Edward Conard

Top Ten New York Times Bestselling Author

  • “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 full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…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
  • “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
  • “…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
  • “…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
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, July 18, 2024

AI Summary. The authors classify U.S. disinflation episodes by how committed monetary policymakers were, judging commitment strong in some episodes and weak in others based on policy records and public statements about acceptable output losses. They find no evidence that stronger commitment affected expected inflation, and conclude weak commitment failed mainly through premature abandonment of disinflationary policy.

Christina Romer and David Romer National Bureau of Economic Research
Date Posted:

Over 9 post-WWII episodes in which the Fed embarked on disinflation, tightening with high initial commitment and willingness to endure output losses yielded a 5-year reduction of 3pp, while very weak commitment resulted in ½ pp after 5 years.

Does policymakers' commitment to disinflation work by shaping expectations or by persistence?

Core argument: Classifying policymakers' statements in policy records, speeches, and testimony, the authors judge monetary policymakers strongly committed to disinflation in 1958, 1979, and 1981, and only weakly committed in 1968, 1974, and 1978.

We categorize this variation in commitment using what policymakers said about several issues both in the policy records and in public speeches and testimony,[including]how much output loss policymakers were willing to accept. We conclude that monetary policymakers were very committed to disinflation in the 1958, 1979, and 1981 episodes and only weakly committed in the 1968, 1974, and 1978 episodes. In 1981, e.g. policymakers felt they had erred in backing away from disinflationary policy in the spring of 1980, and were willing to accept large output losses to finally get inflation down. In 1978, they wanted no more than a mild slowing of output growth, and believed that monetary policy could not reduce inflation on its own. There is no evidence that stronger commitment to disinflation directly affected expected inflation. The main channel through which weak commitment led to [failure] was premature abandonment of the disinflationary policy.

Takeaways by Macro Roundup® AI

  1. Classifying policymakers' statements in policy records, speeches, and testimony, the authors judge monetary policymakers strongly committed to disinflation in 1958, 1979, and 1981, and only weakly committed in 1968, 1974, and 1978.
  2. The authors conclude that weak commitment led to failed disinflation mainly through premature abandonment of the disinflationary policy, and find no evidence that stronger commitment affected expected inflation.
  3. In 1981 policymakers, judging they had erred in backing away from disinflation in the spring of 1980, were willing to accept large output losses, whereas in 1978 they sought no more than a mild slowing of output growth and believed monetary policy alone could not reduce inflation.

Related Articles:

  • The Fed Can Take Its Time Taming Inflation — Wage growth and price growth reinforce each other and both run 1 to 1.5 percentage points above pre-pandemic rates, with underlying inflation estimated at 2.5% to 3%. The author puts roughly a 1-in-3 chance that persistently strong demand keeps inflation above 3%, and argues strong job growth lets the Federal Reserve spend months assessing that risk.
  • How Quickly Do Prices Respond to Monetary Policy? — An analysis finds recent swings in inflation have been concentrated in the categories most sensitive to monetary policy, with inflation for that responsive group now close to its pre-2020 rate. The authors estimate that interest rate increases likely began putting downward pressure on prices about a year later and will continue to do so near term.
  • Are Consumers Retrenching? — US labor income net of social insurance taxes has grown at a 6% annual rate while nominal consumer spending grew 4% and capital income 3%. Growth in core "market-based" consumer spending is running about half a percentage point below its 4.4% pre-pandemic annual average, while net labor income runs roughly a point faster.

AI Summary. Markets are again over-pricing Federal Reserve rate cuts: rising CEO confidence, 3.0% consumer price inflation, and record stock prices argue against cutting, meaning the case for cuts rests on the Federal Reserve's model of a lower long-run neutral rate rather than incoming data.

Torsten Sløk Apollo
Date Posted:

Torsten Sløk argues that reflexivity, financial conditions easing in advance of foreshadowed rate cuts, is making it more difficult to cut. “The Fed’s insistence on the next move being a cut makes it more difficult to actually cut rates.”

Are markets over-pricing rate cuts that incoming data do not support?

Core argument: CPI inflation at 3.0% does not argue for the Fed to cut interest rates soon, particularly with the stock market reaching new all-time highs and CEOs becoming increasingly optimistic about the outlook.

The market is making the same mistake it made in January when it priced in six cuts. Looking at the ongoing uptrend in CEO confidence, there is no reason for the Fed to cut interest rates anytime soon. In fact, it is not the incoming data that is the reason to begin cutting interest rates soon. It is the Fed’s model, which says that interest rates in the long run should be much lower than the fed funds rate today. In other words, the Fed has moved from being data dependent to being r-star dependent. Not even CPI inflation at 3.0% argues for the Fed to cut interest rates soon, particularly not in a situation where the stock market is reaching new all-time highs every day, and CEOs are becoming increasingly optimistic about the outlook. The Fed’s insistence on the next move being a cut makes it more difficult to actually cut rates. That is because signals to the market about coming Fed cuts push stock prices higher and tighten credit spreads, which in turn puts more upward pressure on growth and inflation.

Takeaways by Macro Roundup® AI

  1. CPI inflation at 3.0% does not argue for the Fed to cut interest rates soon, particularly with the stock market reaching new all-time highs and CEOs becoming increasingly optimistic about the outlook.
  2. The Fed has shifted from data dependence to r-star dependence, with the case for cuts resting on its model that long-run interest rates should be much lower than today's fed funds rate rather than on incoming data.
  3. The Fed's insistence that its next move is a cut makes cutting harder, because signals of coming cuts push stock prices higher and tighten credit spreads, adding upward pressure on growth and inflation.

Related Articles:

  • The Fed Cut Reflexivity Paradox — Financial conditions are significantly easier than when the Federal Reserve began raising interest rates, with the S&P 500's market value up $9tn since the Fed shifted to discussing cuts — a household windfall equal to about 50% of annual consumer spending. Easy financial conditions and continued fiscal support are offsetting rate hikes.
  • The Transition to a Higher Cost of Capital — Bond yields near 4.5% sit below the 5.5% short-term interest rate, leaving little risk premium, and those yields have been enough to draw buyers back toward normal bond holdings. The author argues yields still need to rise to a sustainable cost of capital given structurally higher fiscal and inflationary spending.
  • Markets Think Inflation Will Be Too High For The Next 20 Years — Inflation expectations derived from the gap between regular Treasury yields and inflation-indexed Treasury yields show expected annual inflation over the next 10 and 20 years running considerably above expected inflation for the decade beginning 20 years out. Before the pandemic-era inflation surge, actual inflation and expected future inflation tracked each other closely.

AI Summary. Labor demand continues to outpace labor supply, with job openings 17% above pre-pandemic levels and average wages up 3.9% year on year. The author argues current conditions do not warrant interest rate cuts, as the risk of inflation getting stuck above 2.5% is too great.

Michael Strain Project Syndicate
Date Posted:

.@MichaelRStrain argues current economic conditions are still too strong to start a cutting cycle. “The risk that inflation gets stuck above 2.5% is too great for policymakers to lower rates now.” @AEIecon

Do labor market conditions justify cutting interest rates now?

Core argument: Job openings remain 17% above pre-pandemic levels, and by the author's calculations labor demand continues to outpace labor supply even as the labor market weakens from a still-strong position.

The labor market is weakening, but it is still strong. According to my calculations, labor demand continues to outpace labor supply. Job openings are normalizing, but they remain 17% higher than before the pandemic. This is reflected in wage inflation. Average wages grew by 3.9% in June year on year. Current economic conditions do not indicate that the Fed should begin cutting rates in the next two months. The risk that inflation gets stuck above 2.5% is too great for policymakers to lower rates now. The Fed has entered the last mile of its fight against inflation. With its credibility at stake, it must not flinch before it reaches the finish line.

Takeaways by Macro Roundup® AI

  1. Job openings remain 17% above pre-pandemic levels, and by the author's calculations labor demand continues to outpace labor supply even as the labor market weakens from a still-strong position.
  2. Average wages grew 3.9% year on year in June, which the author presents as wage inflation arguing against a Fed rate cut in the next two months.
  3. The author argues the risk that inflation gets stuck above 2.5% is too great to lower rates now, with the Fed in the last mile of its inflation fight and its credibility at stake.

Related Articles:

  • The Fed Cut Reflexivity Paradox — Financial conditions are significantly easier than when the Federal Reserve began raising interest rates, with the S&P 500's market value up $9tn since the Fed shifted to discussing cuts — a household windfall equal to about 50% of annual consumer spending. Easy financial conditions and continued fiscal support are offsetting rate hikes.
  • The Fed Can Take Its Time Taming Inflation — Wage growth and price growth reinforce each other and both run 1 to 1.5 percentage points above pre-pandemic rates, with underlying inflation estimated at 2.5% to 3%. The author puts roughly a 1-in-3 chance that persistently strong demand keeps inflation above 3%, and argues strong job growth lets the Federal Reserve spend months assessing that risk.
  • It’s All About Shelter — Producer price inflation for final demand tracks consumer price inflation excluding shelter closely, and both show inflation under control; overall consumer inflation looks hot only because the shelter component is up 5.6%. That shelter measure lags rents by construction, and more current rent series show no recent inflation.

AI Summary. Effective homeowners' insurance rates rose 34% nationally between 2018 and 2023, with increases of 43% in Florida and 60% in Texas, and premiums equal to 5% of per capita disposable income in Louisiana, the highest in the US. Loss exposure of Florida's two state insurance backstops is estimated at 1% of the state's economic output.

Sujeet Indap Financial Times
Date Posted:

Between 2018 and 2023 the price of homeowners insurance in the US increased 34%, vs 21% for headline CPI. Florida and Texas saw 43% and 60% rises respectively.

How unevenly are rising homeowners' insurance costs hitting US states?

Core argument: Effective homeowners' insurance rates rose 34% across the US between 2018 and 2023, with Texas up 60% and Florida up 43%, according to data compiled by S&P.

Overall effective rate changes in the US were 34% between 2018 and 2023. But in Florida and Texas, the growth has been 43% and 60%, respectively, according to data complied by S&P. In Louisiana, homeowners’ insurance premiums accounted for 5% of per capita disposable income, according to data compiled by Moody’s, the largest hit in America. Texas has insurers of last resort called the Texas Windstorm Insurance Association as well as the Texas Fair Plan. Florida’s state backstop plans are called the Citizens Property Insurance Corporation and the Florida Hurricane Catastrophe Fund. Moody’s estimates that the loss exposure of these two now accounts for 1% of the Sunshine State’s total economic output. The state of Florida does not explicitly guarantee these entities but rating agencies think Florida will stand behind them and they are therefore counted as contingent liabilities.

Takeaways by Macro Roundup® AI

  1. Effective homeowners' insurance rates rose 34% across the US between 2018 and 2023, with Texas up 60% and Florida up 43%, according to data compiled by S&P.
  2. Louisiana homeowners' insurance premiums accounted for 5% of per capita disposable income, the largest such burden in America, according to data compiled by Moody's.
  3. Moody's estimates the loss exposure of Florida's Citizens Property Insurance Corporation and Florida Hurricane Catastrophe Fund equals 1% of state economic output, counted by rating agencies as contingent liabilities despite no explicit state guarantee.

Related Articles:

  • Home Insurance Premiums Are Surging—and States Are Allowing It — Home insurers recorded a $16bn underwriting loss, the largest since at least 2000, according to AM Best, which expects losses to continue. An analysis by S&P Global Market Intelligence finds state-approved rate increases have averaged just 0.2 percentage point below what insurers requested, with California approving an average 21% increase.
  • Measuring the Climate Risk Exposure of Insurers — The authors estimate that U.S. life insurers' aggregate climate transition risk exposure rose by more than $150bn, about 28% of their market value, during a fossil fuel price collapse, with more than $85bn attributable solely to climate stress. The ten largest U.S. property and casualty insurers mostly showed excess reserves, indicating no sign of undercapitalization under physical climate stress.
  • As Texas Burns, Property Insurance Costs Soar — Rising property insurance premiums are attributed to climate-related damage, higher rebuilding costs, and costlier reinsurance protection for insurers, which is passed on to homeowners. The insurance industry says rebuilding and replacement costs rose 55% over a three-year span, driven by raw materials, wages, supply-chain bottlenecks, and a rising share of larger homes.

AI Summary. In mice, the pro-inflammatory protein IL-11 increases with age across cell types and tissues, and treating older mice with an IL-11-blocking antibody improved metabolism and muscle function and reduced frailty and ageing biomarkers. The authors report the treatment extended median lifespan by 22.5% in males and 25% in females.

Anissa Widjaja, Wei-Wen Lim, et al. Nature
Date Posted:

A treatment that inhibits the pro-inflammatory cytokine IL-11 extends the median lifespan of male mice by 22.5% and of female mice by 25%, and may inhibit aging pathologies in older people.

Can blocking a pro-inflammatory protein extend lifespan in mice?

Core argument: Anti-IL-11 treatment begun at 75 weeks of age and continued until death extended median lifespan by 22.5% in male mice and 25% in female mice.

​​For healthspan and lifespan, inflammation is a centrally important hallmark. Here we examined whether IL-11, a pro-inflammatory cytokine, has a negative effect on age-associated disease and lifespan. As mice age, IL-11 is upregulated across cell types and tissues to modulate cellular, tissue- and organismal-level ageing pathologies. Administration of anti-IL-11 to 75-week-old mice for 25 weeks improves metabolism and muscle function, and reduces ageing biomarkers and frailty across sexes. Treatment with anti-IL-11 from 75 weeks of age until death extends the median lifespan of male mice by 22.5% and of female mice by 25%. We suggest that anti-IL-11 therapy, which is currently in early-stage clinical trials for fibrotic lung disease, may provide a translational opportunity to determine the effects of IL-11 inhibition on ageing pathologies in older people.

Takeaways by Macro Roundup® AI

  1. Anti-IL-11 treatment begun at 75 weeks of age and continued until death extended median lifespan by 22.5% in male mice and 25% in female mice.
  2. Administering anti-IL-11 to 75-week-old mice for 25 weeks improved metabolism and muscle function and reduced ageing biomarkers and frailty in both sexes.
  3. IL-11, a pro-inflammatory cytokine, is upregulated across cell types and tissues as mice age, and anti-IL-11 therapy, already in early-stage clinical trials for fibrotic lung disease, may offer a translational opportunity for ageing pathologies in older people.

Related Articles:

  • The (Surprisingly) Good News on Life Expectancy: It’s Still Going Up — Commonly reported "period" life expectancy assumes current age-specific death rates persist for a newborn's entire life, while "cohort" life expectancy better measures how long a child born today will actually live. Death rates from cancer, heart disease, and stroke have fallen substantially over the past two decades, and the author argues that progress should continue.

Friday, July 19, 2024

AI Summary. A study of European elections since the 1990s finds that less-educated voters are significantly more likely than highly educated voters to support populist parties when governments implement deficit-reducing austerity measures, with no such gap in the absence of austerity. The authors measure populism as anti-pluralist rhetoric challenging the legitimacy of established political institutions.

Leonardo Baccini and Thomas Sattler American Journal of Political Science
Date Posted:

In the European Social Survey administered between 2002 and 2016, less-educated individuals were six times more likely to exhibit populist sentiment if policies of fiscal austerity were in place in the preceding electoral period than if they were not.

Does austerity drive less-educated voters toward populist parties?

Core argument: Individuals with only lower secondary education show a populism score six times higher with austerity than without, based on European district-level election outcomes and individual-level voting data since the 1990s.

We measure austerity as the amount of deficit reducing policies implemented by the government in a given time period. We examine the political effects of these adjustments in Europe since the 1990s using both district-level election outcomes and individual-level voting data. The conceptualization and operationalization of populism is [based on measures of] anti-pluralist rhetoric that “challenges the legitimacy of established political institutions and emphasizes that the will of the people should prevail.” Figure 4 displays the marginal effect of Lower Secondary Education on Populism Score [of individuals] with and without austerity. Less-educated individuals are significantly more likely than highly educated individuals to support populist parties if austerity measures have been implemented. Without austerity measures, less-educated individuals are not more likely to support populist parties than highly educated individuals. The effect is sizable: Populism Score is six times higher with austerity than without. Economically vulnerable voters increasingly turn to populist parties when governments implement fiscal adjustment measures.

Takeaways by Macro Roundup® AI

  1. Individuals with only lower secondary education show a populism score six times higher with austerity than without, based on European district-level election outcomes and individual-level voting data since the 1990s.
  2. Without austerity measures, less-educated European voters are no more likely than highly educated voters to support populist parties.
  3. The analysis measures austerity as the amount of deficit-reducing policies a government implements in a given period and operationalizes populism through anti-pluralist rhetoric that challenges the legitimacy of established political institutions and emphasizes that the will of the people should prevail.

Related Articles:

  • The Road to A Political Realignment in American Politics — College-educated voters are now more likely to identify as Democrats while those without degrees back Republicans, with educational attainment increasingly correlated with views on abortion, LGBTQ+ rights, and religion's relationship to government. This sorting leaves most states politically uncompetitive, with eight states near the national average in education levels holding 97 electoral votes in play.
  • 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.
  • If Everyone Voted, Would Biden Benefit? Not Anymore — Polling indicates infrequent, less engaged voters now favor the Republican presidential candidate, a reversal that would mean higher turnout benefits Republicans rather than Democrats. In Pennsylvania, new registrants under automatic voter registration have affiliated with Republicans over Democrats by six percentage points.

AI Summary. A European-style welfare state with government spending at 45% of GDP cannot be financed by taxing the rich alone and would require a large consumption tax, which Republican opposition has long blocked. Proposed tariffs of 10% on all imports and 60% on China are a regressive consumption tax that could open the door to a later value-added tax.

Scott Sumner The Money Illusion
Date Posted:

.@MoneyIllusion notes that government in Europe is at least 10% of GDP larger than the US, primarily funded via VAT, and argues that Trump’s tariff regime would be a backdoor VAT. “It’s the fiscal equivalent of Nixon going to China.”

Do broad tariffs open the door to a European-style consumption tax?

Core argument: Trump's proposed 10% tariff on all imports and 60% on Chinese goods is a tax on consumption that the author argues is even more regressive than a VAT.

The progressive left will never be able to achieve their dream of a Euro-style welfare state by taxing the rich. If you read the smarter progressives, they all know this. They understand that the US would have to add a large tax on consumption in order to get government spending up to 45% of GDP. Until now, that idea has been a complete non-starter, because of intense opposition from the GOP. But now, Trump is proposing a big new tax on consumption, indeed a tax that is even more regressive than a VAT. He’s advocating a 10% tariff on all imports (and 60% on China.) Yes, that falls far short of a 20% VAT on goods and services. But it’s the foot in the door. The next step is when the Dems reclaim power and complain that tariffs hurt the poor because the consumption basket of the rich is skewed toward services. “Why should services be exempt?” They switch us from a 10% tariff to a 10% VAT. Then, when more money is needed, it becomes a 12% VAT. Rinse and repeat…we are on the way to becoming a Euro-style welfare state.

Takeaways by Macro Roundup® AI

  1. Trump's proposed 10% tariff on all imports and 60% on Chinese goods is a tax on consumption that the author argues is even more regressive than a VAT.
  2. The author argues that a Euro-style welfare state with government spending at 45% of GDP cannot be financed by taxing the rich alone and requires a large consumption tax, as smarter progressives recognize.
  3. The author projects that Democrats returning to power would object that tariffs exempt services, which the rich consume disproportionately, converting a 10% tariff into a 10% VAT and then raising it to 12%.

Related Articles:

  • He Helped Trump Remake Global Trade. His Work Isn’t Done — A former U.S. trade representative argues that countries running chronic trade surpluses for decades are by definition protectionist, and backs a universal 10% tariff plus a higher tariff on China to push toward globally balanced trade over time. Alternatives include import certificates tied to exports and a charge on foreign investment in U.S. assets.
  • The Rich Aren’t Rich Enough to Balance the Federal Budget — The Congressional Budget Office calculates that the top-earning 20% of U.S. households received 58% of income and paid 69% of federal taxes, while the top 1% earned 18% and paid 25%. U.S. top income, capital-gains, corporate, and estate tax rates exceed typical OECD levels; the revenue gap reflects value-added taxes.
  • Can Trade Intervention Lead to Freer Trade? — China accounts for over 31% of global manufacturing but under 13% of global consumption, while the United States accounts for under 17% of manufacturing and nearly 27% of consumption. The author argues persistent surpluses reflect household subsidies to producers, and that the US could counter them with tariffs or taxes on capital inflows.

AI Summary. University of Michigan consumer survey data show a record-high 30% of the population holds stocks worth more than $500,000 and 37% own a home worth more than $500,000. These wealth gains, combined with record-high cash flows from fixed income, are argued to be a significant tailwind to consumer spending.

Torsten Sløk Apollo
Date Posted:

Torsten Sløk cites a Michigan Survey of Consumer Sentiment report showing that 30% of the population has stocks worth more than $500,000, a record high, and notes “the tailwind to consumer spending for homeowners and equity owners is significant.”

Are rising household wealth gains boosting consumer spending?

Core argument: A record-high 30% of the U.S. population holds stocks worth more than $500,000, and 37% own a home worth more than $500,000, according to the University of Michigan Survey of Consumer Sentiment.

The University of Michigan Survey of Consumer Sentiment shows that a record-high 30% of the population has stocks worth more than $500,000, and 37% own a home worth more than $500,000. It is remarkable that these wealth gains for the household sector have taken place while the Fed was raising interest rates. The bottom line is that the tailwind to consumer spending for homeowners and equity owners is significant, in particular when combined with record-high cash flows from fixed income.

Takeaways by Macro Roundup® AI

  1. A record-high 30% of the U.S. population holds stocks worth more than $500,000, and 37% own a home worth more than $500,000, according to the University of Michigan Survey of Consumer Sentiment.
  2. These household wealth gains occurred while the Federal Reserve was raising interest rates.
  3. The tailwind to consumer spending from homeowners and equity owners is significant, particularly combined with record-high cash flows from fixed income.

Related Articles:

  • Young Americans Continue to Build Wealth, Across the Distribution — Younger Americans now hold about double the average wealth Generation X had at the same age, roughly matching what Generation X and Baby Boomers had 5-6 years later in life. Generation X and Baby Boomers currently have roughly equal average wealth at the same age, after Generation X had been about $100,000 ahead.
  • Has Intergenerational Progress Stalled? Income Growth Over Five Generations of Americans — Using post-tax, post-transfer income data, the authors find each of the past four US generations was better off than the prior one, with Millennials' real median household income at ages 36–40 18% above the previous generation's, versus 34% for the Silent Generation, 27% for Baby Boomers, and 16% for Generation X.
  • Stock Market Wealth and Entrepreneurship — The authors estimate a causal effect of stock market wealth on business entry, comparing investors with similar portfolios but different returns from idiosyncratic holdings. Effects are concentrated among moderate-wealth owners with returns of 25% or above and in strong stock market years, consistent with gains lifting individuals past a wealth threshold for starting a firm.

AI Summary. Inflation on the Federal Reserve's preferred gauge has fallen from 4.3% to an estimated 2.6%, the steepest decline since 1984, while unemployment has risen from 3.6% to 4.1%, an increase seldom seen outside recessions. Simple monetary policy guidelines such as the Taylor Rule suggest interest rates, pushed above 5%, ought to be lower.

Greg Ip Wall Street Journal
Date Posted:

.@greg_ip notes that the current Fed funds rate is above levels implied by most versions of the Taylor Rule and argues despite a shifting balance of risks towards a weak labor market, the “Fed seems reluctant to take the win” and begin cutting,

Should the Fed cut rates now given falling inflation and rising unemployment?

Core argument: Inflation by the Federal Reserve's preferred gauge has fallen from 4.3% a year ago to an estimated 2.6%, the steepest decline since 1984 and near the Fed's 2% target.

The Federal Reserve pushed interest rates above 5% a year ago, determined to achieve two things: much lower inflation and a cooler labor market. It has succeeded. Inflation, by its preferred gauge, has fallen from 4.3% then to an estimated 2.6% now, the steepest decline since 1984, and within shouting distance of the Fed’s 2% target. Meanwhile, the unemployment rate has risen to 4.1% from 3.6%, an increase seldom seen outside recessions. The Fed seems reluctant to take the win. The Fed’s reticence is understandable. It likes to telegraph its plans well in advance and, having blown its forecasts on inflation so badly before, is doubly cautious. Interest rates that looked appropriate a year ago now look too high. Economists have devised several simple formulas, such as the “Taylor Rule,” as monetary policy guidelines, and they suggest rates ought to be lower.

Takeaways by Macro Roundup® AI

  1. Inflation by the Federal Reserve's preferred gauge has fallen from 4.3% a year ago to an estimated 2.6%, the steepest decline since 1984 and near the Fed's 2% target.
  2. The U.S. unemployment rate has risen to 4.1% from 3.6%, an increase seldom seen outside recessions, after the Fed pushed interest rates above 5% a year ago.
  3. Simple monetary policy formulas such as the Taylor Rule suggest interest rates ought to be lower than the levels that looked appropriate a year ago.

Related Articles:

  • Inflection Point — US inflation data indicate the early-year spike was an aberration, with core personal consumption prices estimated to have risen just 0.13% in a single month. The authors project monthly prints averaging 0.17% for the rest of the year, ending at 2.7% year-on-year, slightly below the Federal Reserve's median projection of 2.8%.
  • Is the Market Repeating the Mistake It Made in January? — Markets are again over-pricing Federal Reserve rate cuts: rising CEO confidence, 3.0% consumer price inflation, and record stock prices argue against cutting, meaning the case for cuts rests on the Federal Reserve's model of a lower long-run neutral rate rather than incoming data.
  • The Fed Can Take Its Time Taming Inflation — Wage growth and price growth reinforce each other and both run 1 to 1.5 percentage points above pre-pandemic rates, with underlying inflation estimated at 2.5% to 3%. The author puts roughly a 1-in-3 chance that persistently strong demand keeps inflation above 3%, and argues strong job growth lets the Federal Reserve spend months assessing that risk.

AI Summary. A nuclear fusion experiment at the University of Wisconsin-Madison set a record for the strongest steady magnetic field confining a plasma, reaching 17 tesla — more than twice the field strength used by high-resolution MRI brain scanners. The high-temperature superconducting magnets were built by startup Commonwealth Fusion Systems.

Tim De Chant Tech Crunch
Date Posted:

A nuclear fusion experiment at the University of Wisconsin-Madison set a record for the strongest magnetic field confining a plasma, raising hopes that future reactors will produce more power than they consume.

A nuclear fusion experiment at the University of Wisconsin-Madison set a record for the strongest magnetic field confining a...

Have fusion magnets set a new record for field strength?

Core argument: The University of Wisconsin-Madison's WHAM fusion experiment produced a 17 tesla magnetic field, a record for the strongest steady magnetic field confining a plasma and more than twice the strength used by high-resolution MRI brain scanners.

A nuclear fusion experiment at the University of Wisconsin-Madison has set a record for the strongest steady magnetic field confining a plasma, ushering in new hope that forthcoming demonstration reactors will deliver on their promises to produce more power than they consume.The new magnets came from Commonwealth Fusion Systems (CFS), a pioneering startup in the fusion industry which delivered the devices to UW-Madison’s WHAM experiment earlier this month. Once the WHAM team chilled the magnets down to operating temperature and applied a strong electrical current, the high-temperature superconductors produced a 17 tesla magnetic field. That’s more than twice as powerful as high-resolution MRI scanners use to image the human brain.

Takeaways by Macro Roundup® AI

  1. The University of Wisconsin-Madison's WHAM fusion experiment produced a 17 tesla magnetic field, a record for the strongest steady magnetic field confining a plasma and more than twice the strength used by high-resolution MRI brain scanners.
  2. Commonwealth Fusion Systems built the high-temperature superconducting magnets and delivered them to the WHAM experiment, where the team chilled them to operating temperature and applied a strong electrical current.
  3. The magnet record raises hope that forthcoming demonstration reactors will deliver on promises to produce more power than they consume.

Related Articles:

  • China Outspends the U.S. on Fusion in the Race for Energy’s Holy Grail — Scientists familiar with China's fusion facilities estimate that at its current pace of spending and development, China will surpass U.S. and European magnetic fusion capabilities within three or four years. Much U.S. fusion spending goes to legacy programs, while China's roughly $1.5bn is largely directed at building systems that would compete with leading private U.S. fusion firms.
  • US Scientists Repeat Fusion Power Breakthrough — Scientists at the Lawrence Livermore National Laboratory achieved net energy gain in a fusion reaction for a second time, with preliminary results indicating the experiment produced a higher energy output than the first ignition.
  • European Scientists Set New Nuclear Fusion Energy Record — Researchers at the Joint European Torus facility outside Oxford set a nuclear fusion energy record, generating 69 megajoules from a five-second sustained reaction, up from a previous record of 59 megajoules. The experiment consumed far more power than the reaction produced.