Edward Conard

Top Ten New York Times Bestselling Author

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

Macro Roundup


Tuesday, September 17, 2024

AI Summary. The authors argue workers must take costly actions to make nominal wages catch up with inflation, so inflation imposes welfare costs even when real wages do not fall, and observed wage growth understates inflation's costs. In their survey, workers would sacrifice 1.75% of wages to avoid such conflict, more than doubling estimated costs.

Joao Guerreiro, Jonathon Hazell, Chen Lian et al. National Bureau of Economic Research
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.@JADHazell @jptguerreiro @ChenLian92 argue inflation is costlier to workers than the decline in real wages, as countering wage erosion requires costly conflict with employers. Workers would sacrifice 1.75% of their real wages to avoid conflict.

Why do workers dislike inflation even when real wages hold up?

Core argument: In a survey of workers, respondents were willing to sacrifice 1.75% of their wages to avoid the costly actions ("conflict") needed to make nominal wages catch up with inflation.

We argue that workers must take costly actions (“conflict”) to have nominal wages catch up with inflation, meaning there are welfare costs even if real wages do not fall as inflation rises. We show that, following a rise in inflation, wage catchup resulting from more frequent conflict does not raise welfare. Instead, the impact of inflation on worker welfare is determined by what we term “wage erosion”—how inflation would lower real wages if workers' conflict decisions did not respond to inflation. As a result, measuring welfare using observed wage growth understates the costs of inflation. We conduct a survey showing that workers are willing to sacrifice 1.75% of their wages to avoid conflict. Calibrating the model to the survey data, the aggregate costs of inflation incorporating conflict more than double the costs of inflation via falling real wages alone. The right figure[s] in Figure 11 shows the dynamic response of real wages and welfare-relevant wage erosion for the 2021-23 inflation surge. The gap between real wages and wage erosion [right panels] measures the large aggregate costs of inflation due to conflict.

Takeaways by Macro Roundup® AI

  1. In a survey of workers, respondents were willing to sacrifice 1.75% of their wages to avoid the costly actions ("conflict") needed to make nominal wages catch up with inflation.
  2. Calibrating their model to the survey data, the authors find that incorporating conflict costs more than doubles the aggregate costs of inflation relative to costs from falling real wages alone.
  3. The authors argue that worker welfare depends on "wage erosion"—how inflation would lower real wages if conflict decisions did not respond to inflation—so measuring welfare using observed wage growth understates inflation's costs.

Related Articles:

  • Trends in Real Wage Growth among Union, Nonunion Workers — Wage changes for union and nonunion workers tend to move similarly over time, with union workers' nominal wage changes less volatile, and since 2002 both groups' wages increased at the same rate. When consumer prices grew faster than wages, real wage growth turned negative despite a strong labor market, then turned positive as inflation fell.
  • 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%.
  • Are Real Wages Catching Up? — Real wage growth has turned slightly positive, but wage levels remain below where they stood before the inflation surge: consumer prices rose nearly 18% while the Employment Cost Index, a broad wage measure, rose a little under 15%, leaving cumulative real wage growth about 3pp below zero.

AI Summary. Real disposable income per head has grown almost twice as much in the US as in the European Union since 2000, with the EU trailing the US and China in the digital revolution and only four of the world's top 50 tech companies European. If average productivity growth since 2015 persists, EU output would merely stay constant until 2050.

Martin Wolf Financial Times
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.@martinwolf_ notes that Europe has fallen behind the US in technological innovation: in the last 50 years, no new EU-based company has achieved a market cap > €100B while the US has 5 new firms worth >$1T.

Is Europe falling behind the US in income and technology?

Core argument: Real disposable income per head has grown almost twice as much in the US as in the EU since 2000, a gap attributed in large part to the EU falling far behind the US and China in the digital revolution.

“Real disposable income [per head] has grown almost twice as much in the US as in the EU since 2000”. A big part of the reason is that the EU has fallen far behind the US (and even China) in the digital revolution. Only four of the world’s top 50 tech companies are European. EU energy prices are relatively high, particularly in comparison with those of the US. EU demographics are also dire. Thus, “[i]f the EU were to maintain its average productivity growth rate since 2015, it would only be enough to keep GDP constant until 2050”. Not least, Europeans are unable to protect themselves, as the war in Ukraine has shown. “Europe is stuck in a static industrial structure with few new companies rising up to disrupt existing industries or develop new growth engines.

Takeaways by Macro Roundup® AI

  1. Real disposable income per head has grown almost twice as much in the US as in the EU since 2000, a gap attributed in large part to the EU falling far behind the US and China in the digital revolution.
  2. Only four of the world's top 50 tech companies are European, and Draghi describes Europe as stuck in a static industrial structure with few new companies rising up to disrupt existing industries or develop new growth engines.
  3. Maintaining the EU's average productivity growth rate since 2015 would only be enough to keep GDP constant until 2050, against a backdrop of relatively high energy prices and dire demographics.

Related Articles:

  • Europeans ‘Less Hard-Working’ Than Americans, Says Norway Oil Fund Boss — Norway's sovereign wealth fund argues that American companies are outpacing European rivals on innovation and technology because the US more readily accepts failure and risk and because Americans work harder and are more ambitious. US shares now make up almost half of the fund's equity holdings, up from 32% a decade earlier, while UK holdings fell from 15% to 6%.
  • Comparing EU-to-US Output Per Hour — European Union output per hour worked has risen from about 72% of the US level in the early 2000s to about 82%. The EU's 28% shortfall in GDP per capita versus the US is roughly two-thirds attributable to lower output per hour and one-third to fewer hours worked; Germany's shortfall reflects fewer hours alone.
  • Europe Regulates Its Way to Last Place — Europe's regulators tend to act on the mere possibility of harm rather than evidence of it, an approach that can throttle innovation early. The McKinsey Global Institute found that among companies with over $1bn in revenue, U.S. firms spent 80% more on research and development, had 30% higher return on capital, and grew revenue 1.3 percentage points faster.

AI Summary. An aggressive Federal Reserve rate-cutting campaign may not benefit risk assets, because it would weaken the dollar at a time when foreign investors hold about 20% of U.S. corporate equities. A weaker dollar imposes currency losses on those investors, which could prompt them to sell U.S. equities and dollars, deepening the decline.

Fed Guy Blog Joseph Wang
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.@FedGuy12 argues that aggressive rate cuts would likely be bearish for U.S. equities, as dollar depreciation might cause foreigners, who now own about 20% of U.S. stock, to sell in order to avoid FX losses.

Do aggressive rate cuts hurt US stocks by weakening the dollar?

Core argument: Foreign portfolio investment accounts for around 20% of U.S. corporate equities, with foreign holdings at all-time highs, so an aggressive rate cut campaign that depreciates the dollar may not benefit risk assets.

An aggressive rate cut campaign may not be positive risk assets because it would depreciate the dollar even as foreign holdings of U.S. equities reach all-time highs. The top 6 equity holdings of Norway’s sovereign wealth fund are all U.S. technology stocks. On a percentage basis, foreign portfolio investments account for around 20% of U.S. corporate equities. While interest rate differentials have only modestly narrowed, the dollar has dropped to multi-month lows against many key currencies. A potentially aggressive rate cut cycle, slowing economy, and large deficits suggest further dollar weakness. A weaker dollar imposes FX losses on foreign investors, which could lead them to sell their U.S. equities and dollars, which in turn could lead to a further sell-off.

Takeaways by Macro Roundup® AI

  1. Foreign portfolio investment accounts for around 20% of U.S. corporate equities, with foreign holdings at all-time highs, so an aggressive rate cut campaign that depreciates the dollar may not benefit risk assets.
  2. The dollar has fallen to multi-month lows against many key currencies even though interest rate differentials have narrowed only modestly, and an aggressive rate cut cycle, slowing economy, and large deficits suggest further dollar weakness.
  3. A weaker dollar imposes FX losses on foreign investors, which could lead them to sell their U.S. equities and dollars and trigger a further sell-off; the top 6 equity holdings of Norway's sovereign wealth fund are all U.S. technology stocks.

Related Articles:

  • Local Currency Returns — U.S. foreign exchange policy has rested with the Treasury since the 1933 dollar devaluation, and a president could pursue depreciation through direct intervention using the Exchange Stabilization Fund or diplomatic talks with other countries. A weaker dollar eases global financial conditions but could prompt foreign investors holding large amounts of U.S. equities to sell to avoid currency losses.
  • 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.
  • Long-Term Shareholder Returns: Evidence From 64,000 Global Stocks — A study of about 64,000 global stocks estimates net global stock market wealth creation of $75.7tn, with returns highly concentrated: the top 159 firms (0.25%) account for half of net wealth creation and the top 1,526 (2.39%) account for all of it. Fewer than half of stocks beat one-month US Treasury bills, 42.6% of non-US and 44.8% of US stocks.

AI Summary. An analysis of immigration court data on the 1.8m asylum seekers and refugees who arrived in the US in one year found that in battleground states about 72% settled in counties that voted Democratic in the prior presidential election, which contain roughly 60% of the US population. In those states, 85% settled in counties whose economies had grown.

Elena Mejía and Shawn Donnan Bloomberg
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A Bloomberg analysis finds that in 2023, 12% of migrants seeking asylum and refugees went to swing states, and 72% of these went to counties that voted for Biden in 2020.

Are new migrants settling in growing, Democratic-leaning counties?

Core argument: About 72% of migrants who arrived in 2023 in battleground states settled in counties that voted for Biden, while fewer than a third went to Trump counties, according to Bloomberg News's analysis of immigration court data obtained by Syracuse University researchers.

Bloomberg News analyzed immigration court data obtained by researchers at Syracuse University that show where the 1.8 million asylum seekers and refugees who landed in the US in 2023 have taken up residence. In past decades, these records for immigration court cases would not have offered as comprehensive a picture of new arrivals. Now, though, more border-crossers are turning themselves in to apply for asylum and, eventually, a work permit, making the data set more exhaustive. In the battleground states that will decide this November’s election, about 72% of migrants in 2023 went to Biden counties while less than a third went to Trump counties. Counties that voted for Biden four years ago are home to roughly 60% of the overall US population. Swing states received 12% of all migrants, with most going to blue counties like Philadelphia, home to Pennsylvania’s largest city, and Gwinnett, which is outside Atlanta. In swing states, 85% of migrants settled in places that saw GDP growth from 2019 to 2022, according to the latest available data.

Takeaways by Macro Roundup® AI

  1. About 72% of migrants who arrived in 2023 in battleground states settled in counties that voted for Biden, while fewer than a third went to Trump counties, according to Bloomberg News's analysis of immigration court data obtained by Syracuse University researchers.
  2. In swing states, which received 12% of all migrants, 85% settled in counties that saw GDP growth from 2019 to 2022, with most going to blue counties such as Philadelphia and Gwinnett outside Atlanta.

Related Articles:

  • Economic Renaissance or Fleeting Recovery? Left-Behind Counties See Boom in Jobs and Businesses Amid Widening Divides — More than 1,000 US "left-behind" counties—home to 18% of the population and defined by lagging population and income growth—recorded their strongest three-year stretch of job and business creation since 2000, with jobs growing over 4x faster than in the preceding four years. Their share of national jobs nonetheless kept falling.
  • America Is Uniquely Ill-Suited To Handle a Falling Population — U.S. population growth slowed to about 7.4% in the decade to 2020, the slowest since the Great Depression, as the fertility rate fell from above the 2.1 needed for a stable population to 1.67. Because local and regional authorities levy 48% of all U.S. taxes—versus 20% in France and 6% in Britain—shrinking local revenue forces service cuts or tax rises.
  • Many Places Still Have Not Recovered from the Pandemic Recession — Metro areas still short of their pre-pandemic employment levels saw steeper job losses during the pandemic recession (16.1% on average versus 13.4% for recovered areas) and slower job growth beforehand (0.5% average annual growth over the prior five years versus 1.5%). Worker shortages have been especially acute in these lagging areas.

AI Summary. An analysis of the two US presidential candidates' fiscal plans finds neither has made deficit reduction a priority, with the Democratic candidate's acceptance of tax increases on higher earners giving more room to fund policy goals. The Republican candidate's proposed offsets—tariffs and cuts to clean energy subsidies—are described as insufficient to cover the cost of his tax plans.

James Capretta and Jack Rowing American Enterprise Institute
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James Capretta @rowing_jack @AEIecon review the budgetary effects of the Harris and Trump campaign plans and argue “Neither candidate is promising fiscal restraint despite the adverse outlook. The best that might be hoped for is for no further erosion.”

Do either presidential candidate's fiscal plans reduce the deficit?

Core argument: Neither Harris nor Trump has pledged to make deficit reduction a priority, though Harris's willingness to embrace tax increases on the well-off gives her more room, at least on paper, to fund her policy objectives.

It is possible to provide a summary perspective of what the candidates’ plans would do to the fiscal outlook, as reflected in Table 1. While neither candidate has pledged to make deficit reduction a priority, Harris’s willingness to embrace tax hikes (at least for the well-off) provides her with more space to meet her policy objectives, at least on paper. It is noteworthy that President Biden had more success securing his spending plans than tax increases. Trump is more boxed in than Harris because the GOP is institutionally opposed to tax hikes and Trump himself is not interested in spending reforms. He is left with suggesting substantial tariffs and cuts to the Biden administration’s clean energy subsidies as offsets, which are insufficient to cover the full costs of his tax plans.

Takeaways by Macro Roundup® AI

  1. Neither Harris nor Trump has pledged to make deficit reduction a priority, though Harris's willingness to embrace tax increases on the well-off gives her more room, at least on paper, to fund her policy objectives.
  2. Trump's proposed offsets—substantial tariffs and cuts to the Biden administration's clean energy subsidies—are insufficient to cover the full costs of his tax plans.
  3. Trump is more constrained than Harris because the Republican Party is institutionally opposed to tax hikes and Trump himself is not interested in spending reforms.

Related Articles:

  • The 2024 Harris Campaign Policy Proposals: Budgetary, Economic and Distributional Effects — The authors project a presidential campaign's policy proposals would raise spending by $2.3tn and tax revenue by $1.1tn over 10 years, widening primary deficits by $2tn once economic feedback is included. They estimate GDP falls 1.3% by 2034 and wages fall 0.8%, with top-5% households worse off.
  • Larry Summers and Bob Rubin Join Our CIOs to Discuss the Surprising Economic Cycle — Adopting the Simpson-Bowles fiscal consolidation when interest rates were at zero would have risked excessive disinflation, since long rates had no room to fall to provide an offsetting expansionary impulse. After the large run-up in debt and rise in real interest rates, the developing fiscal situation risks inflationary pressure, Treasury market disruption, or crowding out of private investment.
  • Government Debt in Mature Economies. Safe or Risky? — When governments insulate taxpayers rather than bondholders from unfunded spending shocks, government bond yields rise as debt is marked to market, shifting the risk to bondholders — a "risky debt" regime the authors argue better fits recent experience. In that regime, large-scale central bank asset purchases give government bonds temporary price support at a net loss to taxpayers.

Wednesday, September 18, 2024

AI Summary. A European Union competitiveness report attributes the EU's labour productivity growth gap with the US largely to weaker activity in information and communications technology and large-scale digital services; excluding main ICT sectors, EU productivity was broadly at par with the US from 2000-2019. It estimates Europe's investment share must rise about 5 percentage points of GDP.

Mario Draghi and Staff European Commission
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An EC study of European competitiveness finds that EU gross value-added per hour worked increased by 0.7%/year from 2000-19, vs. 1.2%/year in the US. “Europe is lagging in the breakthrough digital technologies that will drive growth in the future.”

Does weaker technology sector activity explain Europe's productivity growth gap?

Core argument: Excluding the main ICT sectors — computer and electronics manufacturing and information and communication activities — EU productivity was broadly at par with the US over 2000–2019.

The EU’s aggregate gap in labour productivity growth compared with the US reflects differences in industry composition, sectoral innovation, and technology diffusion. The EU economy has traditionally been strong in all mid-technology sectors that are not at the centre of radical technological advances, but [has seen] less activity in sectors in which much of the productivity growth has originated in recent years, notably the ICT sector and the exploitation of large-scale digital services. Excluding the main ICT sectors (the manufacturing of computers and electronics and information and communication activities) from the analysis, EU productivity has been broadly at par with the US in the period 2000-2019. To digitalise and decarbonise the economy and increase our defence capacity, the investment share in Europe will have to rise by around 5 percentage points of GDP to levels last seen in the 1960s and 70s. This is unprecedented: for comparison, the additional investments provided by the Marshall Plan between 1948-51 amounted to around 1-2% of GDP annually.

Takeaways by Macro Roundup® AI

  1. Excluding the main ICT sectors — computer and electronics manufacturing and information and communication activities — EU productivity was broadly at par with the US over 2000–2019.
  2. The EU's aggregate labour productivity growth gap versus the US reflects differences in industry composition, sectoral innovation, and technology diffusion, with the EU strong in mid-technology sectors that are not at the centre of radical technological advances.
  3. Digitalising and decarbonising the EU economy and increasing defence capacity will require Europe's investment share to rise by around 5 percentage points of GDP, to levels last seen in the 1960s and 70s, against the Marshall Plan's 1–2% of GDP annually in 1948–51.

Related Articles:

  • Draghi is Trying To Save Europe From Itself — Real disposable income per head has grown almost twice as much in the US as in the European Union since 2000, with the EU trailing the US and China in the digital revolution and only four of the world's top 50 tech companies European. If average productivity growth since 2015 persists, EU output would merely stay constant until 2050.
  • Europeans ‘Less Hard-Working’ Than Americans, Says Norway Oil Fund Boss — Norway's sovereign wealth fund argues that American companies are outpacing European rivals on innovation and technology because the US more readily accepts failure and risk and because Americans work harder and are more ambitious. US shares now make up almost half of the fund's equity holdings, up from 32% a decade earlier, while UK holdings fell from 15% to 6%.
  • Can Europe’s Economy Ever Hope To Rival the US Again? — Europe's largest publicly traded companies invested $400bn less than US counterparts in one recent year, and venture capital investment in US companies was almost 3x that in Europe. Research and development spending by the seven largest US technology companies exceeded $200bn, about half of Europe's total public and private R&D spending.

AI Summary. Interest rates are expected to remain relatively high even through an easing cycle: futures pricing implying short-term rates near 4.5% and later 3% would still leave rates roughly double the 1.8% average of the past decade. The authors expect inflation to take longer to reach the 2% target, steepening the yield curve.

Torsten Sløk Apollo
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Torsten Sløk notes that Fed Funds futures expect “rates will reach 3% by the end of next year, nearly double the average 1.8% rate over the past decade.” Sløk expects that long rates are going to decline less than short rates.

Will interest rates stay high even through an easing cycle?

Core argument: If futures market pricing of at least four Fed rate cuts in 2024 proves correct, short-term rates would end 2024 near 4.5%, the highest for overnight rates since 2007, excluding the Fed's current hiking cycle.

Even if the Fed embarks on an easing cycle, we believe that interest rates will remain relatively higher for longer. If we assume the interest rate futures market is correct in pricing in at least four rate cuts in 2024—which we believe is overblown—short-term interest rates would by the end of 2024 be around 4.5%, a level that would still be the highest for overnight rates since 2007 (excluding the Fed’s current hiking cycle). Furthermore, if we take in the expectations for additional ~five rate cuts in 2025, rates will reach 3% by the end of next year, which is nearly double the average 1.8% rate over the past decade. Our expectation remains that it will take longer for inflation to come down to the central bank’s 2% target range, and as a result the curve will continue to steepen, meaning long rates are going to decline less than short rates.

Takeaways by Macro Roundup® AI

  1. If futures market pricing of at least four Fed rate cuts in 2024 proves correct, short-term rates would end 2024 near 4.5%, the highest for overnight rates since 2007, excluding the Fed's current hiking cycle.
  2. Market expectations for roughly five additional cuts in 2025 would bring rates to 3% by the end of that year, nearly double the 1.8% average of the past decade.
  3. Inflation is expected to take longer to fall to the Fed's 2% target, with the yield curve continuing to steepen as long rates decline less than short rates.

Related Articles:

  • Markets Think Inflation Will Be Too High For The Next 20 Years — Inflation expectations derived from the gap between regular Treasury yields and inflation-indexed Treasury yields show expected annual inflation over the next 10 and 20 years running considerably above expected inflation for the decade beginning 20 years out. Before the pandemic-era inflation surge, actual inflation and expected future inflation tracked each other closely.
  • Larry Summers and Bob Rubin Join Our CIOs to Discuss the Surprising Economic Cycle — Adopting the Simpson-Bowles fiscal consolidation when interest rates were at zero would have risked excessive disinflation, since long rates had no room to fall to provide an offsetting expansionary impulse. After the large run-up in debt and rise in real interest rates, the developing fiscal situation risks inflationary pressure, Treasury market disruption, or crowding out of private investment.
  • Weaker Demand for Treasuries — Recent 10-year and 30-year US Treasury auctions each cleared three basis points above the yields trading minutes beforehand, signaling demand significantly weaker than the market expected. Larger and more frequent such gaps since the Federal Reserve began raising interest rates make auction metrics an early indicator of weakening Treasury demand.

AI Summary. Students for Fair Admissions, which won the Supreme Court case barring race-based admissions preferences, is threatening investigations and lawsuits against Princeton, Yale, and Duke over declines in Asian American enrollment that it says defied expectations. Asian American enrollment fell to 29% from 35% at Duke and to 24% from 30% at Yale.

Anemona Hartocollis New York Times
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Students for Fair Admissions argues that a drop in Asian enrollment of 6pp y/y at Yale and Duke and 2.2pp at Princeton suggests renewed discrimination in admissions against Asian applicants. Admissions data are not available.

Students for Fair Admissions argues that a drop in Asian enrollment of 6pp y/y at Yale and Duke and 2.2pp at Princeton...

Are elite universities complying with the ban on race-based admissions?

Core argument: Asian American enrollment fell to 29% from 35% at Duke, to 24% from 30% at Yale, and to 23.8% from 26% at Princeton, declines that Students for Fair Admissions said defied expectations.

The group that successfully sued Harvard to end affirmative action in university admissions last year is now threatening to investigate whether schools are complying with the new rules and to file lawsuits if it believes that they are not. The Supreme Court ruled that giving preferences to students based on race violated the equal protection clause of the 14th Amendment and civil rights law. The group, Students for Fair Admissions, has focused on three universities — Princeton, Yale, and Duke — where there were notable declines in Asian American enrollment this year compared with the last year, which the group said defied expectations. Asian American enrollment dropped to 29% from 35% at Duke; to 24% from 30% at Yale; and to 23.8% from 26% at Princeton. At the same time, Black enrollment rose to 13% from 12% at Duke; stayed at 14% at Yale; and dropped to 8.9% from 9% at Princeton.

Takeaways by Macro Roundup® AI

  1. Asian American enrollment fell to 29% from 35% at Duke, to 24% from 30% at Yale, and to 23.8% from 26% at Princeton, declines that Students for Fair Admissions said defied expectations.
  2. Students for Fair Admissions, which won its Supreme Court case against Harvard, is threatening to investigate whether universities are complying with the ruling and to file lawsuits if it concludes they are not.
  3. Black enrollment rose to 13% from 12% at Duke, held at 14% at Yale, and slipped to 8.9% from 9% at Princeton.

Related Articles:

  • At M.I.T., Black and Latino Enrollment Drops Sharply After Affirmative Action Ban — Massachusetts Institute of Technology's first undergraduate class admitted after the U.S. Supreme Court banned affirmative action saw Black enrollment fall to 5% from 15% and Hispanic and Latino enrollment fall to 11% from 16%. Asian American students rose to 47% from 40%, while white students were 37% compared with 38%.
  • Americans and Affirmative Action: How the Public Sees the Consideration of Race in College Admissions, Hiring — Survey research finds more Americans disapprove than approve of colleges considering race and ethnicity in admissions: half of U.S. adults said they disapprove of selective colleges weighing race and ethnicity to increase diversity, a third approved, and 16% were unsure. In another survey, 82% said colleges should not consider race or ethnicity, versus 17% who said they should.
  • US PISA Results By Subpopulation — On the international PISA student assessments, American Asian and White students ranked at the top, American Hispanic students outscored Hispanic students elsewhere, and American Black students performed well. In reading, American Asian students placed first and American White students third.

AI Summary. China produces about 1bn tonnes of steel a year, as much as the rest of the world combined, and its exports reached 90m tonnes in 2023, up 35% from the prior year. With Chinese mills selling abroad cheaply, foreign steelmakers' profits have fallen and some are seeking anti-dumping duties.

Economist Staff The Economist
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China’s steel exports surged by 35% in 2023 vs. 2022, increasing by more than total US or Japanese production. In August, barely 1% of the 250 steel mills in China that reported their finances to the government turned a profit.

How are surging Chinese steel exports affecting foreign steelmakers?

Core argument: China's steel exports reached 90m tonnes in 2023, up 35% year on year, exceeding the annual output of either America or Japan, though that is a fraction of China's roughly 1bn tonnes of yearly production, which matches the rest of the world combined.

Each year China makes as much steel as the rest of the world combined. The vast scale of its output—around 1bn tonnes a year—is obscured by the fact that most of it stays in the country. Lately, however, China’s exports of the metal have surged, reaching 90m tonnes in 2023, up by 35% on the previous year. That may be a fraction of China’s total production, but it is more than what America or Japan make in a year. With China’s economy struggling, its steelmakers are selling abroad at bargain prices, to the distress of foreign competitors and politicians alike. In August barely 1% of the 250 steel mills in China that report their finances to the government turned a profit, according to Isha Chaudhary of Wood Mackenzie. The domestic price for hot-rolled coil steel, a benchmark product, has fallen by 16% over the past year. Last month Nippon Steel, Japan’s biggest steelmaker, called on its government to impose anti-dumping duties on Chinese imports. In the quarter to June, its net profit shrank by 11% year on year. ArcelorMittal, Europe’s steelmaking champion, has been hit even harder: its net profit for the same period was down by 73%.

Takeaways by Macro Roundup® AI

  1. China's steel exports reached 90m tonnes in 2023, up 35% year on year, exceeding the annual output of either America or Japan, though that is a fraction of China's roughly 1bn tonnes of yearly production, which matches the rest of the world combined.
  2. Barely 1% of the 250 Chinese steel mills reporting finances to the government turned a profit in August, according to Isha Chaudhary of Wood Mackenzie, while China's domestic price for hot-rolled coil steel fell 16% over the past year.
  3. Nippon Steel's net profit fell 11% year on year in the quarter to June and ArcelorMittal's fell 73%, with Nippon Steel calling on Japan's government to impose anti-dumping duties on Chinese imports.

Related Articles:

  • Mexico Targets Chinese Steel Imports With Increased Tariff Of Nearly 80% — Mexico imposed a tariff of nearly 80% on some steel imports, including certain Vietnamese exports of cold-rolled steel sheets, after local producers said Chinese steelmakers had strangled their production. Exporters that prove the steel originates outside China are exempt.
  • Why China Is Starting a New Trade War — Chinese policy advisers say China's leadership is guided by building a self-sufficient industrial supply chain that could withstand severe Western sanctions and by a philosophical objection to U.S.-style consumption as wasteful. That leaves exports as the main route to stabilizing a weakened economy and replacing jobs lost in domestic construction, shifting job losses to workers abroad.
  • Pettis On China’s Export Strategy — China is shifting investment from its weakened property sector toward manufacturing, which already accounts for 27% of Chinese GDP versus 14% elsewhere and is constrained by weak demand rather than scarce capital. Since China holds about 18% of global GDP but 30% of global manufacturing, added output must be absorbed abroad absent higher consumption.