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
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “Unintended Consequences 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
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…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
  • “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
  • “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
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…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


Friday, October 4, 2024

AI Summary. US companies need about 7% earnings-per-share growth to deliver a normal 4% equity risk premium above the risk-free rate, versus about 3% for other developed markets, with the highest expectations embedded in technology and the largest US tech firms. Chinese companies could generate a 4% risk premium over Chinese bonds with no earnings growth.

Atul Narayan and Alex Greene Bridgewater Associates
Date Posted:
Is Database:
Database

Over the last decade, US equities have delivered a 529% total compounded return in dollar terms, vs. 125% for the rest of the developed world. Given current elevated P/E ratios, US companies need about 7% EPS growth to earn a 4% risk premium over bonds.

How much earnings growth must US stocks deliver to justify prices?

Core argument: US companies need about 7% EPS growth to deliver a normal 4% risk premium over the risk-free rate, versus 3% for other developed equity markets.

While the US continues to have significantly better companies, that’s also a lot more priced-in today versus a decade ago. We show the EPS hurdle rate by sector needed to generate a normal level of risk premium for equity investors above the risk-free rate [estimated at 4%.] You can see that US companies need about a 7% EPS growth to clear this hurdle, while other developed equity markets need less than half as much (3%) to achieve the same risk premium. This priced-in hurdle is broad-based across sectors, and with both a higher weight and more aggressive expectations, the burden for outperformance in tech and the Mag 7 specifically is higher than ever. In contrast, even with no earnings growth, Chinese companies should be able to generate a 4% risk premium over Chinese bonds—in other words, a very high-risk premium is priced into Chinese stocks today.

Takeaways by Macro Roundup® AI

  1. US companies need about 7% EPS growth to deliver a normal 4% risk premium over the risk-free rate, versus 3% for other developed equity markets.
  2. Chinese companies could generate a 4% risk premium over Chinese bonds with no earnings growth, indicating a very high risk premium is priced into Chinese stocks.
  3. The priced-in EPS hurdle is broad-based across sectors, and with both a higher weight and more aggressive expectations, the burden for outperformance in tech and the Magnificent 7 is higher than ever.

Related Articles:

  • 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.
  • End of an Era: The Coming Long-Run Slowdown in Corporate Profit Growth and Stock Returns — The authors estimate that declining interest and corporate tax rates accounted for over 40% of real corporate profit growth from 1989 to 2019, while falling risk-free rates explain the entire expansion in price-to-earnings multiples. Real earnings before interest and taxes grew slightly more slowly than in 1962–1989, at 2.2% versus 2.4% per year.

AI Summary. Newly released data show the US adult obesity rate fell by about two percentage points between 2020 and 2023, with the steepest decline among college graduates. The author argues the new generation of diabetes and weight-loss drugs is highly likely behind the reversal, as one in eight US adults have used them.

John Burn-Murdoch Financial Times
Date Posted:

The US obesity rates declined 2pp between 2020 and 2023. @jburnmurdoch argues the decline is likely a function of GLP-1 drugs like Ozempic and Wegovy; 6% of Americans are current users and 1 in 8 have used such drugs.

Are new weight-loss drugs driving the first drop in obesity?

Core argument: Newly released data finds the US adult obesity rate fell by around two percentage points between 2020 and 2023, following decades of rising obesity rates worldwide.

Around the world, obesity rates have been stubbornly climbing for decades, if anything accelerating in recent years. But now newly released data finds that the US adult obesity rate fell by around two percentage points between 2020 and 2023. We have known for several years from clinical trials that Ozempic, Wegovy, and the new generation of diabetes and weight loss drugs produce large and sustained reductions in body weight. Now with mass public usage taking off — one in eight US adults have used the drugs, with 6% current users — the results may be showing up at the population level. While we can’t be certain that the new generation of drugs is behind this reversal, it is highly likely. For one, the decline is steepest among college graduates, the group most likely to be using them.

Takeaways by Macro Roundup® AI

  1. Newly released data finds the US adult obesity rate fell by around two percentage points between 2020 and 2023, following decades of rising obesity rates worldwide.
  2. One in eight US adults have used drugs such as Ozempic and Wegovy, with 6% current users, after clinical trials showed large and sustained reductions in body weight.
  3. The obesity decline is steepest among US college graduates, the group most likely to be using the new drugs, though the drugs' role in the reversal cannot be confirmed.

Related Articles:

  • Today’s Most Important Technology — The share of patients taking semaglutide for weight control rather than type 2 diabetes rose from under 10% in 2019 to 41.7%. Obesity and overweight, affecting 1 in 8 people worldwide, cost the global economy $2tn — nearly 70 cents on the dollar from premature mortality and lost productivity — an impact projected to double by 2035 absent intervention.
  • The Year of Ozempic — GLP-1 medications act on receptors in the gut, liver, muscles, and brain, and studies report they reduce heart attacks and strokes, slow kidney disease progression, and shrink liver fat deposits. Users have also reported diminished cravings for alcohol, tobacco, gambling, and other compulsive behaviors, though anecdotal reports outpace clinical studies.
  • How Weight Loss Drugs Stopped a Danish Recession — Strong demand for the weight-loss and diabetes drugs Ozempic and Wegovy has kept Denmark out of recession: GDP is up about 1.1% over the past year but down 0.9% excluding pharmaceuticals, meaning drugmakers added roughly 2% to growth. Booming exports let Denmark's central bank hold rates lower while maintaining its euro peg.

AI Summary. The European Union voted to impose tariffs of up to 45% on electric vehicles made in China, lasting five years, with China vowing to protect its companies. Chinese-made electric cars rose from around 3% to more than 20% of EU electric vehicle sales over three years, with Chinese brands accounting for about 8%.

Alberto Nardelli, Jorge Valero, and Craig Trudell Bloomberg
Date Posted:

The EU voted to impose tariffs as high as 45% on Chinese-built EVs; over the past three years, the Chinese-built EV share of European sales rose from 3 to 20%. Germany voted against the move.

Is Europe imposing steep tariffs on Chinese-made electric vehicles?

Core argument: The European Union voted to impose tariffs as high as 45% on electric vehicles made in China for five years, with Beijing having vowed to protect its companies and a broader trade conflict threatened.

The European Union voted on Friday to impose tariffs as high as 45% on electric vehicles from China, threatening a broader trade conflict with Beijing which has already vowed to protect its companies. The European Commission, the bloc’s executive arm, can now proceed with implementing the duties, which would last for five years. Ten member states voted in favor of the measure, while Germany and four others voted against and 12 abstained, according to people familiar with the results. The share of electric cars sold in the EU that were made in China climbed from around 3% to more than 20% in the past three years. Chinese brands accounted for around 8% of that market share, as international companies that export from China including Tesla Inc. taking up the rest.

Takeaways by Macro Roundup® AI

  1. The European Union voted to impose tariffs as high as 45% on electric vehicles made in China for five years, with Beijing having vowed to protect its companies and a broader trade conflict threatened.
  2. Ten EU member states voted in favor of the duties, while Germany and four others voted against and 12 abstained, according to people familiar with the results.
  3. Electric cars made in China rose from around 3% to more than 20% of EV sales in the EU over three years, with Chinese brands accounting for roughly 8% and exporters from China including Tesla the rest.

Related Articles:

  • 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 Auto Export Wave Echoes Japan’s in the ’70s — The shift from petroleum-fueled internal combustion vehicles to electric vehicles moves resource leverage from Persian Gulf oil producers to critical minerals, with China holding more than half of global processing capacity for lithium, cobalt, and graphite and about a third for nickel. Chinese companies have spent $4.5bn acquiring stakes in nearly 20 lithium mines, mostly in Latin America and Africa.
  • Trade Intervention for Freer Trade — The authors argue the United States should counter surplus countries' trade policies either by restricting their goods exports through tariffs or by restricting their capital inflows through taxes, volume limits, reserve requirements, transaction approvals, or investor eligibility rules. They contend capital controls are a more targeted alternative to uniform tariffs, which impose equal costs on more and less mercantilist countries.

AI Summary. An analysis of federal survey data estimates that about 18m US adults — nearly a third of adult cannabis users — report symptoms of cannabis use disorder, with roughly 3m considered addicted. Among those aged 18 to 25, the cannabis use disorder rate of 16.6% matches the alcohol use disorder rate of 15.1%.

Megan Twohey, Danielle Ivory, and Carson Kessler New York Times
Date Posted:
Is Database:
Database

More than 4.5mm Americans aged 18-25 use marijuana daily or nearly daily. A @nytimes analysis finds 1/3 of American marijuana users have reported symptoms of cannabis use disorder, including 16.6% of users 18-25.

How widespread are cannabis use disorder symptoms among American adults?

Core argument: Columbia University epidemiologist Deborah Hasin estimates, in an analysis conducted for The New York Times, that about 18 million Americans — nearly a third of users ages 18 and up — report symptoms of cannabis use disorder, with about three million considered addicted.

About 18 million people — nearly a third of all users ages 18 and up — have reported symptoms of cannabis use disorder, according to estimates from a unique data analysis conducted for The Times by a Columbia University epidemiologist. That would mean they continue to use the drug despite significant negative effects on their lives. Of those, about three million people are considered addicted. Last year, the federal government’s National Survey on Drug Use and Health found that the rate of cannabis use disorder among people ages 18 to 25 was 16.6%. It has caught up to the rate of alcohol use disorder, 15.1%. “It’s a really significant turning point,” said Deborah Hasin, a professor of epidemiology at Columbia University who performed the unique analysis of other data from the survey for The Times. Those ages 12 to 17 have not shown notable increases in cannabis use in the survey, but their rate of cannabis use disorder is ticking up, and it’s higher than their rate of alcohol use disorder (5% compared with 3%).

Takeaways by Macro Roundup® AI

  1. Columbia University epidemiologist Deborah Hasin estimates, in an analysis conducted for The New York Times, that about 18 million Americans — nearly a third of users ages 18 and up — report symptoms of cannabis use disorder, with about three million considered addicted.
  2. The federal National Survey on Drug Use and Health put cannabis use disorder among people ages 18 to 25 at 16.6%, catching up to the 15.1% rate of alcohol use disorder, which Hasin called "a really significant turning point.".
  3. Among those ages 12 to 17, the survey shows no notable increase in cannabis use, but their cannabis use disorder rate is ticking up and exceeds their alcohol use disorder rate, 5% versus 3%.

Related Articles:

  • Changes in Self-Reported Cannabis Use in the United States From 1979 to 2022 — US survey data show per capita reports of past-year cannabis use rose 120% and reported days of use rose 218% over a recent 14-year span, with a 15-fold increase in daily or near-daily use reported over three decades. Daily or near-daily cannabis users now outnumber comparable alcohol users (17.7m vs 14.7m), though far more people drink.
  • American Workers Testing Positive for Marijuana Reaches 25-Year Record — Marijuana positivity in U.S. workplace drug tests rose to 4.3% of more than 6m general workforce tests, up from 3.9%, the highest rate since 1997, while positivity for some opioids and barbiturates declined. Positive tests following on-the-job accidents reached 7.3%, tripling over a decade as more than two-thirds of U.S. states legalized recreational or medicinal use.
  • It’s Time to Talk About America’s Disorder Problem — A meta-analysis of 56 studies found that disorder policing consistently reduces crime, but that indiscriminate "aggressive order maintenance" arrests did not significantly reduce crime while problem-oriented strategies targeting specific sources of disorder often had sizable effects without spillovers. The authors note that a large share of disorder comes from a small number of people and places.

AI Summary. US dockworkers ended a three-day strike that halted trade at East and Gulf coast ports, extending their contract and reopening ports while negotiations resume on a long-term deal including a pay increase of about 62%. A supply-chain data company estimates the resulting cargo backlog will take over a month to clear.

Laura Curtis and Josh Wingrove Bloomberg
Date Posted:

The dockworker’s three-day strike ended with a pay increase of about 62% with the longshoremen agreeing to extend their contract through January 15. The cargo backlog from the strike will likely take over a month to clear.

How long will a brief port strike's cargo backlog take to clear?

Core argument: US dockworkers ended a three-day strike that had paralyzed trade on the East and Gulf coasts, with the International Longshoremen's Association and the US Maritime Association extending their prior contract through Jan. 15.

US dockworkers agreed to end a three-day strike that had paralyzed trade on the US East and Gulf coasts and threatened to become a factor in the presidential election. The International Longshoremen’s Association and the US Maritime Association extended their previous contract through Jan. 15, the two groups said in a joint statement Thursday. Ports are opening Friday and the two sides will restart negotiations on a long-term agreement, which will include a pay increase of about 62%. Even though the strike lasted just three days, the cargo backlog is likely to take over a month to clear, according to project44, a supply chain data company in Chicago.

Takeaways by Macro Roundup® AI

  1. US dockworkers ended a three-day strike that had paralyzed trade on the East and Gulf coasts, with the International Longshoremen's Association and the US Maritime Association extending their prior contract through Jan. 15.
  2. Ports reopen Friday as the International Longshoremen's Association and the US Maritime Association restart negotiations on a long-term agreement that will include a pay increase of about 62%.
  3. The cargo backlog from the three-day strike is likely to take over a month to clear, according to project44, a Chicago-based supply chain data company.

Related Articles:

  • Dockworkers Launch Strike at Ports From Maine to Texas — Dockworkers at dozens of East Coast and Gulf Coast ports, represented by the International Longshoremen's Association's 45,000 members, launched a strike at cargo terminals handling more than half of US import and export volumes. Port employers raised their wage offer to a 50% increase over six years, up from 40%.
  • Americas Transportation: Eye on Freight: Potential Ramifications Should Labor Disruption Arise at East/Gulf Coast Ports — The authors estimate that a labor disruption at U.S. East and Gulf Coast ports would halt roughly $4.9bn of containerized goods per day — about $25bn after one work week — equal to roughly 61% of total U.S. ocean trade and 25% of total daily U.S. trade. Pulled-forward demand and re-routing to the West Coast could mitigate the impact.
  • 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.

AI Summary. The Silver Bulletin election model gives Harris a 56% chance of winning the presidency to Trump's 44%, close to a tossup. Harris leads the national polling average by 3.1 points but Pennsylvania by only 1.3, and the model puts a 21% chance she wins the popular vote while losing the Electoral College.

Nate Silver and Eli McKown-Dawson Silver Bulletin
Date Posted:

The latest @NateSilver538 update shows Harris leading in the national popular vote by 3.1pp. His model shows a 56% probability of Harris winning the electoral college, “about as close to a pure tossup as you can get.”

Is the presidential race close to a tossup with Electoral College bias?

Core argument: The Silver Bulletin forecast gives Harris a 56% chance of winning the presidency to Trump's 44%, about as close to a pure tossup as possible.

Another day, another few polls added to the model, and still very little change to the overall forecast. At the moment Harris has an ever-so-slight edge — she has a 56% chance of winning the election to Trump’s 44% chance — but we’re about as close to a pure tossup as you can get. Harris is still hurt by Electoral College bias though. She leads by 3.1 points in our national polling average but only 1.3 points in the Pennsylvania average. And the model thinks there’s a 21% chance Harris wins the popular vote but loses the Electoral College.

Takeaways by Macro Roundup® AI

  1. The Silver Bulletin forecast gives Harris a 56% chance of winning the presidency to Trump's 44%, about as close to a pure tossup as possible.
  2. Harris leads by 3.1 points in the Silver Bulletin national polling average but only 1.3 points in Pennsylvania, leaving her hurt by Electoral College bias.
  3. The Silver Bulletin model puts a 21% chance on Harris winning the popular vote while losing the Electoral College.

Related Articles:

AI Summary. Researchers built a complete map of the fruit fly brain from electron microscopy images stitched together with AI tools, identifying 8,453 neuron types, of which 4,581 were newly discovered. A computer simulation built from the map was more than 90% accurate at predicting which neurons would respond and how the fly would behave.

Sara Reardon Nature
Date Posted:

Mala Murthy and @SebastianSeung announced a complete fruit fly brain wiring diagram, or ‘connectome’, of nearly 140,000 neurons and more than 54.5 million synapses. A computer model based on the data predicted fruit fly behavior with 90% accuracy.

Can a complete brain map accurately predict neural responses and behavior?

Core argument: The FlyWire fruit-fly brain map identified 8,453 neuron types, more than anyone had expected, of which 4,581 were newly discovered, opening new research directions, according to Seung and Murthy.

Seung and Murthy say that they’ve been developing the FlyWire map for more than four years, using electron microscopy images of slices of the fly’s brain. The researchers and their colleagues stitched the data together to form a full map of the brain with the help of AI tools. The researchers identified 8,453 types of neuron — much more than anyone had expected. Of these, 4,581 were newly discovered, which will create new research directions. The team was surprised by some of the ways in which the various cells connect to one another, too. Neurons that were thought to be involved in just one sensory wiring circuit, such as a visual pathway, tended to receive cues from multiple senses, including hearing and touch. Researchers used the connectome to create a computer model of the entire fruit-fly brain, including all the connections between neurons. The researchers learned that the simulation was more than 90% accurate at predicting which neurons would respond and therefore how the fly would behave.

Takeaways by Macro Roundup® AI

  1. The FlyWire fruit-fly brain map identified 8,453 neuron types, more than anyone had expected, of which 4,581 were newly discovered, opening new research directions, according to Seung and Murthy.
  2. Seung, Murthy, and colleagues built the FlyWire map over more than four years from electron microscopy images of slices of the fly's brain, stitching the data together with the help of AI tools.
  3. A computer model of the entire fruit-fly brain built from the connectome was more than 90% accurate at predicting which neurons would respond and how the fly would behave.

Monday, October 7, 2024

AI Summary. Across the 1978 to 1992 birth cohorts, adult household incomes fell for white children raised in low-income families and rose for those raised in high-income families, increasing the intergenerational persistence of income ranks among white children by 28%. Over the same cohorts, adult incomes rose for Black children at all parental income levels.

Raj Chetty, Will Dobbie, Benjamin Goldman, Sonya Porter and Crystal Yang National Bureau of Economic Research
Date Posted:
Is Database:
Database
Is Important:
Important

Raj Chetty @OppInsights finds that a white child born into the bottom household income quintile in 1992 had a 29.7% chance of remaining there, up from 24.9% in 1978, and an 11.9% chance of rising to the top quintile, down from 13.7% in 1978.

Are class gaps in economic mobility widening while race gaps narrow?

Core argument: Between the 1978 and 1992 birth cohorts, the intergenerational persistence of household income ranks for white children rose 28%, as adult incomes fell sharply for white children from low-income families and rose for those from high-income families.

Between the 1978 and 1992 birth cohorts, household incomes in adulthood fell sharply for white children growing up in low-income families. At the same time, incomes increased for white children growing up in high-income families. These divergent trends resulted in growing white class gaps, with the intergenerational persistence of household income ranks for white children increasing by 28%. The gap in average household incomes for white children raised in low-income (25th percentile) versus high-income (75th percentile) families grew from $17,720 in the 1978 birth cohort to $20,950 in the 1992 birth cohort. In contrast, incomes in adulthood increased across all parental income levels for Black children.

Takeaways by Macro Roundup® AI

  1. Between the 1978 and 1992 birth cohorts, the intergenerational persistence of household income ranks for white children rose 28%, as adult incomes fell sharply for white children from low-income families and rose for those from high-income families.
  2. The adult household income gap between white children raised at the 25th versus 75th parental income percentile widened from $17,720 in the 1978 birth cohort to $20,950 in the 1992 cohort.
  3. For Black children, adult incomes increased across all parental income levels between the 1978 and 1992 birth cohorts, in contrast to the divergence among white children.

Related Articles:

  • Changing Opportunity: Sociological Mechanisms Underlying Growing Class Gaps and Shrinking Race Gaps in Economic Mobility* — The authors find that children's economic mobility improves across birth cohorts in communities where parental employment rates increase, with larger effects for children who move to such communities at younger ages. The relationship is strongest for the parental employment rates of peers in a child's own birth cohort, suggesting it is mediated by social interaction.
  • Intergenerational Mobility in American History: Accounting for Race and Measurement Error — Accounting for Black families, who historical studies routinely drop, and for measurement error in fathers' economic status can double estimates of intergenerational persistence in linked United States census data from 1850 to 1940. The author argues historical mobility was lower than previously estimated, implying greater equality of opportunity today than in the past.
  • The Economics of Inequality in High-Wage Economies — Information technology created investment opportunities exceeding the supply of properly trained talent, while trade with low-wage economies, low-skilled immigration, trade deficits, and aging demographics eased constraints on low-skilled labor and risk-averse savings. The author argues this framework, rather than rising cronyism, explains high returns to success, slowing productivity growth, and low interest rates.

AI Summary. The authors present four signs that US labor market change has accelerated, possibly from technology: polarization has ended as low- and middle-paid employment declined while highly paid work grew, low-paid service job growth stalled, the STEM employment share rose over 50%, and retail sales employment fell 25%. They argue artificial intelligence's effects will unfold over decades.

David Deming, Christopher Ong, and Lawrence Summers Aspen Strategy Group
Date Posted:
Is Database:
Database
Is Important:
Important

.@ProfDavidDeming and @LHSummers find higher “churn” in the labor market over 2010-2024 relative to 1990-2019. Growth in low-paid service jobs has “stalled.” Employment in STEM has risen by more than 50%, and retail sales jobs have declined by 25%.

Has the pace of US labor market change accelerated?

Core argument: The STEM share of US employment has risen by more than 50% since 2010, driven by growth in software and computer-related occupations.

We present four indications that the pace of labor market change has accelerated recently, possibly due to technological change. First, the labor market is no longer polarizing— employment in low- and middle-paid occupations has declined, while highly-paid employment has grown. Second, employment growth has stalled in low-paid service jobs. Third, the share of employment in STEM jobs has increased by more than 50% since 2010, fueled by growth in software and computer-related occupations. Fourth, retail sales employment has declined by 25% in the last decade, likely because of technological improvements in online retail. In the past, labor market disruption was fueled by breakthrough general-purpose technologies (GPTs) like steam power and electricity, which enabled the mechanization of agriculture. The impact of AI is likely to be widespread and long-lasting, fitting the mold of past GPTs. However, history teaches us that even if AI disrupts the labor market, its impact will unfold over many decades. [Thus] it is still too early to forecast the impact of AI on the labor market.

Takeaways by Macro Roundup® AI

  1. The STEM share of US employment has risen by more than 50% since 2010, driven by growth in software and computer-related occupations.
  2. The US labor market is no longer polarizing: employment in low- and middle-paid occupations has declined while highly-paid employment has grown, and employment growth has stalled in low-paid service jobs.
  3. Retail sales employment has fallen 25% over the last decade, likely because of technological improvements in online retail.

Related Articles:

  • 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.
  • The Rapid Adoption of Generative AI — A nationally representative U.S. survey found 39% of people aged 18-64 used generative AI, with more than 24% of workers using it in the prior week and nearly one in nine using it every workday. The authors estimate 0.5-3.5% of U.S. work hours are currently assisted by generative AI.
  • Assessing the Implications of a Productivity Miracle — If artificial intelligence can perform economically valuable cognitive tasks at very low marginal cost, consumers would buy far more of the cheapened goods and spend the savings in other categories, expanding activity and employment in sectors facing new demand. Where supply is inherently limited, such as real estate, those savings could bid up prices and produce inflation.

AI Summary. Retail employment began declining in the early 2010s after holding steady for more than two decades, coinciding with heavy big tech investment in deep learning and the commercial adoption of AI-directed warehouse robots and predictive pricing and inventory tools. The author argues this circumstantial evidence suggests AI has already affected the US labor market, but does not constitute proof.

David Deming Forked Lightning
Date Posted:

.@ProfDavidDeming notes an 850,000 decline in retail sales jobs between 2013-23, and speculates Amazon’s use of predictive analytics for product recommendations, inventory management, and warehouse operations are examples of AI-driven productivity gains.

Has AI already reshaped retail employment in the US?

Core argument: Employment in "stockers and order fillers" has grown 60% and in "light delivery service truck drivers" 29% since 2023, compared with 14% overall U.S. job growth.

Companies like Amazon have been using predictive AI tools like machine learning since the mid 2010s to produce personalized prices and product recommendations, optimize inventory management, and other innovations. Why did retail jobs start to decline in the early 2010s specifically, after holding steady for more than two decades after the dot com boom? There were many important AI developments in the early 2010s. Big tech companies started investing heavily in AI in response to the rapid performance improvements realized by deep learning models (like AlexNet) that were trained on Nvidia-produced GPU chips. On the commercial side, Amazon bought Kiva Systems in 2012 (now called Amazon Robotics), a company that uses AI-directed mobile robots to stock and manage inventory. Interestingly, “stockers and order fillers” and “light delivery service truck drivers” have grown by 60% and 29% respectively since 2023, compared to 14% overall job growth. None of this constitutes proof, but it is a decent circumstantial case that AI has already made its presence felt in the US labor market.

Takeaways by Macro Roundup® AI

  1. Employment in "stockers and order fillers" has grown 60% and in "light delivery service truck drivers" 29% since 2023, compared with 14% overall U.S. job growth.
  2. Retail jobs began declining in the early 2010s after holding steady for more than two decades, a period when big tech firms invested heavily in AI following performance gains from deep learning models like AlexNet trained on Nvidia GPUs.
  3. Amazon bought Kiva Systems, now Amazon Robotics, in 2012, a company whose AI-directed mobile robots stock and manage inventory; such evidence amounts to a circumstantial rather than conclusive case that AI has already affected the U.S. labor market.

Related Articles:

  • Technological Disruption in the US Labor Market — The authors present four signs that US labor market change has accelerated, possibly from technology: polarization has ended as low- and middle-paid employment declined while highly paid work grew, low-paid service job growth stalled, the STEM employment share rose over 50%, and retail sales employment fell 25%. They argue artificial intelligence's effects will unfold over decades.
  • Does Worker Scarcity Spur Investment, Automation and Productivity? Evidence from Earnings Calls — The authors estimate that a one-unit increase in a firm's labor issues, as measured by earnings calls, raises its investment by 28 basis points, implying roughly $55bn in additional US investment attributable to tighter labor markets. The effect is concentrated in industries relying heavily on routine manual tasks, such as manufacturing assembly and warehouse packaging.
  • 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.

AI Summary. Florida's housing market is cooling amid excess inventory and weaker buyer demand, with analysts warning some cities could see a price correction. Home insurance premiums in parts of the state are up as much as 400% over five years, pricing out some homeowners and prompting institutional investors to sell properties.

Deborah Acosta Wall Street Journal
Date Posted:

The pandemic-era Florida boom, which saw home prices double since 2017, is cooling off because of surplus inventory and dwindling buyer interest, coupled with a 400% rise in homeowners insurance premiums in parts of the state since 2019.

Are rising insurance costs and excess inventory cooling Florida's housing market?

Core argument: Florida home insurance premiums have risen as much as 400% over the past five years in certain areas, pricing many homeowners out of the market, and are likely to climb further after the hurricane season.

Much of Florida's housing market is cooling off because of a surplus of inventory and dwindling buyer interest. Analysts worry that a price correction in some cities could follow. Surging insurance costs are pricing many homeowners out of the market. Insurance premiums in Florida are up as much as 400% over the past five years in certain areas. Insurance premiums are likely to become even steeper following this hurricane season. Institutional investors are starting to sell some of their Florida properties because of the climbing insurance costs and the current interest-rate environment. This is another sign the market is approaching an inflection point.

Takeaways by Macro Roundup® AI

  1. Florida home insurance premiums have risen as much as 400% over the past five years in certain areas, pricing many homeowners out of the market, and are likely to climb further after the hurricane season.
  2. Much of Florida's housing market is cooling as inventory builds and buyer interest dwindles, and analysts worry a price correction could follow in some cities.
  3. Institutional investors are beginning to sell some of their Florida properties because of climbing insurance costs and the interest-rate environment, another sign the market is approaching an inflection point.

Related Articles:

  • Florida’s Home Insurance Industry May Be Worse Than Anyone Realizes — A working paper by researchers at Harvard, Columbia, and the Federal Reserve finds that nearly 20% of Florida insurers rated financially stable by the rating agency Demotech became insolvent, with 99.7% of that agency's ratings in the sample at A or above. The researchers argue this signals Florida's insurance market is more precarious than already known.
  • Movers And Money: Mapping the Flow of Income During the Pandemic — Manhattan recorded the largest county-level income outflow to other states at $16.5bn, with 27.7 cents of every dollar leaving—$4.6bn—going to Florida, including $2.9bn to Miami-Dade County and $1.1bn to Palm Beach County. California had the largest state-level losses, while Florida was the biggest beneficiary with a net gain of $39bn.
  • Snow Belt to Sun Belt Migration: End of an Era? — The correlation between US county population growth or net migration and historical extreme heat and cold days has declined over roughly the past 50 years, and in 2010–2020 was essentially zero. The authors argue this pivoting is likely to continue and reverse the 20th-century Snow Belt to Sun Belt migration pattern.

AI Summary. The Congressional Budget Office's current-law baseline projects U.S. national debt rising from 102% of GDP to 125% by 2035, exceeding the record 106% share set in 1946 within three years. The authors estimate the Harris campaign plan would raise debt to 133% of GDP by 2035 and the Trump plan to 142%.

CRFB Staff Committee for a Responsible Federal Budget
Date Posted:

.@BudgetHawks forecasts a rise in the federal debt by 2035 from 125% of GDP under current law to 133% of GDP under Harris’s plan and 142% of GDP under Trump’s. The point estimates are flanked by wide confidence intervals. @MarcGoldwein

How much would rival campaign plans add to national debt?

Core argument: Under central estimates, President Trump's plan would push federal debt to 142% of GDP in FY 2035, a 17% of GDP increase over the CBO current law baseline of 125%.

The national debt currently stands at 99% of Gross Domestic Product (GDP) and is projected to grow from 102% of GDP at the start of FY 2026 to 125% by the end of 2035 based on the CBO current law baseline. The debt will exceed its record as a share of the economy – 106% set in 1946 – in just three years. Debt would continue to grow faster than the economy under either candidates’ plans and in most scenarios would grow faster and higher than under current law. Under our central estimates, we find that Vice President Harris’s plan would push debt to 133% of GDP in FY 2035 – an 8% of GDP increase. We estimate President Trump’s plan would push debt to 142% of GDP in 2035 – a 17% of GDP increase.

Takeaways by Macro Roundup® AI

  1. Under central estimates, President Trump's plan would push federal debt to 142% of GDP in FY 2035, a 17% of GDP increase over the CBO current law baseline of 125%.
  2. Under central estimates, Vice President Harris's plan would push federal debt to 133% of GDP in FY 2035, an 8% of GDP increase relative to the CBO current law baseline.
  3. Federal debt stands at 99% of GDP and is projected to rise from 102% at the start of FY 2026 to 125% by the end of 2035, exceeding the 1946 record of 106% within three years.

Related Articles:

AI Summary. The author argues a resurgence of inflation is the biggest threat to an otherwise positive economic outlook, noting the 2021–2023 inflation pattern resembles the first peak of the 1970s, which was followed by a second wave. Risks cited include expected interest rate cuts despite a strong underlying economy and potentially inflationary policy proposals.

Jesper Rangvid Rangvid's Blog
Date Posted:

Drawing a parallel to the 1970’s, Jesper Rangvid warns that despite recent progress in returning inflation to target, overly loose monetary policy and a strong underlying US economy run the risk of resurgent inflation.

Is a second wave of inflation the biggest threat to the economy?

Core argument: Markets price a 50 basis point Federal Reserve cut this year and a further 100–125 basis points next year, roughly matching Fed governors' dot plots, though the author argues the strength of the US economy argues against further cuts.

In my view, the biggest threat to the otherwise positive economic situation is a resurgence of inflation. As I often remind readers, in the 1970s, many believed inflation was under control, only for it to spike again. Figure 6 illustrates this by comparing U.S. inflation today with inflation in the 1970s. The pattern during 2021-2023 closely mirrors the first inflation peak of the 1970s. In the mid-to-late 1970s, a second inflation wave followed. There are two potential risks on the horizon that could reignite inflation. Monetary policy could become overly loose. Markets anticipate a 50-basis-point cut this year and a further 100-125 basis points next year, and Fed governors expect about the same, as revealed by their “dot plots”. This comes against the backdrop of a strong underlying economy, as noted earlier. In fact, the strength of the current US economy argues against further interest rate cuts, yet they are still likely to happen. Without delving too deeply into politics, it is fair to say that Trump’s policies, if he wins, could be inflationary.

Takeaways by Macro Roundup® AI

  1. Markets price a 50 basis point Federal Reserve cut this year and a further 100–125 basis points next year, roughly matching Fed governors' dot plots, though the author argues the strength of the US economy argues against further cuts.
  2. The author argues US inflation during 2021–2023 closely mirrors the first inflation peak of the 1970s, which was followed by a second inflation wave in the mid-to-late 1970s.
  3. The author identifies two risks that could reignite inflation: monetary policy becoming overly loose and Trump's policies, if he wins.

Related Articles:

  • 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.
  • U.S. Inflation Is Still Hotter than Pre-Pandemic. And that’s Okay — If underlying services inflation holds near 2% a year and prior relationships reassert themselves, total yearly personal consumption inflation could settle near 3% rather than returning to 2%. That would carry implications for interest rate pricing, and traders assuming a reversion to pre-pandemic inflation norms may be surprised.
  • The Future Of r* — Long-run equilibrium interest rates are argued to stay low relative to recent decades' historical average but above pre-pandemic lows, implying rates only slightly below current levels, with a nominal neutral rate near 3.5% offered as illustration. Rising government debt, particularly in the US, is identified as the main risk to that view.

AI Summary. China's state-owned defense enterprises now account for four of the world's ten largest companies by combined defense and nondefense revenue — including the two largest, Aviation Industry Corporation of China and China State Shipbuilding — and five of the top 12 by defense revenue alone, up from none in the top 100 a decade earlier.

Seth Jones Foreign Affairs
Date Posted:

Seth Jones @CSIS notes that China is acquiring weapons systems “at a pace five to six times as fast as the United States,” and argues that the US “needs to commit much more attention and resources to military readiness.”

How dominant have Chinese state-owned defense firms become globally?

Core argument: Four of the world's top ten companies by combined defense and nondefense revenue are Chinese, including the two largest, Aviation Industry Corporation of China and China State Shipbuilding, whereas a decade ago no Chinese firm ranked in the top 100 defense companies.

Driving this production are China’s massive state-owned enterprises, which are charged with developing and building the country’s weapons systems. Today, four of the world’s top ten largest companies in combined defense and nondefense revenue are Chinese, including the two largest: Aviation Industry Corporation of China and China State Shipbuilding. This is a seismic change from a decade ago, when no Chinese firm cracked the world’s top 100 defense companies. Looking at defense revenue alone, China has five companies in the global top 12, also up from zero ten years ago. Chinese defense companies now rival such U.S. giants as Lockheed Martin, RTX (Raytheon), Boeing, Northrop Grumman, and General Dynamics in size and production capacity. Washington must also address the glaring weaknesses in its current defense industrial system. The Defense Department—including the military services—needs a faster, more flexible, and less risk-averse contracting and acquisition process.

Takeaways by Macro Roundup® AI

  1. Four of the world's top ten companies by combined defense and nondefense revenue are Chinese, including the two largest, Aviation Industry Corporation of China and China State Shipbuilding, whereas a decade ago no Chinese firm ranked in the top 100 defense companies.
  2. China now has five companies in the global top 12 by defense revenue alone, up from zero ten years ago, with Chinese defense firms rivaling Lockheed Martin, RTX, Boeing, Northrop Grumman, and General Dynamics in size and production capacity.
  3. China's weapons development and production is driven by state-owned enterprises, while the U.S. Defense Department needs a faster, more flexible, and less risk-averse contracting and acquisition process.

Related Articles:

  • China’s Newest Nuclear Submarine Sank, Setting Back Its Military Modernization — U.S. officials say China's first Zhou-class nuclear-powered attack submarine, which features a distinctive X-shaped stern designed for greater maneuverability, sank at a shipyard near Wuhan, a setback for a priority weapons program that Chinese authorities sought to conceal.
  • China’s Shipyards Are Ready for a Protracted War. America’s Aren’t — China produced more than half of the world's commercial shipbuilding output, while Europe accounts for about 5% and the US next to nothing, with most of the remainder built in South Korea and Japan. Analysts argue that in a protracted conflict China's wartime-scale yards could quickly accelerate production, replace lost ships, and repair damaged ones.
  • Top Defence Contractors Set To Rake In Record Cash After Orders Soar — A Center for Strategic and International Studies report argues the U.S. defense industrial base is not prepared for the current security environment and operates in a manner better suited to peacetime. The study recommends reassessing total munitions requirements and stockpile replenishment needs, creating a strategic munitions reserve, and setting a sustainable procurement plan.