Edward Conard

Top Ten New York Times Bestselling Author

  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, May 21, 2024

AI Summary. After adjusting for worker characteristics, the gap between union and non-union members' hourly earnings has been declining since the Great Recession, while the union differential in weekly wages has been more stable at roughly 15 log points. That weekly gap reflects both a higher hourly wage (about 10 log points) and longer working hours (about 5 log points).

David Blanchflower and Alex Bryson National Bureau of Economic Research
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The private sector union weekly earnings premium reflects a 10% higher hourly wage and 5% more working hours, reflecting trade unions’ role in “ensuring workers receive the paid hours they desire.” @D_Blanchflower @AlexanderBryson

Does the union wage premium reflect higher hourly pay or hours?

Core argument: The regression-adjusted union differential in weekly wages stands at roughly 15 log points, composed of an hourly wage premium of about 10 log points and longer working hours worth about 5 log points.

The regression-adjusted difference between union members’ and non-members’ hourly earnings has been falling since the Great Recession. The union differential in weekly wages has been more stable. Although it fellby around 5 log points during COVID, it remains 15 log points [roughly 15 ppt]. This weekly earnings differential arises from a higher hourly wage of around 10 log points and longer working hours (5 log points). [Chart 3 above, which includes only the private sector; as the authors note, “The monotonic decline since the late 1970s is driven by decline in the private sector, whereas density has remained relatively stable in the public sector”]. A recent literature indicates that many workers wish to work more hours than their employer offers them. What is perhaps most striking is the [apparent] role unions play in raising hours. It is a [putative] role that has not emerged clearly from the earlier literature but is important for the welfare of workers whose consumption is dependent not only on hourly wages, but the [number of] paid hours of work.

Takeaways by Macro Roundup® AI

  1. The regression-adjusted union differential in weekly wages stands at roughly 15 log points, composed of an hourly wage premium of about 10 log points and longer working hours worth about 5 log points.
  2. The regression-adjusted gap between union members' and non-members' hourly earnings has been falling since the Great Recession, while the weekly wage differential has been more stable, falling about 5 log points during COVID.
  3. The authors attribute the monotonic decline in union density since the late 1970s to the private sector, with density relatively stable in the public sector, and note that unions' apparent role in raising paid hours matters for workers whose consumption depends on hours as well as hourly wages.

Related Articles:

  • US Union Members See Record Pay Raises, Outpacing Nonunion Workers — US private sector union workers' wages rose 6.3% over 12 months, the largest increase in Bureau of Labor Statistics employment cost data going back to 2001, while nonunion private sector pay rose 4.1%, not much above inflation.
  • Pettis On American Labor Unions — Strong labor unions are incompatible with a global trading system in which countries that subsidize domestic production externalize those costs through large, persistent trade surpluses, according to this argument. The US must either reform that system or unilaterally limit its economy's role in absorbing global savings and production imbalances.
  • Labor Market Conflict and the Decline of the Rust Belt — The authors argue that persistent labor market conflict in the Rust Belt's main industries lowered investment and productivity growth, shifting employment to the rest of the country, and estimate it accounts for roughly half the decline in the region's share of US manufacturing employment. Rising foreign competition plays a more modest quantitative role.

AI Summary. The natural rate of interest — the inflation-adjusted rate prevailing when the economy grows at trend with inflation at target — is unobservable and uncertain, but most estimates have risen and sit above pre-pandemic levels. The data lean toward a long-run natural rate higher than pre-pandemic and possibly above Federal Reserve projections.

Ernie Tedeschi Georgetown University
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.@ernietedeschi argues that higher growth, higher debt levels, and greater political risk have most likely driven long-run R* higher than its pre-pandemic levels and higher than the 60bps the median FOMC participant currently projects.

Has the natural rate of interest risen above pre-pandemic levels?

Core argument: Most direct and indirect estimates of R*, the natural rate of interest that prevails when growth is at its sustainable trend and inflation at target, have risen since 2022 and stand above 2019 levels, though Laubach-Williams and a few other prominent estimates are lower.

R* [ the “natural rate of interest”] prevails when the economy is growing at its sustainable trend rate and inflation is at target. It is one of the most important concepts in markets today, but it is both unobservable and highly uncertain. Most direct or indirect estimates of R* appear to have risen since 2022 and are above 2019 levels, though a few prominent ones like Laubach-Williams are lower. The data lean toward the conclusion that the pandemic and its aftermath have, for the moment, arrested the structural decline in R* the U.S. was undergoing in the decades prior to 2020. Taken together, the data are not unanimous but lean towards the conclusion that the long-run natural rate of interest at the moment is most likely higher than its pre-pandemic level. They also raise the real possibility that it is higher in level terms than the 60 basis points the median Federal Open Market Committee (FOMC) participant currently projects.

Takeaways by Macro Roundup® AI

  1. Most direct and indirect estimates of R*, the natural rate of interest that prevails when growth is at its sustainable trend and inflation at target, have risen since 2022 and stand above 2019 levels, though Laubach-Williams and a few other prominent estimates are lower.
  2. The data raise the real possibility that the long-run natural rate of interest is higher in level terms than the 60 basis points the median FOMC participant projects.
  3. The data lean toward the conclusion that the pandemic and its aftermath have, for the moment, arrested the structural decline in U.S. R* of the decades before 2020, though estimates are not unanimous and R* remains unobservable and highly uncertain.

Related Articles:

  • Political Risks to the U.S. Safe Harbor Premium — The authors estimate a "shadow" country risk premium for the US of 25–35 basis points rather than the zero conventionally assumed, reflecting US political and institutional risk. If the US premium rose to current UK levels, they project real equity wealth per household would be $50,000 lower and real GDP 1% smaller after 10 years.
  • Quo Vadis, r*? The Natural Rate Of Interest After The Pandemic — Estimates of the natural rate of interest across core advanced economies suggest it may have increased, though the estimates are widely dispersed and statistically uncertain. Low expected potential growth and rising longevity may weigh on the natural rate, while large fiscal deficits, age-related spending, and public investment needs for infrastructure, defense, and the green transition may push it up.
  • The Future Of r* — Long-run equilibrium interest rates are argued to stay low relative to recent decades' historical average but above pre-pandemic lows, implying rates only slightly below current levels, with a nominal neutral rate near 3.5% offered as illustration. Rising government debt, particularly in the US, is identified as the main risk to that view.

AI Summary. Immigrants authored or co-authored 30% of U.S. patents in industries important to economic and national security, including semiconductors, automobile manufacturing and software, according to an analysis of patent data. The immigrant-authored share reaches 44% in strategic information industries and 38% in professional services.

Connor O’Brien and Adam Ozimek Economic Innovation Group
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Immigrants make up 20% of the US workforce, but they accounted for ⅓ of US Nobel prize winners in the last decade, and they were authors or co-authors on 30% of all patents in strategic industries from 2000-18. @cojobrien @ModeledBehavior

How large is immigrants' share of patents in security-critical industries?

Core argument: Using U.S. patent data from 2000–2018, the authors estimate that immigrants authored or co-authored 30% of patents in U.S. industries important for economic and national security, from semiconductors to automobile manufacturing to software development.

Nearly one out of every seven people who live in the United States is foreign-born. Yet the benefits of immigration have been much larger than immigrants’ share of the population would suggest. Foreign-born talent has been instrumental in American scientific and technological leadership, accounting for more than 1/3 of U.S. Nobel Prizes over the last decade. We use U.S. patent data between 2000 and 2018 to estimate the share of patents with foreign-born authors by industry. We find that immigrants authored or co-authored 30% of patents within U.S. industries that are important for economic and national security, from semiconductors to automobile manufacturing to software development. The share of patents that are immigrant-authored varies widely by industry. In the information industries considered strategic, 44% of patents originate from immigrant inventors. In professional services, the share is 38%.

Takeaways by Macro Roundup® AI

  1. Using U.S. patent data from 2000–2018, the authors estimate that immigrants authored or co-authored 30% of patents in U.S. industries important for economic and national security, from semiconductors to automobile manufacturing to software development.
  2. The immigrant-authored share of patents varies widely by industry, reaching 44% in information industries considered strategic and 38% in professional services.
  3. Foreign-born people make up nearly one in seven U.S. residents, while foreign-born talent accounted for more than one-third of U.S. Nobel Prizes over the last decade.

Related Articles:

  • Foreign-born Skilled Workers Play a Critical Role in Strategically Significant Industries — Foreign-born workers make up 20.3% of the roughly 19.9mn workers in strategically significant US industries—those ranking in the top fifth for research spending per worker and above average in use of science and engineering workers—compared with 18.4% of the workforce overall. Manufacturing and professional services account for 83% of employment in these industries.
  • 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.
  • Immigration and the U.S. Economy Since the Pandemic: An Accounting Exercise — The US native-born labor force fell by about 1.2m over four years, a decline driven overwhelmingly by population aging, while foreign-born labor supply grew by about 3m, leaving the overall labor force up roughly 2m. Without immigration, the total US labor force would have shrunk.

AI Summary. Firms with access to both bank loans and corporate bonds are borrowing a greater share through bonds, and those bonds' maturities have shortened both absolutely and relative to the same firms' loans. The shift is driven by smaller firms, whose loan share fell from about 60% to 50%.

Nina Boyarchenko and Leonardo Elias Federal Reserve Bank of New York
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A @NewYorkFed analysis finds that the share of bank-intermediated credit for small firms has fallen from 58% in 2002 to 50% in 2022, as small firms increasingly rely on bond financing.

Are firms shifting from bank loans to shorter-maturity corporate bonds?

Core argument: Firms below the 75th percentile of the size distribution cut their share of intermediated credit from about 60% to 50%, while the share for the largest 25% of firms held steady near 30%.

Firms that can borrow through both bank loans and corporate bonds are increasingly borrowing a greater fraction of debt through corporate bonds and that the maturity of those bonds has shortened dramatically since 2002, both in an absolute sense and relative to the maturity of loans the same firms have outstanding. Thus, firms are relying increasingly more on the corporate bond market as a source of funding and are accessing the corporate bond market more frequently, as existing corporate bonds mature more frequently. Firms that have access to both intermediated credit and debt markets seem to be increasingly relying on public debt markets. The trend is driven by firms in the bottom 75th percentile of the size distribution. While the share of intermediated credit for the top 25th percentile of firms has stayed relatively constant (at around 30%), the share of loans has decreased considerably for the rest of the firms (from around 60% to 50%). That is, smaller firms that have access to both bond and loan markets are increasingly relying more on bond financing.

Takeaways by Macro Roundup® AI

  1. Firms below the 75th percentile of the size distribution cut their share of intermediated credit from about 60% to 50%, while the share for the largest 25% of firms held steady near 30%.
  2. Firms with access to both bank loans and corporate bonds are borrowing a greater fraction of debt through bonds, and the maturity of those bonds has shortened sharply since 2002, both in absolute terms and relative to their outstanding loans.
  3. As existing corporate bonds mature more frequently, firms are accessing the corporate bond market more often as a source of funding.

Related Articles:

  • Stress Testing the Corporate Debt Servicing Capacity: A Scenario Analysis — A scenario analysis projects that the U.S. public corporate sector's overall debt-servicing capacity is robust to sustained elevated interest rates, aided by low borrowing costs on existing debt and moderate near-term refinancing needs. Firms with weaker balance sheets, including some large investment-grade borrowers, are projected to see meaningful credit-quality deterioration, with the share of debt at risk rising.
  • Corporate Debt, Boom-Bust Cycles, and Financial Crises — Using a dataset on sectoral credit exposure for 115 economies, the authors find corporate debt accounts for two-thirds of credit expansion before financial crises and three-quarters of nonperforming loans during busts, and that corporate debt expansions predict crises similarly to household debt. Recoveries are slower after corporate debt booms.
  • The Corporate Debt Maturity Wall: Implications for Capex and Employment — The authors estimate the average interest rate on outstanding corporate debt will rise from 4.20% to 4.50%, lifting private sector interest expense as a share of gross output by 0.25 percentage points. They project this would reduce capital spending growth by up to 0.25 percentage points and labor cost growth by up to 0.15.

AI Summary. ASML and TSMC have ways to remotely disable extreme ultraviolet lithography machines, the world's most advanced chipmaking equipment, in the event of a Chinese invasion of Taiwan, according to people familiar with the matter. TSMC is ASML's largest customer for these machines.

Diederik Baazil, Cagan Koc, and Jordan Robertson Bloomberg
Date Posted:

Both ASML and TSMC have contingency plans to disable Taiwanese chip manufacturing in the event of a Chinese invasion of Taiwan. About 90% of the world’s most advanced chips are made in Taiwan. @markets

Can advanced chipmaking machines be remotely disabled if Taiwan is invaded?

Core argument: ASML and TSMC have ways to disable the world's most sophisticated chipmaking machines if China invades Taiwan, according to people familiar with the matter.

ASML Holding NV and Taiwan Semiconductor Manufacturing Co. have ways to disable the world’s most sophisticated chipmaking machines in the event that China invades Taiwan, according to people familiar with the matter. The remote shut-off applies to Netherlands-based ASML’s line of extreme ultraviolet machines, known within the industry as EUVs, for which TSMC is its single biggest client. TSMC Chairman Mark Liu hinted in a September interview with CNN that any invader of Taiwan would find his company’s chipmaking machines out of order. “Nobody can control TSMC by force,” Liu said. “If there is a military invasion you will render TSMC factory non-operable.”

Takeaways by Macro Roundup® AI

  1. ASML and TSMC have ways to disable the world's most sophisticated chipmaking machines if China invades Taiwan, according to people familiar with the matter.
  2. The remote shut-off applies to ASML's extreme ultraviolet (EUV) machines, for which TSMC is the Netherlands-based company's single biggest client.
  3. TSMC Chairman Mark Liu said in a September CNN interview that "nobody can control TSMC by force" and that a military invasion would render the TSMC factory non-operable.

Related Articles:

  • Buffett Praises BYD and TSMC After Selling Shares of Both Firms — Berkshire Hathaway reduced its stake in Taiwan Semiconductor Manufacturing by 86%, a sale that could have fetched $3.7bn at the average share price over the period. The decision was attributed to concerns over geopolitical tensions between China and Taiwan, not to any reassessment of the business or its management.
  • Taiwan ‘Most Dangerous’ Issue in China-US Relations, Xi Tells Biden In Meeting — China's leadership has called Taiwan the most dangerous issue in US-China relations, urging the US to stop arming the island and denying that Beijing has imminent plans for military aggression. According to a senior US official, China stated a preference for peaceful reunification while also describing conditions under which force could be used.
  • The Chips Act Has Been Surprisingly Successful So Far — The US government has spent over half of its $39bn in Chips Act semiconductor incentives, and chip companies and supply chain partners have announced $327bn of investments over the next 10 years, according to Semiconductor Industry Association calculations. US data show a 15-fold increase in construction of computing and electronics manufacturing facilities.

Wednesday, May 22, 2024

AI Summary. The share of US income going to labor reached its lowest level since the Great Depression, falling roughly 5 percentage points between 1929 and 2022 across most industries, alongside a worldwide decline of about 6 percentage points since 1980. The author argues the most plausible causes are technological, including capital-augmenting technology.

Loukas Karabarbounis Journal of Economic Perspectives
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Labor’s share of US GDP fell from 64% in 1950 to 59% in 2022, consistent with declines in other countries since 1980. Increasing deployment of capital-augmenting technology appears central to this trend.

Is technology driving the worldwide decline in labor's income share?

Core argument: The U.S. labor share fell roughly 5 percentage points between 1929 and 2022, reaching its lowest level since the Great Depression, with declines across the great majority of U.S. industries.

In 2022 the labor share in the United States was at its lowest level since the Great Depression. The headline estimate for the United States is a roughly 5 percentage points decline of the labor share between 1929 and 2022, [across] the great majority of US industries. We observe [more recent] labor share declines in Europe, Asia, and emerging markets - a worldwide decline of roughly 6 percentage points in the labor share since 1980. My view is that the most plausible causes have technological origin. Perhaps the most intuitive explanation for the decline of the labor share is that capital-augmenting technology has increased over time. When factors are substitutes following an increase in capital-augmenting technology, production requires more capital relative to labor to accomplish the same level of output. In this case, the labor share decreases.

Takeaways by Macro Roundup® AI

  1. The U.S. labor share fell roughly 5 percentage points between 1929 and 2022, reaching its lowest level since the Great Depression, with declines across the great majority of U.S. industries.
  2. Labor share declines also appear in Europe, Asia, and emerging markets, amounting to a worldwide drop of roughly 6 percentage points since 1980.
  3. The author argues the most plausible causes of the labor share decline are technological, since rising capital-augmenting technology requires more capital relative to labor for the same output when factors are substitutes.

Related Articles:

  • The Unexpected Compression: Competition at Work in the Low Wage Labor Market — The authors estimate that post-pandemic labor market tightness compressed the US wage distribution, reducing the college wage premium and offsetting roughly one-quarter of the four-decade rise in 90-10 wage inequality. They attribute this in part to greater labor supply elasticity facing firms in low-wage markets, which reduced employer market power as young non-college workers moved to higher-paying jobs.
  • Income Inequality in the United States: Using Tax Data to Measure Long-Term Trends — Using administrative tax data with the Survey of Consumer Finances, the authors estimate the top 1% pre-tax income share fell from 11.1% in 1962 to 9.4% in 1979, then rose to 13.8% by 2019, a 3 percentage point rise over the full period. Their after-tax measure shows increases of only 1.4 points since 1979 and 0.2 points since 1962.
  • Perspectives on the Labor Share — The share of US income going to labor fell roughly 5 percentage points between 1929 and 2022, with declines across most US industries and in most countries of Europe, Asia, and emerging markets. The author argues the most plausible causes are technological, including the information age and automation.

AI Summary. US growth is projected to slow to about 2.2% from 4.1%, close to potential given the boost to labor force growth from recent immigration, while growth in other advanced G10 economies is projected to pick up from about -0.4% to +1.2%. Core inflation estimates point to two Federal Reserve rate cuts, with timing sensitive to incoming data.

Jan Hatzius Goldman Sachs
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Jan Hatzius @GoldmanSachs argues US Q1 growth of 2.2% is “close to potential given the boost to labor force growth from the recent immigration wave,” and continues to forecast rate cuts in July and November.

How does immigration-boosted labor supply shape US growth and rate cuts?

Core argument: US GDP growth is estimated to slow from 4.1% in 2023H2 to 2.2% in 2024H1, a pace close to potential given the boost to labor force growth from the recent immigration wave.

We estimate that US GDP growth will slow from 4.1% in 2023H2 to 2.2% in 2024H1. This would have looked quite strong prior to the pandemic but is now close to potential given the boost to labor force growth from the recent immigration wave. By contrast, we estimate that growth in other G10 economies will pick up from an average of -0.4% in 2023H2 to an average of +1.2% in 2024H1. Using CPI, PPI, and import prices, we estimate that core PCE increased 0.26% month-on-month, a pace well below the 0.36% average of the prior three months but probably not sufficient for a July cut if maintained in May and June. However, we also estimate that the market-based core PCE index—which was noted by Fed Chair Powell in a talk last week and which excludes imputed items such as portfolio management services and gambling—rose just 0.18%, a pace that would be quite consistent with a July cut if maintained. We continue to forecast cuts in July and November, but the timing remains sensitive to upcoming data.

Takeaways by Macro Roundup® AI

  1. US GDP growth is estimated to slow from 4.1% in 2023H2 to 2.2% in 2024H1, a pace close to potential given the boost to labor force growth from the recent immigration wave.
  2. Growth in other G10 economies is estimated to pick up from an average of -0.4% in 2023H2 to an average of +1.2% in 2024H1, in contrast to the US slowdown.
  3. Core PCE is estimated to have risen 0.26% month-on-month, below the 0.36% average of the prior three months but probably not low enough for a July cut, while the market-based core PCE index noted by Fed Chair Powell rose 0.18%.

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.
  • How Fast Can the Fed Ease? The Private Sector Response to Easier Conditions Will Be a Key Factor — US households have reduced debt over the past 20 years, leaving room to borrow more if incentives improve, while companies that issued debt at low rates hold large liquidity and healthy balance sheets. That gives businesses capacity to raise investment, and business surveys indicate capital-spending sentiment is already improving.
  • Is Nominal Wage Growth Starting to Slow? — Aggregate nominal wage income, which tracks closely with nominal gross domestic product, has grown at a yearly rate of just 4.5%—identical to the pre-pandemic pace—compared with almost 7% over the prior six months. The author argues that several consecutive slow months, rather than a one-off, suggest the deceleration could be significant.

AI Summary. Producer price measures of input costs for manufactured goods have turned positive again, in some cases rising at the fastest rate in more than a year, and this is filtering through to core final demand. US domestic manufacturing production has been flat or slightly down since 2013 despite strong growth in domestic demand for manufactured goods.

Matt Klein The Overshoot
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.@M_C_Klein notes an uptick in the price of multiple manufacturing inputs and suggests that goods inflation may reaccelerate if wage growth reverts from slow year-to-date growth. Domestic US manufacturing production has been flat since 2013.

Are rising producer input costs pushing goods inflation higher?

Core argument: Producer price measures of input costs for manufactured goods have turned positive again, in some cases rising at the fastest rate in more than a year, and are already filtering through to core final demand.

The PPI measures of input costs for manufactured goods have turned positive again, and in some cases are rising at the fastest rate in more than a year. This is already filtering through to core final demand, and while that measure is different from the CPI in several important respects, the direction of travel is significant. If wage growth remains slow, as it has so far this year, then indicators such as retail sales may be more indicative of the change in underlying economic conditions, and may flow through to interest rates. If wage growth reverts, then the recent inflation data are probably more representative of overall trends. Lurking in the background is the depressing fact that domestic American manufacturing production has been either flat or down slightly since 2013, with no growth over the past few years. That is a remarkably poor performance considering the tremendous growth in domestic demand for manufactured goods over that period, even if some of the trouble can be attributed to the specific product and industry mix of what is made in the U.S.

Takeaways by Macro Roundup® AI

  1. Producer price measures of input costs for manufactured goods have turned positive again, in some cases rising at the fastest rate in more than a year, and are already filtering through to core final demand.
  2. If wage growth remains slow, as it has so far this year, indicators such as retail sales may be more indicative of changing underlying economic conditions, while a reversion in wage growth would make the recent inflation data more representative of overall trends.
  3. Domestic American manufacturing production has been flat or slightly down since 2013 with no growth in the past few years, a poor performance given the growth in domestic demand for manufactured goods over that period.

Related Articles:

  • An Analysis of Pandemic-Era Inflation In 11 Economies — A cross-country analysis of 11 economies finds wide agreement that global energy and food price increases and supply disruptions in key sectors drove pandemic-era inflation, and that their recession accounts for most of the global cooling of inflation. The authors find tight labor markets had smaller but more persistent inflationary effects, leaving wage inflation as the larger remaining factor.
  • America’s Manufacturing Productivity Problem — Weak US manufacturing productivity growth reflects a compositional shift, as high-tech, fast-productivity-growth industries were increasingly offshored and became a smaller share of US manufacturing, alongside weak manufacturing investment. Capital intensity—fixed assets used per worker—slowed in the 2000s and nearly flatlined in the 2010s, with stagnation in electrical and vehicle manufacturing.
  • Is Nominal Wage Growth Starting to Slow? — Aggregate nominal wage income, which tracks closely with nominal gross domestic product, has grown at a yearly rate of just 4.5%—identical to the pre-pandemic pace—compared with almost 7% over the prior six months. The author argues that several consecutive slow months, rather than a one-off, suggest the deceleration could be significant.

AI Summary. A study of Massachusetts outmigration finds 52% of movers earned 1.3 to over 2.6x the state average, with Florida, New Hampshire, Maine, North Carolina, and Texas the top destinations and southern states capturing most of the transferred income. The study projects net outmigration could cost the state $19.2bn in adjusted gross income and $961m in income taxes annually by 2030.

Mark Williams, Yuhan Liu and Linglan Xu Boston University
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Since 2013, net outmigration from Massachusetts has increased by 1,100% as people move to states with lower income tax, housing, and health care costs. By 2030, net outmigration could cost MA $0.9B in lost income taxes per year.

Are high earners driving Massachusetts outmigration and shrinking its tax base?

Core argument: 52% of those leaving Massachusetts earned 1.3 to more than 2.6 times the state average, with 19% earning $200,000 or more and 33% earning $100,000 to $199,999.

Over half (52%) of those moving earned 1.3 to over 2.6 times the state average. 19% earned $200,000 or more (placing them in at least the top 12% of US household incomes). 33% earned $100,000 to $199,999 (placing them in at least the top 15% of US household incomes). 11 states captured the bulk of MA net outmigration. Top 5 destination states included Florida, New Hampshire, Maine, North Carolina, and Texas. Southern states gained the lion's share of earnings transfer as measured in adjusted gross income. Over half who moved from MA stayed in New England. By 2030, net outmigration could cost MA $19.2 billion in adjusted gross income and $961 million in lost income taxes per year.

Takeaways by Macro Roundup® AI

  1. 52% of those leaving Massachusetts earned 1.3 to more than 2.6 times the state average, with 19% earning $200,000 or more and 33% earning $100,000 to $199,999.
  2. Eleven states captured the bulk of Massachusetts net outmigration, led by Florida, New Hampshire, Maine, North Carolina and Texas, with Southern states gaining the largest share of transferred adjusted gross income even as over half of movers stayed in New England.
  3. Massachusetts net outmigration could cost the state $19.2 billion in adjusted gross income and $961 million in lost income taxes per year by 2030, the study projects.

Related Articles:

AI Summary. U.S. Customs and Border Protection reported more than 37,000 Chinese nationals detained at the border with Mexico in a single year, roughly 10x pre-pandemic levels, with families among the fastest-growing group. United Nations data show China's annual net emigration rose above 300,000, compared with about 190,000 a year over the prior decade.

Marrian Zhou Nikkei Asia
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37,000 largely middle-class Chinese migrants were detained at the US border with Mexico last year, 10x the pre-pandemic level. UN data estimates total annual emigration from China rose to over 300,000 in 2023. @ZhouMarrian

Is Chinese migration to the U.S. border rising sharply?

Core argument: U.S. Customs and Border Protection detained over 37,000 Chinese nationals on the border with Mexico last year, 10 times the level of pre-pandemic years.

The number of Chinese migrants crossing the U.S.-Mexico border skyrocketed in 2023. Although the actual total is elusive, over 37,000 Chinese nationals were detained on the border with Mexico last year, according to the U.S. Customs and Border Protection. This figure is 10 times greater than in pre-pandemic years. Among those arriving, families with children are a particularly fast-growing group. U.S. border patrol agents encountered Chinese migrant families 6,645 times in the 2023 fiscal year from Oct. to Sept., and 7,081 times so far since Oct 2023, CBP data shows. That compares to 1,151 encounters in fiscal year 2022. Data compiled by the United Nations shows that in 2022 and 2023 total annual emigration rose to over 300,000, measured in net outflow, compared to an average of about 190,000 annually for the decade through 2019. Emigration plunged in 2020 when the COVID pandemic hit.

Takeaways by Macro Roundup® AI

  1. U.S. Customs and Border Protection detained over 37,000 Chinese nationals on the border with Mexico last year, 10 times the level of pre-pandemic years.
  2. United Nations data show China's total annual emigration rose above 300,000 in net outflow in 2022 and 2023, compared with roughly 190,000 annually on average in the decade through 2019.
  3. U.S. border patrol agents encountered Chinese migrant families 6,645 times in fiscal year 2023, up from 1,151 encounters in fiscal year 2022.

Related Articles:

  • America’s Southern Border Has Become A Global Crossroads — Migrants from countries other than Mexico, El Salvador, Guatemala, and Honduras made up more than half of all people apprehended at the US southern border for the first time, with Venezuelans the largest share. Crossings included 43,000 Russians, 42,000 Indians, and 24,000 Chinese, up from 4,100, 2,600, and 450 two years earlier.
  • 2023 Letter — Rising numbers of Chinese nationals are being apprehended at the US-Mexico border, with US officers encountering around 1,000 in one month early in the year and nearly 5,000 by November. Most Chinese emigrants leave through legal means, going primarily to Singapore, Japan, and Thailand.
  • Living Outside China Has Become More Like Living Inside China — About 10.5m people living outside China are or once were Chinese citizens, a diaspora exceeded only by India's, Russia's, and Mexico's. Chinese citizens received more than 70% of 81,000 American investor visas issued to dollar-millionaires over a decade, and 18% of China's nearly 900 dollar-billionaires now live abroad, up from 6%.