Edward Conard

Top Ten New York Times Bestselling Author

  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “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
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “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
  • “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
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…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 comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, August 15, 2024

AI Summary. Analysis of Gallup World Poll data estimates that if graduates could move freely, 23mm would relocate to America, 17mm to Canada and 9mm to Australia, raising the US graduate population by 7% and those of Canada, Australia and Switzerland by roughly 2.5x. China and India would lose the most graduates, an estimated 14mm and 12mm.

Economist Staff The Economist
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An @TheEconomist analysis of Gallup data estimates that in the absence of barriers to entry, 23mm college graduates would move to the US, 17mm to Canada, and 9mm to Australia. China would lose 14mm, and India 12mm.

How many graduates would move if borders were open?

Core argument: The Economist estimates that if there were no barriers to entry, 23mm graduates would move to America, 17mm to Canada and 9mm to Australia, the three most powerful magnets for talent.

The Economist analysed data from the Gallup World Poll. As a proxy for talent, we considered only respondents who said they had completed an undergraduate degree. Using data from 2010-23 we estimated how many graduates each country could expect to gain and lose if moving were easy. Three big, rich, English-speaking countries are the most powerful magnets. If there were no barriers to entry, 23mm graduates would move to America, 17mm to Canada, and 9mm to Australia, we estimate. Taking account of the number who would consider leaving these countries, global free movement for graduates would raise the number of them in the US by 7%. Canada, Australia, and Switzerland would see their graduate populations rise by a factor of around 2.5; New Zealand by over fourfold. At the other end of the scale, China and India would lose the largest number of graduates in absolute terms (14mm and 12mm respectively).

Takeaways by Macro Roundup® AI

  1. The Economist estimates that if there were no barriers to entry, 23mm graduates would move to America, 17mm to Canada and 9mm to Australia, the three most powerful magnets for talent.
  2. Accounting for graduates who would leave, The Economist estimates free movement would raise the US graduate population by 7%, with Canada, Australia and Switzerland rising by a factor of about 2.5 and New Zealand by over fourfold.
  3. China and India would lose the largest number of graduates in absolute terms, 14mm and 12mm respectively, according to The Economist's estimates drawn from 2010-23 Gallup World Poll data on respondents with undergraduate degrees.

Related Articles:

  • Top Talent, Elite Colleges, and Migration: Evidence from the Indian Institutes of Technology — Among top scorers on India's Joint Entrance Exam for the Indian Institutes of Technology, 62% of the top 100 and 36% of the top 1,000 migrated abroad within eight years, primarily to the U.S. for graduate school. The authors argue elite schools shape migration by signaling ability and providing access to networks.
  • Foreign-born Skilled Workers Play a Critical Role in Strategically Significant Industries — Foreign-born workers make up 20.3% of the roughly 19.9mn workers in strategically significant US industries—those ranking in the top fifth for research spending per worker and above average in use of science and engineering workers—compared with 18.4% of the workforce overall. Manufacturing and professional services account for 83% of employment in these industries.
  • The Global AI Talent Tracker 2.0 — The United States remains the leading destination for the world's most elite AI talent and hosts 60% of top AI institutions. China's share of top AI researchers working domestically rose from 29% in 2019 to 47% in 2022, and India retained one-fifth of its top AI researchers in 2022 versus nearly none in 2019.

AI Summary. The US external deficit widened by 1.7 percentage points of GDP over a five-year span while the dollar depreciated 14%, which is inconsistent with the view that foreign capital inflows drove the deficit by strengthening the dollar. The author argues easier US financial conditions raised asset prices and consumption, boosting imports and weakening the dollar.

Maurice Obstfeld Peterson Institute for International Economics
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Maurice Obstfeld argues that a “demand switch from import-competing goods toward cheaper Chinese imports”  helps explain the China shock; he argues this would have occurred even if the US trade deficit had been smaller.

Do foreign capital inflows drive the US trade deficit?

Core argument: The US external deficit widened by 1.7pp of GDP over 2002–06 while the dollar depreciated 14%, a pattern inconsistent with the view that foreign capital inflows widened the deficit by bidding up demand for US assets and the dollar.

Over 2002–06, the US external deficit grew by 1.7pp of GDP as the dollar depreciated by 14%, inconsistent with the view that capital inflows from abroad induced a bigger US deficit by expanding the demand for US assets and strengthening the dollar. The mechanisms at work [are] that low US interest rates and especially the easing of other US financial conditions allowed a big increase in home prices as well as in equity prices and consumption spending, accompanied by a weaker dollar. Higher consumption spilled over into imports and nontraded US products, drawing resources from the manufacturing export sector and raising the net export deficit at the same time. A demand switch from import-competing goods toward cheaper Chinese imports helps explain the China shock—and this switch would have occurred even if the US trade deficit had been smaller.

Takeaways by Macro Roundup® AI

  1. The US external deficit widened by 1.7pp of GDP over 2002–06 while the dollar depreciated 14%, a pattern inconsistent with the view that foreign capital inflows widened the deficit by bidding up demand for US assets and the dollar.
  2. Low US interest rates and the easing of other US financial conditions allowed large increases in home prices, equity prices, and consumption alongside a weaker dollar, with higher consumption spilling into imports and nontraded products and drawing resources from the manufacturing export sector.
  3. A demand switch from import-competing goods toward cheaper Chinese imports helps explain the China shock, and that switch would have occurred even had the US trade deficit been smaller.

Related Articles:

  • The Dangers of a US Capital Inflow Tax — A tax on foreign capital inflows large enough to balance US trade would raise real interest rates for all US borrowers, domestic and foreign-funded alike, since some foreign funding is needed whenever a trade deficit exists. The argument holds the deficit would shrink mainly through lower investment, reducing demand, growth, and innovation.
  • 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.
  • He Helped Trump Remake Global Trade. His Work Isn’t Done — A former U.S. trade representative argues that countries running chronic trade surpluses for decades are by definition protectionist, and backs a universal 10% tariff plus a higher tariff on China to push toward globally balanced trade over time. Alternatives include import certificates tied to exports and a charge on foreign investment in U.S. assets.

AI Summary. The International Monetary Fund notes that goods produced in China for nonresident firms are recorded as exports even when they never leave the country, and as imports when resold domestically at higher wholesale prices, creating a goods trade deficit in balance-of-payments data. The author estimates this understates China's goods surplus by roughly $300bn, over 1.5 percentage points of GDP.

Brad Setser Council on Foreign Relations
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.@Brad_Setser argues that a new method China uses to account for foreign firms’ contract manufacturing in China for sale in China understates the current account surplus by $300B/year as of Q2 2024 and that the actual surplus is close to $700B.

Does China's trade accounting understate its goods surplus?

Core argument: China's goods surplus in the balance of payments is about $300 billion — over 1.5 percentage points of China's GDP — smaller than it should be, reducing the country's reported current account surplus.

This is what the IMF reports: “When a Chinese contractor sells produced goods to the nonresident enterprise that outsourced the production, exports of goods are recorded in BOP even if the goods remain in China. If the nonresident enterprise subsequently sells the goods in China, imports of goods are recorded in BOP. Given that the Chinese contractors’ ex-factory price for the nonresident enterprise is normally lower than the nonresident enterprises’ wholesale price for Chinese distributors, these transactions result in a deficit in the goods trade balance in BOP.” All this “fake” trade deficit does is reduce China’s reported current account surplus—as the goods surplus in the balance of payments is now about $300B (over 1.5 percentage points of China’s GDP) smaller than what it should be in the balance of payments data. I personally now estimate the current account surplus to be close to $700B even after the drop tied [to] the resumption of tourism in 2023.

Takeaways by Macro Roundup® AI

  1. China's goods surplus in the balance of payments is about $300 billion — over 1.5 percentage points of China's GDP — smaller than it should be, reducing the country's reported current account surplus.
  2. The IMF describes how goods sold by a Chinese contractor to a nonresident enterprise are recorded as exports even while remaining in China, and as imports if resold domestically, producing a goods trade deficit because the ex-factory price is normally below the nonresident's wholesale price.
  3. China's current account surplus is estimated at close to $700 billion, even after the drop tied to the resumption of tourism in 2023.

Related Articles:

  • The Dangerous Myth of Deglobalization — China's manufacturing surplus rose by about 1 percentage point of global GDP over a four-year span and is far larger than those of Germany and Japan. China's $800bn goods trade surplus depends on the large U.S. trade deficit, which is still indirectly financed by China through the large offshore dollar stockpiles held by Chinese exporters.
  • China’s Excess Savings Are A Danger — China's current account surplus of 4% of GDP is larger in global terms than its 2007 peak of 10%, because its share of the world economy at market prices rose from 6% to 17%. Sustaining that surplus would require China to fund deficits in smaller developing countries.
  • China’s Record Manufacturing Surplus — China's manufacturing trade surplus has reached about 2% of world GDP, exceeding the peak surpluses of export powerhouses like Japan and Germany, and shows no signs of shrinking as policy continues to emphasize advanced manufacturing capacity. The main offsetting manufactured-goods deficit is in the United States rather than commodity exporters.

AI Summary. China's central government revenue has contracted 3% against a forecast of 3%+ growth, creating a roughly 500bn yuan ($70bn) budget hole that Beijing would need to cover by widening the central deficit. Local governments face falling land sales and debt-servicing needs, and are being redirected toward de-risking rather than stimulus.

Houze Song Macro Polo
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.@hzsong projects 2024 nominal growth in China of ~4% vs. the CCP’s 5% target, largely driven by local governments preoccupied with debt service vs. new investments funded by land sales.

Will a revenue shortfall keep Beijing from delivering stimulus?

Core argument: China's central government revenue has contracted 3% against a forecast of 3%-plus growth, creating a 500 billion yuan ($70 billion) budget hole in the second half that Beijing would need to cover by widening the central deficit by roughly the same amount.

Central government revenue was forecast to see 3%+ growth this year, yet to date, revenue has instead contracted by 3%. That will create a 500 billion yuan ($70B) hole in the budget in 2H, implying that Beijing will have to increase the central budget deficit by ~$70B to avoid the budget shortfall from handicapping growth even more. To the extent Beijing increases the budget deficit in 2H, it will do so conservatively to cover the revenue shortfall but fall far short of being stimulative. Stimulus also won’t come from local governments as they are once again struggling with deleveraging. Not only are local governments facing a broad revenue crunch from continued decline in land sales, part of their dwindling revenue also needs to be used for debt servicing. In fact, Beijing has shown its preference in recent weeks by letting local governments use bond borrowing to refinance existing debt instead of financing new projects. It appears Beijing has already decided to not rely on local governments to stimulate the economy, instead redirecting them to focus on de-risking.

Takeaways by Macro Roundup® AI

  1. China's central government revenue has contracted 3% against a forecast of 3%-plus growth, creating a 500 billion yuan ($70 billion) budget hole in the second half that Beijing would need to cover by widening the central deficit by roughly the same amount.
  2. Any increase in China's central budget deficit in the second half will likely be conservative, covering the revenue shortfall while falling far short of being stimulative.
  3. Chinese local governments face a revenue crunch from continued declines in land sales and must use part of their dwindling revenue for debt servicing, with Beijing letting them use bond borrowing to refinance existing debt rather than finance new projects.

Related Articles:

  • China Economy Memo: Tempest in a Teapot or Crisis A-Brewing? — The authors argue China is heading into a protracted debt crisis in which about 40% of local government financing vehicles default, hitting regional banks most exposed to such lending. They estimate total losses for these creditors at roughly $5tn, or about 30% of China's GDP.
  • China’s Debt Isn’t The Problem — China's roughly $47.5tn debt pile is a symptom rather than the core problem, which is the unrecognized losses from a decade of misallocated investment into excess property, infrastructure, and manufacturing. Resolving it requires distributing asset-side losses quickly in ways that minimize financial distress costs, not just restructuring liabilities to protect the financial system.
  • The Rise and Fall of LGFVs — China has nearly 12,000 local government financing vehicles whose aggregated assets and liabilities equal roughly 120% and 75% of national GDP, and whose earnings before interest, taxes, and depreciation do not cover their interest payments. Their average borrowing cost of about 5% far exceeds their 1% return on assets, and 80–90% of their annual spending is funded by new debt.

AI Summary. Average US wages have now outpaced average price inflation over the past four years, after a stretch in which prices had risen faster than wages. Wage growth has continued even as price growth moderated.

Jeremy Horpedahl Economist Writing Every Day
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.@jmhorp finds that on average US wage earners are slightly better off than they were 4 years ago: CPI-adjusted real wages are up 0.3% since the start of the Biden Administration relative to a 6.6% increase during Trump’s first term.

Have wages outpaced inflation over the past four years?

Core argument: Average American wages have outpaced average price inflation since January 2021, leaving wage earners on average better off than four years earlier.

Average wages have now outpaced average price inflation since January 2021. Despite some of that time period containing the worst price inflation in a generation, wages have continued to grow even as price growth has moderated. For most of Biden’s term, it was true that prices had outpaced wages. But no longer.

Takeaways by Macro Roundup® AI

  1. Average American wages have outpaced average price inflation since January 2021, leaving wage earners on average better off than four years earlier.
  2. For most of Biden's term, price growth exceeded wage growth, but wages have continued to rise as price growth moderated, reversing that gap.
  3. The period since January 2021 included the worst price inflation in a generation, yet wage growth has persisted through it.

Related Articles:

  • Has Pay Kept Up With Inflation? — All four measures of typical and aggregate pay have grown since 2019 when adjusted using the personal consumption expenditures price index, but show smaller increases in three measures and a decline in one when adjusted using the consumer price index. This pattern of smaller gains under consumer price index adjustment holds across time periods.
  • The Economic Experience of Non-College Americans Over the Pandemic — Inflation-adjusted median weekly earnings for US workers aged 25-64 without a college degree rose 4.6% from $829 to $867, outpacing the 3.3% gain for college-educated workers, a reversal from the Great Recession when college wages grew faster. Inflation-adjusted wealth grew 5.5% for non-college households versus 4.8% for college households.
  • 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.

Friday, August 16, 2024

AI Summary. The annual change in the debt-to-GDP ratio equals the deficit plus a "growth dividend," the amount by which nominal GDP growth shrinks the ratio. Under Congressional Budget Office baseline projections, interest payments stay below the growth dividend, so projected primary deficits—not existing debt—drive the unsustainable debt path.

Danny Yagan National Bureau of Economic Research
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.@dannyyagan notes that in CBO projections, GDP growth exceeds the average interest rate until 2040, making medium-run projections of debt/GDP less alarming, but highlighting the critical importance of primary surpluses for long-run debt sustainability.

Do primary deficits, not existing debt, drive the rising debt ratio?

Core argument: The annual change in the U.S. debt-to-GDP ratio equals the deficit plus a growth dividend, defined as last year's debt ratio times −y/(1+y), where y is the nominal GDP growth rate.

The deficit as a share of GDP increasingly exceeds each year’s change in the debt-to-GDP ratio. The debt ratio change equals the deficit plus the growth dividend: the amount by which GDP growth shrinks the debt ratio, equal to last year’s debt ratio times −y/1+y where y is the nominal GDP growth rate. The growth dividend has more than doubled since the Great Recession because the debt ratio has more than doubled. Adding a growth dividend row to CBO’s main budget table enables readers to exactly decompose America’s debt ratio path. Current debt increases the debt ratio each year by the amount that interest payments exceed the growth dividend. This excess interest remains negative in CBO baseline’s projection. Hence, America’s current debt is sustainable in the CBO baseline despite currently high interest payments. Projected primary deficits – i.e., future tax revenue failing to cover future non-interest spending – entirely drive America’s unsustainable debt ratio path. The primary deficit provides a good guide to how the debt ratio is projected to change, while the deficit does not.

Takeaways by Macro Roundup® AI

  1. The annual change in the U.S. debt-to-GDP ratio equals the deficit plus a growth dividend, defined as last year's debt ratio times −y/(1+y), where y is the nominal GDP growth rate.
  2. The growth dividend has more than doubled since the Great Recession because the debt ratio has more than doubled, and excess interest — interest payments minus the growth dividend — remains negative in the CBO baseline, leaving America's current debt sustainable in that projection.
  3. Projected primary deficits, in which future tax revenue fails to cover future non-interest spending, entirely drive America's unsustainable debt ratio path, so the primary deficit, not the deficit, guides how the debt ratio is projected to change.

Related Articles:

  • An Update to the Budget and Economic Outlook: 2024 to 2034 — The Congressional Budget Office projects a federal budget deficit of $1.9tn in fiscal 2024, or $2tn excluding payment-timing shifts, rising to $2.8tn by 2034. On that adjusted basis, deficits equal 7% of gross domestic product in 2024, dip to 5.5% by 2027, and reach 6.9% by 2034, versus a 3.7% average over the past 50 years.
  • Federal Debt — Stabilizing federal debt would require a zero primary deficit — borrowing only to cover interest on past borrowing — which today would mean a cash deficit of about 3% of GDP, or roughly $800bn a year. The actual deficit is about $1.7tn, or 6% of GDP, with no political dynamics in prospect that would cut it to 3%.
  • Living with High Public Debt — High public debt ratios are likely to persist because large sustained primary budget surpluses are politically unrealistic, real interest rates are already very low, faster global growth is hard to engineer, inflation is not a sustainable route to reducing debt, and financial repression is less feasible amid liberalized markets.

AI Summary. More than a third of U.S. young adults reported no salary or wages, and 13.3% were neither in school nor working outside the summer months, down slightly from a record 14%. Disconnection rates are highest in rural areas (1 in 5) and among young Black adults, reaching 29.1% in rural areas.

William Rodgers III, Alice Kassens, Nishesh Chalise, and Nicole Summers-Gabr Federal Reserve Bank of St. Louis
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.@StLouisFed analysts find that from 2017 to April 2024, 16% of US 18-24-year-olds were “disconnected” from both the labor force and education, and argue that investing in disconnected young adults could further their contributions to US economic growth.

How many young adults are neither in school nor working?

Core argument: Excluding June–August, 14% of U.S. young adults were disconnected — neither in school nor working — in 2020, a record high, with the rate falling slightly to 13.3% in 2022.

More than 1/3 of young adults reported having no salary or wages. Many of these young adults belong to a group known as “disconnected youth,” meaning they are neither in school nor working. Even when excluding the summer months of June through August, 14% of young adults nationwide were disconnected in 2020, a record high. Excluding the summer months, the rate fell slightly to 13.3% in 2022. 1 in 5 rural young adults are disconnected, compared with 17.1% of young adults who live in principal cities and 15.6% of young adults in metro areas. Regardless of geography, young Black adults have the highest rates of disconnection: 29.1% (rural), 23.8% (city), and 20.9% (metro area). Compared with those in metro areas, larger shares of disconnected young adults in rural areas and cities come from families with income of less than $50,000. Educational attainment plays a role in being disconnected; 80.2% of disconnected young adults in rural areas and 2/3 of disconnected young adults in cities have no more than a high school diploma.

Takeaways by Macro Roundup® AI

  1. Excluding June–August, 14% of U.S. young adults were disconnected — neither in school nor working — in 2020, a record high, with the rate falling slightly to 13.3% in 2022.
  2. Disconnection among young adults is highest in rural areas at 1 in 5, compared with 17.1% in principal cities and 15.6% in metro areas, and young Black adults have the highest rates in every geography: 29.1% rural, 23.8% city, and 20.9% metro.
  3. Educational attainment plays a role in disconnection, with 80.2% of disconnected young adults in rural areas and two-thirds in cities holding no more than a high school diploma.

Related Articles:

  • Measuring Unemployment Risk — The authors estimate individual unemployment risk using employment status, demographic, job, and geographic characteristics, and find that before a recession this risk is concentrated: unemployment risk is below 5% for the vast majority of employed workers. Unemployed individuals, a small share of the population, average nearly 22% risk, about 10x the average for employed (2.7%) or out-of-the-labor-force (2.4%) individuals.
  • The Dual U.S. Labor Market Uncovered — The authors identify a dual U.S. labor market in which a primary segment of about 55% of the population is almost always employed, while a secondary segment of about 14% absorbs most seasonal and business-cycle fluctuations. Workers in the secondary segment have 6x higher turnover and are 10x more likely to be unemployed than primary-segment workers.
  • Men’s Falling Labor Force Participation Across Generations — Each successive generation of prime-age men has shown higher rates of not participating in the labor force, with millennials starting at a higher level and declining more steeply into their mid-30s, a pattern driven by school enrollment. Given rising educational attainment, the authors suggest the sustained rise in male nonparticipation may slow, which could benefit economic growth.

AI Summary. Proposed federal legislation would ban "grossly excessive" prices during any "atypical disruption" of a market without defining those terms, empowering the Federal Trade Commission to enforce the ban using whatever metric it chooses. The author argues this amounts to sweeping government price controls across every industry, replacing supply and demand with bureaucratic judgment.

Cathy Rampell Washington Post
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.@crampell argues that under Kamala Harris’s “price-gouging” proposal, “Supply and demand would no longer determine prices or profit levels. Far-off Washington bureaucrats would.”

Would banning "grossly excessive" prices amount to economy-wide price controls?

Core argument: Sen. Elizabeth Warren's bill, the likely template for Harris's proposal, would ban any "grossly excessive price" during any "atypical disruption" of a market without defining either term.

The most likely template for Harris’s proposal is a recent bill from Sen. Elizabeth Warren (D-Mass.). (Harris co-sponsored similar legislation with Warren in 2020, when Harris was a senator.) Warren’s bill would ban any “grossly excessive price” during any “atypical disruption” of a market. Alas, no definition was provided for these terms, either; rather, the bill would empower the Federal Trade Commission to enforce bans using any metric it deems appropriate. It’s hard to exaggerate how bad this policy is. It is, in all but name, a sweeping set of government-enforced price controls across every industry, not only food. Supply and demand would no longer determine prices or profit levels. Far-off Washington bureaucrats would. The FTC would be able to tell, say, a Kroger in Ohio the acceptable price it can charge for milk.

Takeaways by Macro Roundup® AI

  1. Sen. Elizabeth Warren's bill, the likely template for Harris's proposal, would ban any "grossly excessive price" during any "atypical disruption" of a market without defining either term.
  2. Warren's bill would empower the Federal Trade Commission to enforce the ban using any metric it deems appropriate, letting the agency tell a Kroger in Ohio the acceptable price for milk.
  3. Warren's bill amounts, in all but name, to sweeping government-enforced price controls across every industry rather than food alone, with Washington bureaucrats rather than supply and demand determining prices and profit levels.

Related Articles:

  • What Was Up with Grocery Prices? — Retail grocery workers' wages rose roughly 15 percentage points more than wages in food manufacturing and the overall workforce, and profit margins at food and beverage stores increased from 2.9% to 4.4% while food manufacturing margins were little changed at about 6.8%. That margin increase is small relative to the 25% rise in grocery prices.
  • How Far $100 Goes at the Grocery Store After Five Years of Food Inflation — Prices for hundreds of grocery items have risen more than 50% over five years as food companies raised prices, with recent Labor Department data showing grocery prices up 1% from a year earlier. Executives have said higher prices were needed to offset their own rising costs for ingredients, transportation, and labor.
  • An Update About How Inflation Has Affected Households at Different Income Levels Since 2019 — The Congressional Budget Office estimates that income after transfers and taxes grew faster than consumption prices for all income groups, lowering the share of income needed to buy the same goods by 2% for the lowest-income fifth and 6.3% for the highest-income fifth.

AI Summary. Chicago spends more than $24,000 per student on public schools, up 107%, while reading and math proficiency in grades 3–8 fell 63% and 78%; the city has led the nation in homicides for 12 consecutive years. Its population has declined for nine straight years as almost half the city budget goes to debt service and public pensions.

George Will Washington Post
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.@GeorgeWill argues, “Chicago’s population has declined for 9 consecutive years as education has cratered, crime has soared, and public services have withered because almost 1/2 of the city budget goes to debt service and government employees’ pensions.”

Has higher school spending in a big city improved student outcomes?

Core argument: Chicago public school spending has risen 107% since 2012 to more than $24,000 per student, excluding debt service and capital expenditures, while grades 3–8 proficiency fell 63% in reading and 78% in math.

Spending on public schools (more than $24,000 per student, not counting debt service and capital expenditures) has increased 107% since 2012, but proficiency in reading and math in grades 3-8 plummeted 63% and 78%, respectively. Crime is higher than in any other major U.S. city. Year-on-year, robberies are up 21%, assaults 7%, violent crimes in schools 26%. Chicago has led the nation in number of homicides for 12 consecutive years. The [Illinois Policy Institute] says Chicago’s population has shrunk by more than a quarter since it peaked in 1950; in 2023, the city hit its lowest point since 1920. Chicago’s population has declined for nine consecutive years as education has cratered, crime has soared, and public services have withered because almost half of the city budget goes to debt service and government employees’ pensions. These have been negotiated with government sitting on both sides of the table: its employees demanding that it do what it wants to do — grow. The steep price of this progressivism is disproportionately paid by its supposed beneficiaries.

Takeaways by Macro Roundup® AI

  1. Chicago public school spending has risen 107% since 2012 to more than $24,000 per student, excluding debt service and capital expenditures, while grades 3–8 proficiency fell 63% in reading and 78% in math.
  2. Chicago's crime is higher than in any other major U.S. city, with robberies up 21%, assaults up 7%, and violent crimes in schools up 26% year-on-year, and the city has led the nation in homicides for 12 consecutive years.
  3. The Illinois Policy Institute says Chicago's population has shrunk by more than a quarter since its 1950 peak, declining for nine consecutive years and hitting its lowest point since 1920 in 2023, while almost half the city budget goes to debt service and government employee pensions.

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.
  • Students Are Making a ‘Surprising’ Rebound From Pandemic Closures. But Some May Never Catch Up — An analysis of standardized test data led by Stanford and Harvard researchers finds elementary and middle-school students have regained about a third of pandemic learning losses in math and a quarter in reading. Because poorer districts lost more ground initially, the typical poor district remains nearly half a grade level behind, versus about a fifth for rich districts.
  • Long COVID for Public Schools: Chronic Absenteeism Before and After the Pandemic — Nationwide chronic absenteeism — the share of students missing at least 10% of a school year — rose from 15% in 2018 to 28% in 2022, and although rates improved in 2023, they remained 75% above the pre-pandemic baseline. Chronic absenteeism is associated with lower standardized test scores, with the highest rates in lower-achieving, higher-poverty districts.

AI Summary. The US is easing arms-export restrictions so that the UK and Australia no longer need licences for roughly 80% of their defence-related trade with the US, removing barriers to trilateral defence cooperation under the Aukus pact. The State Department says the change is critical to allied work on hypersonics, artificial intelligence, and undersea military capabilities.

Demetri Sevastopulo Financial Times
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The US is easing licensing restrictions on roughly 80% of defense-related trade with the UK and Australia, to facilitate the 2021 Aukus security pact covering nuclear-powered submarines, hypersonic missiles, and artificial intelligence.

Will easing arms-export licensing rules deepen trilateral defense technology cooperation?

Core argument: The US State Department says its amended International Traffic in Arms Regulations will let the UK and Australia obtain American technology without licences for roughly 80% of their defence-related trade with the US.

The US is easing its restrictions on sharing sensitive technology with the UK and Australia, removing barriers to trilateral defence co-operation as the allies try to counter China in the Indo-Pacific. The US Department of State is amending its International Traffic in Arms Regulation rules to facilitate military-related technology sharing with the allies, erasing some hurdles for Aukus, the submarine, and advanced technology development accord the allies agreed in 2021. The State Department said the reform would mean the UK and Australia did not need to apply for licences to obtain American technology for roughly 80% of their defence-related trade with the US. The move would also be “critical” to Pillar 2, in which the three allies are co-operating in areas ranging from hypersonics to artificial intelligence and undersea military capabilities.

Takeaways by Macro Roundup® AI

  1. The US State Department says its amended International Traffic in Arms Regulations will let the UK and Australia obtain American technology without licences for roughly 80% of their defence-related trade with the US.
  2. The rule change removes barriers to trilateral defence co-operation under Aukus, the submarine and advanced technology accord the US, UK and Australia agreed in 2021, as the allies seek to counter China in the Indo-Pacific.
  3. The State Department described the reform as "critical" to Aukus Pillar 2, under which the three allies co-operate in areas ranging from hypersonics to artificial intelligence and undersea military capabilities.

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