Edward Conard

Top Ten New York Times Bestselling Author

  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…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
  • “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
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Friday, April 12, 2024

AI Summary. Producer price inflation for final demand tracks consumer price inflation excluding shelter closely, and both show inflation under control; overall consumer inflation looks hot only because the shelter component is up 5.6%. That shelter measure lags rents by construction, and more current rent series show no recent inflation.

Greg Mankiw Greg Mankiw Blog
Date Posted:

Greg Mankiw argues that CPI inflation is temporarily elevated because the housing component lags actual rents, which have now stabilized. He believes that CPI Y/Y in early 2025 will be < 2.5%.

Is high inflation just a lagging shelter measurement?

Core argument: The CPI for shelter is up 5.6%, which makes headline CPI look hot, while PPI for final demand and CPI less shelter track each other closely and show inflation under control.

PPI for final demand tracks the CPI less shelter very closely. By both measures, inflation is now very much under control. The problem is that the CPI for shelter is up 5.6%, so the overall CPI looks quite hot. Some would argue that leaving out shelter is misleading because shelter is such a large fraction of the typical household budget. On the other hand, the CPI for shelter is well known to be a lagging indicator of rents by virtue of how it is constructed, and other more current series show no recent inflation in rents. This latter argument puts me in the optimistic camp on inflation. By the way, I recently made a bet with my friend Larry Ball that overall CPI from February 2024 to February 2025 will be less than 2.5%. I am writing the bet here as a sort of contract. We will check back next year. The bet is for $5. That is in nominal terms. So, in real terms, I get more if I win than Larry gets if he wins.

Takeaways by Macro Roundup® AI

  1. The CPI for shelter is up 5.6%, which makes headline CPI look hot, while PPI for final demand and CPI less shelter track each other closely and show inflation under control.
  2. The CPI shelter component is a lagging indicator of rents by virtue of how it is constructed, and other more current series show no recent inflation in rents.
  3. A $5 nominal bet with Larry Ball holds that overall CPI from February 2024 to February 2025 will be less than 2.5%.

Related Articles:

  • Furman On CPI — Core consumer price inflation has run hot for three consecutive months, at a 3.5% annual rate over 12 months and 4.6% over the past three, undercutting the view that the early-year jump was a seasonal anomaly. Shelter inflation has plateaued around a 5.5% annual rate rather than falling as bottom-up forecasts assumed.
  • How Quickly Do Prices Respond to Monetary Policy? — An analysis finds recent swings in inflation have been concentrated in the categories most sensitive to monetary policy, with inflation for that responsive group now close to its pre-2020 rate. The authors estimate that interest rate increases likely began putting downward pressure on prices about a year later and will continue to do so near term.
  • Importing Shelter Inflation — Shelter costs make up about 30% of the consumer price index, and their monthly inflation appears to be stabilizing above pre-pandemic rates rather than delivering the disinflation forward-looking data had implied. The author suggests this may be related to a surge in migration, estimated at 3.3m migrants in a year.

AI Summary. Early signs of US fiscal stress would appear in markets as weaker Treasury auction results, including lower bid-to-cover ratios and softer demand from interest rate-sensitive buyers, rating agency opinions on the deteriorating fiscal position, and a higher term premium on longer-dated debt.

Torsten Sløk Apollo
Date Posted:

Torsten Sløk notes that the first signs of fiscal stress will likely be large gaps between average and “tail” bids in Treasury auctions, lower bid-to-cover ratios, or softer demand from interest-rate-sensitive buyers.

Where would the first signs of US fiscal stress appear?

Core argument: Tailing Treasury auctions, lower bid-to-cover ratios, or softer demand from interest rate-sensitive buyers are identified as early market signs of US fiscal stress.

Where would the first signs of US fiscal stress appear in markets? 1) Tailing Treasury auctions, lower bid-to-cover ratios, or softer demand from interest rate-sensitive buyers. 2) Rating agencies issuing opinions about the deteriorating US fiscal situation. 3) The term premium trending higher.

Takeaways by Macro Roundup® AI

  1. Tailing Treasury auctions, lower bid-to-cover ratios, or softer demand from interest rate-sensitive buyers are identified as early market signs of US fiscal stress.
  2. Rating agencies issuing opinions about the deteriorating US fiscal situation is identified as a second place where fiscal stress would first appear.
  3. A term premium trending higher is identified as a third market sign of US fiscal stress.

Related Articles:

  • The Long Term Budget Outlook: 2024 to 2054 — The Congressional Budget Office projects the federal budget deficit will reach 8.5% of gross domestic product over a 30-year horizon, with outlays rising to 27.3% of GDP and revenues to 18.8%. The projected growth is attributed to rising interest costs, large sustained deficits excluding interest, and spending on federal health care programs, particularly Medicare.
  • Olivier Blanchard on Debt Explosions — The author argues that rising long-term US Treasury yields reflect a term premium driven by heavy bond supply and weaker demand, including the Federal Reserve shrinking its holdings, rather than a risk premium, since inflation-indexed yields have also risen. Risks include a failed auction or debt monetization producing high inflation.
  • From Riches to Rags: Causes of Fiscal Deterioration Since 2001 — Federal debt held by the public rose from 32% to 98% of GDP over roughly two decades, despite earlier Congressional Budget Office projections that the debt would be paid off. The authors attribute 37 percentage points to major tax cuts, 33 to discretionary spending and Medicare expansions, and 28 to recession and pandemic responses.

AI Summary. China's central bank effectively fixed the yuan's daily reference rate rather than letting it follow the market, stabilizing the currency but leaving an exchange rate that cannot be called flexible. The bank is targeting the yuan's value against the dollar rather than against a basket of currencies.

Brad Setser Council on Foreign Relations
Date Posted:

.@Brad_Setser argues that the People’s Bank of China dropped the pretense of a market-driven exchange rate in 2023, and is currently targeting the yuan’s value against the dollar, not a basket of currencies.

Is China's currency still flexible, or pegged to the dollar?

Core argument: The PBOC has stopped moving the yuan's daily fix, which anchors a two-percentage-point trading band, allowing spot to weaken further while ending the pattern of spot leading the fix downward.

Faced with ongoing depreciation pressures (and a regime where, absent heavy-handed intervention by the PBOC, the market was basically leading the yuan to crawl down), the PBOC dropped the pretense that the yuan, which is required to trade within a two-percentage point band around the daily fix – was flexible and that the fix was somehow market determined. The fix just stopped moving, which meant that spot could weaken further. It worked. The CNY has stabilized, and spot no longer leads the fix down. It just isn’t quite anything that can realistically be called a flexible exchange rate. It also has become clear that the PBOC is currently targeting the yuan's value against the dollar, not its value against a basket of currencies.

Takeaways by Macro Roundup® AI

  1. The PBOC has stopped moving the yuan's daily fix, which anchors a two-percentage-point trading band, allowing spot to weaken further while ending the pattern of spot leading the fix downward.
  2. The yuan has stabilized under the unmoving fix, but the resulting regime cannot realistically be called a flexible exchange rate.
  3. The PBOC is currently targeting the yuan's value against the dollar rather than against a basket of currencies.

Related Articles:

  • The Threat from China’s Capital Flight — Oddities in China's official balance of payments statistics suggest its actual current account surplus may be nearly 3x the reported figure, which would make it about as large relative to world output as it has ever been. The likeliest explanation for simultaneous downward pressure on the yuan is capital flight of roughly $500bn a year.
  • Anatomy of Capital Fight in China… — Unaccounted capital outflows from China show up not only in the balance of payments' net errors and omissions category but also in net other investment and in the gap between customs-reported and foreign-exchange-reported goods trade balances. This combined residual averaged roughly $100bn per quarter, and about twice that during periods of heavier outflow pressure.
  • Is the Chinese Government Pushing Down the Yuan? — The Bank for International Settlements measure of China's inflation-adjusted, trade-weighted exchange rate has fallen roughly 14% from its recent peak, the largest decline among the 64 countries it tracks. The author argues this reflects a policy choice, with China's central bank having outsourced foreign reserve management to state-run banks while lending increasingly large sums to the domestic banking system.

AI Summary. U.S. export controls on China are associated with broad-based supply-chain decoupling, with U.S. suppliers more likely to end relationships with Chinese customers, including ones not targeted. The authors estimate affected suppliers suffered negative abnormal stock returns erasing $130bn in market value alongside lower bank lending, profitability, and employment, while affected Chinese firms shifted toward domestic and non-U.S. suppliers.

Matteo Crosignani, Lina Han, Marco Macchiavelli and André Silva Federal Reserve Bank of New York
Date Posted:
Is Database:
Database

US firms hit by controls restricting exports to China saw negative stock returns that wiped out $130 billion in market capitalization and drops in bank lending, profitability, and employment. @mcrosign @linahan56358916 @andrefjsilva

What do export controls cost U.S. suppliers selling to China?

Core argument: U.S. suppliers affected by export controls on their Chinese customers had negative abnormal stock returns wiping out $130 billion in market capitalization, and experienced declines in bank lending, profitability, and employment.

The U.S. has imposed export controls to deny China access to strategic technologies. These measures prompted a broad-based decoupling of U.S. and Chinese supply chains. Once their Chinese customers are subject to export controls, U.S. suppliers are more likely to terminate relations with Chinese customers, including those not targeted by export controls. As a result of these disruptions, affected suppliers have negative abnormal stock returns, wiping out $130 billion in market capitalization, and experience a drop in bank lending, profitability, and employment. Relations between targeted Chinese firms and their U.S. suppliers are more likely to be terminated after the export controls relative to unaffected Chinese firms. We also find that affected Chinese firms increase new relationships with domestic Chinese suppliers. There is evidence that, following U.S. export controls, China has boosted domestic innovation and self-reliance, and increased purchases from non-U.S. firms that produce similar technology to the U.S.-made ones subject to export controls.

Takeaways by Macro Roundup® AI

  1. U.S. suppliers affected by export controls on their Chinese customers had negative abnormal stock returns wiping out $130 billion in market capitalization, and experienced declines in bank lending, profitability, and employment.
  2. U.S. suppliers are more likely to terminate relations with Chinese customers once those customers are subject to export controls, including customers not themselves targeted.
  3. Affected Chinese firms increased new relationships with domestic Chinese suppliers, and evidence indicates China boosted domestic innovation and self-reliance and increased purchases from non-U.S. firms producing technology similar to that under U.S. export controls.

Related Articles:

  • China On Cusp Of Next-Generation Chip Production Despite US Curbs — China's largest chipmaker, SMIC, has assembled new production lines in Shanghai to mass-produce 5-nanometre smartphone processors designed by Huawei, using its existing stock of US- and Dutch-made equipment. Though 5nm remains a generation behind cutting-edge 3nm chips, the move indicates China's semiconductor industry is still progressing despite US export controls.
  • China AI & Semiconductors Rise: US Sanctions Have Failed — China's Kirin 9000S is a better-designed, leading-edge chip than the West realizes, developed without access to extreme ultraviolet lithography or cutting-edge US intellectual property, indicating existing export controls have not worked. The authors argue only decisive, full-scale measures—not half measures—could prevent China from mass-manufacturing chips needed for high-end military applications.
  • China Imports Record Amount of Chipmaking Equipment — Chinese customs data show semiconductor production tool imports reached nearly $5bn over two months, up 70% from $2.9bn a year earlier, a record high. Most of the equipment came from the Netherlands and Japan, which have imposed export restrictions on chipmaking equipment alongside the US.

AI Summary. China's Ministry of Industry and Information Technology has ordered state-owned mobile operators to inventory non-Chinese semiconductors in their networks and set timelines to replace them. Intel and AMD, which have supplied the bulk of core processors in Chinese networking equipment, stand to be hit hardest.

Liza Lin Wall Street Journal
Date Posted:

Sino-American decoupling is accelerating: China has moved up its deadline to get US-made chips out of the PRC’s telecom system to 2027.

Is China ordering telecom carriers to replace foreign chips with domestic ones?

Core argument: China's Ministry of Industry and Information Technology ordered state-owned mobile operators to inspect their networks for non-Chinese semiconductors and draft timelines to replace them, setting a deadline to phase out foreign core chips in telecom infrastructure.

The deadline given by China’s Ministry of Industry and Information Technology aims to accelerate efforts by Beijing to halt the use of such core chips in its telecom infrastructure. The regulator ordered state-owned mobile operators to inspect their networks for the prevalence of non-Chinese semiconductors and draft timelines to replace them. In the past, efforts to get the industry to wean itself off foreign semiconductors have been hindered by the lack of good domestically made chips. Chinese telecom carriers’ procurements show they are switching more to domestic alternatives, a move made possible in part because local chips’ quality has improved and their performance has become more stable. Such an effort will hit Intel and AMD the hardest. The two chip makers have in recent years provided the bulk of the core processors used in networking equipment in China and the world.

Takeaways by Macro Roundup® AI

  1. China's Ministry of Industry and Information Technology ordered state-owned mobile operators to inspect their networks for non-Chinese semiconductors and draft timelines to replace them, setting a deadline to phase out foreign core chips in telecom infrastructure.
  2. Intel and AMD will be hit hardest by the directive, having provided the bulk of core processors used in networking equipment in China and globally in recent years.
  3. Chinese telecom carriers' procurements show a shift toward domestic alternatives, made possible in part by improved quality and more stable performance of local chips, after earlier substitution efforts were hindered by the lack of good domestically made chips.

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.
  • The US-China Chip War is Escalating — China's imports of chipmaking equipment have reached record highs, with purchases rising from Japan, the Netherlands, and Singapore alongside a rebound in imports from the United States, as Chinese manufacturers work to indigenize chip production. Chinese government and military buyers have obtained some NVIDIA A100 and H100 chips that US sanctions were designed to block.

Monday, April 15, 2024

AI Summary. Linking census records of sheltered and unsheltered homeless adults to tax and benefit data, the authors find nearly half had formal employment while homeless and nearly all worked or received at least one safety net program, yet incomes stayed low across the surrounding decade, suggesting homelessness arises amid long-term deprivation rather than sudden income loss.

Bruce Meyer, Angela Wyse, Gillian Meyer, Alexa Grunwaldt and Derek Wu National Bureau of Economic Research
Date Posted:
Is Database:
Database

In a sample of ~140k homeless people, Meyer et al found that 40-50% aged 25-59 had earnings of $12-14k in 2018 dollars and 80%+ had benefits from SSI and related programs. For those with low permanent income, even modest events trigger homelessness.

Does homelessness stem from long-term poverty rather than sudden income loss?

Core argument: Nearly half of adults recorded as sheltered or unsheltered homeless in the 2010 Census had formal employment in the year they were observed as homeless, and nearly all either worked or were reached by at least one safety net program.

Starting from the first large and nationally representative sample of adults recorded as sheltered and unsheltered homeless taken from the 2010 Census, we link restricted-use longitudinal tax records and administrative data on the Supplemental Nutrition Assistance Program (SNAP), Medicare, Medicaid, Disability Insurance (DI), Supplemental Security Income (SSI), veterans’ benefits, housing assistance, and mortality. Nearly half of these adults had formal employment in the year they were observed as homeless, and nearly all either worked or were reached by at least one safety net program. Nevertheless, their incomes remained low for the decade surrounding an observed period of homelessness, suggesting that homelessness tends to arise in the context of long-term, severe deprivation rather than large and sudden losses of income. People appear to experience homelessness because they are very poor despite being connected to the labor market and safety net, with low permanent incomes leaving them vulnerable to the loss of housing when met with even modest disruptions to life circumstances.

Takeaways by Macro Roundup® AI

  1. Nearly half of adults recorded as sheltered or unsheltered homeless in the 2010 Census had formal employment in the year they were observed as homeless, and nearly all either worked or were reached by at least one safety net program.
  2. Incomes of adults observed as homeless in the 2010 Census remained low across the decade surrounding that period, suggesting homelessness arises amid long-term, severe deprivation rather than large and sudden income losses.
  3. The study links the first large, nationally representative sample of homeless adults to restricted-use longitudinal tax records and administrative data on SNAP, Medicare, Medicaid, Disability Insurance, SSI, veterans' benefits, housing assistance, and mortality.

Related Articles:

  • Evaluating the Success of the War on Poverty since 1963 Using an Absolute Full-Income Poverty Measure — The authors estimate that an absolute full-income poverty measure, which counts a fuller set of income sources and adjusts thresholds only for inflation, fell from 19.5% to 1.6%, versus an official decline to 10.5%. They also find relative poverty reductions modest and government dependence more than doubled among working-age adults.
  • More Americans Are Ending Up Homeless—at a Record Rate — Homelessness counts across more than 300 U.S. tracking entities are up roughly 11% from the prior year, which would be the largest recorded increase since comparable federal tracking began in 2007. Advocates for the homeless say high housing costs remain the biggest driver, taking a heavier toll as pandemic-era relief spending and eviction moratoriums wind down.

AI Summary. California has lost tech jobs across computer systems design, streaming and social networks, software publishing, and web search, and its share of US tech industry jobs has fallen to the lowest level in more than a decade after peaking near 19% in late 2019. California still receives 31% of the industry's total compensation.

Joseph Politano Apricitas Economics
Date Posted:

California’s share of US tech jobs is the lowest in a decade, falling from nearly 19% in late 2019 to just over 16% in February. Californians maintain an advantage in high-end jobs, earning 31% of the industry’s total compensation. @JosephPolitano

Is California losing its share of US tech jobs?

Core argument: California has lost 21k jobs in computer systems design, 15k in streaming and social networks, 11k in software publishing, and 7k in web search since August 2022, while gaining under 1k in computing infrastructure and data processing.

Since August 2022 California has lost 21k jobs in computer systems design, 15k in streaming and social networks, 11k in software publishing, and 7k in web search—while gaining less than 1k in computing infrastructure and data processing. As a result, the share of US tech jobs located in California has fallen significantly since 2020, dropping a full percentage point over the last year and hitting the lowest levels in more than a decade. California had gone from having less than 15% of all US tech industry jobs in 2010 to nearly 19% in late 2019, but the pandemic and ensuing remote work shock immediately reversed that trend. Despite losing significant amounts of tech jobs to other states, California still retains a massive advantage at the high end of the industry: Californians receive a whopping 31% of the industry’s total compensation.

Takeaways by Macro Roundup® AI

  1. California has lost 21k jobs in computer systems design, 15k in streaming and social networks, 11k in software publishing, and 7k in web search since August 2022, while gaining under 1k in computing infrastructure and data processing.
  2. California's share of US tech industry jobs has fallen a full percentage point over the past year to its lowest level in more than a decade, after rising from under 15% in 2010 to nearly 19% in late 2019 before the pandemic and remote work reversed the trend.
  3. Californians receive 31% of the US tech industry's total compensation, an advantage at the high end of the industry that persists despite job losses to other states.

Related Articles:

  • California Mints Millionaires Faster Than They Can Leave — The number of California residents with incomes of $1m or more grew by 61,900, or 66%, from 2019 to 2021, lifting the state's share of US millionaires to 17.9% from 17% while the shares of New York, Texas, and Florida fell. Rising in-state incomes minted more new millionaires than the net outflow of higher-earning taxpayers to other states.
  • Behavioral Responses to State Income Taxation of High Earners: Evidence from California — A California ballot measure raising top marginal income tax rates by up to 3 percentage points prompted an additional 0.8% of the affected tax base to leave the state, with an estimated income elasticity of 2.5–3.2 for high earners who stayed. The authors estimate these responses eroded 45.2% of windfall revenues within one year and 60.9% within two.
  • The Ultra-Rich Are Flourishing and Sticking Around In California — California is home to 113 billionaires, more than any country except China, and added over 116,000 millionaire taxpayers between the end of 2019 and 2021, according to the state's Department of Finance. The number of residents reporting income above $50m rose 158% to 3,182.

AI Summary. Japan's population of Japanese nationals fell by 837,000 over a year, the largest annual decline since comparable records began in 1950, while the overall population, buoyed by rising numbers of foreign residents, fell by 595,000 to 124.3mn. The number of foreign nationals living in Japan reached a record 3.2mn.

Leo Lewis Financial Times
Date Posted:

Japan’s native population fell by 837,000 in 2023, almost 100 people an hour. Some of the decline was offset by immigration for a net change of 595,000. Japan’s foreign population reached a record high of 3.2mm in June 2023.

Is rising foreign residency offsetting Japan's declining native population?

Core argument: Japan's population of Japanese nationals fell by 837,000 in the 12 months to October 1, 2023, the largest annual drop since comparable records began in 1950, equal to 2,293 people per day or just under 96 per hour.

The number of Japanese nationals dropped by the biggest amount in a year since comparable records began in 1950 — a fall of 837,000 in the 12 months to October 1, 2023. That decline represents a daily drop of 2,293 people or just under 96 per hour. Japan’s overall population was 124.3mn in October — down 595,000 from the previous year when adjusted for steadily rising levels of migrant workers, overseas students, and foreign permanent residents. In a report released last year, the country’s Immigration Services Agency said the number of foreign nationals living in Japan had reached a record high of 3.2mn at the end of June 2023. The increase was driven by expansion in a visa programme for skilled workers in specified sectors and in technical internships.

Takeaways by Macro Roundup® AI

  1. Japan's population of Japanese nationals fell by 837,000 in the 12 months to October 1, 2023, the largest annual drop since comparable records began in 1950, equal to 2,293 people per day or just under 96 per hour.
  2. Japan's overall population stood at 124.3mn in October, down 595,000 from a year earlier when adjusted for rising numbers of migrant workers, overseas students, and foreign permanent residents.
  3. Japan's Immigration Services Agency reported that foreign nationals living in Japan reached a record 3.2mn at the end of June 2023, an increase driven by expansion of a visa programme for skilled workers in specified sectors and in technical internships.

Related Articles:

  • Where Can Investors Find Geographic Diversification Today? — Japan offers investors geographic diversification, with among the lowest correlation in economic conditions to the US of any developed country, reflecting trade exposure split between the US, China, and the broader Asia region. Most sales of Japanese-listed companies are domestic, and investors remain underweight Japanese assets.
  • Japanese Workers Secure Biggest Pay Rise In Three Decades — Japanese companies including Honda, Nippon Steel, and ANA Holdings granted workers their largest pay rise in more than three decades, with economists expecting large firms to give unionised workers average increases above 4%, up from 3.6% the prior year. The increases strengthen the case for the Bank of Japan to begin raising interest rates.
  • Japan’s Foreign Worker Tally Tops Two Million For First Time — Japan's foreign worker count reached about 2.05 million, the most on record, a 12.4% increase from a year earlier, according to the Labor Ministry. About three in five of the roughly 319,000 establishments employing non-Japanese staff have no more than 30 employees in total.

AI Summary. About 70% of US mortgage holders hold rates more than three percentage points below what a new loan would cost, compared with a 1998–2020 period in which no more than 40% had rates even one point below market. Economists at the Federal Housing Finance Agency estimate this lock-in effect accounts for roughly 1.3m fewer home sales.

Emily Badger and Francesca Paris New York Times
Date Posted:

70% of American mortgage holders have a rate more than 3pp below the current market rate; the Federal Housing Finance Agency estimates this lock-in effect is responsible for about 1.3mm fewer home sales from the spring of 2022 through 2023.

How many home sales have low locked-in mortgage rates prevented?

Core argument: Economists at the Federal Housing Finance Agency estimate the mortgage lock-in effect accounts for about 1.3 million fewer U.S. home sales from spring 2022 through the end of 2023, against roughly five million annual sales in more normal times.

Between 1998 and 2020, there was never a time when more than 40% of American mortgage holders had locked-in rates more than one percentage point below market conditions. By the end of 2023 about 70% of all mortgage holders had rates more than three percentage points below what the market would offer them if they tried to take out a new loan. Indeed, according to new research from economists at the Federal Housing Finance Agency, this lock-in effect is responsible for about 1.3 million fewer home sales in America during the run-up in rates from the spring of 2022 through the end of 2023. That’s a startling number in a nation where around five million homes sell annually in more normal times — most of those to people who already own.

Takeaways by Macro Roundup® AI

  1. Economists at the Federal Housing Finance Agency estimate the mortgage lock-in effect accounts for about 1.3 million fewer U.S. home sales from spring 2022 through the end of 2023, against roughly five million annual sales in more normal times.
  2. By the end of 2023, about 70% of all U.S. mortgage holders had rates more than three percentage points below what the market would offer them on a new loan.
  3. Between 1998 and 2020, the share of American mortgage holders with rates more than one percentage point below market conditions never exceeded 40%.

Related Articles:

  • The Lock-In Effect of Rising Mortgage Rates — The authors estimate that each percentage point by which market mortgage rates exceed a homeowner's original rate lowers the probability of sale by 18.1%, an effect they calculate prevented 1.33m US home sales. They estimate this supply reduction raised home prices by 5.7%, outweighing a 3.3% price decline from higher rates.
  • The Boomer-Millennial Housing Battle Cools — Demographic needs are outweighing affordability in the housing market, with the share of first-time buyers returning nearly to pre-pandemic levels despite high prices and interest rates. One in four Millennial buyers reported purchasing because they had no choice, and Millennials again make up the largest group of homebuyers.
  • 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. Homicides fell about 20% across 133 U.S. cities in the first three months of the year compared with the same period a year earlier, according to tabulations of police department data by a crime-data analyst, with declines of 35% in Philadelphia, 15% in New York City, and 58% in Columbus, Ohio.

Dan Frosch and Cameron McWhirter Wall Street Journal
Date Posted:

Homicides in American cities are approaching the pre-pandemic level, dropping 20% y/y in 2023.

Are homicides falling sharply across American cities?

Core argument: Homicides fell about 20% across 133 U.S. cities from the start of the year through the end of March compared with the same period in 2023, according to crime-data analyst Jeff Asher's tabulation of police department statistics.

Nationwide, homicides dropped around 20% in 133 cities from the beginning of the year through the end of March compared with the same period in 2023, according to crime-data analyst Jeff Asher, who tabulated statistics from police departments across the country. Philadelphia saw a 35% drop in killings as of April 12 compared with the same period last year, police data show. In New York City, homicides fell 15% through April 7. Homicides in Columbus, Ohio, plunged 58% through April 7. During the pandemic, homicide rates shot up around the country, sparking concerns that the progress made during a decadeslong drop in violent crimes had been undone. The number of homicides in the U.S. rose nearly 30% in 2020 from the prior year to 21,570, the largest single-year increase ever recorded by the Federal Bureau of Investigation.

Takeaways by Macro Roundup® AI

  1. Homicides fell about 20% across 133 U.S. cities from the start of the year through the end of March compared with the same period in 2023, according to crime-data analyst Jeff Asher's tabulation of police department statistics.
  2. Philadelphia recorded a 35% drop in killings as of April 12 versus the same period a year earlier, while New York City homicides fell 15% through April 7 and Columbus, Ohio, homicides dropped 58% through April 7.
  3. U.S. homicides rose nearly 30% in 2020 from the prior year to 21,570, the largest single-year increase recorded by the FBI, sparking concerns that a decadeslong decline in violent crime had been undone.

Related Articles:

  • Punching TikToks Are Part of a Real New York Crime Wave — Felony assaults in New York City's subway have risen two- to threefold since the pandemic, a pattern that does not match the rest of the country and appears connected to local criminal justice practices. Research finds that ending cash bail for most misdemeanors and nonviolent felonies is associated with increased repeat offending among those previously charged with violent felonies.
  • The Collapse of Broken-Windows Policing in New York City, Los Angeles, and Washington, DC, 2013–22 — Arrests for minor "broken-windows" offenses—counted as misdemeanors, violations, and infractions per 100,000 residents—fell 74% in New York, 77% in Washington, DC, and 81% in Los Angeles over the period studied, declining steadily in New York and Los Angeles.
  • Pandemic Murder Wave Has Crested. Here’s the Postmortem — Murders in 93 US cities fell 5% year over year after the increase that began in 2020, though homicides remained 4,764 (28.7%) above pre-pandemic levels, according to data compiled by AH Datalytics. US murder rates remain far higher than in other wealthy nations.

AI Summary. Around $90tn in the US is projected to pass from those born before 1964 to their heirs by 2045, according to research by Cerulli Associates. With government finances strained by pandemic costs and aging populations, debate is growing over whether inheritance taxes—long avoidable through planning—should be made harder to sidestep.

Emma Agyemang Financial Times
Date Posted:

Over the next 20 years, $90T in wealth will be transferred from Americans born before 1964 to their heirs according to financial research firm Cerulli Associates.

Should governments make inheritance taxes harder to avoid?

Core argument: Cerulli Associates research projects roughly $90tn will pass from Americans born before 1964 to their heirs by 2045.

Roy Jenkins, a former UK finance minister and EU Commission president, once described inheritance tax as a “voluntary levy,” paid only by those who distrust their heirs more than they dislike the tax authorities. But as baby boomer wealth starts to trickle down to younger cohorts, and with government coffers around the world strained by the costs of the pandemic and aging populations, debate is growing about whether it should become, at the very least, less voluntary. By 2045, around $90tn in the US alone is set to be transferred from those born before 1964 to their heirs, according to research by Cerulli Associates.

Takeaways by Macro Roundup® AI

  1. Cerulli Associates research projects roughly $90tn will pass from Americans born before 1964 to their heirs by 2045.
  2. Roy Jenkins, a former UK finance minister and EU Commission president, called inheritance tax a "voluntary levy," paid only by those who distrust their heirs more than they dislike the tax authorities.
  3. Debate over making inheritance taxation less voluntary is growing as government finances worldwide are strained by pandemic costs and aging populations.

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