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


Monday, April 29, 2024

AI Summary. A wealth tax applies to net assets regardless of the return earned, making it equivalent to taxing an assumed rather than actual flow of capital income. As a result, effective tax rates on returns fall as returns rise and climb toward infinity as returns approach zero, with tax still owed on loss-making assets.

Shafik Hebous, Alexander Klemm, Geerten Michielse and Carolina Osorio-Buitron International Monetary Fund
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The IMF argues that a well-designed tax on income from capital, at a lower rate than labor income, would be less distortive and more equitable than a wealth tax if countries seek to raise more revenue from the rich.

How does a wealth tax affect effective tax rates across returns?

Core argument: A wealth tax of 1¼ percent is equivalent to a 25 percent capital income tax only for assets yielding a 5 percent return, since a wealth tax effectively taxes an assumed rather than actual flow of capital income.

One option that is increasingly being discussed is taxing the stock of net wealth directly. Moving from capital income to wealth taxes raises the question of how they differ at a fundamental level. The key difference is that the former is applied on a flow and the latter on a stock: a wealth tax is imposed on the net wealth (assets minus liabilities) of individuals, irrespective of the return. Wealth taxes are thus equivalent to taxing a fixed rate of return, that is, an assumed rather than the actual flow of capital income. This implies that high-yielding investments bear light taxation (in percent of the income), while low-return investments—including loss-making ones—are taxed heavily under a wealth tax. Figure 7 provides an illustration of the taxation of an asset through a wealth or a capital income tax, where the hypothetical income tax rate is 25 percent and the wealth tax rate is 1¼ percent. With these tax rates, they are equivalent for assets yielding a return of 5%. The figure shows how effective tax rates on returns decline as the return rises. Even more strikingly they rise for very low returns, tending to infinity as returns approach zero. And they would still be collected on loss-making assets.

Takeaways by Macro Roundup® AI

  1. A wealth tax of 1¼ percent is equivalent to a 25 percent capital income tax only for assets yielding a 5 percent return, since a wealth tax effectively taxes an assumed rather than actual flow of capital income.
  2. Under a wealth tax, effective tax rates on returns decline as returns rise and rise for very low returns, tending to infinity as returns approach zero, and the tax is still collected on loss-making assets.
  3. The fundamental difference between capital income and wealth taxes is that the former applies to a flow while the latter applies to the stock of net wealth—assets minus liabilities—irrespective of the return earned.

Related Articles:

AI Summary. Data center power demand is projected to grow 15% annually through 2030, lifting data centers to 8% of US power demand from about 3% and raising overall US power demand growth to 2.4% a year versus roughly 0% over the prior decade.

Carly Davenport, Brian Singer, Et al. Goldman Sachs
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A @GoldmanSachs analysis argues US power demand will grow at 2.4%/year through 2030 versus 0% over the last decade. They forecast data centers will be 8% of power demand by 2030 from 3% currently.

Will data center growth end a decade of flat US power demand?

Core argument: Data center power demand is forecast to grow at a 15% CAGR over 2023–2030, lifting data centers to 8% of total US power demand by 2030 from about 3% currently.

We forecast a 15% CAGR in data center power demand from 2023-2030, driving data centers to make up 8% of total US power demand by 2030 from about 3% currently. We now see a 2.4% CAGR in US power demand growth through 2030 from 2022 levels vs. ~0% over the last decade. Of the 2.4%, about 90 bps of that is tied to data centers. We estimate about 47 GW of incremental power generation capacity will be required to support US data center power demand growth cumulatively through 2030, met with about 60% gas and 40% renewable sources. We expect this to drive about $50 bn of capital investment in US power generation capacity cumulatively through 2030.

Takeaways by Macro Roundup® AI

  1. Data center power demand is forecast to grow at a 15% CAGR over 2023–2030, lifting data centers to 8% of total US power demand by 2030 from about 3% currently.
  2. US power demand is projected to grow at a 2.4% CAGR through 2030 from 2022 levels, versus roughly 0% over the prior decade, with about 90 bps of that tied to data centers.
  3. About 47 GW of incremental US generation capacity is estimated as required cumulatively through 2030 to support data center demand growth, met with about 60% gas and 40% renewables, driving about $50 bn of capital investment.

Related Articles:

  • 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.
  • Electricity Grids and Secure Energy Transitions — Under a scenario based on announced government pledges, global electricity demand is projected to grow 2.7% per year, more than doubling from just under 25,000 terawatt-hours to nearly 54,000 terawatt-hours by 2050. Hydrogen production via electrolysis and electric vehicles account for more than half of that projected growth.
  • The AI Transition One Year Later: On Track, but Macro Impact Still Several Years Off — Investment in AI hardware is projected to rise substantially as a precursor to integrating AI into business processes, with the investment cycle estimated to peak at 2–2½% of GDP and early signs visible among AI-enabling companies. The authors estimate generative AI could raise developed-market labor productivity growth by 1.5pp annually over a 10-year adoption period, roughly 15% cumulatively.

AI Summary. A substantial share of China's net export proceeds is never repatriated and cannot be accounted for; the authors attribute this to offshore holdings by private Chinese firms, overseas accumulation by state-owned entities, and reduced reinvestment by foreign exporters. They argue state-linked funds could be repatriated in a crisis, while lower foreign reinvestment is more structural.

Martin Lynge Rasmussen Money: Inside and Out
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In the 12 months ending March 2024, China ran a goods trade surplus of $844B, however only $411B has been repatriated. Two of the three drivers of this form of capital flight are unlikely to be reversed. @martin_lynge

Why do much of China's export earnings never return home?

Core argument: A substantial share of China's net export proceeds never returns to China and cannot be accounted for, with three categories identified as possibly making up a large portion of the estimated amounts.

A substantial part of China's net export proceeds never make it back to China and cannot be accounted for. We think the following three categories might make up a large portion of the estimated numbers. 1) Offshore accumulation by domestic private Chinese firms would be the clearest form of capital flight, but likely also the most reversible one. Domestic private Chinese firms might have kept export proceeds offshore as investment returns have been higher offshore than onshore recently. At the same time this group might repatriate offshore holdings once it becomes onshore assets become more attractive. These funds should probably be considered outside of the reach of Chinese authorities. 2) Overseas accumulation by state-owned companies (or offshore funds within the state's reach) should not be considered capital flight as authorities should be able to repatriate these funds and convert them into RMB if needed. These might be considered shadow reserves that can support China's BoP in times of crisis. 3) Lower reinvestment by foreign companies exporting out of China might also account for a part of the unremitted export proceeds. This trend is likely more structural and might therefore not reverse as easily as the flows from domestic private firms.

Takeaways by Macro Roundup® AI

  1. A substantial share of China's net export proceeds never returns to China and cannot be accounted for, with three categories identified as possibly making up a large portion of the estimated amounts.
  2. Offshore accumulation by domestic private Chinese firms, possibly driven by higher investment returns offshore than onshore, would be the clearest form of capital flight but likely the most reversible should onshore assets become more attractive.
  3. Overseas accumulation by state-owned companies and offshore funds within the state's reach should not count as capital flight, since authorities should be able to repatriate and convert these funds into RMB, making them shadow reserves supporting China's balance of payments in a crisis.

Related Articles:

  • Foreign Direct Investment in China Falls to Lowest Level in Decades — China's direct investment liabilities, a measure of foreign capital flowing into the country, totalled about $33bn in 2023, an 82% decline from the prior year and the lowest annual level since 1993, according to China's State Administration of Foreign Exchange.
  • 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.
  • 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.

AI Summary. Across Nordic countries, inflation rose to around 10% after the pandemic regardless of whether the country targeted inflation or its exchange rate, indicating no monetary policy goal was superior in the face of a global inflation shock. The authors find no strong evidence that floating exchange rates delivered lower output variability.

Jesper Rangvid Rangvid's Blog
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Citing divergences in the exchange rate against the Euro across Scandinavia, Jesper Rangvid argues, “It seems that there is virtually no trade-off between the variability of exchange rates and the variability of other macroeconomic variables.”

Does the choice of monetary policy regime affect inflation and output stability?

Core argument: Inflation rose to around 10% after the pandemic in every Nordic country, whether it targeted inflation or the exchange rate, indicating that no monetary policy goal was superior in the face of a global inflation shock.

First, no Nordic country – regardless of monetary policy strategy – has been able to prevent the post-pandemic inflation flare-up. In every Nordic country, no matter whether it has an inflation-targeting or an exchange rate-targeting regime, inflation increased to around 10% after the pandemic. This indicates that in the face of a global inflation shock, no monetary policy goal is superior to any other. This is an important conclusion. Second, exchange rate developments have been very different. Neither Denmark nor Finland had exchange rate volatility towards the euro. However, the Swedish and Norwegian currencies have consistently depreciated against the euro over the past decade, while the Icelandic króna has fluctuated significantly. Third, it might be expected that countries with floating exchange rates would have lower output variability because one reason for choosing a floating exchange rate is that it can function as a shock absorber and allow monetary policy to be geared towards domestic stabilisation. However, there is no strong empirical evidence to back up this hypothesis, at least over the past several decades in the Nordic countries.

Takeaways by Macro Roundup® AI

  1. Inflation rose to around 10% after the pandemic in every Nordic country, whether it targeted inflation or the exchange rate, indicating that no monetary policy goal was superior in the face of a global inflation shock.
  2. Denmark and Finland saw no exchange rate volatility against the euro, while the Swedish and Norwegian currencies consistently depreciated against the euro over the past decade and the Icelandic króna fluctuated significantly.
  3. The hypothesis that floating exchange rates lower output variability by acting as a shock absorber lacks strong empirical support in the Nordic countries over the past several decades.

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.
  • Have Interest Rates Risen Fundamentally? — The underlying equilibrium level of real interest rates cannot be observed and must be estimated, and two Federal Reserve estimates disagree: one suggests it remains very low while the other suggests it has been rising. If the equilibrium rate has not risen, monetary policy is currently tight, and interest rates should fall significantly once inflation is controlled.

AI Summary. Opium prices in Guatemala's poppy-growing highlands have collapsed from $64 an ounce to about $9.60, with growers reporting a fall from roughly $2,310 to $256 per kilo. Eradication patrols now find only scattered small plots where cultivation once blanketed the land.

Simon Romero New York Times
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Prices for poppies are plunging as fentanyl outcompetes heroin. In Guatemala, poppy prices have fallen almost 90% since 2017.

Prices for poppies are plunging as fentanyl outcompetes heroin. In Guatemala, poppy prices have fallen almost 90% since...

Has synthetic opioid supply collapsed prices for opium poppy growers?

Core argument: Opium prices in Guatemala's poppy-growing highlands fell from $64 an ounce to about $9.60, according to police commander Ludvin López, who said land around Ixchiguán that was once covered in poppies now holds only scattered tiny plots.

The convoy rolled out of the military base before dawn into the mist-shrouded mountains straddling Guatemala’s border with Mexico. Its mission: destroy opium poppies used to make heroin. But after scouring village after village, they found only tiny plots of poppies here and there — a fraction of the region’s cultivation in previous years. “The land here used to be covered in poppies,” said Ludvin López, a police commander, as soldiers fanned out around Ixchiguán, an area of remote hamlets populated by speakers of Mam, a Mayan language. But that was before opium prices plunged from $64 an ounce to about $9.60, he added. Regino García, a Mam leader from San Antonio Ixchiguán, said poppy prices began tumbling in 2017, eventually crashing to 2,000 quetzals ($256) per kilo from 18,000 quetzals ($2,310).

Takeaways by Macro Roundup® AI

  1. Opium prices in Guatemala's poppy-growing highlands fell from $64 an ounce to about $9.60, according to police commander Ludvin López, who said land around Ixchiguán that was once covered in poppies now holds only scattered tiny plots.
  2. Mam leader Regino García said poppy prices began tumbling in 2017 and eventually crashed to 2,000 quetzals ($256) per kilo from 18,000 quetzals ($2,310).
  3. A Guatemalan convoy sent to destroy opium poppies along the Mexican border found, after scouring village after village, only tiny plots amounting to a fraction of the region's cultivation in previous years.

Related Articles:

  • Importing the Opioid Crisis? International Trade and Fentanyl Overdoses — A study using U.S. mortality and import data finds a positive state-level association between imports per resident and drug overdose death rates, driven by fentanyl and accounting for an estimated 15,000–20,000 deaths per year. The authors estimate that 10% higher imports per resident is associated with an 8.1% higher fentanyl death rate.
  • The Global Network Behind The Fentanyl Crisis — Nearly 110,000 Americans died of drug overdoses in a year, with more than two-thirds of those deaths caused by fentanyl, a synthetic opioid 50x as potent as heroin. A kilogram of precursor chemicals bought from Chinese manufacturers for about $800 can produce 415,000 fentanyl pills, which sell wholesale for as little as 50 cents each.
  • America’s Ten-Year-Old Fentanyl Epidemic is Still Getting Worse — Fentanyl and other synthetic opioids kill roughly 75,000 Americans a year, more than double the 2019 figure, with annual overdose deaths rising 5% year-over-year after a decade of steep increases. Fentanyl killed more than a third of a million Americans over the prior decade, and border seizures nearly doubled in a year.

Tuesday, April 30, 2024

AI Summary. Tracking the same patients as they age from Medicaid into Medicare at 65, the authors find higher provider acceptance rates are associated with larger increases in primary care and specialist visits, especially new-patient specialist visits. They conclude Medicaid's smaller provider network plays a large role in limiting service provision.

Calvin Ackley, Abe Dunn, Eli Liebman and Adam Hale Shapiro Federal Reserve Bank of San Francisco
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When Medicaid patients qualify for Medicare at age 65, service provision increases by about 20%. 60-90% of the increase in office visits is with physicians who had not accepted a new Medicaid patient in the prior year. @ah_shapiro

How much do provider acceptance rates limit Medicaid patients' care?

Core argument: Tracking the same individuals as they age into Medicare from Medicaid at 65, a one percentage point increase in Medicare acceptance rates is correlated with a 0.008 larger increase in primary care visits.

We track the services provided to the same individual as they age into Medicare from Medicaid at age 65, becoming dual enrolled. On average, a one percentage point increase in Medicare acceptance rates is correlated with a 0.008 larger increase in primary care visits, consistent with patients having more access using more care. Bringing the Medicare acceptance rate down to the Medicaid acceptance rate (about 10 percentage points) would lead to about .08 fewer monthly primary care visits, which is about one-third of the pre-period mean and about 50% higher than the total increase we see in primary visits. A 10 percentage point increase in the state-level Medicaid acceptance rate would lead to a 0.028 smaller increase in specialist visits per month across the threshold, about 11% of the pre-period mean. Results are especially strong for new-patient visits with specialists. [Our] analysis indicates that Medicaid’s smaller provider network plays a large role in limiting service provision.

Takeaways by Macro Roundup® AI

  1. Tracking the same individuals as they age into Medicare from Medicaid at 65, a one percentage point increase in Medicare acceptance rates is correlated with a 0.008 larger increase in primary care visits.
  2. Lowering the Medicare acceptance rate to the Medicaid rate, about 10 percentage points, would mean roughly 0.08 fewer monthly primary care visits, about one-third of the pre-period mean and about 50% larger than the total observed increase.
  3. A 10 percentage point higher state-level Medicaid acceptance rate would lead to a 0.028 smaller increase in specialist visits per month across the age-65 threshold, about 11% of the pre-period mean, with results especially strong for new-patient specialist visits.

Related Articles:

  • Has the Medicare Cost Problem Gone Away? — Average annual real per capita spending growth in the US Medicare program fell from 5.2% in 1987-1996 to 2.7% in 1996-2005 and 0.7% in 2006-2022, a slowdown most plausibly attributed to congressionally mandated payment reforms and cuts. With enrollment projected to rise from 66m to 83m by 2040, aggregate costs are expected to grow rapidly.
  • A Huge Threat to the U.S. Budget Has Receded. And No One Is Sure Why — Spending per Medicare beneficiary in the US has nearly leveled off over more than a decade, though total enrollment has grown as baby boomers age. Policy changes including cuts to hospital and private plan payments explain some savings, but the Congressional Budget Office attributes most of its lowered forecasts to "technical adjustments" in public health and medical practice.
  • Why Medicare and Social Security Are Sustainable — Growth in U.S. health spending above GDP growth has slowed considerably, and the Congressional Budget Office projects social insurance spending will eventually rise by about 5 percentage points of GDP, half of that from assumed health cost increases. The author argues better incentives for medically effective care could hold cost growth well below those projections.

AI Summary. Companies in the S&P 500 employ 29m people globally, compared with 158m total US employment, meaning more than 80% of US employment lies outside the index. 87% of US firms with revenue above $100m are private.

Torsten Sløk Apollo
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Torsten Sløk @apolloglobal notes the American economy is largely private: 80% of Americans work for firms outside of the S&P 500 and 87% of US firms with revenue greater than $100 million are private.

Do public stock indexes represent most of the US economy?

Core argument: S&P 500 companies employ 29 million people globally against 158 million employed in the US economy, meaning more than 80% of US employment sits outside S&P 500 firms.

Most of the time in financial markets goes with talking about the S&P 500. But public markets and public companies are only a small part of the economy. Total global employment in the S&P 500 companies is 29 million, and total employment in the US economy is 158 million. Put differently, more than 80% of total employment in the US economy is outside the S&P 500 companies. This is consistent with our recent note in which we showed that 87% of firms in the US with revenue greater than $100 million are private. The bottom line is that the vast majority of the US economy is in private markets.

Takeaways by Macro Roundup® AI

  1. S&P 500 companies employ 29 million people globally against 158 million employed in the US economy, meaning more than 80% of US employment sits outside S&P 500 firms.
  2. Some 87% of US firms with revenue greater than $100 million are private, consistent with the argument that the vast majority of the US economy is in private markets.
  3. Financial market commentary centers on the S&P 500, though public markets and public companies make up only a small part of the US economy.

Related Articles:

  • Many More Private Firms in the US — 87% of US firms with revenue above $100m are privately held rather than publicly traded.
  • Birth, Death, and Wealth Creation — The median age at which US companies went public rose from 7.9 years in 1976–2000 to 9.5 years in 2001–2022, implying that more wealth creation now occurs in private markets. Research on more than 28,000 US-listed companies since 1926 finds that just under 60% destroyed $9.1tn of wealth while about 2% created $50tn.
  • The Economics of Inequality in High-Wage Economies — United States Income, Wealth, Consumption, and Inequality Diana Furchtgott-Roth

AI Summary. The author argues that a policy of low interest rates combined with a weaker dollar would most straightforwardly be implemented through 1940s-style yield curve control, capping short- and long-dated rates below market levels and easing Treasury market stability concerns. Such a policy would boost equities and fixed income, and has historically been followed by higher inflation and stagnant growth.

Joseph Wang Fed Guy Blog
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.@FedGuy12 argues that Donald Trump’s preferences for lower interest rates and a weaker dollar would lead to a “significant positive for all assets, from equities to fixed income” in the short term, but higher inflation and stagnant long-term growth.

Would capping interest rates below market levels boost assets and inflation?

Core argument: The author puts roughly a 50% chance on significant upside risk over the coming year, alongside a clear shift in political discourse biased toward inflationary policies.

President Trump has long made clear his preference for low interest rates, and reports indicate he may further his trade wars by also devaluing the dollar. The most straightforward implementation of these two goals would be to set ceilings on short and longer dated rates at below market levels – in effect a return to 1940s style yield curve control. This would also completely resolve the many stability concerns of the Treasury market. Lower rates and a weaker dollar would be a significant positive for all assets, from equities to fixed income. This has also historically led to higher inflation, stagnant economic growth, and the eventual deployment of deflationary policies by popular demand. But that is a process that plays out over a period of years. At the moment it looks like there is roughly 50% chance of significant upside risk in the coming year. In any case, there is clear change in the political discourse that is biased towards inflationary policies.

Takeaways by Macro Roundup® AI

  1. The author puts roughly a 50% chance on significant upside risk over the coming year, alongside a clear shift in political discourse biased toward inflationary policies.
  2. The most straightforward way to deliver President Trump's stated preference for low rates and a reportedly desired weaker dollar would be ceilings on short and longer dated yields below market levels, a return to 1940s style yield curve control.
  3. Lower rates and a weaker dollar would be a significant positive for all assets from equities to fixed income and would resolve Treasury market stability concerns, but have historically led to higher inflation, stagnant growth, and eventually deflationary policies demanded by the public.

Related Articles:

  • Global Views: Friendly Baseline, Greater Risks — Despite upside inflation surprises, the authors argue the broader disinflation narrative remains intact, citing a labor market that continues to rebalance: a jobs-workers gap of 2.0m, a quits rate below pre-pandemic levels, and wage growth running just over 4% year-on-year. They expect wage growth to converge to 3.5%, the pace they estimate is consistent with 2% inflation.
  • Parsing the 2024 Inflation Rebound — Average pay for most workers is rising about 4.5–5% a year, roughly 1.5–2pp faster than the pre-pandemic average, implying an underlying inflation trend about 1–2pp above the pre-pandemic pace absent a surge in productivity or saving. Earlier one-off drops in consumer goods prices held measured inflation below that trend and appear to have ended.
  • The Fed Is Tightening More Than It Says — The authors estimate that the Federal Reserve's balance-sheet runoff makes its current policy rate of 5.375% equivalent in its effect on financial conditions to a rate of 5.763% without runoff, a gap of 39 basis points. They project that gap to widen to a full percentage point as assets continue rolling off at $95bn a month.

AI Summary. Survey data show white, non-Hispanic families own the large majority of U.S. employer businesses, with their share of business-owning families falling from 80% to 73%. Over the same period, the Black, non-Hispanic share rose from 5% to 8% and the Hispanic or Latino share from 4% to 7%.

Wendy Edelberg and Noadia Steinmetz-Silber Brookings Institution
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A surge in entrepreneurship among blacks and Hispanics from 2019-22 increased the non-white share of business-owning families from 20% in 2016 to 27% in 2022. @WendyEdelberg

Is business ownership in the U.S. becoming more racially diverse?

Core argument: White, non-Hispanic families accounted for 80% of U.S. employer business-owning families in 2019, compared with 5% Black, non-Hispanic and 4% Hispanic or Latino.

Figure 2 shows the composition of owners of employer businesses by race and ethnicity. White, non-Hispanic (“white”) families make up the lion’s share of business ownership in the U.S. In 2019, 80% of business-owning families were white, compared to 5% Black, non-Hispanic (“Black”) and 4% Hispanic or Latino. In the 2022 SCF, these gaps began to shrink—73% of business owners were white, 8% were Black, and 7% were Hispanic or Latino.

Takeaways by Macro Roundup® AI

  1. White, non-Hispanic families accounted for 80% of U.S. employer business-owning families in 2019, compared with 5% Black, non-Hispanic and 4% Hispanic or Latino.
  2. In the 2022 Survey of Consumer Finances, the white, non-Hispanic share of business owners was 73%, with Black, non-Hispanic owners at 8% and Hispanic or Latino owners at 7%.

Related Articles:

  • Latinos Are Starting U.S. Businesses at a Torrid Pace — 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.
  • 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.
  • High Tech Business Entry In The Pandemic Era — High-tech industries accounted for a disproportionate share of the surge in net new business establishments after 2019, with net entry higher in tech than non-tech industries. The authors find suggestive evidence that tech establishment births rose more for existing firms than new firms, though both categories saw elevated openings.

AI Summary. Recent US student debt cancellation policies are estimated to cost a combined $870bn to $1.4tn, with $620bn already implemented through an income-driven repayment program, interest cancellation during repayment pauses, and targeted discharges. The newest cancellation plan is preliminarily estimated to cost an additional $250bn to $750bn.

CRFB Staff Committee for a Responsible Federal Budget
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.@MarcGoldwein @BudgetHawks estimates the cost of the Biden Administration’s proposed student debt cancellations over the next decade at $0.9-1.4T, more than total Federal spending on higher education from 1962-2019.

How much do recent student debt cancellation policies cost in total?

Core argument: All recent student debt cancellation policies, including the Biden Administration's new plan, are estimated to cost a combined $870 billion to $1.4 trillion.

Including the Biden Administration’s new student debt cancellation plan, we estimate all recent student debt cancellation policies will cost a combined $870 billion to $1.4 trillion. $620 billion of debt cancellation has already been implemented, including $275 billion from President Biden’s new Income-Driven Repayment (IDR) program known as SAVE, $195 billion from cancelling interest as part of nearly 41 months of repayment pauses since March of 2020, and roughly $150 billion from a variety of more targeted actions such as discharging debt for those who attended closing schools and making it easier to cancel debt under existing loan forgiveness programs. The President’s newest debt cancellation scheme could cost an additional $250 to $750 billion based on our preliminary estimates.

Takeaways by Macro Roundup® AI

  1. All recent student debt cancellation policies, including the Biden Administration's new plan, are estimated to cost a combined $870 billion to $1.4 trillion.
  2. The President's newest debt cancellation plan could cost an additional $250 billion to $750 billion, according to preliminary estimates.

Related Articles:

  • Debt Moratoria: Evidence from Student Loan Forbearance — The authors estimate that borrowers whose student loan payments were frozen ended with about $1,500 more in student loan balances and $1,200 (3%) more in other household debt, including mortgage, auto, and credit card borrowing, than borrowers without a payment stoppage. The findings suggest the pause raised short-term consumption and overall leverage, with effects concentrated among borrowers never previously delinquent.
  • PLUS or Minus? The Effect of Graduate School Loans on Access, Attainment, and Prices — The authors estimate that uncapping federal graduate student borrowing increased previously constrained students' borrowing and shifted their debt from private to federal sources, but had no effect on graduate enrollment, the racial and gender composition of entering students, human capital accumulation, or later earnings. They find the resulting increase in federal loans significantly raised program prices.
  • How Gen Z Is Becoming the Toolbelt Generation — Enrollment in vocational-focused community colleges rose 16% to its highest level since tracking began, with construction-trades programs up 23% and heating, ventilation, air conditioning and vehicle repair programs up 7%. Federal data show the number of carpenters and electricians grew over the past decade even as their median ages fell.

AI Summary. China's publicly released military budget understates its spending; adjusting for purchasing power and adding uncounted expenditures, the authors estimate the buying power of China's military budget at $711bn, roughly triple Beijing's stated figure and nearly equal to the United States'. Such parity favors China, whose spending concentrates on Asia while US resources are spread across multiple theaters.

Mackenzie Eaglen American Enterprise Institute
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After adjusting for hidden expenditures, labor costs, and purchasing power parity, @MEaglen @AEI estimates that Chinese military spending in 2022 was $710.6B, nearly equal to the US’s $742.2B.

How large is China's military spending in purchasing power terms?

Core argument: After economic adjustments and estimates of uncounted expenditures, the buying power of China's 2022 military budget reaches an estimated $711 billion, triple Beijing's claimed topline and nearly equal to U.S. military spending that year.

Beijing’s publicly released military budget is inaccurate and does not adequately capture the colossal scope and scale of China’s ongoing military buildup and wide-ranging armed forces modernization. After accounting for economic adjustments and estimating reasonable but uncounted expenditures, the buying power of China’s 2022 military budget balloons to an estimated $711 billion— triple Beijing’s claimed topline and nearly equal with the United States’ military budget that same year. Equal defense spending between the United States and China plays to Beijing’s benefit. As a global power, the United States must balance competing priorities in the Indo-Pacific and elsewhere, which spreads Washington’s budget thinly across multiple theaters. Meanwhile, each yuan China invests in its military directly builds its regional combat power in Asia.

Takeaways by Macro Roundup® AI

  1. After economic adjustments and estimates of uncounted expenditures, the buying power of China's 2022 military budget reaches an estimated $711 billion, triple Beijing's claimed topline and nearly equal to U.S. military spending that year.
  2. Beijing's publicly released military budget is inaccurate and does not adequately capture the scope and scale of China's military buildup and armed forces modernization.
  3. Equal U.S.–China defense spending plays to Beijing's benefit, as the United States spreads its budget across the Indo-Pacific and other theaters while each yuan China invests directly builds its regional combat power in Asia.

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  • The US and Its Allies Face a $10 Trillion Reckoning in the Race to Rearm — World defense spending reached a record $2.2tn, and security officials say military budgets may need to reach Cold War levels of as high as 4% of economic output to deliver on NATO's plans. Bloomberg Economics calculates that US and Group of Seven allies hitting that level would mean over $10tn in additional commitments over a decade.
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AI Summary. The suicide rate among Americans in their 20s and 30s has surpassed the rate among those in their 40s and 50s, as suicide fell among middle-aged adults and rose among younger adults. Among men, the highest suicide rate is now found in those in their 20s, aside from men aged 75 and older.

Jean Twenge Generation Tech
Date Posted:
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Suicide rates for Americans in their 20s and 30s are now higher than among those in their 40s or 50s, reversing “the long-accepted statistic that more middle-aged Americans take their own lives than younger adults.” @jean_twenge

Have suicide rates among young adults surpassed those of middle-aged Americans?

Core argument: In 2020 and 2021, the suicide rate among Americans in their 20s or 30s exceeded the rate among those in their 40s or 50s, reversing the long-accepted pattern that middle-aged Americans take their own lives more often.

In 2020 and 2021, the suicide rate among Americans in their 20s or 30s was higher than the suicide rate among those in their 40s or 50s (see Figure 1; 2021 is the most recent data available). Between 2019 and 2021, suicide fell among middle-aged adults and continued to rise among younger adults. The end result was the reversal of the long-accepted statistic that more middle-aged Americans take their own lives than younger adults. But is it still true that the highest suicide rate is among middle-aged men? That’s what headlines have often noted. It is not. The highest suicide rate is now among younger men (see Figure 2). Suicide rates for middle-aged men fell precipitously after 2018 while those for younger men rose. Until men reach 75 or older, when suicides rise due to terminal illness, the highest suicide rates are now among men in their 20s – not the middle-aged.

Takeaways by Macro Roundup® AI

  1. In 2020 and 2021, the suicide rate among Americans in their 20s or 30s exceeded the rate among those in their 40s or 50s, reversing the long-accepted pattern that middle-aged Americans take their own lives more often.
  2. Between 2019 and 2021, suicide fell among middle-aged adults while continuing to rise among younger adults.
  3. Suicide rates for middle-aged men fell after 2018 while rates for younger men rose, leaving men in their 20s with the highest suicide rate until age 75 or older, when suicides rise due to terminal illness.

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