Edward Conard

Top Ten New York Times Bestselling Author

  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, June 4, 2024

AI Summary. Using a randomized visa lottery for low-skill non-agricultural foreign workers, the authors estimate that U.S. firms authorized to employ more immigrants significantly increased production, investment, and profit rates, with effects on native employment zero or positive overall and positive in rural areas.

Michael Clemens and Ethan Lewis National Bureau of Economic Research
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US firms that won a low-skill H2B work visa lottery in 2021-22 and hired temporary foreign workers saw higher revenue and investment with no crowding out of temporary domestic workers. @m_clem @ethanglewis

How does hiring low-skill immigrants affect firm growth and native employment?

Core argument: Firms exogenously authorized through a randomized U.S. visa lottery in 2021 and 2022 to employ more foreign workers in low-skill jobs significantly increased production (elasticity 0.20–0.22), investment (1.5–2.1), and the rate of profit (0.15).

U.S. firms face a binding quota on visas to employ foreign workers in low-skill occupations outside of agriculture. The government allocates this quota to firms in part through a randomized lottery. We evaluate the marginal impact of the quota on firms entering this lottery in 2021 and 2022. Firms exogenously authorized to employ more immigrants in low-skill jobs significantly increase production (elasticity 0.20–0.22), investment (1.5–2.1), and the rate of profit (0.15). Because the foreign-native elasticity of substitution in production is very low in the policy-relevant occupations (0.8–2.2), the effect on native employment is zero or positive overall, and positive in rural areas. The vertical axis in the three panels [of Figure 7] shows the effect of foreign employment on each outcome. The results exhibit substantial heterogeneity across different predetermined firm types. The magnitude of the [positive] U.S. employment effect [of foreign workers] is 7.9 times greater in rural areas than urban areas. The investment results are consistent with small firms and rural firms facing more binding capital constraints, which tend to magnify the effects of shocks.

Takeaways by Macro Roundup® AI

  1. Firms exogenously authorized through a randomized U.S. visa lottery in 2021 and 2022 to employ more foreign workers in low-skill jobs significantly increased production (elasticity 0.20–0.22), investment (1.5–2.1), and the rate of profit (0.15).
  2. The foreign-native elasticity of substitution in the policy-relevant low-skill occupations is estimated at 0.8–2.2, and the effect of additional foreign workers on native employment is zero or positive overall and positive in rural areas.
  3. The positive U.S. employment effect of foreign workers is 7.9 times greater in rural areas than urban areas, and the investment results are consistent with small and rural firms facing more binding capital constraints.

Related Articles:

  • Immigration’s Effect on US Wages and Employment Redux — The authors estimate that immigration to the US over 2000-2019 raised wages of natives with a high school degree or less by 1.7% to 2.6%, a period when that group's real wages fell by 5% to 6%. Effects on more-educated natives ranged from -0.5% to +0.7%, with an overall average effect of +0.5% to +0.8% that was not statistically significant.
  • Monopsony, Efficiency, and the Regularization of Undocumented Immigrants — A study of France's amnesty program, which regularized undocumented workers making up 2.0% of workers in Paris and nearly 1% nationwide, finds positive effects on employment and wages, particularly for male, low-skill workers. The authors argue regularization reduces employers' wage-setting power in the undocumented labor market, and estimate a rise in total French GDP of around 1%.
  • Without Immigrants, US Working-Age Population Would Shrink — All net US employment growth since early 2020 has been among foreign-born workers, and without immigration the US working-age population would be shrinking — a pattern likely to persist for the rest of the decade. The jump in immigration appears to be enabling a soft landing that most economists had thought impossible.

AI Summary. Over 2014–2023 the 10 largest U.S. stocks averaged 19% of market capitalization while generating 47% of total economic profit, and by 2023 they were 27% of market capitalization and 69% of economic profit. The S&P 500 returned above its average when concentration was rising and below it when concentration was falling.

Michael Mauboussin and Dan Callahan Morgan Stanley
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Last year the top 10 equities made up 27% of market capitalization but 69% of total economic profits; historically, increasing concentration has been associated with above-average S&P 500 returns. @mjmauboussin

Does rising stock market concentration reflect the largest companies' economic profits?

Core argument: The top 10 stocks averaged 19% of market capitalization but 47% of total economic profit from 2014 to 2023, and in 2023 reached 27% of market capitalization and 69% of total economic profit.

From 2014 to 2023, the top 10 stocks were 19% of the market capitalization, on average, while the companies made up 47% of the total economic profit. In 2023, the top 10 equities were 27% of the market capitalization and the firms contributed 69% to the total economic profit. The S&P 500 has delivered returns above the average when concentration was rising and below the average when concentration was falling. The results were pronounced for the concentration changes associated with the inflating and deflating of the dot-com bubble, with compound annual returns of 23.5% from 1994 through 1999 and just 3.6% from 2000 to 2013. The largest stocks at the apex in 1999 traded at very high multiples of earnings and cash flow. The top stocks today are at a premium to the overall market but also represent companies with solid ROICs and growth prospects. Owning the stock of the largest company has historically been a poor investment relative to the market overall until about a decade ago. Owning the second and third largest stocks produced excess returns from 1950 to 2023. However, all three of the top stocks have provided stellar relative returns from 2014 to 2023.

Takeaways by Macro Roundup® AI

  1. The top 10 stocks averaged 19% of market capitalization but 47% of total economic profit from 2014 to 2023, and in 2023 reached 27% of market capitalization and 69% of total economic profit.
  2. The S&P 500 delivered above-average returns when concentration was rising and below-average returns when it was falling, with compound annual returns of 23.5% from 1994 through 1999 and 3.6% from 2000 to 2013.
  3. Owning the largest company's stock was historically a poor investment relative to the market until about a decade ago, while the second and third largest produced excess returns from 1950 to 2023, and all three delivered strong relative returns from 2014 to 2023.

Related Articles:

  • Long-Term Shareholder Returns: Evidence From 64,000 Global Stocks — A study of about 64,000 global stocks estimates net global stock market wealth creation of $75.7tn, with returns highly concentrated: the top 159 firms (0.25%) account for half of net wealth creation and the top 1,526 (2.39%) account for all of it. Fewer than half of stocks beat one-month US Treasury bills, 42.6% of non-US and 44.8% of US stocks.
  • The Concentration Conundrum; What To Do About Market Dominance — The largest US stocks make up a bigger share of the equity market than during the 2000 technology bubble, yet their valuations are lower than in earlier bubble episodes including the Nifty 50 of the early 1970s and Japan's late-1980s bubble. Today's dominant companies are also more profitable with stronger balance sheets.
  • The Economics of Inequality in High-Wage Economies — United States Income, Wealth, Consumption, and Inequality Diana Furchtgott-Roth

AI Summary. Around 70% of sectors are posting positive year-over-year profit growth, with big tech showing the largest acceleration in demand and profits but strength broadening across the economy. Companies are responding with rising capital spending growth and more optimistic investment plans, as firms typically add capacity with a slight lag after real demand picks up.

Bob Prince, Khia Kurtenbach, and Bella Dunbar Bridgewater Associates
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Bridgewater argues higher rates won’t slow capital spending given strong cash flow growth and relatively low net leverage. “Capex growth is expected to accelerate“ driven by the AI buildout, increases in defense spending, and electrical demand.

Is broadening profit growth driving a pickup in business investment?

Core argument: Around 70% of sectors have posted positive year-over-year profit growth, with last quarter's gains showing broad-based strength, while big tech firms saw the most significant acceleration in demand and profits in the upswing so far.

Last year we saw a broad-based turn down in corporate profits. Corporates pulled in their horns, though the pullback was more muted than typical, as companies’ cash stockpiles allowed them to operate without materially cutting jobs and wages and allowed high spending on capex to continue. Now, we’re seeing the same in reverse. In year-over-year terms, around 70% of sectors have experienced positive profit growth. While big tech firms have had the most significant acceleration in demand and profits in the economic upswing so far, last quarter’s growth shows broad-based strength. We’re already seeing corporates respond, with capital spending growth ticking back up and with increasingly optimistic capital spending plans. As real demand picks up, corporates typically respond (with a slight lag) by investing in building out additional capacity.

Takeaways by Macro Roundup® AI

  1. Around 70% of sectors have posted positive year-over-year profit growth, with last quarter's gains showing broad-based strength, while big tech firms saw the most significant acceleration in demand and profits in the upswing so far.
  2. Corporate capital spending growth has ticked back up alongside increasingly optimistic capex plans, consistent with the pattern in which companies respond to picking-up real demand, with a slight lag, by building out additional capacity.
  3. Last year's broad-based downturn in corporate profits produced a more muted pullback than typical, as cash stockpiles let companies avoid materially cutting jobs and wages while continuing high capex.

Related Articles:

  • Are We on the Brink of an AI Investment Arms Race? — Spending on AI chips and data centers was a bit below $100bn in 2023, around 0.4% of US GDP, and the broader set of companies exposed to AI-related investment has not yet seen a major jump in sales. The authors argue the underlying dynamics point to a spending surge large enough to shape the business cycle.
  • 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.
  • Electricity 2024 — More than 8,000 data centers operate globally, with about 33% in the United States, 16% in Europe, and close to 10% in China. US data center electricity use is projected to rise from roughly 200 TWh in 2022, about 4% of US electricity demand, to almost 260 TWh, or 6% of total demand.

AI Summary. China's manufacturing surplus rose by about 1 percentage point of global GDP over a four-year span and is far larger than those of Germany and Japan. China's $800bn goods trade surplus depends on the large U.S. trade deficit, which is still indirectly financed by China through the large offshore dollar stockpiles held by Chinese exporters.

Brad Setser Foreign Affairs
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Between 2019 and 2023 China’s manufacturing surplus rose by 1pp of global GDP. @Brad_Setser notes “It is impossible for a global economy characterized by a large U.S. deficit on one side and a large Chinese surplus on the other to truly fragment.”

Are the US and Chinese economies still dependent on each other?

Core argument: China's manufacturing surplus rose by about one percentage point of global GDP between 2019 and 2023, leaving it far larger than the surpluses of Germany and Japan, the world's other manufacturing powerhouses.

Between 2019 and 2023, China’s manufacturing surplus rose by about a percentage point of global GDP; it is now far larger than the surpluses run by Germany and Japan, the world’s other manufacturing powerhouses. China could not have achieved its current $800 billion trade surplus in goods if the United States did not have a large trade deficit. That deficit is no longer financed by the direct purchase of U.S. bonds by China’s central bank. But it is still indirectly financed by China, in the form of the large stockpiles of dollars that Chinese exporters now hold offshore. The way China's surpluses remain the mirror image of the U.S. deficit is just one of the many, complex forms in which the U.S. and Chinese economies continue to rely on one another, even as the ties become harder to see in topline economic data.

Takeaways by Macro Roundup® AI

  1. China's manufacturing surplus rose by about one percentage point of global GDP between 2019 and 2023, leaving it far larger than the surpluses of Germany and Japan, the world's other manufacturing powerhouses.
  2. China could not run its $800 billion goods trade surplus without a large U.S. trade deficit, which China still finances indirectly through the large offshore dollar stockpiles held by Chinese exporters rather than central bank purchases of U.S. bonds.
  3. The mirror-image relationship between Chinese surpluses and the U.S. deficit is one of many complex ways the two economies continue to rely on each other, even as those ties become harder to see in topline economic data.

Related Articles:

  • Brazil, India, and Mexico are Taking on China’s Exports — Foreign direct investment into China fell to a 30-year low even as Chinese leaders launched an investment push in high-tech goods such as batteries and electric vehicles. Weak domestic demand for cars, chemicals, and steel has pushed Chinese goods into global markets, with average manufactured export prices down nearly 10% and export volumes near record levels.
  • China’s Excess Savings Are A Danger — China's current account surplus of 4% of GDP is larger in global terms than its 2007 peak of 10%, because its share of the world economy at market prices rose from 6% to 17%. Sustaining that surplus would require China to fund deficits in smaller developing countries.
  • China’s Record Manufacturing Surplus — China's manufacturing trade surplus has reached about 2% of world GDP, exceeding the peak surpluses of export powerhouses like Japan and Germany, and shows no signs of shrinking as policy continues to emphasize advanced manufacturing capacity. The main offsetting manufactured-goods deficit is in the United States rather than commodity exporters.

AI Summary. Huawei's Mate 60 smartphone contained a system-on-chip made with SMIC technology comparable to the 7-nanometer process, despite Chinese chipmakers lacking access to ASML's most advanced lithography machines. Semiconductor engineers say the chips were likely made by exposing silicon to light multiple times, a technique that worsens yields and raises costs and becomes harder at more advanced nodes.

Yoko Kubota Wall Street Journal
Date Posted:

In an effort to eradicate dependence on US technology, China established another national semiconductor fund in May worth roughly $48B on top of a previous $50B. However, China has no homegrown alternative for higher-end lithography machines.

Can China make advanced chips without access to top lithography machines?

Core argument: Huawei's Mate 60 smartphone contains a system-on-chip made with SMIC technology comparable to the 7-nanometer process, seen as a feat given that SMIC and other Chinese chip makers lack access to ASML's latest lithography machine.

Last year, Huawei Technologies released its new Mate 60 smartphone, which contained a system-on-chip made with SMIC’s technology comparable with the 7-nanometer process. It was seen as a feat because SMIC and other Chinese chip makers don’t have access to the latest lithography machine made by ASML. Veteran semiconductor-manufacturing engineers think Huawei and its partners could have made the chips using a process that exposes the silicon to light multiple times instead of once—but doing so would lead to worse yields and higher costs. At more advanced levels of chipmaking, the technique would become even more difficult and less efficient, the engineers say. China has no homegrown alternative for the higher-end lithography machines. The country’s top domestic option is Shanghai Micro Electronics Equipment Group, whose website shows it makes lithography machines for production of chips as advanced as 90-nanometer circuit size. Globally, that technology was introduced more than 20 years ago.

Takeaways by Macro Roundup® AI

  1. Huawei's Mate 60 smartphone contains a system-on-chip made with SMIC technology comparable to the 7-nanometer process, seen as a feat given that SMIC and other Chinese chip makers lack access to ASML's latest lithography machine.
  2. Veteran semiconductor-manufacturing engineers say Huawei and its partners could have produced the chips by exposing silicon to light multiple times rather than once, a method that would worsen yields and raise costs, growing harder and less efficient at more advanced levels.
  3. China's top domestic lithography option, Shanghai Micro Electronics Equipment Group, states on its website that it makes machines for chips as advanced as 90-nanometer circuit size, technology introduced globally more than 20 years ago.

Related Articles:

  • China Tells Telecom Carriers to Phase Out Foreign Chips in Blow to Intel, AMD — 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.
  • China Is Quietly Reducing Its Reliance On Foreign Chip Technology — China's producers of wafer-fabrication tools have increased their domestic market share from 4% to an estimated 14%, according to broker Bernstein. Even if Huawei and SMIC reach 5nm chip production, they would remain behind Samsung and TSMC, which have mass-produced 3nm chips.
  • 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.

AI Summary. OPEC+, led by Saudi Arabia and Russia, agreed to extend its layered production cuts while allowing members to begin adding barrels back to the market, with larger increases to follow. The International Monetary Fund estimates Saudi Arabia needs oil above $96 a barrel to balance its budget, versus an $80 average from 2000 to 2020.

Javier Blas Bloomberg
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OPEC+ is apparently abandoning attempts to drive oil prices from the current $77/barrel for Brent crude toward $100, allowing output increases starting in the fall. KSA needs oil prices to average $96 a barrel to balance their budget. @JavierBlas

Is OPEC+ abandoning its push for higher oil prices?

Core argument: OPEC+, led by Saudi Arabia and Russia, announced a deal that on paper extends its cumulative production cuts into 2025, but allows members to start adding barrels from October, with significant increases the following year.

Over the weekend, the group, led by Saudi Arabia and Russia, announced a deal that, on paper, prolongs its complex layers of cumulative production cuts well into 2025. But read the fine print, and the agreement looks different. Under the pact, OPEC+ members will be able to start adding more barrels into the market from October, with significant increases next year. Saudi Arabia needs oil prices to average more than $96 a barrel this year to square the government books, up from an average of $80 from 2000 to 2020, according to the International Monetary Fund. With a GDP-to-debt ratio of less than 30%, Prince Mohammed has the luxury of having plentiful room to issue even more debt. The Saudi population has surged to about 34 million this year, nearly double from 18 million in 2000. As a result, Saudi Arabia looks poorer per capita than its wealthy neighbors: GDP per capita stood at just over $30,000 in 2023, well behind the $55,000 of the United Arab Emirates and the $80,000 of Qatar.

Takeaways by Macro Roundup® AI

  1. OPEC+, led by Saudi Arabia and Russia, announced a deal that on paper extends its cumulative production cuts into 2025, but allows members to start adding barrels from October, with significant increases the following year.
  2. Saudi Arabia needs oil prices to average more than $96 a barrel this year to balance its government books, up from an average of $80 over 2000–2020, according to the International Monetary Fund.
  3. Saudi Arabia's population has nearly doubled to about 34 million this year from 18 million in 2000, and its GDP per capita stood at just over $30,000 in 2023, behind the United Arab Emirates' $55,000 and Qatar's $80,000.

Related Articles:

  • Megaprojects in the Desert Sap Saudi Arabia’s Cash — Saudi Arabia's spending on megaprojects has risen while oil revenues have leveled off, and the International Monetary Fund estimated oil prices near $80–$86 a barrel would be needed to balance its budget. The kingdom is expected to run a deficit of about $21bn, roughly 2% of gross domestic product.
  • Saudi Arabia’s PIF and the New Petrodollar Recycling — Saudi Arabia's Public Investment Fund appears to have taken over a significant portion of the foreign asset allocation previously handled by the Saudi Central Bank, making its balance sheet a window into a new form of petrodollar recycling. Of roughly $777bn in total assets, $305bn were current and $472bn non-current, with $225bn of the latter held as investment securities.
  • The World Is Transitioning to American Oil From Saudi Crude — Saudi Aramco scrapped plans to raise production capacity to 13mm barrels a day from 12mm, a cancellation expected to save $20–40bn in capital spending over five years and signaling insufficient demand for additional Saudi oil. Saudi Arabia, pumping about 9mm barrels a day under OPEC+ cuts, appears set on lower output to support higher prices.

AI Summary. India's ruling Bharatiya Janata Party is on course to win roughly 240 of the 543 lower-house seats, short of an outright majority and forcing reliance on smaller National Democratic Alliance partners, which together led in at least 292 seats. Share prices in Mumbai fell as counts showed weaker-than-expected results.

John Reed, Benjamin Parkin, Jyotsna Singh, and Chris Kay Financial Times
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In a surprise result, Modi’s BJP lost its outright parliamentary majority. Indian stocks fell 6% on the day after surging to a record high Monday, when exit polls indicated Modi would win the election comfortably.

Will India's ruling party need coalition partners after losing its majority?

Core argument: Narendra Modi's BJP was on course for roughly 240 of the 543 seats in India's lower house, short of the outright majority it won on its own at each of the previous two general elections.

Narendra Modi’s Bharatiya Janata party is set to lose its parliamentary majority, forcing the Indian prime minister to rely on smaller allies to secure a historic third term. Share prices slumped in Mumbai on Tuesday after vote counts showed the BJP and its National Democratic Alliance allies performing much worse than expected. As of Tuesday evening, the BJP was on course to take around 240 seats out of the 543 in India’s lower house, falling short of the outright majority Modi’s party won on its own at the previous two general elections. Together with its NDA allies, the ruling party was ahead in at least 292 seats.

Takeaways by Macro Roundup® AI

  1. Narendra Modi's BJP was on course for roughly 240 of the 543 seats in India's lower house, short of the outright majority it won on its own at each of the previous two general elections.
  2. The BJP and its National Democratic Alliance allies were ahead in at least 292 seats, leaving Modi reliant on smaller allies to secure a third term as prime minister.
  3. Share prices slumped in Mumbai after vote counts showed the BJP and its National Democratic Alliance allies performing much worse than expected.

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.
  • Apple’s India iPhone Output Hits $14 Billion in China Shift — Apple assembled $14bn of iPhones in India in its last fiscal year, doubling output there to roughly 14%, or about 1 in 7, of its iPhones. China remains Apple's largest iPhone-making hub and biggest overseas market, though its revenue there is falling amid competition from rivals such as Huawei.
  • Wall Street Snubs China for India in a Historic Markets Shift — US-listed exchange-traded funds buying Indian stocks drew record inflows while the four largest China funds saw combined outflows of nearly $800m, and India's weight in the main developing-market equity benchmark hit an all-time high of 18% as China's fell to a record low of 24.8%. Indian equities trade at more than 20x future earnings, 27% above their 2010–2020 average.

Wednesday, June 5, 2024

AI Summary. Evidence indicates that policies reducing economic desperation, such as employment and more generous transfer programs, lower property crime and therefore overall crime, but have little systematic relationship to violent crime. The evidence appears at least as strong for the reverse relationship, with uncontrolled violence worsening poverty, joblessness, children's schooling, and mental health.

Jens Ludwig and Kevin Schnepel University of Chicago
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US jobs programs, transfers, and macroeconomic upturns tend to reduce property crime but not serious violent crime, so these programs have little impact on the total social costs of crime, which are driven by serious violence.

Does higher income reduce property crime but not violent crime?

Core argument: The best available evidence suggests that policies reducing economic desperation, such as more jobs or more generous transfer programs, reduce property crime and therefore overall crime, while showing little if any systematic relationship to violent crime.

The best available evidence suggests that policies that reduce economic desperation, like more jobs or more generous transfer programs, reduce property crime and, hence, overall crime (Figure 1). The best available evidence [also] suggests that jobs and transfer programs have little, if any, systematic relationship to violent crime (Figure 1). That’s true for jobs programs or social programs for low-income populations in general, or for specific higher-risk sub-populations like people exiting prison. Economic conditions contribute importantly to property crime but are not the key driver of violent crime. If anything, the evidence seems to be at least as strong for the reverse relationship: Uncontrolled violence exacerbates poverty and joblessness. Exposure to community violence harms children’s schooling outcomes and the mental health of both parents and children. Local economic development is hard when people and businesses are fleeing to safety. The flip side is that anything that helps control [the] violent crime problem can be a massive tailwind for community development efforts.

Takeaways by Macro Roundup® AI

  1. The best available evidence suggests that policies reducing economic desperation, such as more jobs or more generous transfer programs, reduce property crime and therefore overall crime, while showing little if any systematic relationship to violent crime.
  2. That pattern holds for jobs and social programs aimed at low-income populations broadly and for higher-risk sub-populations such as people exiting prison, with economic conditions contributing importantly to property crime but not driving violent crime.
  3. Evidence for the reverse relationship appears at least as strong: uncontrolled violence exacerbates poverty and joblessness, while exposure to community violence harms children's schooling and the mental health of both parents and children, and local economic development is hard when people and businesses flee to safety.

Related Articles:

  • 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.
  • Violent Crime Is Falling, But That’s Not the Whole Story — Violent crime in large US cities and some of the largest suburban counties fell 2.6% and homicides fell 10.4% after three straight years of increases, but both remained above pre-pandemic levels, according to the Major Cities Chiefs Association. Federal Bureau of Investigation data show a milder pattern because they also cover suburbs, small towns, and rural areas.
  • New York’s Subways Have Less Crime but More Violence — Major crime on New York's subways is on track to run 13.4% below 2019 levels, but ridership remains down about a third, so crime per rider is much higher this year than from 2006 through 2019. Property crime has not risen; violent incidents account for the increase.

AI Summary. Americans earn about $3.7tn a year from interest and dividends, according to the Commerce Department, roughly $770bn more than four years earlier. The Federal Reserve recorded wealth held in stocks, real estate, and other assets such as pensions at the highest level it has ever observed.

David Uberti Wall Street Journal
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Americans earned ~ $3.7T in annualized investment income in Q1 – up $770B from 2020. In the last quarter of 2023, wealth held in stocks, real estate, and other assets such as pensions reached the highest level ever recorded.

Is American investment income at its highest level ever?

Core argument: Americans earned about $3.7 trillion from interest and dividends in the first quarter at a seasonally adjusted annual rate, according to the Commerce Department, up roughly $770 billion from four years earlier.

Americans in the first quarter earned about $3.7 trillion from interest and dividends at a seasonally adjusted annual rate, according to the Commerce Department, up roughly $770 billion from four years earlier. In the last quarter of 2023, wealth held in stocks, real estate and other assets such as pensions reached the highest level ever observed by the Federal Reserve.

Takeaways by Macro Roundup® AI

  1. Americans earned about $3.7 trillion from interest and dividends in the first quarter at a seasonally adjusted annual rate, according to the Commerce Department, up roughly $770 billion from four years earlier.
  2. Wealth held by Americans in stocks, real estate and other assets such as pensions reached the highest level ever observed by the Federal Reserve in the final quarter of 2023.

Related Articles:

  • Wealth Inequality by Age in the Post-Pandemic Era — Americans under 40 held just 4.9% of total U.S. wealth while making up 37% of the adult population, whereas those over 54 held 71.6% with a similar population share. These age gaps narrowed slightly afterward, with the real value of financial assets held by under-40s rising more than 50% versus about 20% for those over 54.
  • Baby-Boomers are Loaded. Why Are They So Stingy? — Household data show that older Americans have shifted from spending more than their income to saving: in the mid-1990s those aged 65-74 spent 10% more than they took in, while since 2015 they have saved about 1% of income. Federal Reserve survey data show the share of retired households reporting saving rose from 46% to 51%.
  • The Rise and Fall of Pandemic Excess Wealth — Real household net worth peaked at about $13tn above its pre-pandemic projected path before falling back to that path, while real financial assets peaked roughly $10tn above trend and then dropped to about $7.3tn below it. The shortfall in financial assets is attributed mainly to lower equity holdings, which fell 17%.

AI Summary. Japan's fertility rate fell to a record low of 1.2 in an eighth consecutive annual decline, dropping below 1 in Tokyo, according to the Ministry of Health, Labour and Welfare. Births totaled 727,277, down 5.6% from the prior year, while deaths reached almost 1.58m, shrinking the population by 848,659 excluding migration.

Mia Glass and Sarah Hilton Bloomberg
Date Posted:

Japan’s fertility rate dropped to a record low of 1.2 last year with 727,277 births, down 5.6% y/y. The country’s population shrank by 848,659, the 17th straight year of decline.

Is Japan's fertility rate still falling to record lows?

Core argument: Japan's fertility rate fell to a record low of 1.2, an eighth consecutive decline, with the rate dropping below 1 in Tokyo, according to Ministry of Health, Labour and Welfare data.

Japan’s fertility rate dropped to a record low of 1.2 last year, in an eighth consecutive decline that underscores the challenges faced by the world’s most elderly country. The figure, an indication of the average number of children a woman is likely to produce over her lifetime, dropped below 1 in Tokyo, according to data published by the Ministry of Health, Labour and Welfare on Wednesday. The total number of births in Japan last year was 727,277, 5.6% less than the previous year, while the total number of deaths rose to almost 1.58 million, meaning the population shrank by 848,659, the 17th straight fall. The data exclude migration.

Takeaways by Macro Roundup® AI

  1. Japan's fertility rate fell to a record low of 1.2, an eighth consecutive decline, with the rate dropping below 1 in Tokyo, according to Ministry of Health, Labour and Welfare data.
  2. Japan recorded 727,277 births, 5.6% fewer than the previous year, while deaths rose to almost 1.58 million, shrinking the population by 848,659 in a 17th straight fall.
  3. Japan's population figures exclude migration, and the fertility rate indicates the average number of children a woman is likely to bear over her lifetime.

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AI Summary. Just 14% of South Korean jobs are at companies with over 250 employees—the lowest share in the OECD, versus 58% in the US—and studies find small Korean service firms are about 30% as productive as large ones, compared with 84% in the Netherlands and 90% in Germany. The author argues this low productivity yields very low wages, depressing fertility.

Snowden Todd Charging Sheep
Date Posted:

Snowden Todd argues that one key driver of South Korea’s low fertility, forecast at 0.68 children/woman this year, is the fact that only 14% of workers are employed by higher productivity, higher wage large enterprises (250+), the lowest in the OECD.

Do unproductive small businesses and low wages depress South Korean fertility?

Core argument: Just 14% of South Korean jobs are at companies with over 250 employees, the lowest share in the OECD, compared with 58% in the United States.

Between the Hyundai apartments and Samsung theme parks, South Korea certainly looks like a nation of big business. But looks can be deceiving: peek beneath the hood and you find that the Republic of Samsung is a nation awash in shitty small businesses. With just 14% of jobs at companies with over 250 employees, South Korea has the lowest proportion of jobs at big companies of any nation in the OECD. Contrast this with the U.S., where 58% of jobs are at such companies. It is truly striking how unproductive South Korea’s small businesses are compared to those in Western nations. The OECD, for example, found small service sector firms in Korea are 30% as productive as larger firms with over 250 workers. In the Netherlands and Germany, that figure is 84 and 90%, respectively. Similarly, the Asian Development Bank found that in 2010, small Korean firms with five to 49 workers were just 22% as productive as firms with over 200 workers. And extremely low productivity manifests just how you might expect: in very low wages.

Takeaways by Macro Roundup® AI

  1. Just 14% of South Korean jobs are at companies with over 250 employees, the lowest share in the OECD, compared with 58% in the United States.
  2. The OECD found small South Korean service-sector firms are 30% as productive as firms with over 250 workers, versus 84% in the Netherlands and 90% in Germany.
  3. The Asian Development Bank found that in 2010 small Korean firms with 5 to 49 workers were 22% as productive as firms with over 200 workers, and such low productivity translates into very low wages.

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  • $75,000 for a Baby? South Korean Businesses Float Incentives As Demographic Crisis Looms — South Korea's total fertility rate fell from 0.78 to 0.72 and is projected to reach 0.68, far below the 2.1 the OECD says is needed for a stable population. Military personnel numbers have dropped below 500,000, schools and universities report shrinking enrollment, and kindergartens have been converted into nursing homes.
  • East Asia’s Coming Population Collapse — United Nations projections show China's population falling 8%, Japan's 18%, South Korea's 12%, and Taiwan's 8% between 2020 and 2050, while the US population rises 12%. Working-age people per person over 65 are projected to drop to about 1.8 in China and 1.2 in Japan and South Korea.

AI Summary. Longitudinal data show that more years spent living with parents is associated with having fewer children, with four extra years of coresidence implying roughly 0.15 to 0.3 fewer children regardless of local housing density. The association persists when comparing individuals with similar lifetime income, early test scores, desired family size, and marital histories.

Lyman Stone Institute for Family Studies
Date Posted:

Within the U.S. people who spent more years living with parents had fewer children. Four extra years with parents implied 0.15 to 0.3 fewer children. @lymanstoneky

Does living with parents longer reduce how many children people have?

Core argument: Four extra years living with parents implied about 0.15–0.3 fewer children, an effect found regardless of area density and considerable in magnitude.

Regardless of area density, people who spent more years living with their parents had fewer children. Four extra years with parents implied about 0.15 to 0.3 fewer children, a quite considerable effect. These longitudinal results should motivate a clearer awareness of what factors absolutely do matter for fertility. Most notably, extending the years that young people live with their parents has a huge negative effect in both cross-sectional and longitudinal data. If I use interaction terms, the huge negative effects of parental coresidence are not substantially diminished: for individuals with similar amounts of lifetime income, living with parents reduces fertility; for individuals with similar early-in-life test scores, living with parents reduces fertility; for individuals with similar early-in-life family size desires, living with parents reduces fertility; for individuals with similar lifetime marital histories, living with parents reduces fertility.

Takeaways by Macro Roundup® AI

  1. Four extra years living with parents implied about 0.15–0.3 fewer children, an effect found regardless of area density and considerable in magnitude.
  2. The negative fertility effect of parental coresidence is not substantially diminished by interaction terms for lifetime income, early-life test scores, early-life family size desires, or lifetime marital histories.
  3. Extending the years young people live with their parents carries a large negative effect on fertility in both cross-sectional and longitudinal data.

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