Edward Conard

Top Ten New York Times Bestselling Author

  • “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
  • “…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 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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…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 represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “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
  • “…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 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 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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


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.

Monday, July 22, 2024

AI Summary. The authors calculate that proposed U.S. policies to lower drug prices, while especially benefiting low-income and elderly populations, could sharply reduce pharmaceutical firms' investment in research and development. They estimate that a single international price per drug across the highest-income advanced economies, holding firm profits fixed, would halve U.S. prices while raising other countries' prices by 28% to 300%.

Kate Ho and Ariel Pakes National Bureau of Economic Research
Date Posted:

US efforts to reduce domestic pharmaceutical prices, without corresponding increases in other high-income countries, “could dramatically reduce firms’ investment in highly welfare-improving R&D.”

Do policies to lower U.S. drug prices reduce pharmaceutical research investment?

Core argument: The authors calculate that a single international drug price across the highest-income OECD countries, holding total pharmaceutical firm profits fixed, would cut U.S. prices by half while raising every other country's prices by 28% to 300%.

As long as the vast majority of the funds for research keep being supplied by firms, an increase in pharmaceutical research likely requires increased private incentives to do that research.Our calculations indicate that currently proposed U.S. policies to reduce pharmaceutical prices, though particularly beneficial for low-income and elderly populations, could dramatically reducefirms’ investment in highly welfare-improving R&D. The U.S. subsidizes the worldwide pharmaceutical market. One reason is U.S. prices are higher than elsewhere. If each drug had asingle international price across the highest-income OECD countries, and total pharmaceutical firm profits were held fixed, then U.S. prices would fall by half and every other country’s prices would increase (by 28% to 300%). International prices would maintain firms’ R&D incentives and more equitably share the costs of pharmaceutical research.

Takeaways by Macro Roundup® AI

  1. The authors calculate that a single international drug price across the highest-income OECD countries, holding total pharmaceutical firm profits fixed, would cut U.S. prices by half while raising every other country's prices by 28% to 300%.
  2. Currently proposed U.S. policies to reduce pharmaceutical prices, though particularly beneficial for low-income and elderly populations, could sharply reduce firms' investment in welfare-improving R&D, according to the authors' calculations.
  3. Because firms supply the vast majority of pharmaceutical research funds, the authors argue that increasing such research likely requires greater private incentives, and that international pricing would maintain R&D incentives while sharing research costs more equitably.

Related Articles:

  • Evaluation and Learning in R and D Investment — Pharmaceutical firms favor incremental drugs because they are easier to evaluate, even though novel drugs generate more learning that improves future screening decisions. The authors argue policymakers could strengthen incentives for novel research by making it easier for firms to capture indirect revenues from successor projects, which accrue even when the original project fails.
  • The Hamilton Index, 2023: China Is Running Away With Strategic Industries — An analysis of value-added output in 10 strategically important advanced industries, together accounting for over $10tn in global production, found China was the leading producer in seven and produced more than all other nations outside the top 10 combined. The authors argue China's gains came at the expense of the US and other advanced economies.

AI Summary. The U.S. labor force participation rate rose from 60.8% to 62.7%, and immigrants, though 18% of the adult population, account for 40% of that increase. The foreign-born participation rate stands at 66.4% versus 61.8% for the native-born, and without immigration's contribution the overall rate would be 62.2%.

Benn Steil and Elisabeth Harding Council on Foreign Relations
Date Posted:

.@BennSteil notes that foreign-born workforce participation is 66.4%, vs 61.8% for native-born, and argues that the increasing immigrant share of the US population, from 16% in January ‘21 to 18% in June ‘24, means faster growth and slowing inflation.

How much has immigration raised the labor force participation rate?

Core argument: The U.S. labor force participation rate rose from 60.8% in June 2020 to 62.7%, and without the increased foreign-born population share and their rising participation, it would stand at only 62.2%.

Since June 2020, with the rapid early spread of Covid, the LFPR has risen from 60.8% to 62.7%, with a particularly notable uptick in the last four months. Since President Biden took office in January 2021, the adult foreign-born population of the United States has grown by over 5 million. The share of immigrants in the adult population has risen from 16% to 18%. At the start of 2021, the foreign and native born LFPRs were 64.2% and 60.9%, respectively. And since then the foreign-born LFPR has grown by a whopping 2.2pp—far more than the 0.9pp growth in the native-born LFPR. Today, the foreign-born LFPR, at 66.4%, is nearly 5pp higher than that of the native-born, at only 61.8%. Without both the increase in the share of foreign-born in the population and the increase in the foreign-born LFPR, the overall LFPR would today be only 62.2% - a substantial half a percentage point lower than the actual 62.7%. Though immigrants constitute only 18% of the adult population, they account for a much larger 40% of the rise in the LFPR.

Takeaways by Macro Roundup® AI

  1. The U.S. labor force participation rate rose from 60.8% in June 2020 to 62.7%, and without the increased foreign-born population share and their rising participation, it would stand at only 62.2%.
  2. The foreign-born labor force participation rate has grown 2.2 percentage points since the start of 2021, far more than the 0.9 points for the native-born, leaving foreign-born participation at 66.4% versus 61.8%.
  3. Immigrants make up 18% of the U.S. adult population, up from 16%, but account for 40% of the rise in the labor force participation rate, with the adult foreign-born population up over 5 million since January 2021.

Related Articles:

  • The Demographic Outlook: 2024 to 2054 — The Congressional Budget Office projects the US population will grow from 342mm in 2024 to 383mm in 2054, an average 0.4% a year — less than half the 0.9% pace of the prior five decades. Immigration accounts for about 70% of growth over the next decade and for all population growth beginning in 2040.
  • Surging Population Growth From Immigration May Have Little Effect on Inflation — A 1% immigration-driven population increase with labor-force integration comparable to native-born workers expands employment and output immediately, leaving demand and supply balanced. Because capital accumulates only over time, the temporary shortage of capital relative to labor is argued to raise real returns to capital and depress real wages, with smaller effects if immigrants take manual jobs requiring less capital.
  • 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. Home prices are unusually high relative to incomes and rents given relatively high mortgage rates, but because prices are "sticky downward" this gap has historically closed through stagnant prices and fewer transactions while incomes and rents catch up. Rents rising faster than prices in city cores appears in New York and Los Angeles.

Aziz Sunderji Home Economics
Date Posted:

.@AzizSunderji notes that rents are rising faster than home prices, particularly in New York and Los Angeles, with home prices “merely stagnating and transactions drying up while the incomes and rents catch up.”

How do high home prices relative to incomes and rents correct?

Core argument: U.S. home prices are unusually high relative to incomes and rents, particularly given relatively high mortgage rates, yet a correction through outright price declines is unlikely because home prices are "sticky" and sellers balk at selling at a loss.

Prices are unusually high, compared to incomes and rents, especially given today’s relatively high mortgage rates. But they are unlikely to correct through price declines, because home prices are “sticky”—sellers balk at selling at a loss. As Robert Shiller wrote in 2003, “home prices are sticky downward. That is, when excess supply occurs, prices do not immediately fall to clear the market.” Instead, this relationship has corrected in the past through prices merely stagnating and transactions drying up while the incomes and rents catch up. And that seems to be what’s happening these days, at least in some markets like New York. For what it’s worth this same pattern—of rents rising faster than prices in the core of the city—appears in Los Angeles, but not in the other cities I looked at.

Takeaways by Macro Roundup® AI

  1. U.S. home prices are unusually high relative to incomes and rents, particularly given relatively high mortgage rates, yet a correction through outright price declines is unlikely because home prices are "sticky" and sellers balk at selling at a loss.
  2. Robert Shiller wrote in 2003 that home prices are "sticky downward," meaning that when excess supply occurs, prices do not immediately fall to clear the market.
  3. Past corrections came through prices stagnating and transactions drying up while incomes and rents caught up, a pattern apparent in New York, with rents rising faster than prices in the urban core in Los Angeles as well.

Related Articles:

  • The Price of Housing in the United States — Real housing price appreciation in the United States has varied widely across regions, with West Coast cities rising earlier while prices in other regions remained comparable in real terms to decades earlier. The authors find essentially no relationship between real price growth and zoning restrictiveness in the earliest period studied, and progressively steeper gradients in later periods.
  • The Boomer-Millennial Housing Battle Cools — Demographic needs are outweighing affordability in the housing market, with the share of first-time buyers returning nearly to pre-pandemic levels despite high prices and interest rates. One in four Millennial buyers reported purchasing because they had no choice, and Millennials again make up the largest group of homebuyers.
  • The US Housing Market Is Very Quickly Becoming Unaffordable — Home prices in Las Vegas, Phoenix, Orlando, and Tampa now stand at 6 to 7x incomes, exceeding the ratios reached at the peak of the early 2000s housing bubble in each of those metro areas. All four shifted from affordable, to unaffordable, back to affordable, and into unaffordable territory again.

AI Summary. An analysis of Census Bureau survey data finds that women having no children at all, rather than mothers having fewer, accounted for more than two-thirds of the 6.5% decline in average births among 35- to 44-year-olds between 2012 and 2022. Some demographers and economists expect rising childlessness to be sustained as attitudes toward family shift.

Rachel Wolfe Wall Street Journal
Date Posted:

Two-thirds of the 6.5% decline in mean births in the US 35-44 cohort between 2012 and 2022 is due to the increasing number of women who have zero children.

Is rising childlessness driving most of the decline in births?

Core argument: Childlessness accounted for over two-thirds of the 6.5% drop in average lifetime births among 35- to 44-year-old American women between 2012 and 2022, according to University of Texas demographer Dean Spears's analysis of Census Bureau CPS data for The Wall Street Journal.

Women without children, rather than those having fewer, are responsible for most of the decline in average births among 35- to 44-year-olds during their lifetimes so far, according to an analysis of the Census Bureau’s CPS data by University of Texas demographer Dean Spears for The Wall Street Journal. Childlessness accounted for over two-thirds of the 6.5% drop in average births between 2012 to 2022. While more people are becoming parents later in life, 80% of the babies born in 2022 were to women under 35, according to the Centers for Disease Control and Prevention’s National Vital Statistics data. The number of American women over 40 who had no children was declining until 2018, according to Current Population Survey data, when it then began to rise again. Now, some demographers and economists expect the increase in childlessness will be sustained due to shifts in how people think about families.

Takeaways by Macro Roundup® AI

  1. Childlessness accounted for over two-thirds of the 6.5% drop in average lifetime births among 35- to 44-year-old American women between 2012 and 2022, according to University of Texas demographer Dean Spears's analysis of Census Bureau CPS data for The Wall Street Journal.
  2. 80% of babies born in the U.S. in 2022 were to women under 35, according to the CDC's National Vital Statistics data, even as more people become parents later in life.
  3. The number of American women over 40 with no children declined until 2018 and then began rising, according to Current Population Survey data, and some demographers and economists expect the increase in childlessness to be sustained by shifts in how people think about families.

Related Articles:

  • Young Families Have Continued Leaving Big Cities Post-Pandemic — Large urban counties have continued to lose population of young children even as their overall population growth resumed, driven by immigration. Birth rates in large urban counties have declined twice as fast as in rural counties over the past decade, and the number of children under five fell in 58% of all US counties.
  • U.S. Fertility Rate Falls to Record Low — The U.S. total fertility rate fell 2% to 1.62 births per woman, the lowest since federal tracking began in the 1930s, with about 3.59mn births — the fewest since 1979 — according to provisional data. Birth rates for women aged 35-39, at 54.7 per 1,000, were close to the rate of 55.4 per 1,000 for women aged 20-24.
  • US Births Are Down Again, After the COVID Baby Bust and Rebound — US births declined steadily for years before the pandemic, with almost 600,000 fewer annual births in 2019 than in 2007, a 13% drop. The pandemic-related baby bust and subsequent rebound were short-term deviations from that longer trend, and 2022 birth counts remained below 2019 levels.

AI Summary. China's real household consumption growth is projected at around 3 to 4% annually over the next five to ten years, reflecting a continued slowdown in urban per capita spending growth. If household consumption stays near 39% of GDP, it would contribute only about 1.2 to 1.6 percentage points to annual GDP growth, well below its contribution in the 2010s.

Logan Wright, Camille Boullenois, Charles Austin Jordan, et al. Rhodium Group
Date Posted:

The @rhodium_group forecasts Chinese real household consumption growth of 3-4% over the next 5-10 years, consistent with GDP growth of around 3%. Chinese household income including transfers is ~ 60% of GDP vs. ~80% in the US.

How much will household consumption contribute to China's growth?

Core argument: China's real household consumption growth over the next five to ten years most probably runs around 3–4%, reflecting headwinds and a likely continued slowdown in urban per capita spending growth.

The most probable range of China’s real household consumption growth over the next five to ten years is around 3 to 4%. This reflects headwinds, along with the probability of a continued slowdown in urban per capita spending growth, from 6% in nominal terms over the past decade (and therefore around 5% in real terms). If the economy remains imbalanced and household consumption stays around 39% of China’s GDP, that means that consumption will contribute only around 1.2 to 1.6 percentage points of GDP growth per year for most of the next decade, a much lower contribution to growth than in the 2010s. Nothing in economic development is certain, but if the future looks roughly like the recent past, this is the most probable trajectory for household consumption growth.

Takeaways by Macro Roundup® AI

  1. China's real household consumption growth over the next five to ten years most probably runs around 3–4%, reflecting headwinds and a likely continued slowdown in urban per capita spending growth.
  2. Urban per capita spending in China grew 6% in nominal terms over the past decade, roughly 5% in real terms, a pace expected to slow further.
  3. If household consumption stays around 39% of China's GDP, consumption would contribute only about 1.2 to 1.6 percentage points of GDP growth per year for most of the next decade, below its contribution in the 2010s.

Related Articles:

  • Why Xi Jinping Is Afraid to Unleash China’s Consumers — China's push for self-sufficiency began in the mid-2000s, and its reliance on global supply chains for inputs into its products has declined alongside that strategy, alongside a doctrine of "comprehensive national security" spanning the economy and society. Analysts argue China now gauges national power in military capacity rather than purely economic terms, making manufacturing central.
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