Edward Conard

Top Ten New York Times Bestselling Author

  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard 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
  • “…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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, September 4, 2024

AI Summary. Private investment funds pursuing private credit strategies have become major corporate lenders in a now $5tn industry, drawing borrowers with higher returns, stronger contractual covenants than public debt markets offer, and protection from creditor-versus-creditor conflicts. As corporate borrowing shifts private, information about many firms and entire industries becomes unavailable to public investors.

Jared Ellias and Elisabeth de Fontenay Yale Law Journal
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The share of lending in the form of “private credit” has grown dramatically since the financial crisis. Private credit may now be a $1.5 trillion industry that is at least as large as the syndicated loans market. @jared_ellias and Elisabeth de Fontenay

Does the shift to private credit hide corporate information from public investors?

Core argument: New data presented by the authors shows the private credit industry has reached $5 trillion, as private investment funds become increasingly important corporate lenders and bring to corporate debt the consolidation forces reshaping equity markets.

Private investment funds executing a “private credit” strategy have become increasingly important corporate lenders, bringing into corporate debt the same forces of consolidation that have been reshaping the equity markets. We offer new data that illustrates the meteoric rise of the now 5 trillion private credit industry. Private credit [is] attractive relative to public debt markets because: 1) Debt investors receive attractive returns on their investment compared to public debt investing; 2) Private credit investors receive, on average, far stronger contractual covenants than the public debt market currently offers; and 3) Debt investors are protected from “creditor-on-creditor violence,” which has created risk and increased the monitoring costs associated with investing in public corporate debt. As the corporate debt markets go dark, we move to a world in which information about many firms and even entire industries will be lost to the investing public.

Takeaways by Macro Roundup® AI

  1. New data presented by the authors shows the private credit industry has reached $5 trillion, as private investment funds become increasingly important corporate lenders and bring to corporate debt the consolidation forces reshaping equity markets.
  2. The authors attribute private credit's appeal over public debt markets to attractive relative returns, on average far stronger contractual covenants, and protection from "creditor-on-creditor violence," which has created risk and raised monitoring costs in public corporate debt.
  3. The authors argue that as corporate debt markets go dark, information about many firms and even entire industries will be lost to the investing public.

Related Articles:

  • Private Credit: Characteristics and Risks — Private credit loans are negotiated bilaterally outside traditional regulatory requirements and are illiquid because no secondary market exists, leaving investors expected to hold them to maturity or face steep losses if they need to exit. Scarce data on this growing form of nonbank lending makes assessing its risks difficult.
  • The Calm Before the Storm — Private credit and direct lending have not rewritten the rules of credit risk, and much financial innovation amounts to repackaging risk in higher-fee wrappers. High-yield bonds followed a comparable path: after the 1980s boom, below-investment-grade default rates reached roughly 10.4% and 9.1% before the market matured.
  • Corporate Debt, Boom-Bust Cycles, and Financial Crises — Using a dataset on sectoral credit exposure for 115 economies, the authors find corporate debt accounts for two-thirds of credit expansion before financial crises and three-quarters of nonperforming loans during busts, and that corporate debt expansions predict crises similarly to household debt. Recoveries are slower after corporate debt booms.

AI Summary. US homebuilding falls short of demand, particularly in high-demand coastal markets, with per-person permitting running at less than half the level of two and five decades ago. The author argues Washington could unlock construction by conditioning federal highway funds on state housing reform, the same lever used to push states to set the drinking age at 21.

Edward Glaeser New York Times
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Ed Glaeser @AEIecon notes “Per capita, there was less than half as much permitting in 2023 as in 2003 or 1973”, and argues that Federal transportation funding should be conditional on state actions to remove barriers to new home construction.

Can federal highway funds pressure states to reform housing rules?

Core argument: U.S. housing permitting per capita in 2023 was less than half the level of 2003 or 1973, with too few homes built especially in coastal markets where demand is greatest.

We are just not building enough homes, especially in the coastal markets where there is the most demand. Per capita, there was less than half as much permitting in 2023 as in 2003 or 1973. To unleash enough new building to bring affordability, we need to dust off our history books and remember how this country raised the legal alcohol drinking age. The National Minimum Drinking Age Act of 1984 demanded states raise the minimum age to buy or publicly possess alcohol to 21 — or face a reduction in federal highway funds. The threat of losing such funds is a big stick.

Takeaways by Macro Roundup® AI

  1. U.S. housing permitting per capita in 2023 was less than half the level of 2003 or 1973, with too few homes built especially in coastal markets where demand is greatest.
  2. The author argues that unleashing enough new building to bring affordability requires emulating the National Minimum Drinking Age Act of 1984, which required states to raise the minimum age to buy or publicly possess alcohol to 21 or face reduced federal highway funds.
  3. The threat of losing federal highway funds is, in the author's view, a big stick.

Related Articles:

  • 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.
  • 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.
  • 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.

AI Summary. A gap between housing demand and supply emerged after the COVID-19 pandemic that has likely put upward pressure on rents. Leading indicators including units under construction, the gap between completed units and net household formation, and market rents on new leases tend to foreshadow shelter inflation by about a year, and suggest it will keep declining toward more traditional levels.

Òscar Jordà and Aren Yalcin Federal Reserve Bank of San Francisco
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.@sffed analysts forecast that CPI shelter inflation will decline from 5.1% in July ‘24 to its pre-pandemic average of 3.3% in spring ‘25, based on trends in new units under construction and completed, net household formation, and rents on new leases.

Will shelter inflation keep declining toward traditional levels?

Core argument: Units under construction, the gap between completed units and net household formation, and market rents on new leases tend to foreshadow shelter inflation by about one year, and together suggest shelter inflation will keep declining toward more traditional levels over the next year.

Leading up to the COVID-19 pandemic and with the financial crisis in the rearview mirror, household formation and completions growth began to equalize in the mid-2010s. However, since the pandemic, a considerable gap between demand and supply of housing emerged that has likely put upward pressure on rents. We consider different leading indicators of shelter inflation, particularly units under construction and the gap between completed units and net household formation to assess the evolution of future rent inflation. These two, along with market rents for new lease agreements, tend to foreshadow shelter inflation by about one year. Taken together, these measures suggest that shelter inflation will continue to decline toward more traditional levels over the next year.

Takeaways by Macro Roundup® AI

  1. Units under construction, the gap between completed units and net household formation, and market rents on new leases tend to foreshadow shelter inflation by about one year, and together suggest shelter inflation will keep declining toward more traditional levels over the next year.
  2. A considerable gap between housing demand and supply emerged after the COVID-19 pandemic, which has likely put upward pressure on rents.
  3. Household formation and completions growth began to equalize in the mid-2010s, with the financial crisis in the rearview mirror and before the pandemic.

Related Articles:

  • It’s All About Shelter — Producer price inflation for final demand tracks consumer price inflation excluding shelter closely, and both show inflation under control; overall consumer inflation looks hot only because the shelter component is up 5.6%. That shelter measure lags rents by construction, and more current rent series show no recent inflation.
  • 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.
  • How the U.S. Might Outgrow Pandemic-Era Housing (Un)Affordability Problems — 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.

AI Summary. The Congressional Budget Office estimates more than 9m people have migrated on net to the U.S. in recent years, nearly matching the prior decade's total and lifting population growth to almost 1.2% a year. Fewer than 30% are lawful permanent residents; without immigration, growth would be 0.2%.

Paul Kiernan Wall Street Journal
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Since the end of 2020, net immigration has lifted the US population by 9 million people, contributing to annual population growth of 1.2%, the highest since the early 1990s. The bulk of the 6.5mm net illegal immigrants came across the southern border.

How much does immigration drive U.S. population growth?

Core argument: More than nine million people have migrated to the U.S. on net since the end of 2020, coming both legally and illegally, nearly as many as arrived in the previous decade, according to Congressional Budget Office estimates and projections.

Since the end of 2020, more than nine million people have migrated to the U.S., after subtracting those who have left, coming both legally and illegally, according to estimates and projections from the Congressional Budget Office. That’s nearly as many as the number that came in the previous decade. Immigration has lifted U.S. population growth to almost 1.2% a year, the highest since the early 1990s. Without it, the U.S. population would be growing 0.2% a year because of declining birthrates and would begin shrinking around 2040, the CBO projects. Most migrants didn’t come through regular legal channels. Less than 30%, or 2.6 million, are what the CBO counts as “lawful permanent residents,” which includes green-card holders and other immigrants who came through legal channels, such as family or employment-based visas.

Takeaways by Macro Roundup® AI

  1. More than nine million people have migrated to the U.S. on net since the end of 2020, coming both legally and illegally, nearly as many as arrived in the previous decade, according to Congressional Budget Office estimates and projections.
  2. Immigration has lifted U.S. population growth to almost 1.2% a year, the highest since the early 1990s; without it, the Congressional Budget Office projects growth of 0.2% a year and a population that begins shrinking around 2040 because of declining birthrates.
  3. Fewer than 30% of those migrants, or 2.6 million, are counted by the Congressional Budget Office as lawful permanent residents, a category including green-card holders and immigrants arriving through family or employment-based visas.

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. More than 19m new business applications have been filed since the end of 2020, and the pace remains well above the steady pre-pandemic rate. Evidence suggests the surge reflects real entrepreneurship rather than a measurement artifact, as it also appears among applications the Census deems likely to pay wages.

Eric Van Nostrand U.S. Department of the Treasury
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According to a Treasury analysis of new US business applications, many to establish firms with a high propensity to hire employees, remain 50% above the pre-pandemic period.

Does the post-pandemic surge in business applications reflect real entrepreneurship?

Core argument: More than 19 million new business applications have been filed since the end of 2020, a pace that has eased from its peak but remains well above the steady pre-COVID rate.

There has been a surge in applications to start new businesses since the pandemic, with over 19 million new applications since the end of 2020. While the pace of new business applications has eased somewhat from its heights last year the pace remains well above the steady pre-COVID rate. The surge in business applications following the pandemic is so sharp that one might wonder whether it truly reflects a rise in entrepreneurship, or whether it may be some measurement artifact related to a pandemic-era distortion. However, several pieces of evidence suggest that the surge is real and no well-supported alternative explanation has been offered a few years into this trend. The surge is not confined to the broadest set of business applications, which includes many sole proprietorships or other entities that may not fit prevailing understandings of a “small business” (left panel). A similar surge is present for those applications the Census considers having a high propensity to pay wages (middle panel), as well as those who indicate a date on which they will begin paying wages (right panel).

Takeaways by Macro Roundup® AI

  1. More than 19 million new business applications have been filed since the end of 2020, a pace that has eased from its peak but remains well above the steady pre-COVID rate.
  2. The post-pandemic surge extends beyond the broadest application measure to those the Census considers to have a high propensity to pay wages and those specifying a date for beginning wage payments.
  3. Several pieces of evidence suggest the rise in business applications is real rather than a pandemic-era measurement artifact, and no well-supported alternative explanation has been offered a few years into the trend.

Related Articles:

  • High Tech Business Entry In The Pandemic Era — High-tech industries accounted for a disproportionate share of the surge in net new business establishments after 2019, with net entry higher in tech than non-tech industries. The authors find suggestive evidence that tech establishment births rose more for existing firms than new firms, though both categories saw elevated openings.
  • Immigrant Entrepreneurship: New Estimates and a Research Agenda — Immigrants account for about a quarter of new employer businesses in the United States, and firms with immigrant owners are more likely to hold patents and hold more patents per employee. This higher propensity toward innovation is only partly explained by differences in owners' education levels and fields of study.
  • Why is the U.S. GDP Recovering Faster Than Other Advanced Economies? — The U.S. output advantage over other advanced economies is attributed mainly to faster labor productivity growth and secondarily to hours worked per employee. Rigid foreign labor markets and job-retention policies kept workers attached to firms producing below capacity, while the U.S. saw about 3x more sectoral worker reallocation and a surge in new firm formation.

Thursday, September 5, 2024

AI Summary. Studies linking Census Bureau survey responses to administrative records find greater measurement error for Black and Hispanic individuals than whites, mainly underreporting of program receipt across food stamps, Social Security, unemployment insurance, Medicaid, Medicare, and pensions. The authors conclude the safety net supports minority groups more than survey data suggest.

Bruce Meyer, Nikolas Mittag and Derek Wu National Bureau Of Economic Research
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Bruce Meyer finds that when recipients of a variety of US government assistance programs complete Census Bureau surveys, they significantly underreport program participation. Black and Hispanic recipients show the highest rates of underreporting.

Does survey underreporting understate safety net support for minorities?

Core argument: Reviewing linked survey–administrative data for SNAP, Social Security, Unemployment Insurance, TANF, Medicaid, Medicare, and private pensions in major Census Bureau surveys, the authors find a strong and robust pattern of greater measurement error for Black and Hispanic individuals and households than for whites.

We review existing studies that use linked data to assess the reporting of key programs (including SNAP, Social Security, Unemployment Insurance, TANF [Temporary Assistance for Needy Families], Medicaid, Medicare, and private pensions) in major Census Bureau surveys, aiming to extract the evidence on differences in survey accuracy by race and ethnicity. Our key finding is a strong and robust pattern of greater measurement error for Black and Hispanic individuals and households relative to whites. The dominant error is underreporting for a wide variety of programs, samples, and surveys. Table 4 shows that receipt rates [for all groups] are markedly higher using the administrative values than the survey values. The increases in receipt rates tend to be largest for Black and Hispanic individuals. For white individuals, the biases in receipt rates are smaller in fractional terms, with SNAP and pension receipt less than doubling and TANF and UI receipt increasing by about a third. The implication is that the safety net better supports minority groups than the survey data suggest, through higher program receipt and greater poverty reduction.

Takeaways by Macro Roundup® AI

  1. Reviewing linked survey–administrative data for SNAP, Social Security, Unemployment Insurance, TANF, Medicaid, Medicare, and private pensions in major Census Bureau surveys, the authors find a strong and robust pattern of greater measurement error for Black and Hispanic individuals and households than for whites.
  2. Administrative records show markedly higher program receipt rates than Census Bureau survey values for all groups, with the largest increases for Black and Hispanic individuals; for whites, SNAP and pension receipt less than double and TANF and UI receipt rise by about a third.
  3. Underreporting is the dominant error across a wide variety of programs, samples, and surveys, implying that the safety net supports minority groups better than survey data suggest, through higher program receipt and greater poverty reduction.

Related Articles:

  • Evaluating the Success of the War on Poverty since 1963 Using an Absolute Full-Income Poverty Measure — The authors estimate that an absolute full-income poverty measure, which counts a fuller set of income sources and adjusts thresholds only for inflation, fell from 19.5% to 1.6%, versus an official decline to 10.5%. They also find relative poverty reductions modest and government dependence more than doubled among working-age adults.
  • Another Wrong Way to Measure Poverty — The official U.S. poverty measure has barely changed in over 50 years because most social benefits aren't counted as recipient income, even as benefits to the average household in the bottom 20% rose from $9,700 to $45,000 in inflation-adjusted dollars; counting all benefits puts poverty at 2.5%.
  • Homelessness and the Persistence of Deprivation: Income, Employment, and Safety Net Participation — Linking census records of sheltered and unsheltered homeless adults to tax and benefit data, the authors find nearly half had formal employment while homeless and nearly all worked or received at least one safety net program, yet incomes stayed low across the surrounding decade, suggesting homelessness arises amid long-term deprivation rather than sudden income loss.

AI Summary. Valuations of AI-related stocks remain well below levels seen in past bubbles, with the median price-to-earnings and enterprise-value-to-sales ratios of the 7 largest technology companies roughly half those of the dominant 7 at the 2000 technology peak. But leading AI firms are no longer capital-light, and a major capital-spending boom threatens the high returns current valuations imply will continue.

Peter Oppenheimer, Guillaume Jaisson, Sharon Bell and Lilia Peytavin Goldman Sachs
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Peter Oppenheimer argues for “Tech’s rational exuberance,” noting the median PE and EC/Sales of the 7 largest tech firms are ~ half of those seen in the tech bubble. But the capital-intensive AI buildout “threatens to stifle the high rates of return.”

Are AI stock valuations at bubble levels?

Core argument: The median PE and enterprise value/sales of the 7 biggest technology companies today is roughly half that of the dominant 7 at the peak of the 2000 technology bubble.

Despite the significant interest that AI has generated, it still does not appear to have driven a bubble in valuations which sets it apart, so far at least, from previous narrative investment cycles like the internet in the late 1990s. Current valuations are much lower than have been typical in recent bubble periods, stretching back to the Nifty 50 era of the early 1970s, the Japanese bubble in the late 1980s, and the technology bubble in 2000. The median PE and EC/Sales of the 7 biggest technology companies today is roughly half that of the dominant 7 at the peak of the technology bubble in 2000. [But] AI winners of today are no longer capital-light businesses. Just as we saw with the networking companies of the internet, AI is driving a major capex boom and threatens to stifle the high rates of returns that have characterised the sector over the past 15 years and which current valuations imply will continue. Many leading tech companies are now ramping up their spending at an extraordinary rate.

Takeaways by Macro Roundup® AI

  1. The median PE and enterprise value/sales of the 7 biggest technology companies today is roughly half that of the dominant 7 at the peak of the 2000 technology bubble.
  2. Current valuations sit well below those typical of prior bubble periods, including the Nifty 50 era of the early 1970s, Japan's late-1980s bubble, and the 2000 technology bubble.
  3. Today's AI winners are no longer capital-light businesses, as AI drives a major capex boom that threatens the high rates of return of the past 15 years that current valuations imply will continue.

Related Articles:

  • A Severe Case of COVIDIA: Prognosis For An AI-Driven US Equity Market — Computing cycles move from infrastructure to platforms to applications, and NVIDIA data center revenues as a share of market-wide capital spending are projected to reach levels last seen at the 1969 mainframe peak and the dot-com boom. Large cloud providers spend more than twice as much training foundational models as running them for customers.
  • 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.
  • Are We on the Brink of an AI Investment Arms Race? — Spending on AI chips and data centers was a bit below $100bn in 2023, around 0.4% of US GDP, and the broader set of companies exposed to AI-related investment has not yet seen a major jump in sales. The authors argue the underlying dynamics point to a spending surge large enough to shape the business cycle.

AI Summary. The U.S. marriage rate has fallen more than 60% since 1970, from 85.9 to 30.5 marriages per 1,000 unmarried Americans aged 15 and older, and the share of adults who are married has dropped from 72% to about 50%. Demographers project roughly one in three young adults may never marry.

W. Bradford Wilcox and Alan Hawkins Journal of Policy Analysis and Management
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Only ~ 50% of American adults are currently married, down from 72% in 1960. @BradWilcoxIFS notes that children raised in single-parent families, “are about 4 times more likely to be poor, compared to those raised in married families.”

How far has American marriage declined in recent decades?

Core argument: The U.S. marriage rate has fallen more than 60% since 1970, from 85.9 marriages per 1,000 unmarried Americans aged 15 and up to 30.5 per 1,000 by 2021.

The U.S. marriage rate has fallen by more than 60% since 1970. In 1970, 85.9 men and women married per 1,000 unmarried Americans 15 and up. By 2021, that number had fallen to 30.5 per 1,000. Likewise, the median age of marriage has risen for men from 23 in 1970 to 30.5 in 2022 and for women from 21 in 1970 to 28.6 in 2022. The practical significance of this is that only about 50% of American adults are currently married, down from 72% in 1960. Moreover, demographers now project that a record share of young adults, about one in three, may never marry.

Takeaways by Macro Roundup® AI

  1. The U.S. marriage rate has fallen more than 60% since 1970, from 85.9 marriages per 1,000 unmarried Americans aged 15 and up to 30.5 per 1,000 by 2021.
  2. About 50% of American adults are married, down from 72% in 1960, and demographers project that roughly one in three young adults may never marry.
  3. The median age at marriage rose from 23 in 1970 to 30.5 in 2022 for men, and from 21 to 28.6 over the same period for women.

Related Articles:

  • Young Adults in the U.S. Are Reaching Key Life Milestones Later Than in the Past — Pew Research Center analysis of Census Bureau data finds 21-year-olds in the US are less likely than their counterparts four decades earlier to have a full-time job, be financially independent, live on their own, be married, or have a child. Among 21-year-olds, 39% worked full time versus 64% four decades earlier, and a quarter were financially independent versus 42%.
  • In a Growing Share of U.S. Marriages, Husbands and Wives Earn About the Same — In 29% of U.S. opposite-sex marriages both spouses earn about the same, 55% have a husband as primary or sole earner, and 16% have a primary-earning wife. The share of marriages in which the husband is the sole provider fell from 49% to 23% over the past 50 years.
  • Intermarriage in America Post-Loving v. Virginia — US interracial marriage rates showed no decline despite heightened public discourse about racial tension, a metric where increased racial tension would be expected to register. The author argues America's ethnoracial composition is more mixed than it has ever been, resembling a Latin American country more than a European one.

AI Summary. US public investment spending has defended Rust Belt economies while accelerating growth in the already-booming Sun Belt, and at the local level has benefited rural, conservative areas more than urban, liberal ones — a design lawmakers intended to counter regional inequality and build political durability for the projects.

Joseph Politano Apricitas Economics
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.@JosephPolitano cites 18 House Republicans’ efforts to protect clean energy tax credits in the IRA from repeal and argues that spending from the infrastructure bill, IRA, and CHIPS Act may create a coalition inside the GOP to protect these bills.

How is public investment spending reshaping regional and local economies?

Core argument: America's public investment boom has primarily defended the economies of the long-struggling Rust Belt while accelerating growth in the long-booming Sun Belt.

At a broader regional level, spending has primarily served to defend the economies of the long-struggling Rust Belt while accelerating growth in the long-booming Sun Belt. At the most local levels, the growth in public investment has benefitted America’s rural, conservative areas more than its urban, liberal ones—an intentional effort crafted by lawmakers to combat the regional inequalities of the 2010s and buy political staying power for the projects’ end goals. There’s some evidence this strategy is already working—no Republican voted for the Inflation Reduction Act when it was passed two years ago, but this month 18 House Republicans signed a letter pleading for Speaker Johnson to spare the bill’s clean energy tax credits from possible repeal efforts. Those signers included representatives from Georgia, Arizona, Indiana, Virginia, Utah, and Nebraska.

Takeaways by Macro Roundup® AI

  1. America's public investment boom has primarily defended the economies of the long-struggling Rust Belt while accelerating growth in the long-booming Sun Belt.
  2. At the most local level, growth in U.S. public investment has benefitted rural, conservative areas more than urban, liberal ones, an intentional design by lawmakers to counter the regional inequalities of the 2010s and build political staying power for the projects.
  3. No Republican voted for the Inflation Reduction Act when it passed two years ago, yet 18 House Republicans—including members from Georgia, Arizona, Indiana, Virginia, Utah, and Nebraska—signed a letter asking Speaker Johnson to spare its clean energy tax credits from repeal.

Related Articles:

  • Business Spending Is Lining Up to Reinforce Growth — Around 70% of sectors are posting positive year-over-year profit growth, with big tech showing the largest acceleration in demand and profits but strength broadening across the economy. Companies are responding with rising capital spending growth and more optimistic investment plans, as firms typically add capacity with a slight lag after real demand picks up.
  • With US Chips Act Money Mostly Divvied Up, the Real Test Begins — The US Chips Act is a bet that Intel, Micron, Taiwan Semiconductor Manufacturing, and Samsung can return advanced chip production to the US, with an explicit goal of making a fifth of the world's most advanced processors by 2030, up from roughly zero. Nearly 100 companies have pledged about $400bn in US facilities.
  • Republican Districts Dominate US Clean Technology Investment Boom — A Financial Times analysis found that more than 80% of pledged investment in large-scale clean energy and semiconductor manufacturing is destined for Republican congressional districts. The analysis attributes this partly to those districts' available land and cheap labor, and to state-level tax breaks and subsidies in states such as Georgia and Ohio.