Edward Conard

Top Ten New York Times Bestselling Author

  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…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 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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…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
  • “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


Tuesday, August 13, 2024

AI Summary. The authors estimate that the cumulative increase in the U.S.-born population since 2010 was about 1.4m larger, and the foreign-born increase 1.7m larger, than official survey data show. Published data show a decline in the U.S.-born population over a recent one-year span, while the authors estimate an increase of 1.5m.

Wendy Edelberg and Tara Watson Brookings Institution
Date Posted:

.@WendyEdelberg and @taraelizwatson find that the native-born US population continues to grow, but the foreign-born share is ~18.5%, 1pp higher than Census Bureau reports.

Does official survey data understate growth in the US-born population?

Core argument: The authors estimate the cumulative increase in the U.S.-born population since 2010 was about 1.4 million larger than published data show, and the foreign-born increase 1.7 million larger.

We assume the mortality rate is the same at each age for the U.S.-born and foreign-born, and that net international migration adds only to the foreign-born population. We estimate that the cumulative increase in the U.S.-born population since 2010 was about 1.4 million greater than in the published data and the increase in the foreign-born population was 1.7 million greater. The difference in the recent growth in the U.S. born population between CPS reports and our own estimates is particularly noteworthy. The published data show a decline in the U.S.-born population between January 2023 and January 2024. This is at odds with the fact that the number of U.S.-born people turning 16 in 2023 far exceeded the number of deaths in 2023. In contrast, our estimate is that the U.S.-born population increased by 1.5 million, a similar pace to the preceding year.

Takeaways by Macro Roundup® AI

  1. The authors estimate the cumulative increase in the U.S.-born population since 2010 was about 1.4 million larger than published data show, and the foreign-born increase 1.7 million larger.
  2. Published CPS data show the U.S.-born population declining between January 2023 and January 2024, while the authors estimate it rose by 1.5 million, a pace similar to the preceding year.
  3. The authors argue the published decline conflicts with the number of U.S.-born people turning 16 in 2023 far exceeding deaths that year, estimating under the assumptions that mortality rates are equal by age across U.S.-born and foreign-born and that net international migration adds only to the foreign-born population.

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.
  • New Immigration Estimates Help Make Sense Of The Pace Of Employment — The Congressional Budget Office estimates net immigration was 3.3m in 2023, versus the 1m it had projected, implying faster population and labor force growth than currently reported. The authors estimate this raised real economic growth by about 0.1 percentage point and, by lifting both production and demand, added little price or wage pressure.
  • 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. Fewer than 0.1% of US corporations — roughly 350 firms — account for nearly 70% of the corporate tax base, and these large multinationals can shift profits to lightly taxed offshore locations. The authors argue coordinated minimum taxation narrows the gap between home and foreign tax rates, easing the tradeoff between curbing profit-shifting and competitiveness.

Kimberly Clausing Journal of Economic Perspectives
Date Posted:

.@KClausing notes that 350 US firms represent 70% of the tax base, and argues that international cooperation is required to maintain competitiveness of domestic firms while preventing profit-shifting to low-tax jurisdictions.

Can coordinated minimum taxation ease the tradeoff between curbing profit-shifting and competitiveness?

Core argument: Fewer than 0.1% of all US corporations — about 350 firms — account for nearly 70% of the corporate tax base, according to the 2022 IRS Statistics of Income database, and these large firms are far more likely to be multinational.

A small number of large corporations have disproportionate economic heft; these companies are also far more likely to be multinational companies. According to the [2022] IRS Statistics of Income database fewer 0.1% of all corporations, or about 350 firms, account for nearly 70% of the tax base. These large firms have the ability to shift profits to more lightly taxed offshore destinations. Concerns [about competitiveness] made it difficult for US policymakers to satisfy key policy goals: clamping down on profit-shifting would raise competitiveness worries, but being too responsive to competitiveness worries would spur further tax base erosion. Coordinated minimum taxation shrinks tax differentials between home tax rates and the lowest rate abroad, enabling governments to better set corporate tax policy based on domestic policy goals. As US policymakers contemplate reform of international corporate taxation in the years ahead, traditional tax policy dilemmas will be less stark. While the Base Erosion and Profit Shifting agreement and the Pillar 2 rules can be improved over time, they illustrate the importance of international economic cooperation in addressing global collective action problems.

Takeaways by Macro Roundup® AI

  1. Fewer than 0.1% of all US corporations — about 350 firms — account for nearly 70% of the corporate tax base, according to the 2022 IRS Statistics of Income database, and these large firms are far more likely to be multinational.
  2. US policymakers faced competing pressures in international corporate taxation: clamping down on profit-shifting raised competitiveness worries, while being too responsive to those worries spurred further tax base erosion.
  3. Coordinated minimum taxation shrinks the differential between home tax rates and the lowest rates abroad, which the authors argue lets governments set corporate tax policy according to domestic goals and makes traditional tax policy dilemmas less stark.

Related Articles:

  • Tax Policy and Investment in a Global Economy — Using administrative tax data, the authors estimate that firms experiencing the mean corporate tax change under the 2017 US tax law increased investment by 20% relative to firms with no change, with long-run domestic and total capital up 7% and 13%. They find higher depreciation deductions largely offset added revenue from capital accumulation.
  • Who Gains from Corporate Tax Cuts? — The authors estimate that corporate tax cuts boost overall investment and employment, with goods-producing firms such as manufacturers raising capital expenditure and wage bills without changing dividends, and a 1% cut in the marginal tax rate lifting their capital spending by as much as 8%. Service-sector firms instead direct most of the windfall to dividends.
  • Lessons from the Biggest Business Tax Cut in US History — The authors find the 2017 US business tax cuts reduced corporate tax revenue by 40% while raising total tangible corporate investment by about 11%, with firms facing larger tax declines investing relatively more. They estimate long-run GDP is higher by under 1% and labor income by under $1,000 per employee.
  • Which U.S. Stocks Generated the Highest Long-Term Returns? — 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.

AI Summary. A National Association of Realtors measure combining median existing-home prices, mortgage rates and median family incomes shows affordability roughly unchanged from the mid-1980s, but the drivers differ: mortgage rates then exceeded 10% with prices not unusually high relative to incomes, while prices have risen more than 50% since 2019 with rates just below 6.5%.

Nicole Friedman and Alana Pipe Wall Street Journal
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Housing affordability has fallen to levels last seen in the 1980s, driven primarily by high home prices relative to median family income. Mortgage rates around 6.5% remain below the long-term average since 1971.

Do high prices rather than high mortgage rates now drive unaffordability?

Core argument: The income needed to afford the median-priced single-family home with 20% down rose from $49,152 in January 2021 to $110,544 in June 2024, according to the National Association of Realtors' affordability index.

The National Association of Realtors’ affordability metric incorporates median single-family existing-home prices, mortgage rates and median family incomes. Even though it is roughly the same today as in the mid-1980s, the drivers of the housing market and consumer sentiments are nothing alike. In the mid-1980s, home prices weren’t unusually high relative to incomes. It was the mortgage rate, which soared above 18% in 1981 and held above 10% for most of the decade, that frustrated buyers. Mortgage rates currently sit just below 6.5%, according to Freddie Mac, which is more than double where they stood in 2021 but below the long-term average level since 1971. But home prices are much higher, having soared more than 50% since 2019. In January 2021, a family needed income of $49,152 to afford the median-priced single-family home with a 20% down payment, according to NAR’s affordability index. In June 2024, the family would need an income of $110,544 to make the same purchase. New-home construction plunged during the financial crisis and took years to recover. Home builders built 1.4 million units last year, compared with 1.7 million units in 1985, according to Census Bureau data. And shipments of manufactured homes, one of the most affordable types of housing, stood just under 90,000 last year, down from more than 280,000 in 1985.

Takeaways by Macro Roundup® AI

  1. The income needed to afford the median-priced single-family home with 20% down rose from $49,152 in January 2021 to $110,544 in June 2024, according to the National Association of Realtors' affordability index.
  2. Mortgage rates topped 18% in 1981 and stayed above 10% for most of that decade, while home prices were not unusually high relative to incomes; rates now sit just below 6.5%, per Freddie Mac, and prices have risen more than 50% since 2019.
  3. Home builders built 1.4 million units last year versus 1.7 million in 1985, and manufactured-home shipments stood just under 90,000, down from more than 280,000 in 1985, according to Census Bureau data.

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%.
  • Inflation Adjusted House Prices 1.9% Below 2022 Peak — 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%.
  • 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.

AI Summary. Commercial bank loan growth paused amid high interest rates and a regional banking panic, then resumed as rates declined, normalizing toward a pre-pandemic pace though slower than its earlier peak. Private credit blunted the impact of tighter monetary policy, research suggests, by both competing with public debt offerings and lending to companies that struggle to borrow from banks.

Joseph Wang Fed Guy Blog
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.@FedGuy12 notes private credit has “blunted the impact of tightening monetary policy by actively lending to a wide range of businesses,” and that bank credit is “normalizing towards a pre-pandemic pace.”

Is bank loan growth resuming as interest rates decline?

Core argument: Commercial bank loan growth paused last year amid high interest rates and the regional banking panic, and has steadily resumed as rates have declined, normalizing toward a pre-pandemic pace rather than the rapid 2022 rate.

Commercial bank loan growth paused last year amidst high rates and the regional banking panic but looks to resume just as economic growth concerns are surfacing. Private credit has blunted the impact of tightening monetary policy by actively lending to a wide range of businesses. Research suggests private credit has grown by both competing with public debt offerings and by willing to offer credit to companies who have difficulty borrowing from banks. The surge in private lending helped fill the void created by the decline in bank lending. However, bank lending has steadily resumed in recent months as interest rates have declined. Loan growth is not as rapid as 2022, but appears to be normalizing towards a pre-pandemic pace.

Takeaways by Macro Roundup® AI

  1. Commercial bank loan growth paused last year amid high interest rates and the regional banking panic, and has steadily resumed as rates have declined, normalizing toward a pre-pandemic pace rather than the rapid 2022 rate.
  2. Private credit blunted the impact of tighter monetary policy by lending actively to a wide range of businesses, helping fill the void created by the decline in bank lending.
  3. Research suggests private credit has grown both by competing with public debt offerings and by extending credit to companies that have difficulty borrowing from banks.

Related Articles:

  • Private Credit Growth and Monetary Policy Transmission — Private credit — direct lending to businesses by nonbank institutions — accounts for about 15% of private companies' outstanding debt, with volumes comparable to leveraged loans and high-yield corporate bonds. The authors find monetary policy transmission through private credit may be muted relative to bank lending and public bond markets, given resilient credit supply.
  • Where Are All the Defaults? — One explanation for subdued high-yield bond spreads is that the lowest-quality borrowers, those most likely to default, have migrated from high-yield markets into private credit. Moody's reports the number of issuers with its lowest speculative-grade ratings has fallen, and that 62% of its rated universe is rated single-B or below.
  • Economic Effects of Tighter Lending by Banks — Bank lending standards tightened to a degree previously seen only during the 2008 financial crisis and the onset of the COVID-19 pandemic, with the tightening beginning well before the bank collapses and affecting businesses of all sizes. The analysis attributes about 23pp of the tightening to credit supply shocks and about 22pp to lending standards responding to broader economic conditions.

AI Summary. Households across income groups accumulated large amounts of liquid wealth after the onset of the pandemic recession and subsequently spent it down, with credit card delinquency rates falling and then rising as that wealth rose and fell. Delinquency rates for middle and low-income households grew more rapidly and now sit about 3 percentage points above pre-pandemic levels.

Hamza Abdelrahman, Luiz Edgard Oliveira, and Adam Shapiro Federal Reserve Bank of San Francisco
Date Posted:

The bottom 80% of households by income exhausted their extra pandemic-era savings by late 2021, and their credit card delinquencies rates are now about 3 percentage points above late-2019 levels. @ah_shapiro

Has the drawdown of pandemic-era liquid wealth raised credit card delinquencies?

Core argument: Credit card delinquency rates for middle- and low-income households sit about 3 percentage points above late-2019 levels, having grown more substantially and more rapidly than those of high-income households.

We assess the evolution of pandemic-era liquid wealth across two income groups: high-income and middle to low-income. We find that households in both income groups accumulated and subsequently spent large amounts of liquid wealth following the onset of the pandemic recession. The rise and fall in household liquid wealth coincided with a fall and subsequent rise in credit card delinquency rates for both groups. Higher-income households held pandemic-era liquid wealth until mid-2022, and credit card delinquencies started to increase above pre-pandemic levels shortly thereafter. These households recently increased their liquid asset holdings by shifting funds into money market funds, likely fueled by higher interest rates. Middle and low-income households spent down their entire pandemic-era liquid wealth a bit earlier, by late 2021. Similar to high-income households, credit card delinquency rates for middle and low-income households surpassed pre-pandemic levels around the same time they completely drew down their pandemic-era liquid wealth. However, delinquency rates for this group grew more substantially and more rapidly than high-income households and now sit about 3 percentage points above late-2019 levels.

Takeaways by Macro Roundup® AI

  1. Credit card delinquency rates for middle- and low-income households sit about 3 percentage points above late-2019 levels, having grown more substantially and more rapidly than those of high-income households.
  2. Middle- and low-income households spent down their entire pandemic-era liquid wealth by late 2021, and their credit card delinquency rates surpassed pre-pandemic levels around the same time.
  3. Higher-income households held pandemic-era liquid wealth until mid-2022 and have since increased liquid asset holdings by shifting funds into money market funds, likely fueled by higher interest rates.

Related Articles:

  • Pandemic Savings Are Gone: What’s Next for U.S. Consumers? — Researchers estimate U.S. households' pandemic-era excess savings peaked at $2.1tn and were drawn down at an average pace of about $70bn per month before being depleted. The depletion is unlikely to cause households to sharply cut spending as long as they can support consumption through continued employment or wage gains, other wealth, and more debt.
  • The Rich Have all the “Excess” Cash Now — Excess cash balances outside the top 1% have mostly disappeared, but the author argues their liquidation did little to finance consumer spending, which has been driven mainly by wage income. Relatively low household debt leaves many Americans room to spend above their income, potentially aided by lower interest rates.
  • Accumulated Savings During the Pandemic: An International Comparison with Historical Perspective — The authors construct measures of excess household savings accumulated during the COVID-19 pandemic and find they have been unwound in the United States, declined in advanced foreign economies, and slowed in emerging market economies. Past recessions featured smaller increases in excess savings and greater persistence in the accumulated stock.

Wednesday, August 14, 2024

AI Summary. The authors attribute the small rise in U.S. unemployment after World War II to labor force withdrawals—concentrated among women aged 20–44 and male veterans—and to most job separators moving directly into new jobs, even across industries. They argue the postwar job-creation boom followed from wartime military spending having crowded out investment in consumer durables, housing, and business capital.

Shigeru Fujita, Valerie Ramey and Tal Roded Stanford University
Date Posted:

From 1945-46, the US unemployment rate grew by 3pp despite a 24% decline in GDP, supported by a 10% shrinkage of the total labor force (largely women and GI bill students) and pent-up demand for consumer durables and residential/business investment.

Why did unemployment barely rise after a massive wartime demobilization?

Core argument: Withdrawals from the labor force, concentrated among women aged 20–44 and male war veterans, form an important part of the explanation for the small rise in the U.S. unemployment rate at the end of WWII.

Withdrawals from the labor force at the end of WWII were an important part of the explanation for the small rise in the unemployment rate. These withdrawals tended to be concentrated among females between the ages of 20 and 44 and male war veterans. Among those staying in the labor force, most of the workers who separated from their jobs moved directly into a new job. Workers accomplished these job-to-job transitions despite moving across industries. Returning veterans quickly returned to their previous position on the occupation ladder whereas those laid off from civilian jobs experienced a significant step down the occupation ladder. [Finally], the post-war boom in job creation was a direct consequence of the crowding out of investment in consumer durable goods, residential capital, and business capital by military spending during the war. Had government spending crowded out only nondurable goods and services consumption, the recovery would have been much less robust.

Takeaways by Macro Roundup® AI

  1. Withdrawals from the labor force, concentrated among women aged 20–44 and male war veterans, form an important part of the explanation for the small rise in the U.S. unemployment rate at the end of WWII.
  2. Among workers who stayed in the labor force and separated from their jobs at the end of WWII, most moved directly into a new job, accomplishing these transitions even while switching industries.
  3. Returning veterans quickly regained their previous position on the occupation ladder, while workers laid off from civilian jobs experienced a significant step down it.

Related Articles:

  • Lessons from History for Successful Disinflation — The authors classify U.S. disinflation episodes by how committed monetary policymakers were, judging commitment strong in some episodes and weak in others based on policy records and public statements about acceptable output losses. They find no evidence that stronger commitment affected expected inflation, and conclude weak commitment failed mainly through premature abandonment of disinflationary policy.
  • America, Jump-Started: World War II R&D and the Takeoff of the US Innovation System — From 1940 to 1945, the US Office of Scientific Research and Development engaged industrial and academic contractors in more than 2,200 research contracts worth over $9bn in 2022 dollars, despite no pre-war tradition of funding externally performed research. At the war's height, the US government funded the research behind nearly 1 in 8 US patents.
  • The Long-Run Impacts of Public Industrial Investment on Local Development and Economic Mobility: Evidence from World War II — The authors estimate that U.S. counties receiving publicly financed World War II plants saw persistent local development and expanded higher-wage manufacturing employment, with men born there before the war earning $1,200 (2020 dollars), or 2.5%, more annually in adulthood than peers elsewhere. Gains were larger for children of lower-income parents.

AI Summary. A projected scenario has the U.S. house-price-to-income ratio falling about 13 percentage points over roughly seven years, retracing about two-thirds of the pandemic-era rise through strong income growth rather than a price bust, with moderate price appreciation slightly trailing inflation. Such a gradual correction carries risks including reduced labor mobility, delayed household formation, and longer selling times.

Enrique Martínez García and Lauren Spits Federal Reserve Bank of Dallas
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A @DallasFed analysis suggests housing affordability in the US will likely improve gradually through strong income growth and moderate house-price appreciation, but notes the risk of a severe price correction with negative wealth effects.

Can income growth restore housing affordability without a price bust?

Core argument: Under a benign April 2024 scenario, the U.S. price-to-income ratio is projected to decline about 13 percentage points by February 2029 relative to February 2022, retracing roughly two-thirds of the pandemic-era increase.

Chart 4 suggests that under the relatively benign scenario in April 2024, the price-to-income ratio should decline by about 13 percentage points by February 2029 relative to February 2022 levels. Such a drop would retrace approximately two-thirds of the pandemic-era increase. Putting it all together, the affordability correction in the U.S. is not expected to arise from a house-price bust but rather from strong income growth in a scenario with moderate house-price appreciation that slightly trails inflation. While slowly improving housing affordability can be less disruptive than a disorderly house-price bust, there remain associated risks. First, the more gradual correction tempers labor mobility as households face financial constraints that, in turn, limit relocation options in the event of future economic shocks. Second, household formation can be delayed as a result, which can have demographic implications. Third, sellers may encounter increased time and cost risks because fewer people are buying homes. Finally, prolonged unaffordability can increase the odds of a severe correction in a future house-price run-up, inducing a negative wealth effect on economic activity and a restraining of household consumption.

Takeaways by Macro Roundup® AI

  1. Under a benign April 2024 scenario, the U.S. price-to-income ratio is projected to decline about 13 percentage points by February 2029 relative to February 2022, retracing roughly two-thirds of the pandemic-era increase.
  2. The expected U.S. affordability correction is projected to stem from strong income growth alongside moderate house-price appreciation that slightly trails inflation, rather than from a house-price bust.
  3. A gradual affordability correction carries risks including tempered labor mobility among financially constrained households, delayed household formation with demographic implications, higher time and cost risks for sellers, and greater odds of a severe correction in a future price run-up.

Related Articles:

  • Inflation Adjusted House Prices 2.4% Below Peak — Inflation-adjusted U.S. house prices are 2.4% below their peak, while the monthly principal-and-interest payment on an equivalent house has risen 12% over one year and 107% over three years, as house prices rose 31% over that three-year span and 30-year mortgage rates went from 2.81% to 6.78%.
  • 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.
  • Housing and the American Worker — Wages net of housing costs were once substantially higher in high-density areas than low-density areas for workers both with and without college education, but over the past half-century that urban wage premium has persisted only for college-educated workers, not for those with a high school degree or less.

AI Summary. Inflation-adjusted median household net worth for Americans born in the 1980s rose to $130,000 from $60,000, while median wealth for those born in the 1990s more than quadrupled to $41,000, according to the Federal Reserve Bank of St. Louis. Real estate was the largest driver of the increase.

Joe Pinsker and Veronica Dagher Wall Street Journal
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At the start of 2024, the real wealth of Millennials (aged 27 to 44) was ~25% higher than Gen Xers and Baby Boomers at the same point in their life cycles, driven largely by $2.5 trilliongrowth in net housing wealth. @WSJ

Has younger Americans' household wealth risen sharply?

Core argument: The median inflation-adjusted household net worth of older millennials born in the 1980s rose to $130,000 in 2022 from $60,000 in 2019, while median wealth for Americans born in the 1990s more than quadrupled to $41,000, according to St. Louis Fed data.

The median household net worth of older millennials, born in the 1980s, rose to $130,000 in 2022 from $60,000 in 2019, according to inflation-adjusted data from the Federal Reserve Bank of St. Louis. Median wealth more than quadrupled to $41,000 for Americans born in the 1990s, which includes the generation’s youngest members, born in 1996. In early 2024, millennials and older members of Gen Z had, on average and adjusting for inflation, about 25% more wealth than Gen Xers and baby boomers did at a similar age, according to a St. Louis Fed analysis. In the first quarter of 2024, the collective wealth of millennials and older Gen Z stood at $14.2 trillion, up from $4.5 trillion four years earlier, according to the Federal Reserve. The biggest driver of that increase was real estate. Millennials’ housing wealth grew $2.5 trillion, after accounting for the additional mortgage debt they took on.

Takeaways by Macro Roundup® AI

  1. The median inflation-adjusted household net worth of older millennials born in the 1980s rose to $130,000 in 2022 from $60,000 in 2019, while median wealth for Americans born in the 1990s more than quadrupled to $41,000, according to St. Louis Fed data.
  2. The collective wealth of millennials and older Gen Z reached $14.2 trillion in the first quarter of 2024, up from $4.5 trillion four years earlier, with real estate the biggest driver as millennials' housing wealth grew $2.5 trillion net of additional mortgage debt, according to the Federal Reserve.
  3. In early 2024, millennials and older Gen Z held on average about 25% more inflation-adjusted wealth than Gen Xers and baby boomers did at a similar age, according to a St. Louis Fed analysis.

Related Articles:

  • Millennials and Older Gen Zers Made Significant Wealth Gains in 2022 — Older millennials' median wealth stood 37% above what a model based on all generations at the same age would predict — roughly $130,000 versus a predicted $95,000 at age 38 — a 46 percentage point swing from earlier years when they trailed expectations. Housing assets drove most of the growth.
  • 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.
  • Young People Have a Lot More Wealth Than We Thought — Wealth data for young people comes from the Federal Reserve's quarterly Distributional Financial Accounts, which project forward results from the Survey of Consumer Finances conducted every three years. When newer survey results were released, young people turned out to hold considerably more wealth than the projections based on the prior survey had indicated.

AI Summary. An index of employment at 6,500 companies tracking more than 75,000 software developers and engineers found developer employment grew through late 2019 and has been falling since 2020. Over the same period, developers' median base pay rose 24% versus 30% for all U.S. workers, though developers still earn more than 2x the U.S. median salary.

Jeff Nezaj ADP Research
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The ADP software developer employment index was up 11% in Oct. 2019 vs. Jan. 2018, but by Jan 2024 it had fallen to 17% below 2018 levels. Hat tip to Brent Orrell @AEIecon.

Is software developer employment and pay growth falling behind other workers?

Core argument: The ADP Research Institute's software developer employment index has been falling since 2020, with sharp drops in January 2022 (down 4.6 percentage points), May 2022 (down 3.5), and January 2023 (down 3.4), after growing from January 2018 to November 2019.

The ADP Research Institute tracked employees at 6,500 companies, including more than 75,000 software developers and engineers in 10 industries, between January 2018 and January 2024. Using this data, we built an index to track the employment of software developers beginning in January 2018. Developer employment grew from January 2018 to November 2019, then began to fall. The index dropped sharply in January 2022 (down 4.6pp), May 2022 (down 3.5pp), and January 2023 (down 3.4pp). Despite intermediate increases in August 2021 and October 2022, the developer employment index has been falling since 2020. As employment has fallen, pay growth has lagged that of total U.S. workers. Between January 2018 and January 2024, the median base pay for developers grew by 24% while pay growth for total U.S. workers grew by 30%. Still, developers remain well compensated, earning more than two times the U.S. median salary.

Takeaways by Macro Roundup® AI

  1. The ADP Research Institute's software developer employment index has been falling since 2020, with sharp drops in January 2022 (down 4.6 percentage points), May 2022 (down 3.5), and January 2023 (down 3.4), after growing from January 2018 to November 2019.
  2. Median base pay for software developers grew 24% between January 2018 and January 2024, lagging the 30% pay growth for total U.S. workers over the same period.
  3. Software developers earn more than twice the U.S. median salary, according to ADP Research Institute data covering more than 75,000 developers and engineers at 6,500 companies across 10 industries.

Related Articles:

  • Society’s Technical Debt and Software’s Gutenberg Moment — Every wave of technological innovation has been unleashed by something costly becoming cheap enough to waste, and large language models are collapsing the cost and complexity of producing software. The authors argue that decades of underproduced software have left society with immense technical debt that is poised to contract, releasing a wave of innovation.
  • Navigating the Future of Work — Demographic groups whose work has been more displaced by automation have seen slower real wage growth, and automation is estimated to account for about 70% of between-group wage inequality in the US since 1980. Establishments adopting artificial intelligence have slowed hiring of non-AI workers by more than they have added AI specialists.
  • Centaurs and Cyborgs on the Jagged Frontier — In a pre-registered experiment at Boston Consulting Group covering 18 realistic consulting tasks, consultants using ChatGPT-4 completed 12.2% more tasks, worked 25.1% faster, and produced 40% higher quality results than those without it. The tool acted as a skill leveler: the lowest-scoring consultants improved 43%, while top performers gained less.

AI Summary. A global migration advisory firm forecasts a record 128,000 millionaires relocating between countries in a single year, up from the prior record of 120,000. UBS projects the UK and Netherlands will lose the most millionaires by 2028, down 17% and 4%, bucking a trend of rising millionaire counts in 52 of 56 countries it monitors.

Emma Agyemang Financial Times
Date Posted:

UBS projects that the US will add approximately 3mm millionaires between 2023 and 2028. Henley & Partners projects that in 2024 15,000 millionaires will emigrate from China, almost 10,000 from the UK, and 5,000 from India.

Are record numbers of millionaires moving to low-tax countries?

Core argument: Henley & Partners forecasts that a record 128,000 millionaires will relocate between countries in 2024, exceeding the previous record of 120,000 set the prior year.

Henley & Partners, a global migration advisory firm tracks the movement between countries and cities of more than 150,000 high net worth individuals. It forecasts that in 2024, a record 128,000 millionaires will relocate, eclipsing the previous record of 120,000 set last year. Last month, UBS published a report forecasting the UK and Netherlands would lose the most millionaires by 2028 — falling by 17% and 4% respectively. The two countries bucked a worldwide trend in which the number of millionaires is set to rise in 52 out of 56 countries that the bank monitors. Its data includes those who have become millionaires through wealth creation as well as émigrés.

Takeaways by Macro Roundup® AI

  1. Henley & Partners forecasts that a record 128,000 millionaires will relocate between countries in 2024, exceeding the previous record of 120,000 set the prior year.
  2. UBS forecasts the UK and Netherlands will lose the most millionaires by 2028, with their millionaire populations falling 17% and 4% respectively.
  3. UBS projects the number of millionaires will rise in 52 of the 56 countries it monitors, with its data counting both those who become millionaires through wealth creation and émigrés.

Related Articles:

  • Taxing Billionaires: Estate Taxes and the Geographical Location of the Ultra-Wealthy — The authors estimate that US billionaires move to states without estate taxes as they age, with $80.7bn of Forbes 400 wealth escaping estate taxation as a result. They find that for the average state the added estate tax revenue exceeds forgone income tax revenue by 31%, with California a notable exception.
  • 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.
  • China to See Biggest Millionaire Exodus in 2024 as Many Head to U.S. — China is projected to see a record 15,200 high-net-worth individuals — those with at least $1m in assets — leave the country, the world's largest such outflow, according to a Henley & Partners report. The prior year's 13,800 departures went mostly to the US, Canada, and Singapore.

AI Summary. U.S. Citizenship and Immigration Services processed naturalization applications in an average of 4.9 months over the first nine months of the current fiscal year, down from 11.5 months in fiscal 2021 and roughly in line with 2013–2014 speeds. About 3.3m immigrants have become citizens under the Biden administration, and 9m green card holders are currently eligible to naturalize.

Miriam Jordan New York Times
Date Posted:

The Federal government has been processing citizenship requests at the fastest rate since 2014. Since Biden took office, 3.3mm immigrants have become American citizens; 9mm green card holders are currently eligible for citizenship. @NYT

Are immigrants becoming U.S. citizens faster than in recent years?

Core argument: U.S. Citizenship and Immigration Services processed naturalization applications in an average of 4.9 months during the first nine months of the current fiscal year, down from 11.5 months in fiscal 2021 and on par with 2013 and 2014 speeds.

The Trump administration conducted lengthier reviews of naturalization applications. The processing time roughly doubled to about 10 months during Mr. Trump’s tenure. At under five months, application processing speed is now on par with 2013 and 2014. About 3.3 million immigrants have become citizens during President Biden’s time in office, with less than two months to go before the close of the 2024 fiscal year. The U.S. Citizenship and Immigration Services took 4.9 months, on average, to process naturalization applications in the first nine months of the current fiscal year, compared with 11.5 months in fiscal 2021. Nine million green card holders are currently eligible to become U.S. citizens.

Takeaways by Macro Roundup® AI

  1. U.S. Citizenship and Immigration Services processed naturalization applications in an average of 4.9 months during the first nine months of the current fiscal year, down from 11.5 months in fiscal 2021 and on par with 2013 and 2014 speeds.
  2. About 3.3 million immigrants have become U.S. citizens during President Biden's time in office, with less than two months remaining before the close of the 2024 fiscal year.
  3. Naturalization processing times roughly doubled to about 10 months during President Trump's tenure, when the administration conducted lengthier reviews of applications.

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.
  • The Strong Labor Market Has Grown US-Born Employment — The authors estimate that the cumulative increase in the U.S.-born population since 2010 was about 1.4m larger, and the foreign-born increase 1.7m larger, than official survey data show. Published data show a decline in the U.S.-born population over a recent one-year span, while the authors estimate an increase of 1.5m.
  • 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.

AI Summary. Huawei is close to introducing a new artificial intelligence chip, the Ascend 910C, which Chinese internet companies and telecommunications operators have been testing and which Huawei tells potential clients is comparable to Nvidia's H100, a chip not directly available in China. Aided by state support, Huawei has developed Chinese alternatives to U.S. products despite American sanctions.

Liza Lin and Raffaele Huang Wall Street Journal
Date Posted:

China’s Huawei Technologies is close to bringing a new AI chip to market, “overcoming US sanctions to challenge Nvidia in the Chinese market.” @WSJ

Can Chinese chipmakers match leading U.S. AI processors despite sanctions?

Core argument: Huawei is close to introducing its Ascend 910C AI processor, which it has told potential clients is comparable to Nvidia's H100, a chip not directly available in China.

China’s Huawei Technologies is close to introducing a new chip for artificial intelligence use, overcoming U.S. sanctions to challenge Nvidia in the Chinese market. Chinese internet companies and telecommunications operators have been testing Huawei’s latest processor, called Ascend 910C, in recent weeks, according to people familiar with the matter. Huawei told potential clients that the new chip is comparable to Nvidia’s H100, which was introduced last year and isn’t directly available in China, the people said. Huawei’s ability to keep advancing in chips is the latest sign of how the company has managed to break through U.S. erected obstacles and develop Chinese alternatives to products made by the U.S. and its allies. Aided by billions of dollars in state support, it has become a national champion in areas including AI and a key part of Beijing’s endeavor to “delete” American technologies.

Takeaways by Macro Roundup® AI

  1. Huawei is close to introducing its Ascend 910C AI processor, which it has told potential clients is comparable to Nvidia's H100, a chip not directly available in China.
  2. Chinese internet companies and telecommunications operators have been testing Huawei's Ascend 910C, according to people familiar with the matter.
  3. Aided by billions of dollars in state support, Huawei has become a national champion in areas including AI and a key part of Beijing's endeavor to "delete" American technologies.

Related Articles:

  • The Goal for China’s Chip Giant: Cut Out the U.S. — Huawei's Mate 60 smartphone contained a system-on-chip made with SMIC technology comparable to the 7-nanometer process, despite Chinese chipmakers lacking access to ASML's most advanced lithography machines. Semiconductor engineers say the chips were likely made by exposing silicon to light multiple times, a technique that worsens yields and raises costs and becomes harder at more advanced nodes.
  • US Revokes Licences For Supply of Chips to China’s Huawei — The US Department of Commerce has revoked certain export licences allowing American firms to supply semiconductors to Chinese telecoms equipment maker Huawei, affecting chips used in Huawei laptops and mobile phones.
  • China AI & Semiconductors Rise: US Sanctions Have Failed — China's Kirin 9000S is a better-designed, leading-edge chip than the West realizes, developed without access to extreme ultraviolet lithography or cutting-edge US intellectual property, indicating existing export controls have not worked. The authors argue only decisive, full-scale measures—not half measures—could prevent China from mass-manufacturing chips needed for high-end military applications.