Edward Conard

Top Ten New York Times Bestselling Author

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

Macro Roundup


Thursday, July 25, 2024

AI Summary. The authors find that children's economic mobility improves across birth cohorts in communities where parental employment rates increase, with larger effects for children who move to such communities at younger ages. The relationship is strongest for the parental employment rates of peers in a child's own birth cohort, suggesting it is mediated by social interaction.

Raj Chetty, Will Dobbie, Benjamin Goldman, et al. Harvard University
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Children who grew up in counties with higher employment rates had more economic mobility than peers raised in counties with lower rates, even if their parents weren’t employed, suggesting a relationship mediated by social interaction. @OppInsights

Do local parental employment rates shape children's economic mobility?

Core argument: Children's economic mobility outcomes improve across birth cohorts in communities where parental employment rates rise, with larger effects for children who move to those communities at younger ages.

[Mobility] outcomes improve across birth cohorts for children who grow up in communities with increasing parental employment rates, with larger effects for children who move to such communities at younger ages, and are most strongly related to parental employment rates of peers they are more likely to interact with,[e.g.] those in their own birth cohort, suggesting that the relationship between children’s outcomes and parental employment rates is mediated by social interaction. Figure VI presents changes in children’s income ranks versus changes in the employment rates of same-race adults in their childhood counties - white and Black children with parents at the 25th and 75th income percentiles, and [the data] correspond to changes over the period when children in our focal birth cohorts were growing up: age 2 (in 1980) for children in the 1978 birth cohort and age 8 (in 2000) for the 1992 birth cohort.

Takeaways by Macro Roundup® AI

  1. Children's economic mobility outcomes improve across birth cohorts in communities where parental employment rates rise, with larger effects for children who move to those communities at younger ages.
  2. Children's outcomes relate most strongly to the parental employment rates of peers they are more likely to interact with, such as those in their own birth cohort, suggesting that social interaction mediates the relationship.
  3. Changes in children's income ranks are plotted against changes in same-race adult employment rates in childhood counties for white and Black children with parents at the 25th and 75th income percentiles, covering 1980 to 2000.

Related Articles:

AI Summary. Across starting income levels, five-year earnings growth has been consistently slower for Black earners than for White and Asian earners, and fastest for Asian earners, whose largest relative gains came among the highest earners. The authors suggest slower growth among higher-earning Black workers may contribute to a decline in their relative earnings.

Illenin Kondo, Kevin Rinz, Natalie Gubbay, et al. National Bureau of Economic Research
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Using data from tax filers and W-2 recipients from 1998–2019, @AbigailWozniak, @john_voorheis, and @kevinrinz find that earnings for both Black men and Black women fell behind earnings for White men following the Great Recession.

Does earnings growth differ by race across income levels?

Core argument: Five-year earnings growth for Black earners was consistently slower than for White and Asian earners across starting income groups, with gaps in the level of growth particularly evident over longer horizons.

Over a five-year horizon, shown in Panel (b), earnings growth for Black earners was consistently slower than growth for White and Asian earners across starting income groups, and any shifts in growth around the Great Recession are less stark. Since 2005, five-year earnings growth has consistently been fastest for Asian earners at all income levels, with the largest relative gains in growth coming for the highest earners over this period. The patterns in earnings growth reveal that Black earners experienced gaps in the level of growth, particularly over longer horizons, combined with a larger and more persistent slowdown in earnings growth after the Great Recession. [Slower] earnings growth among higher-earning Black people may contribute to [this] decline in relative earnings.

Takeaways by Macro Roundup® AI

  1. Five-year earnings growth for Black earners was consistently slower than for White and Asian earners across starting income groups, with gaps in the level of growth particularly evident over longer horizons.
  2. Since 2005, five-year earnings growth has been fastest for Asian earners at all income levels, with the largest relative gains in growth coming for the highest earners.
  3. Black earners experienced a larger and more persistent slowdown in earnings growth after the Great Recession, and slower growth among higher-earning Black people may contribute to the decline in relative earnings.

Related Articles:

  • Perspectives on the Labor Share — The share of US income going to labor reached its lowest level since the Great Depression, falling roughly 5 percentage points between 1929 and 2022 across most industries, alongside a worldwide decline of about 6 percentage points since 1980. The author argues the most plausible causes are technological, including capital-augmenting technology.
  • The Unexpected Compression: Competition at Work in the Low Wage Labor Market — Labor market tightness produced an unexpected compression in the US wage distribution, with disproportionate wage growth at the bottom reducing the college wage premium and reversing nearly 40% of the rise in 90-10 wage inequality since 1980. The authors attribute this in part to increased competition for low-wage workers.
  • Introducing the Low-Wage Index: A Compositionally-Adjusted Look at Low-Wage Workers Since 1979 — A Low-Wage Index holding constant the labor force mix of sex, age, industry, occupation, and education finds bottom-quartile real weekly wages flat near $450 (in 2023 dollars) from 1979 to 1997, then grew 20% over 1997–2007 and 25% over the last decade. The 75th-to-25th percentile wage ratio fell from 2.9x to 2.5x.

AI Summary. Of the 29,078 U.S. common stocks in a database spanning nearly a century, 51.6% had negative cumulative returns, while 17 stocks returned more than 5m% — led by Altria at 265m%. Those top performers averaged annualized returns of just 13.47%, underscoring the value of time invested.

Hendrik Bessembinder Arizona State University
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Hendrik Bessembinder finds that from 1925 to 2023 51.6% of equities had a negative return; however, 17 stocks had cumulative returns greater than $50,000 per dollar invested, led by Altria Group with a return of $2.65mm for each dollar invested.

How do the best long-term stock returns compare with typical outcomes?

Core argument: Of the 29,078 U.S. common stocks in the CRSP database from December 1925 to December 2023, 51.6% delivered negative cumulative returns.

This report describes compound return outcomes for the 29,078 publicly-listed common stocks contained in the CRSP database from December 1925 to December 2023. The majority (51.6%) of these stocks had negative cumulative returns. However, the investment performance of some stocks was remarkable. Seventeen stocks delivered cumulative returns greater than five million percent (or $50,000 per dollar initially invested), with the highest cumulative return of 265 million percent (or $2.65 million per dollar initially invested) accruing to long-term investors in Altria Group. Annualized compound returns to these top performers relatively were modest, averaging 13.47% across the top seventeen stocks, thereby affirming the importance of “time in the market.” The highest annualized compound return for any stock with at least 20 years of return data was 33.38%, earned by Nvidia shareholders.

Takeaways by Macro Roundup® AI

  1. Of the 29,078 U.S. common stocks in the CRSP database from December 1925 to December 2023, 51.6% delivered negative cumulative returns.
  2. Altria Group accrued the highest cumulative return at 265 million% ($2.65 million per dollar invested), one of seventeen stocks exceeding five million% ($50,000 per dollar invested).
  3. Annualized compound returns for the top seventeen performers averaged 13.47%, while Nvidia earned the highest annualized compound return, 33.38%, among stocks with at least 20 years of return data.

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.
  • Birth, Death, and Wealth Creation — The median age at which US companies went public rose from 7.9 years in 1976–2000 to 9.5 years in 2001–2022, implying that more wealth creation now occurs in private markets. Research on more than 28,000 US-listed companies since 1926 finds that just under 60% destroyed $9.1tn of wealth while about 2% created $50tn.
  • The Economics of Inequality in High-Wage Economies — Information technology created investment opportunities exceeding the supply of properly trained talent, while trade with low-wage economies, low-skilled immigration, trade deficits, and aging demographics eased constraints on low-skilled labor and risk-averse savings. The author argues this framework, rather than rising cronyism, explains high returns to success, slowing productivity growth, and low interest rates.

AI Summary. U.S. public companies issued nearly $10tn in equity and retired just over $14tn, with equity-financed mergers and acquisitions making up 58% of issuance, stock-based compensation 22%, and other non-IPO share sales 20%. Firms with low stock-based compensation and high buybacks had the highest average and median total shareholder returns, though the authors note other factors likely drove these returns.

Michael Mauboussin and Dan Callahan Morgan Stanley
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Btw 2000 and 2023 US public firms raised $10T in equity and retired just over $14T. 22% of issuance funded stock-based compensation (SBC). @mjmauboussin finds firms with low SBC issuance and high buybacks delivered the highest total shareholder returns.

How do equity issuance and retirement patterns relate to shareholder returns?

Core argument: U.S. public companies issued $9.7 trillion in equity from 2000 to 2023 while retiring just over $14 trillion.

From 2000 to 2023, public companies in the U.S. issued nearly $10T in equity and retired just over $14T. Over this period, equity issuance was $9.7 trillion, with equity-financed merger and acquisition deals making up 58% of the total, followed by stock-based compensation (SBC) at 22%, and [new shares that are issued to investors that are not initial public offerings] at 20%. We examine the total shareholder returns from 2021 to 2023 for the stocks of the companies based on their issuance and retirement of equity. We separate the population into quadrants based on whether the companies are above or below the median for issuance and retirement. We measure issuance as SBC divided by sales and retirement as gross buybacks divided by market capitalization. We find that companies with low SBC issuance and high buybacks delivered the highest average and median TSRs of the groups. Firms with high SBC and low buybacks produced the lowest returns. We would hasten to add that numerous causes that had nothing to do with equity issuance were probably important in driving these TSRs.

Takeaways by Macro Roundup® AI

  1. U.S. public companies issued $9.7 trillion in equity from 2000 to 2023 while retiring just over $14 trillion.
  2. Equity-financed M&A deals accounted for 58% of the $9.7 trillion in issuance, followed by stock-based compensation at 22% and non-IPO share issuance to investors at 20%.
  3. Sorting firms into quadrants by stock-based compensation to sales and gross buybacks to market capitalization, companies with low SBC and high buybacks delivered the highest average and median total shareholder returns from 2021 to 2023, and high-SBC, low-buyback firms the lowest.

Related Articles:

  • Cicadian Rhythms — The authors see limited signs of the profit or capital spending declines that often accompany recessions, noting that unlike prior yield-curve inversions the corporate sector is running a surplus with stable interest expense. They flag fading disinflationary-boom prospects as a risk to price-to-earnings multiples, particularly for technology stocks.
  • Stock-Based Compensation — Stock-based compensation for companies in the Russell 3000 index of large U.S. stocks is estimated at about $270bn in 2022, up from roughly $25bn in 2006, while sales rose from $11.5tn to $21.1tn. As a share of sales it was nearly 5x its 2006 level, though it remains 6–8% of total compensation at U.S. public companies.
  • Birth, Death, and Wealth Creation — The median age at which US companies went public rose from 7.9 years in 1976–2000 to 9.5 years in 2001–2022, implying that more wealth creation now occurs in private markets. Research on more than 28,000 US-listed companies since 1926 finds that just under 60% destroyed $9.1tn of wealth while about 2% created $50tn.

AI Summary. The authors project business investment growth to slow to roughly 3% in the second half of the year as the factory-building boom catalyzed by CHIPS Act and Inflation Reduction Act subsidies has peaked. They expect downstream investment in factory equipment and artificial-intelligence-related computer hardware and software to eventually take its place, though the timing is uncertain.

David Mericle and Jessica Rindels Goldman Sachs
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.@GoldmanSachs expects business investment growth to slow from 5-6% in 2024H1 to 3% in 2024H2 as the factory-building boom catalyzed by the CHIPS ACT and IRA fades, but forecasts that business investment will remain above pre-pandemic levels.

Is business investment growth slowing as the subsidized factory-building boom peaks?

Core argument: Business investment growth is expected to slow to roughly 3% in the second half of 2024 as the factory-building boom catalyzed by CHIPS Act and Inflation Reduction Act subsidies, a large contributor to that growth over the past year and a half, has peaked.

We expect business investment growth to slow to a roughly 3% pace in 2024H2 because the factory-building boom catalyzed by CHIPS ACT and Inflation Reduction Act subsidies—which played such a large role in business investment growth over the last year and a half, as the light blue bars in Exhibit 6 show—has now peaked. We are not too worried about this because downstream investment in equipment for those factories and artificial intelligence-related investment in computer hardware and software should eventually take its place and drive further growth, but the timing of this hand-off is somewhat uncertain. We also see some risk that uncertainty about possible changes to regulatory policy or trade policy after the upcoming elections could also delay investment in the coming months.

Takeaways by Macro Roundup® AI

  1. Business investment growth is expected to slow to roughly 3% in the second half of 2024 as the factory-building boom catalyzed by CHIPS Act and Inflation Reduction Act subsidies, a large contributor to that growth over the past year and a half, has peaked.
  2. Downstream investment in factory equipment and artificial intelligence-related investment in computer hardware and software should eventually take the place of the factory-construction boom and drive further growth, though the timing of that hand-off is uncertain.
  3. Uncertainty about possible changes to regulatory or trade policy after the upcoming elections poses a risk of delaying business investment in the coming months.

Related Articles:

  • Business Spending Is Lining Up to Reinforce Growth — 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.
  • U.S. Business Investment in the Post-COVID Expansion — Business fixed investment has held at roughly the same share of U.S. GDP as before COVID, a better outcome than after every other recession since 1980, when investment typically fell as a share of GDP and contributed less well into the recovery. American businesses invested $430bn more than if investment had followed its usual historical pattern.
  • The AI Transition One Year Later: On Track, but Macro Impact Still Several Years Off — Investment in AI hardware is projected to rise substantially as a precursor to integrating AI into business processes, with the investment cycle estimated to peak at 2–2½% of GDP and early signs visible among AI-enabling companies. The authors estimate generative AI could raise developed-market labor productivity growth by 1.5pp annually over a 10-year adoption period, roughly 15% cumulatively.

AI Summary. The authors find that about half of manufacturing job destruction from Chinese import competition comes from plant closures, while about 40% of the relative effect reflects continuing plants switching their primary activity from manufacturing to services such as research, design, management, and wholesale. Gains in services offset manufacturing losses, leaving overall employment unaffected.

Kyle Handley Economic Innovation Group
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.@KyleLHandley argues the “China Shock” has likely run its course; as of 2020 import penetration was well under the 2000-2010 and 2010-2018 trends.

How much manufacturing job loss from import competition reflects switching to services?

Core argument: About 40% of the negative relative manufacturing employment effect from Chinese import competition comes from plant industry switching, as continuing plants shift their primary activity from manufacturing to services.

First, while about half of the job destruction from the China Shock is from plant closure, surviving plants have positive net job creation. Second, the negative manufacturing employment effects from Chinese import competition can be decomposed into firm adjustment margins. About 40% of the relative effect is from plant industry switching: continuing plants that switch their primary activity from manufacturing to services. This employment switching shift is oriented almost exclusively away from hard-hit durable goods sectors towards the service sectors in research, design, management, and wholesale, but would otherwise appear as manufacturing jobs loss in public-use aggregated regional employment data. Third, most job destruction in manufacturing in response to the China Shock occurs within firms that are contemporaneously expanding services employment. This factor, plus industry switching, drives positive overall net job creation in services such that overall employment is unaffected by the shock, as the job gains in services offset losses in manufacturing.

Takeaways by Macro Roundup® AI

  1. About 40% of the negative relative manufacturing employment effect from Chinese import competition comes from plant industry switching, as continuing plants shift their primary activity from manufacturing to services.
  2. About half of the job destruction from the China Shock comes from plant closures, while surviving plants show positive net job creation.
  3. Most manufacturing job destruction from the China Shock occurs within firms simultaneously expanding services employment, and combined with industry switching leaves overall employment unaffected as service gains offset manufacturing losses.

Related Articles:

  • The Mysterious Slowdown in U.S. Manufacturing Productivity — US manufacturing labor productivity growth slowed broadly after the Great Recession, with the four largest firms in each industry averaging –0.5% growth from 2010 to 2022 versus 3.7% from 1987 to 2007, and smaller follower firms showing an identical 4.2 percentage-point decline. The authors find the slowdown spans all industries and firm sizes.
  • 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.
  • 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. China's commodity imports rose 16% in volume terms with record imports of many basic resources, while state statisticians have stopped publishing stock data for many commodities. The US Department of Agriculture projects China will hold 51% of world wheat stocks and 67% of maize stocks, and the country's crude-oil storage capacity has grown from 1.7bn to 2bn barrels.

The Economist Economist Staff
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Chinese import volumes of basic commodities surged by 16% last year despite a slowing economy, suggesting the country is building up strategic reserves of food, industrial, and energy resources.

Is China rapidly stockpiling commodities while withholding inventory data?

Core argument: China's commodity imports rose 16% in volume terms last year, with records broken across many basic resources at a time when commodities are expensive, and state statisticians have stopped releasing stock data for many commodities.

Last year China’s imports of many basic resources broke records, and imports of all types of commodities surged by 16% in volume terms. China appears to be stockpiling materials at a rapid pace—and at a time when commodities are expensive. In a sign of increasing caginess, state statisticians have stopped releasing data for stocks of many commodities. America’s Department of Agriculture forecasts that, by the end of the current growing season, China’s wheat and maize stocks will represent 51% and 67% of the world’s, respectively, up five to ten percentage points from 2018. These are thought to be enough to cover at least a year’s demand. More striking still has been China’s effort to stash metals and fuel. Tom Price of Panmure Liberum finds that the country’s inventory build-up [of copper, nickel, and various other metals] since 2018 has been sufficient to cover at least 35% to 133% of its annual demand, depending on the commodity. Since 2020 China’s crude-storage capacity has increased from 1.7bn to 2bn barrels.

Takeaways by Macro Roundup® AI

  1. China's commodity imports rose 16% in volume terms last year, with records broken across many basic resources at a time when commodities are expensive, and state statisticians have stopped releasing stock data for many commodities.
  2. America's Department of Agriculture forecasts that by the end of the current growing season China's wheat and maize stocks will represent 51% and 67% of the world's respectively, up five to ten percentage points from 2018.
  3. Tom Price of Panmure Liberum finds China's metals inventory build-up since 2018 sufficient to cover at least 35% to 133% of annual demand depending on the commodity, while its crude-storage capacity has grown from 1.7bn to 2bn barrels since 2020.

Related Articles:

  • Could Economic Indicators Signal China’s Intent To Go To War? — China imports nearly three-quarters of the oil it consumes and holds reserves sufficient for about three months at current consumption, so a sustained buildup of those reserves would be among the clearest signals it is preparing for war. China is also the world's largest agricultural importer, with wheat reserves an official described as covering 18 months of demand.
  • China Ups Food Security Drive, Plans To Grow 90 Percent Of Its Grain By 2032, Warning For US And Thai Farmers — China's Ministry of Agriculture and Rural Affairs plans to raise domestic self-sufficiency in grain — mainly rice, wheat, corn and soybeans — to 88.4% within a decade from 82%. The plan would cut grain imports to 122m metric tonnes from 146.9m.
  • China Expands Farmland In Bid To Cut Foreign Food Reliance — China has set a target of maintaining 120mn hectares of cultivated land, a level Beijing views as necessary for food self-sufficiency, and has reclaimed more than 170,000 hectares of farmland in a drive to cut reliance on imported food. Analysts say the effort reflects preparation for a scenario in which confrontation with the US disrupts global food supply chains.

Friday, July 26, 2024

AI Summary. In a randomized experiment, 1,000 low-income individuals received $1,000/month unconditionally for three years while a control group of 2,000 received $50/month, and the transfers reduced individual income excluding transfers by about $1,500/year. The authors find no significant effects on human capital investment and conclude the transfers produced a moderate labor supply reduction not offset by other productive activities.

Eva Vivalt, Elizabeth Rhodes, Alexander Bartik, et al. National Bureau of Economic Research
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Giving low income individuals $12,000/year for 3 years resulted in reduced market income of $1,500/year, due to a 2ppt reduction in labor force participation and 1.3-1.4 hour/week reduction in labor hours. @evavivalt @AlexBartik @dbroockman

Does a guaranteed income reduce work without boosting human capital?

Core argument: A randomized experiment giving 1,000 low-income individuals $1,000/month unconditionally for three years reduced total individual income, excluding the transfers, by about $1,500/year relative to a control group of 2,000 receiving $50/month.

We study an experiment in which 1,000 low-income individuals were randomized into receiving $1,000 per month unconditionally for three years, with a control group of 2,000 participants receiving $50/ month. The transfer caused total individual income to fall by about $1,500/year relative to the control group, excluding the transfers. Participants also [self]-reported their total household income. The transfers decreased total [self-reported] household income by about $4,100/year relative to the control group. If we adjust this measure using the ratio of the individual calculatedincome and individual aggregate self-reported income, we get about a $2,500 reduction in total household income. We observe no significant effects on investments in human capital, though younger participants may pursue more formal education. Overall, our results suggest a moderate labor supply effect that does not appear offset by other productive activities.

Takeaways by Macro Roundup® AI

  1. A randomized experiment giving 1,000 low-income individuals $1,000/month unconditionally for three years reduced total individual income, excluding the transfers, by about $1,500/year relative to a control group of 2,000 receiving $50/month.
  2. Self-reported total household income fell by about $4,100/year under the $1,000/month transfer, or about $2,500/year when adjusted using the ratio of individual calculated income to individual aggregate self-reported income.
  3. The authors observe no significant effects on human capital investment, though younger participants may pursue more formal education, and conclude the transfers suggest a moderate labor supply effect that does not appear offset by other productive activities.

Related Articles:

  • Pandemic Labor Force Participation and Net Worth Fluctuations — Applying the pre-pandemic peak labor force participation rate to the adult population implies about 3.73m "missing workers" and 3.27m "excess retirees" in the US economy. The authors estimate that wealth effects on retirement decisions among those aged 55 and over account for over 50% of the aggregate participation decline and more than 80% of excess retirements.
  • Another Wrong Way to Measure Poverty — The official U.S. poverty measure has barely changed in over 50 years because most social benefits aren't counted as recipient income, even as benefits to the average household in the bottom 20% rose from $9,700 to $45,000 in inflation-adjusted dollars; counting all benefits puts poverty at 2.5%.
  • Post-Pandemic Recovery for America’s Prime Age Labor Force: A Tale of Two Sexes — Prime-age women's labor force participation climbed about 5 points above its pre-pandemic level over a decade, while prime-age men's rose barely a point, only just regaining pre-pandemic levels. Despite economic expansion and labor shortages, work rates for prime-age American men are barely as high as at the trough of the severe Reagan-era recession.

AI Summary. Research finds outcomes for Black adults raised poor worsened on several measures including household income, marriage, and mortality, but declined less than for whites raised poor, narrowing the racial gap. Among children raised poor, 4% of Black and 15% of white adults reach the top fifth of household income.

Richard Reeves and Scott Winship American Enterprise Institute
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Reviewing new Chetty research, @swinshi and @RichardvReeves note the outcome gap between Black and white kids who grew up with low-income parents (~50% of Blacks vs.10-15% of whites) has narrowed in part due to poor whites’ deteriorating prospects.

Has the Black-white opportunity gap narrowed because white outcomes worsened more?

Core argument: The black-white gap in mean household income for children raised poor fell by about $5,900 between 2005 and 2019, still leaving a $14,900 gap equal to 37% of the average white 27-year-old's income.

Black outcomes over the study period—2005 to 2019, when adults were 27 years old—actually worsened on several of the measures examined by economist Raj Chetty. They just didn’t deteriorate as badly as among white kids raised poor. This was true of average and median household income, reaching the top fifth of household income, getting married, mothers being married, and mortality. [Yet] the reduction in black-white opportunity gaps leaves a long way to go. The gap in mean household income fell by about $5,900 over these 14 years, [leaving] a $14,900 gap, equal to 37% of the average white 27-year-olds’ income. The black mean in 2019 was 63% of the white mean, compared with 57% in 2005. Black kids raised poor have a 4% chance of reaching the top fifth of household income, while 15% of their white counterparts will end up there. The gap in marriage rates narrowed by a third, but that was because rates fell so much more for whites raised poor than for blacks. In 2019, it was still the case that 27% of whites, but only 7% of blacks who grew up poor had found a spouse at age 27.

Takeaways by Macro Roundup® AI

  1. The black-white gap in mean household income for children raised poor fell by about $5,900 between 2005 and 2019, still leaving a $14,900 gap equal to 37% of the average white 27-year-old's income.
  2. Black outcomes in Raj Chetty's data worsened from 2005 to 2019 on average and median household income, reaching the top income fifth, marriage, mothers' marriage, and mortality, but deteriorated less than for white children raised poor.
  3. Black children raised poor have a 4% chance of reaching the top fifth of household income versus 15% for their white counterparts, and 7% of blacks versus 27% of whites raised poor had married by age 27 in 2019.

Related Articles:

  • Changing Opportunity: Sociological Mechanisms Underlying Growing Class Gaps and Shrinking Race Gaps in Economic Mobility* — The authors find that children's economic mobility improves across birth cohorts in communities where parental employment rates increase, with larger effects for children who move to such communities at younger ages. The relationship is strongest for the parental employment rates of peers in a child's own birth cohort, suggesting it is mediated by social interaction.
  • Understanding Trends in Worker Pay over the Past 50 Years — Productivity growth has been unequal across industries, across firms within industries, and across workers within firms, slowing growth in both the productivity and the pay of the median worker. The authors argue that working- and middle-class men earlier received "breadwinner rents"—pay above their marginal value to employers—and then endured slow wage growth as women's workforce participation rose.
  • Measuring Social Capital: Can We Tell If Some Places Are Richer in Social Capital Than Others? — The Joint Economic Committee's Social Capital Index ranks Louisiana, Nevada, New Mexico, Florida, and Arizona lowest and Utah, Minnesota, Wisconsin, New Hampshire, Vermont, and Colorado highest, with low- and high-ranking states falling consistently below or above the median across subindexes. All but one of the 21 cross-state correlations among the seven subindexes are positive.

AI Summary. Market depth—the quantity of US Treasury securities participants will buy or sell at given prices—is a widely cited gauge of Treasury market health. One bank's depth measure plunged and, despite rising over the past couple of years, remains well below pre-pandemic levels amid policy uncertainty and regulatory constraints on intermediaries.

David Wessel Brookings Institution
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Citing bids for newly issued Treasuries in the secondary market, @davidmwessel notes market depth is under its historical mean, suggesting the market has grown more illiquid since the pandemic.

How can we tell if the Treasury faces trouble borrowing?

Core argument: J.P. Morgan's Treasury market-depth measure, which reflects the size of bids and offers across maturities between 8:30 a.m. and 10:30 a.m., plunged in March 2020 and remains significantly below pre-COVID levels despite rising over the past couple of years.

Wall Street analysts have several ways to gauge the health of the secondary market. A widely cited one is market depth—the quantity of Treasury securities that market participants are willing to buy or sell at particular prices. As the chart illustrates, J.P. Morgan’s market-depth measure (which reflects the size of bids and offers in the market for U.S. Treasuries at various maturities between 8:30 a.m., when economic data is often released, and 10:30 a.m., when European markets close) plunged in March 2020. It has risen in the past couple of years, but remains significantly below pre-COVID levels in part because of uncertainty about Fed policy and regulatory impediments that have kept intermediaries from growing as fast as the growth in the size of the Treasury market.

Takeaways by Macro Roundup® AI

  1. J.P. Morgan's Treasury market-depth measure, which reflects the size of bids and offers across maturities between 8:30 a.m. and 10:30 a.m., plunged in March 2020 and remains significantly below pre-COVID levels despite rising over the past couple of years.
  2. Market depth—the quantity of Treasury securities market participants are willing to buy or sell at particular prices—is a widely cited gauge Wall Street analysts use to assess the health of the secondary market.
  3. Uncertainty about Federal Reserve policy and regulatory impediments that have kept intermediaries from growing as fast as the Treasury market account in part for the depressed level of Treasury market depth.

Related Articles:

  • Resilience Redux in the US Treasury Market — The authors argue that large, persistent US federal deficits and limited dealer balance-sheet flexibility will cause outstanding Treasury debt to grow rapidly relative to the market's capacity to intermediate trades, absent significant changes in market structure. They contend broad central clearing, all-to-all trading, real-time post-trade reporting, capital-regulation changes, and transparent official purchase programs could strengthen market capacity and resilience.
  • Who Buys Treasuries When the Fed Reduces its Holdings — Analysis of Federal Reserve balance sheet reduction finds that households and broker-dealers absorbed the additional supply of Treasury securities during the 2017–2019 episode, with household holdings correlated with hedge fund holdings. In the first year of the reduction begun in 2022, households purchased a large share while hedge funds did not, and insurance companies and foreign investors also increased holdings.
  • Rapid Increase in T-Bill Supply Is a Growing Risk — The supply of short-term US Treasury bills has risen by $2tn over 12 months, and bills have grown as a share of total debt outstanding. Absorbing this supply requires continued demand from banks, money market funds, and households, and falling appetite could push short-term rates higher and raise the risk of funding-market strains.

AI Summary. The share of U.S. adults under 50 without children who say they are unlikely to ever have kids rose 10 percentage points to 47%. Among this younger group, the most common reason given is simply not wanting children, cited by 64% of women versus 50% of men, while adults 50 and older most often say it just didn't happen.

Rachel Minkin, Juliana Menasch Horowitz and Carolina Aragao Pew Research Center
Date Posted:

In 2023, 47% of US adults aged 18-49 say they’re unlikely to ever have kids, up from 37% in 2018. An increasing number of childless adults, particularly women under 50, report they “just don’t want to have children.” @pewresearch

Why are more U.S. adults under 50 unlikely to have children?

Core argument: The share of U.S. adults under 50 without children who say they are unlikely to ever have kids rose 10 percentage points between 2018 and 2023, from 37% to 47%.

The share of U.S. adults younger than 50 without children who say they are unlikely to ever have kids rose 10 percentage points between 2018 and 2023 (from 37% to 47%). About four-in-ten of those in the older [50+] group (38%) say there was a time when they wanted to have children. A smaller but sizable share (32%) say they never wanted children, and 25% say they weren’t sure one way or the other. Few say they frequently felt pressure to have children from family, friends or society in general. Reasons for not having children – or being unlikely to ever have them – differ between the older and younger groups. The top response for those ages 50 and older is that it just didn’t happen, while those in the younger group are most likely to say they just don’t want to have kids. Women younger than 50 are especially likely to say they just don’t want to have children (64% vs. 50% of men in this group).

Takeaways by Macro Roundup® AI

  1. The share of U.S. adults under 50 without children who say they are unlikely to ever have kids rose 10 percentage points between 2018 and 2023, from 37% to 47%.
  2. Among U.S. adults 50 and older without children, 38% say there was a time when they wanted children, 32% say they never wanted them, and 25% say they weren't sure either way.
  3. Adults 50 and older without children most often say it just didn't happen, while those under 50 most often say they just don't want kids — 64% of women in that group versus 50% of men.

Related Articles:

  • Why Americans Aren’t Having Babies — 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.
  • Fortunate Families? The Effects of Wealth on Marriage and Fertility — Using lottery winners, the authors estimate that wealth windfalls raise the short- and medium-run probability of marriage, an effect driven by male winners. The estimated average effect on marriage dissolution is not statistically distinguishable from zero, but for married women a 1M-SEK windfall nearly doubles the short-run divorce rate, with the effect fading over the long run.
  • The Wealthy Are Starting to Have More Babies Than the Poor Again — In developed countries, men's income and education are now generally positively associated with fatherhood, with 70.1% of US men holding graduate or professional degrees having children versus 48.8% of those without a high school diploma. Among advanced economies, those where men take on more housework and child care have higher fertility rates.

AI Summary. The correlation between US county population growth or net migration and historical extreme heat and cold days has declined over roughly the past 50 years, and in 2010–2020 was essentially zero. The authors argue this pivoting is likely to continue and reverse the 20th-century Snow Belt to Sun Belt migration pattern.

Sylvain Leduc and Daniel Wilson Federal Reserve Bank of San Francisco
Date Posted:

Migration from the “Snow Belt” or coldest places in the US to the “Sun Belt” has steadily declined since the 1970s, and had essentially halted by 2010-20. @sylvainecon @wilson_daniel_j

Is climate no longer driving Americans to move south?

Core argument: In 2010–2020, U.S. county population growth and net migration rates were essentially uncorrelated with historical means of extreme heat days or extreme cold days, after a 50-year steady decline in the Snow Belt to Sun Belt tendency.

Over the course of the past 50 years, the tendency of Americans to move from the coldest places (“Snow Belt”), which have become warmer, to the hottest places (“Sun Belt”), which have become hotter, has steadily declined. In the latest full decade, 2010-2020, both county population growth and county net migration rates were essentially uncorrelated with the historical means of either extreme heat days or extreme cold days. The decline in these correlations holds for all educational groups, with the sharpest decline in correlations for those with four or more years of college. Among age groups, the pattern is strongest for age groups 20-29 and 60-69, suggestive of climate being an especially important factor for those in life stages involving long-term location choices. Given climate change projections for coming decades, our findings suggest the “pivoting” in the U.S. climate-migration correlation over the past 50 years is likely to continue, leading to a reversal of the 20th century Snow Belt to Sun Belt migration pattern.

Takeaways by Macro Roundup® AI

  1. In 2010–2020, U.S. county population growth and net migration rates were essentially uncorrelated with historical means of extreme heat days or extreme cold days, after a 50-year steady decline in the Snow Belt to Sun Belt tendency.
  2. The weakening link between climate and U.S. migration holds across all educational groups, with the sharpest decline in correlations among those with four or more years of college.
  3. The pattern is strongest for ages 20–29 and 60–69, and the authors suggest the pivoting in the U.S. climate-migration correlation is likely to continue, reversing the 20th century Snow Belt to Sun Belt migration pattern.

Related Articles:

  • Climate Change and the Geography of the U.S. Economy — The positive association between extreme heat and U.S. county population growth weakened over recent decades and disappeared entirely in the 2010s, as hot counties grew hotter. Projected climate change is predicted to shift population from the Southeast and parts of the Southwest toward the North, Mountain West, and Pacific coast.
  • Don’t Flee the American Southwest Just Yet — Arizona uses 3% less water than in 1957 despite population growth of more than 555%, and the state may be better positioned to adapt to climate change than many U.S. coastal areas. The Center for Climate Integrity estimates sea walls for U.S. coastal regions will cost at least $400bn, far more than conserving water in a desert.
  • Movers And Money: Mapping the Flow of Income During the Pandemic — Manhattan recorded the largest county-level income outflow to other states at $16.5bn, with 27.7 cents of every dollar leaving—$4.6bn—going to Florida, including $2.9bn to Miami-Dade County and $1.1bn to Palm Beach County. California had the largest state-level losses, while Florida was the biggest beneficiary with a net gain of $39bn.

AI Summary. California's share of US tech jobs has fallen to about 18.1% from 20.7%, barely above the post-1990 low of 18%. Its share of global venture capital investment, at 24%, would mark a new high in data going back to 2015 if sustained for a full year.

Justin Fox Bloomberg
Date Posted:

California’s share of US tech jobs had fallen from 20.7% in May 2020 to 18.1% in May of 2024, but the state’s share of global venture capital investment is on track for a record high of 24% in 2024. @foxjust

Is California losing its tech dominance as its job share falls?

Core argument: California's share of US tech jobs fell from 20.7% in May 2020 to 18.1% as of this May, barely above the post-1990 low of 18% set in 2009.

California’s share of US tech jobs had fallen from 20.7% in May 2020 to 18.1% as of this May (national numbers aren’t available yet for June for a couple of the tech sectors), barely above the post-1990 low of 18% set in 2009. Given the recent trajectory, it seems inevitable that this share will hit new lows soon. In venture capital, not so much — according to PitchBook-NVCA data that goes back to 2015, California’s 24% share of global VC investment in the first half of 2024 would, if sustained for the full year, mark a new high.

Takeaways by Macro Roundup® AI

  1. California's share of US tech jobs fell from 20.7% in May 2020 to 18.1% as of this May, barely above the post-1990 low of 18% set in 2009.
  2. California's 24% share of global venture capital investment in the first half of 2024 would mark a new high in PitchBook-NVCA data going back to 2015 if sustained for the full year.

Related Articles:

  • California is Losing Tech Jobs — California has lost tech jobs across computer systems design, streaming and social networks, software publishing, and web search, and its share of US tech industry jobs has fallen to the lowest level in more than a decade after peaking near 19% in late 2019. California still receives 31% of the industry's total compensation.
  • California Mints Millionaires Faster Than They Can Leave — The number of California residents with incomes of $1m or more grew by 61,900, or 66%, from 2019 to 2021, lifting the state's share of US millionaires to 17.9% from 17% while the shares of New York, Texas, and Florida fell. Rising in-state incomes minted more new millionaires than the net outflow of higher-earning taxpayers to other states.
  • Behavioral Responses to State Income Taxation of High Earners: Evidence from California — A California ballot measure raising top marginal income tax rates by up to 3 percentage points prompted an additional 0.8% of the affected tax base to leave the state, with an estimated income elasticity of 2.5–3.2 for high earners who stayed. The authors estimate these responses eroded 45.2% of windfall revenues within one year and 60.9% within two.

AI Summary. A New York Times/Siena poll found 48% of registered voters held a favorable view of Trump, up from 42% in the prior poll and his highest in that series, while Harris's favorable rating rose to 46% from 36%. Harris's favorable rating exceeded Biden's.

Nate Cohn New York Times
Date Posted:

Trump’s lead over Harris (48% to 47%) among likely voters is within the 3.4pt margin of error of the lastest Times/Siena poll. @Nate_Cohn notes that both candidates had rising favorability ratings vs. prior polls.

Are both major presidential candidates' favorability ratings rising simultaneously?

Core argument: Trump's favorable rating among registered voters reached 48% in the Times/Siena poll, up from 42% in the prior poll and above the 39%–45% range found in all previous Times/Siena surveys.

While the overall result between Ms. Harris and Mr. Trump may look familiar, the poll is full of signs that there’s a lot of dust still in the political air. Mr. Trump hits a high in popularity. Overall, 48% of registered voters say they have a favorable view of him, up from 42% in our last poll (taken after the debate but before the convention and assassination attempt). It’s his highest favorable number in a Times/Siena poll, which previously always found his favorable ratings between 39% and 45%. Ms. Harris is surging. In fact, her ratings have increased even more than Mr. Trump’s. Overall, 46% of registered voters have a favorable view of her, up from 36% when we last asked about her in February. Only 49% have an unfavorable view, down from 54% in our last measure. As important, her favorable rating is higher than Mr. Biden’s. In fact, it’s higher than his standing in any Times/Siena poll since September 2022, which so happens to be the last time Mr. Biden led a Times/Siena national poll of registered voters.

Takeaways by Macro Roundup® AI

  1. Trump's favorable rating among registered voters reached 48% in the Times/Siena poll, up from 42% in the prior poll and above the 39%–45% range found in all previous Times/Siena surveys.
  2. Harris's favorable rating rose to 46% from 36% in February, with her unfavorable rating falling to 49% from 54%, a larger improvement than Trump's.
  3. Harris's favorable rating exceeds Biden's standing in any Times/Siena poll since September 2022, the last time Biden led a Times/Siena national poll of registered voters.

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