Edward Conard

Top Ten New York Times Bestselling Author

  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…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 must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard 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
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, July 31, 2024

AI Summary. The authors estimate that including Social Security in household wealth leaves top wealth shares little changed over three decades, with the top 10% and top 1% shares rising 1.1 and 1.6 percentage points versus roughly 9 and 6 points for marketable wealth alone. Social Security wealth grew from $7tn to $39tn.

Sylvain Catherine, Max Miller, and Natasha Sarin Journal of Finance
Date Posted:
Is Database:
Database
Is Important:
Important

.@sc_cath @mjmill611 and @NatashaRSarin calculate that the market value of future Social Security benefits represented 49% of the wealth of the bottom 90% in 2019. Including Social Security, the wealth share of the top 1% had risen only 1.6pp since 1989.

Does including Social Security change measured wealth inequality trends?

Core argument: Including Social Security wealth, the shares of the top 10% and top 1% increased by 1.1 and 1.6 percentage points, leaving top wealth shares little changed over three decades.

Top wealth shares have not changed much over the last three decades when Social Security is properly accounted for. This is because Social Security wealth increased substantially from $7 trillion in 1989 to $39 trillion in 2019 and now represents 49% of the wealth of the bottom 90% of the wealth distribution. For retirees, we calculate Social Security wealth from the SCF directly by valuing reported benefits as a lifetime annuity. Once Social Security wealth is included the shares of the top 10% and top 1% increased by 1.1 and 1.6 pp, respectively. The present value of Social Security benefits depends on the choice of an appropriate discount rate. We first offer a risk-free valuation of Social Security wealth using the Treasury market yield curve. We find that the share of “marketable wealth” owned by the top 10% and 1% grew by approximately 9 and 6 percentage points (pp) between 1989 and 2019, in line with existing estimates.

Takeaways by Macro Roundup® AI

  1. Including Social Security wealth, the shares of the top 10% and top 1% increased by 1.1 and 1.6 percentage points, leaving top wealth shares little changed over three decades.
  2. Social Security wealth grew from $7 trillion in 1989 to $39 trillion in 2019 and represents 49% of the wealth of the bottom 90% of the wealth distribution.
  3. Measured by marketable wealth alone, with Social Security valued risk-free using the Treasury market yield curve, the top 10% and top 1% shares grew by roughly 9 and 6 percentage points between 1989 and 2019, in line with existing estimates.

Related Articles:

  • Income Inequality in the United States: Using Tax Data to Measure Long-Term Trends — Using administrative tax data with the Survey of Consumer Finances, the authors estimate the top 1% pre-tax income share fell from 11.1% in 1962 to 9.4% in 1979, then rose to 13.8% by 2019, a 3 percentage point rise over the full period. Their after-tax measure shows increases of only 1.4 points since 1979 and 0.2 points since 1962.
  • 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.
  • 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.

AI Summary. A comment argues that widely cited estimates of US income inequality misallocate partnership depreciation deductions to sole proprietorships, which are more equally distributed, thereby lowering the measured top 1% income share and its trend. The authors contend that correcting this and other assumptions about untaxed business and capital income brings those estimates close to higher rival measures.

Thomas Piketty, Emmanuel Saez and Gabriel Zucman University of California
Date Posted:
Is Database:
Database
Is Important:
Important

.@gabriel_zucman argues that Auten & Splinter’s work contains “empirical errors, conceptual errors, and questionable assumptions,” primarily the misallocation of partnership depreciation to sole proprietors rather than the owners of the partnerships.

Does misallocating business depreciation understate the top 1% income share?

Core argument: About half of partnership income is legally exempt from taxation under the tax code's depreciation rules, and an analysis of Auten and Splinter's code indicates they allocate this excess partnership depreciation to owners of sole proprietorships rather than to partnership owners.

About half of partnership income is legally exempt from taxation due to generous depreciation rules in the tax code. An analysis of AS’s code reveals that AS allocates this excess partnership depreciation not to partnership owners, but to owners of sole proprietorships. This depresses the level of the top 1% income share, because sole proprietorships are much more equally distributed than partnerships: the top 1% earns 15% of taxable sole proprietorship income vs. 80% of taxable partnership income. This also leads to a downward trend in the top 1% income share, because the excess depreciation of partnerships was negligible in 1980. We trace the remaining difference with the top 1% income share of Piketty, Saez, and Zucman (2018) to assumptions made by Auten and Splinter (2024) about the distribution of untaxed business income, untaxed capital income, and non-cash notional income. After clarifying these assumptions and confronting them with existing evidence, the Auten and Splinter (2024) estimates become similar in level and trend to those of Piketty, Saez, and Zucman (2018).

Takeaways by Macro Roundup® AI

  1. About half of partnership income is legally exempt from taxation under the tax code's depreciation rules, and an analysis of Auten and Splinter's code indicates they allocate this excess partnership depreciation to owners of sole proprietorships rather than to partnership owners.
  2. The top 1% earns 15% of taxable sole proprietorship income versus 80% of taxable partnership income, so this allocation depresses the level of the top 1% income share and produces a downward trend, since partnership excess depreciation was negligible in 1980.
  3. The remaining difference with the top 1% income share of Piketty, Saez, and Zucman (2018) is traced to Auten and Splinter (2024) assumptions about untaxed business income, untaxed capital income, and non-cash notional income; clarifying those assumptions makes the estimates similar in level and trend.

Related Articles:

  • Income Inequality in the United States: Using Tax Data to Measure Long-Term Trends — Using administrative tax data with the Survey of Consumer Finances, the authors estimate the top 1% pre-tax income share fell from 11.1% in 1962 to 9.4% in 1979, then rose to 13.8% by 2019, a 3 percentage point rise over the full period. Their after-tax measure shows increases of only 1.4 points since 1979 and 0.2 points since 1962.
  • Comment on Auten and Splinter (2023) — A critique argues that Auten and Splinter's methodology misallocates a large share of untaxed business and capital income to the bottom of the distribution, assuming the top 1% earns only about 15% of untaxed business income while tax data show they earn about 55% of business income overall.
  • Short Reply: Comment on Auten and Splinter (2023) — The assumption that top wealth and capital income shares move in parallel over the long run is problematic, since falling interest rates reduce interest income relative to bond wealth and widen the gap. Fully counting passthrough business income, the authors' top 1% capital income share rose 5 percentage points.

AI Summary. Growth in nuclear power plants declined after the Chernobyl accident, particularly in democracies. The authors find fossil fuel campaign contributions became strongly associated with anti-nuclear votes in US Congress, and estimate the resulting decline in nuclear plants cost roughly 141m expected life years in the US and 318m globally.

Alexey Makarin, Nancy Qian, and Shaoda Wang National Bureau of Economic Research
Date Posted:

.@alexeymakarin and team argue that political contributions and advertising spending by fossil fuel interest groups contributed to the post-Chernobyl decline in nuclear power, increasing air pollution and costing 318 million life years globally.

How did a nuclear accident reshape nuclear power politics and public health?

Core argument: The authors estimate that the Chernobyl-driven decline in nuclear power plants led to the loss of approximately 141 million expected life years in the United States and 318 million globally.

The rapid growth of nuclear power plants (NPP) declined dramatically after Chernobyl, especially in countries with democratic governments which had the highest number of NPPs at the time. To understand the mechanisms driving such change, we examine two case studies in detail: the United States and the United Kingdom. In the U.S., we document that: (a) after the Chernobyl accident, campaign contributions to House and Senate races from fossil fuel special interest groups became strongly associated with negative votes on nuclear-related bills, and such donations increased significantly; and (b) newspapers with more fossil fuel advertisements published more anti-nuclear articles after Chernobyl, while we do not observe significant changes in advertisement spending by the fossil fuel industry. We examine air pollution as a downstream outcome of reduced nuclear investment. We estimate that the decline in NPP caused by Chernobyl led to the loss of approximately 141 million expected life years in the US, and 318 million globally.

Takeaways by Macro Roundup® AI

  1. The authors estimate that the Chernobyl-driven decline in nuclear power plants led to the loss of approximately 141 million expected life years in the United States and 318 million globally.
  2. Nuclear power plant growth declined dramatically after Chernobyl, particularly in countries with democratic governments, which held the highest number of plants at the time.
  3. In the United States after Chernobyl, fossil fuel special interest campaign contributions to House and Senate races became strongly associated with negative votes on nuclear-related bills and increased significantly, and newspapers carrying more fossil fuel advertisements published more anti-nuclear articles.

Related Articles:

  • Electravision — The fossil fuel share of global primary energy is falling about 0.40% per year, matching the pace of decarbonization during the 1973–1988 nuclear buildout, though total carbon dioxide emissions have not declined because energy consumption keeps rising. Renewable energy is used almost exclusively for the electricity grid, with little penetration in industry and transport.
  • Plant Vogtle Unit 4 Begins Commercial Operation — The 1,114-megawatt Unit 4 reactor at Georgia's Plant Vogtle entered commercial operation, completing an 11-year expansion that brings the plant's capacity to nearly 5 gigawatts and makes it the largest US nuclear plant. No nuclear reactors are currently under construction in the United States, where nuclear supplies about 19% of electricity.
  • Nuclear Power Is Hard. A Climate-Minded Billionaire Wants to Make It Easier — Start-up TerraPower has begun building a sodium-cooled nuclear reactor designed to be smaller and cheaper than conventional water-cooled plants, with completion expected no earlier than 2030 and the design not yet approved by the Nuclear Regulatory Commission. The company says the reactors should ultimately generate electricity at half the cost of traditional nuclear plants.

AI Summary. After decades of moving together, the business cycles of China and India have decoupled.

Torsten Sløk Apollo
Date Posted:

Torsten Sløk notes that Indian and Chinese business cycles have decoupled after tracking each other for decades.

Have the business cycles of China and India decoupled?

Core argument: Torsten Sløk notes that the business cycles of China and India have decoupled after moving in sync for decades.

The business cycles in China and India are decoupling after having grown in sync for decades.

Takeaways by Macro Roundup® AI

  1. Torsten Sløk notes that the business cycles of China and India have decoupled after moving in sync for decades.

Related Articles:

  • Apple’s India iPhone Output Hits $14 Billion in China Shift — Apple assembled $14bn of iPhones in India in its last fiscal year, doubling output there to roughly 14%, or about 1 in 7, of its iPhones. China remains Apple's largest iPhone-making hub and biggest overseas market, though its revenue there is falling amid competition from rivals such as Huawei.
  • India Equity: An Unsung Long-Term Performance Story — Cumulative total returns for Indian equities have been comparable to or better than US equities over roughly three decades, while Chinese equities have lagged both, according to index data for the MSCI India, S&P 500, and MSCI China indexes.
  • Wall Street Snubs China for India in a Historic Markets Shift — US-listed exchange-traded funds buying Indian stocks drew record inflows while the four largest China funds saw combined outflows of nearly $800m, and India's weight in the main developing-market equity benchmark hit an all-time high of 18% as China's fell to a record low of 24.8%. Indian equities trade at more than 20x future earnings, 27% above their 2010–2020 average.

AI Summary. Microsoft's quarterly capital expenditures reached $19bn, nearly 80% higher than a year earlier and above Wall Street forecasts, with the company saying nearly all of it was cloud and artificial intelligence spending. Half went to land, buildings and leases that the company expects to monetize over 15 years or more, and half to technical equipment such as chips and servers.

Camilla Hodgson, George Steer, and Tim Bradshaw Financial Times
Date Posted:

Microsoft’s capex in their fiscal Q4 ending in June grew 80% y/y to $18B. TD Cowen analysts raised their forecast of MSFT 2025 capital spending from $70B to 84B. The firm says the spend “really will be monetised over 15 years and beyond.”

Is cloud and AI capital spending accelerating at major tech firms?

Core argument: Microsoft's capital expenditures reached $19bn in the quarter to June 30, nearly 80% above the year-earlier period and ahead of Wall Street forecasts, with "nearly all" of it cloud and AI-related, said chief financial officer Amy Hood.

Microsoft’s capital expenditures for the quarter to June 30 hit $19bn, nearly 80% higher than the same period a year ago and ahead of Wall Street’s forecasts. “Nearly all” of that was cloud and AI-related spending, said its chief financial officer Amy Hood, and those investments would pay off during the second half of the year when Azure growth would “accelerate.” Analysts at TD Cowen said on Wednesday that they had raised their forecasts for Microsoft’s capital spending from $70bn to $84bn for the 2025 financial year. Hood said that half of Microsoft’s capital spending went towards land, building, and leases, which “really will be monetised over 15 years and beyond”, while the other half was spent on technical equipment, including chips and servers, which would be “based on demand signals.”

Takeaways by Macro Roundup® AI

  1. Microsoft's capital expenditures reached $19bn in the quarter to June 30, nearly 80% above the year-earlier period and ahead of Wall Street forecasts, with "nearly all" of it cloud and AI-related, said chief financial officer Amy Hood.
  2. TD Cowen analysts raised their forecast for Microsoft's capital spending in the 2025 financial year from $70bn to $84bn.
  3. Amy Hood said half of Microsoft's capital spending went to land, buildings, and leases that "really will be monetised over 15 years and beyond," with the other half on technical equipment including chips and servers, based on demand signals.

Related Articles:

  • AI’s $600B Question — Comparing spending on AI chips to historical railroad construction overlooks that high-fixed-cost, low-marginal-cost businesses without monopoly or oligopoly power tend to see prices competed down to marginal cost, and that semiconductors continually improve in cost versus performance, unlike physical infrastructure. Speculative frenzies accompany technology, but the payoff will take a long time.
  • 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.
  • Gen AI: Too Much Spend, Too Little Benefit? — The author argues generative AI is unlikely to drive revenue expansion because it helps employees find information faster rather than find better information. If AI's benefits remain limited to efficiency gains, competitors can adopt the same tools, so cost savings get arbitraged away rather than raising prices or margins.

Thursday, August 1, 2024

AI Summary. Analyzing long-maturity real interest rates across eight advanced economies over seven centuries, the authors find rates are trend stationary with a persistent downward trend since the Renaissance. They argue demographic and productivity factors are not convincing drivers, finding population and output growth negatively predict real rates over long spans.

Kenneth Rogoff, Barbara Rossi, and Paul Schmelzing American Economic Review
Date Posted:
Is Database:
Database
Is Important:
Important

Long-term real rates over the last 7 centuries show a long downward trend and exhibit no positive correlation with growth in output or population. @krogoff @paul_schmelzing

Do demographics and productivity explain the centuries-long decline in real interest rates?

Core argument: Global long-maturity real interest rates across 8 countries covering over 80% of advanced-economy GDP are trend stationary and show a persistent downward trend since the Renaissance, based on annual data spanning 1311–2022.

We analyze the statistical properties of global long-maturity real interest rates over the past seven centuries. The series covers over 80% of advanced-economy GDP on an annual level across 8 countries, both marketable (consolidated) debt and relevant personal loans transactions by sovereign creditors. We deflate the nominal rate in year t with a seven-year lagged inflation measure to approximate inflation expectations. Real interest rates are trend stationary and exhibit a persistent downward trend since the Renaissance. We show that demographic and productivity factors do not represent convincing drivers of real interest rates over long spans; [indeed] we can qualitatively go beyond these existing facts and find strong evidence in favor of a long-run negative prediction of aggregate population growth and aggregate real output growth for real rates. The most recent decades in which the correlation with real rates is positive appear [to be] a unique exception in a multicentury perspective.

Takeaways by Macro Roundup® AI

  1. Global long-maturity real interest rates across 8 countries covering over 80% of advanced-economy GDP are trend stationary and show a persistent downward trend since the Renaissance, based on annual data spanning 1311–2022.
  2. The authors find that demographic and productivity factors are not convincing drivers of real interest rates over long spans, reporting strong evidence that aggregate population growth and aggregate real output growth predict real rates negatively over the long run.
  3. The positive correlation with real rates observed over the most recent decades appears to be a unique exception in a multicentury perspective, according to the authors.

Related Articles:

  • 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.
  • The Big Picture: Back to the Future — The secular backdrop has shifted from disinflationary to more inflationary, with interest rates no longer near zero and real rates no longer negative. Household balance sheets are as healthy as they have been in 20 years, leaving room to borrow, while the public sector is as indebted as it has ever been.
  • In Search of Safe Havens: The Trust Deficit and Risk-free Investments! — Plotting US Treasury bond rates against a crude fundamental risk-free rate—actual inflation plus real GDP growth—undercuts the argument that central banks set interest rates. Central banks can nudge rates at the margin but cannot override the fundamentals of inflation and real growth.

AI Summary. Inflation-adjusted US house prices stand 1.9% below their 2022 peak. The monthly principal-and-interest payment on a $500,000 house bought with 20% down has roughly doubled over three years, rising 102% as prices climbed 26% and 30-year mortgage rates went from 2.96% to 7.06%.

Bill McBride Calculated Risk
Date Posted:

Real house prices are 1.9% under the 2022 peak and 11% above the bubble peak. Affordability remains at levels last seen in the early 1980s when 30-year mortgage rates were over 14%. @calculatedrisk

How much have monthly mortgage payments risen over three years?

Core argument: Inflation-adjusted U.S. house prices in May stood 1.9% below their 2022 peak, while nominal prices rose 5.9% year over year.

For May: a year ago, the payment on a $500,000 house, with a 20% down payment and 6.43% 30-year mortgage rates, would be around $2,510 for principal and interest. The monthly payment for the same house, with house prices up 5.9% y/y and mortgage rates at 7.06% in May 2024, would be $2,835 - an increase of 13%. However, if we compare to three years ago, there is a huge difference in monthly payments. In May 2021, the payment on a $500,000 house, with a 20% down payment and 2.96% 30-year mortgage rates, would be around $1,678 for principal and interest. The monthly payment for the same house, with house prices up 26% over three years and mortgage rates at 7.06% in May 2024, would be $3,383 - an increase of 102%! Double!!!

Takeaways by Macro Roundup® AI

  1. Inflation-adjusted U.S. house prices in May stood 1.9% below their 2022 peak, while nominal prices rose 5.9% year over year.
  2. The monthly principal-and-interest payment on a $500,000 house with 20% down rose 102% over three years, from $1,678 in May 2021 at a 2.96% mortgage rate to $3,383 in May 2024 at 7.06%, with prices up 26%.
  3. The payment on a $500,000 house with 20% down rose 13% in a year, from about $2,510 at a 6.43% mortgage rate to $2,835 at 7.06% in May 2024.

Related Articles:

  • The Cost of Money is Part of the Cost of Living: New Evidence on the Consumer Sentiment Anomaly — Variation in the University of Michigan consumer sentiment index that inflation and unemployment cannot explain is strongly correlated with growth in consumer borrowing costs, such as mortgage and car loan rates. The authors estimate that including interest payments and homeownership costs in the consumer price index would raise measured inflation from 3% to 9%.
  • 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 Determinants Of Declining Internal Migration — A 10% increase in wages where people live is associated with 3.5% less migration, while a 10% increase in destination wages is associated with 7.8% more migration; a 10% rise in destination home prices is associated with 2.6% less migration. The authors find wage responses alone would have raised migration rates, but housing-related factors more than offset them.

AI Summary. Bank of America deposit data indicates fewer households are moving between cities, with cross-city moves down 4% year-over-year, while those who do move skew toward Gen Z and lower-income households. Payments data show "hidden" homeownership costs such as insurance and property taxes are up significantly, especially in the Sun Belt.

Joe Wadford and David Tinsley Bank of America
Date Posted:

Aggregated deposit data from @BankofAmerica suggests that fewer households are moving between cities and movers “skewing towards Gen Z and lower-income households, as more households apparently move out of necessity as opposed to choice.”

Are rising hidden homeownership costs slowing moves between cities?

Core argument: Bank of America aggregated deposit data suggest moves across cities fell 4% year-over-year in the second quarter of 2024, following a 15% year-over-year decline a year earlier.

Bank of America aggregated deposit data suggests that fewer households are moving between cities. In the second quarter of 2024, moves across cities fell 4% year-over-year after a 15%y/y decrease this time last year. Those that are moving, however, are skewing towards Gen Z and lower-income households, likely as more households move out of necessity as opposed to choice. Some households are likely deferring moves due to increased "hidden" costs of homeownership (e.g., insurance, property taxes). Bank of America aggregated payments data suggests these costs are up significantly y/y especially in the Sun Belt. Looking across cities, we continue to see large population declines in many northeastern and western MSAs as of the second quarter 2024, continuing a long-term trend since the start of the pandemic. In the Northeast, New York and Boston continue to see large net population outflows. And in the West, San Francisco, Los Angeles, Seattle, and Portland all saw significant y/y declines. The situation in the South remains mixed with Austin, San Antonio, Jacksonville, and Tampa again seeing significant inflows, while Miami, Orlando, and DC appear to be having marked declines in population.

Takeaways by Macro Roundup® AI

  1. Bank of America aggregated deposit data suggest moves across cities fell 4% year-over-year in the second quarter of 2024, following a 15% year-over-year decline a year earlier.
  2. Bank of America finds movers skewing toward Gen Z and lower-income households, likely reflecting moves made out of necessity, while other households defer moves as "hidden" homeownership costs such as insurance and property taxes rise year-over-year, especially in the Sun Belt.
  3. New York, Boston, San Francisco, Los Angeles, Seattle, and Portland saw large net population outflows in the second quarter of 2024, while Austin, San Antonio, Jacksonville, and Tampa saw significant inflows and Miami, Orlando, and DC declined.

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.
  • Economic Prosperity is Shifting Toward the Mountain West and Southeast — The most economically prosperous U.S. zip codes house 80.6m residents and averaged nearly 3x the job growth of "comfortable" zip codes and 10x that of "at-risk" ones. In several Southeast and Mountain West states, a much greater share of the population now lives in top-ranked prosperous zip codes than a decade earlier.
  • Snow Belt to Sun Belt Migration: End of an Era? — 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.

AI Summary. Thirteen states and Washington, D.C., have immigrant population shares above the national figure of 14.9%, including California, New Jersey, and New York. After the 2007-09 recession, immigrant shares were roughly flat in California and Nevada while continuing to grow in New Jersey, New York, and Florida.

Subhayu Bandyopadhyay and Hoang Le Federal Reserve Bank of St. Louis
Date Posted:

Thirteen states and DC have a higher foreign-born share of the population than the 14.9% national average. Immigrant shares in the western states were fairly flat from 2009-22, while immigrant shares in the eastern states continued to grow.

How do immigrant population shares differ across states?

Core argument: 13 states and Washington, D.C., exceed the U.S. immigrant share of 14.9%, with states including California, New Jersey, and New York ranking high on the list.

13 states and Washington, D.C., exceeded the 14.9% immigrant share of the U.S. as a whole. As one might expect, some more prosperous states like California, New Jersey, and New York feature high on the list. The 1990s show sharply rising immigrant shares in most of the selected states. The period between 2000 and the 2007-09 Great Recession shows a continuation of this growth, albeit at a somewhat slower pace for some of the states. In the post-Great Recession period, we can observe an interesting divergence between the western U.S. states of California and Nevada on the one hand and the eastern U.S. states of New Jersey, New York, and Florida on the other. Immigrant shares in the western states were fairly flat from 2009 to 2022, while immigrant shares in the eastern states exhibited continuing growth, although New York’s growth was modest.

Takeaways by Macro Roundup® AI

  1. 13 states and Washington, D.C., exceed the U.S. immigrant share of 14.9%, with states including California, New Jersey, and New York ranking high on the list.
  2. Immigrant shares rose sharply across most of the selected states during the 1990s and continued growing from 2000 to the 2007–09 Great Recession, albeit at a somewhat slower pace in some states.
  3. From 2009 to 2022, immigrant shares in California and Nevada were fairly flat while New Jersey, New York, and Florida showed continuing growth, with New York's growth modest.

Related Articles:

  • The Cost of Illegal Immigration — The US foreign-born population rose by 6.6mm to 51.6mm over a roughly three-year span, lifting immigrants to 15.6% of the population, above the prior records of 14.8% in 1890 and 14.7% in 1910. The authors estimate about 13.7mm illegal immigrants now live in the US, a net increase of 3.7mm.
  • What The Data Says About Immigrants In The U.S. — The U.S. foreign-born population reached a record 46.1mm, or 13.8% of the population, roughly 3x the 4.7% share in 1970 but below the record 14.8% in 1890. Mexico is the top country of birth at 23% of immigrants, and unauthorized immigrants numbered about 11mm, or 23% of the foreign-born population.
  • Without Immigrants, US Working-Age Population Would Shrink — All net US employment growth since early 2020 has been among foreign-born workers, and without immigration the US working-age population would be shrinking — a pattern likely to persist for the rest of the decade. The jump in immigration appears to be enabling a soft landing that most economists had thought impossible.

AI Summary. China's household consumption fell from 53% of GDP in 1983 to 37% in 2022, versus 68% in the US, 61% in India and 55% in Vietnam. The author argues this underconsumption limits services to 45% of jobs, well below the 70–80% in comparable economies, driving youth unemployment and falling fertility.

Fuxian Li The Diplomat
Date Posted:

.@fuxianli argues that the CCP’s “planned reforms could indirectly help balance China-U.S. trade by boosting consumption, thereby reducing political hostility between the two major powers.”

Does China's low household consumption limit service jobs and fertility?

Core argument: China's household consumption fell from 53% of GDP in 1983 to 37% in 2022, below 68% in the United States, 61% in India, and 55% in Vietnam.

Household consumption typically accounts for 85 to 90% of household disposable income. China’s declining share of disposable income in GDP has led to a decline in household consumption as a share of GDP from 53% in 1983 to 37% in 2022. Compare that with 68% in the United States, 61% in India, and 55% in Vietnam. China has paid a terrible price for its low household income – and low domestic consumption – in the form of demographic collapse. Many ordinary families cannot afford to raise even one child, and as a result, China’s fertility rate fell from 2.3 births per woman in 1990 to 1.0 last year. Both the two- and three-child policies have been abject failures. When other countries reached China’s current rate of enrollment in tertiary education, the service sector provided 70-80% of jobs. However, due to underconsumption, China’s service sector provides only 45% of jobs, which makes it difficult for college graduates, who are primarily engaged in the service sector, to find jobs. The result: high youth unemployment and declining marriage and fertility rates.

Takeaways by Macro Roundup® AI

  1. China's household consumption fell from 53% of GDP in 1983 to 37% in 2022, below 68% in the United States, 61% in India, and 55% in Vietnam.
  2. China's service sector provides only 45% of jobs, versus the 70-80% other countries reached at comparable tertiary enrollment levels, making it difficult for college graduates to find work.

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.
  • Can China’s Long-Term Growth Rate Exceed 2–3 Percent? — China invests roughly 42–44% of its GDP, while more mature, capital-intensive economies typically invest about 15–20%. Modeling a ten-year path that lowers China's investment share to 30% of GDP, the author argues the resulting growth rate depends mainly on how fast consumption grows.
  • No Quick Fixes: China’s Long-Term Consumption Growth — 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.