levels, evidence that startup activity has settled at a higher baseline.
  • Creative Destruction After the Pandemic — US establishment closures spiked and then returned to normal levels, while new establishment openings reached record highs—peaking at 379,000 in a single quarter—and have since cooled but remain far above any pre-2020 level. Much of this may be new businesses replacing those that closed, and it is unclear whether the new entrants are more productive than the firms they replaced.

AI Summary. South Korea's total fertility rate fell from 0.78 to 0.72 and is projected to reach 0.68, far below the 2.1 the OECD says is needed for a stable population. Military personnel numbers have dropped below 500,000, schools and universities report shrinking enrollment, and kindergartens have been converted into nursing homes.

Christian Davies, Song Jung-a and Kang Buseong Financial Times
Date Posted:

South Korea’s record low fertility rate is impacting multiple sectors: “military personnel fell below 500,000 for the first time, universities and schools reported dwindling student numbers, and kindergartens have been converted into nursing homes.” @FT

Are cash incentives enough to reverse a falling fertility rate?

Core argument: South Korea's total fertility rate fell from 0.78 in 2022 to 0.72 in 2023 according to government figures, and is projected to reach 0.68 this year, far below the 2.1 the OECD says is needed for a broadly stable population.

South Korea’s total fertility rate — the average number of children a woman is expected to give birth to in her lifetime — fell from 0.78 in 2022 to 0.72 in 2023, according to government figures. It is projected to fall to 0.68 this year, far below the 2.1 the OECD says is necessary to ensure a broadly stable population. The effects of the crisis are already being felt. In 2022, the number of South Korean military personnel fell below 500,000 for the first time, while universities and schools reported dwindling student numbers and kindergartens have been converted into nursing homes. Last year, more baby carriages were sold in South Korea for pets than for babies. “What people are experiencing in South Korea now is not the result of the 0.7 fertility rate, but of when the fertility rate was 1.2,” said Choi Seul-gi, a researcher at the Korea Development Institute. “It is going to get much worse.”

Takeaways by Macro Roundup® AI

  1. South Korea's total fertility rate fell from 0.78 in 2022 to 0.72 in 2023 according to government figures, and is projected to reach 0.68 this year, far below the 2.1 the OECD says is needed for a broadly stable population.
  2. South Korean military personnel fell below 500,000 for the first time in 2022, while universities and schools reported dwindling student numbers and kindergartens were converted into nursing homes.
  3. Korea Development Institute researcher Choi Seul-gi argues South Korea's present strains reflect the era when fertility was 1.2 rather than 0.7, and that conditions are going to get much worse.

Related Articles:

  • South Korea Keeps Shattering Its Own Record for World’s Lowest Fertility Rate — South Korea's fertility rate fell to 0.72 expected births per woman over a lifetime from 0.78 the prior year, with births down 7.7% to 230,000 in a nation of about 50m, according to Statistics Korea. Marriages also hit a low, with about 192,500 couples wedding, down 42% from a decade earlier.
  • How a Vast Demographic Shift Will Reshape the World — In East Asia and Europe, growing numbers of retirees will depend on a shrinking working-age population, and some Asian countries are aging before becoming rich — China hit its peak working-age population at 20% of US income levels at the same point, Vietnam at 14%.
  • The Wealth of Working Nations — Because of population aging, growth in GDP per capita and GDP per working-age adult have diverged across advanced economies; from 1998 to 2019 Japan's accumulated growth per working-age adult was 31.9% versus 29.5% in the US. The authors find a standard neoclassical growth model calibrated to each country's working-age population tracks output per working-age adult in most economies.

AI Summary. Multinational companies are reporting lower revenue from China, exporting less to the country, and shipping less from it, as Chinese economic growth slowed to its weakest pace in decades and consumers spend less, particularly on foreign brands. Some firms have responded by cutting their investment in China.

Newley Purnell and Clarence Leong Wall Street Journal
Date Posted:
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Many multinational companies are exporting less from China, sending fewer products there, and seeing declines in Chinese domestic revenues. Multinationals once accounted for more than half of exports out of China, but now make up less than 1/3. @WSJ

Is China becoming less profitable for multinational companies?

Core argument: China's economic growth fell last year to its slowest rate in decades, with consumers spending less, especially on foreign brands, and the country's export machine faltering.

The Chinese market is becoming less attractive [to multinational firms]. The country’s economic growth fell to its slowest rate in decades last year; consumers there are spending less, especially on foreign brands; and its once-unstoppable export machine is faltering. The result is many multinational companies are sending less from China, exporting fewer products there, and seeing declines in their revenue from the country. The changes have prompted some firms to reduce their investment in China.

Takeaways by Macro Roundup® AI

  1. China's economic growth fell last year to its slowest rate in decades, with consumers spending less, especially on foreign brands, and the country's export machine faltering.
  2. Multinational companies are sending less from China, exporting fewer products there, and seeing declines in their China revenue as the market becomes less attractive.
  3. The changes in the Chinese market have prompted some multinational firms to reduce their investment in the country.

Related Articles:

  • China Blocks Use of Intel and AMD Chips in Government Computers — China has issued government procurement guidelines that phase out US microprocessors from Intel and AMD in state PCs and servers and sideline Microsoft's Windows and foreign database software in favor of domestic alternatives. China accounted for 27% of Intel's $54bn in sales and 15% of AMD's $23bn.
  • China Intensifies Push to ‘Delete America’ From Its Technology — A Chinese government directive requires state-owned companies in finance, energy, and other sectors to replace foreign software in their information technology systems by 2027, part of a broader push to remove U.S. technology. Hardware makers were targeted first, with Dell, IBM, and Cisco equipment gradually replaced by Chinese products.
  • Managing Economic and Financial Entanglements With China — China's surplus in manufactured goods net of commodity imports has kept growing relative to trade partners' output and relative to China's own economic output, alongside weak consumer spending and falling homebuilding. U.S. federal spending financed largely by borrowing has supported private balance sheets and demand, muting attention to that surplus.