Edward Conard

Top Ten New York Times Bestselling Author

  • “…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
  • “…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 very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…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 fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “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
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Friday, October 25, 2024

AI Summary. Taiwan Semiconductor Manufacturing Co. reports that the share of usable chips produced at its Phoenix, Arizona plant is about 4 percentage points higher than at comparable factories in Taiwan. Yield is a critical industry measure because it determines whether companies can cover the enormous costs of a chip plant.

Mackenzie Hawkins Bloomberg
Date Posted:

TSMC’s new manufacturing facility in Arizona is achieving yields 4pp higher than comparable facilities in Taiwan.

Can US chip plants match Taiwan's production yields?

Core argument: TSMC's Phoenix plant produces usable chips at a rate about 4 percentage points higher than comparable facilities in Taiwan, according to Rick Cassidy, president of TSMC's US division, speaking on a webinar.

Taiwan Semiconductor Manufacturing Co. has achieved early production yields at its first plant in Arizona that surpass similar factories back home, a significant breakthrough for a US expansion project initially dogged by delays and worker strife. The share of chips manufactured at TSMC’s facility in Phoenix that are usable is about 4 percentage points higher than comparable facilities in Taiwan, Rick Cassidy, president of TSMC’s US division, told listeners on a webinar Wednesday, according to a person who participated. The success rate, or yield, is a critical measure in the semiconductor industry because it determines whether companies will be able to cover the enormous costs of a chip plant. The latest yield advancement is notable for TSMC because it has historically kept the most advanced and efficient plants in its home island of Taiwan.

Takeaways by Macro Roundup® AI

  1. TSMC's Phoenix plant produces usable chips at a rate about 4 percentage points higher than comparable facilities in Taiwan, according to Rick Cassidy, president of TSMC's US division, speaking on a webinar.
  2. Yield is a critical measure in the semiconductor industry because it determines whether companies can cover the enormous costs of a chip plant.
  3. TSMC has historically kept its most advanced and efficient plants in Taiwan, making the Arizona facility's yield advantage notable for a US expansion project dogged by delays and worker strife.

Related Articles:

  • 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.
  • The Chips Act Has Been Surprisingly Successful So Far — The US government has spent over half of its $39bn in Chips Act semiconductor incentives, and chip companies and supply chain partners have announced $327bn of investments over the next 10 years, according to Semiconductor Industry Association calculations. US data show a 15-fold increase in construction of computing and electronics manufacturing facilities.
  • TSMC Boosts Joe Biden’s AI Chip Ambitions With $11.6bn US Production Deal — Taiwan Semiconductor Manufacturing Co. will produce its most advanced 2-nanometre chips at a plant in Phoenix, Arizona, and raise its total US investment from $40bn to $65bn to build a third fabrication plant. The US Commerce Department will provide $6.6bn in grants and up to $5bn in loans.

AI Summary. U.S. manufacturing job growth since the pandemic is occurring disproportionately in counties least exposed to Chinese import competition in the 2000s, according to an analysis of federal employment and wage data. The counties hardest hit by that import competition still have fewer manufacturing jobs than before the pandemic.

Connor O'Brien and Adam Ozimek Agglomerations
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.@ModeledBehavior @cojobrien finds that the current expansion is the first time in 50 years that manufacturing jobs have fully recovered from a recession, but the recovery is not reaching areas hit by the “China Shock.”

Is manufacturing job growth reaching communities hit hardest by Chinese imports?

Core argument: U.S. counties most exposed to Chinese import competition in the 2000s still have fewer manufacturing jobs than before the pandemic, according to an analysis of Quarterly Census of Employment and Wages data.

Is the historic recovery in manufacturing employment since the pandemic actually reaching [economically struggling] places? Not yet. One place to look is the communities hit hardest by the “China Shock.” These are the parts of the U.S. whose local manufacturing ecosystems took the biggest hit from cutthroat competition from Chinese imports in the 2000s. While policymakers are hoping that the manufacturing boom will finally bring relief to these communities, post-pandemic manufacturing job growth is disproportionately happening in places that were least exposed to the China Shock. Breaking down U.S. counties by the degree to which they were exposed to competition from Chinese imports during the 2000s, we used the Quarterly Census of Employment and Wages (QCEW) to find that the most exposed places are not participating in the manufacturing employment boom. Indeed, the hardest-hit places still have fewer manufacturing jobs than they did before the pandemic.

Takeaways by Macro Roundup® AI

  1. U.S. counties most exposed to Chinese import competition in the 2000s still have fewer manufacturing jobs than before the pandemic, according to an analysis of Quarterly Census of Employment and Wages data.
  2. Post-pandemic manufacturing job growth is disproportionately occurring in U.S. counties that were least exposed to the China Shock, rather than in the communities whose manufacturing ecosystems were hit hardest.
  3. Policymakers hope the manufacturing boom will bring relief to communities hit by the China Shock, but those places are not yet participating in the employment recovery.

Related Articles:

  • Manufacturing Jobs Have Recovered, But Not Everywhere — U.S. manufacturing employment recovered the 650,000 jobs lost in the 2020 recession, rising above 12.9m workers and exceeding the pre-pandemic level of 12.8m — the first such post-recession recovery since the late 1970s. Even so, manufacturing's share of private-sector employment fell from 31% in 1970 to 9.7%.
  • The Mysterious Slowdown in U.S. Manufacturing Productivity — US manufacturing labor productivity growth slowed broadly after the Great Recession, with the four largest firms in each industry averaging –0.5% growth from 2010 to 2022 versus 3.7% from 1987 to 2007, and smaller follower firms showing an identical 4.2 percentage-point decline. The authors find the slowdown spans all industries and firm sizes.
  • Labor Market Conflict and the Decline of the Rust Belt — The authors argue that persistent labor market conflict in the Rust Belt's main industries lowered investment and productivity growth, shifting employment to the rest of the country, and estimate it accounts for roughly half the decline in the region's share of US manufacturing employment. Rising foreign competition plays a more modest quantitative role.

AI Summary. NVIDIA's market capitalization exceeds the combined value of the stock markets of five G7 countries, and foreigners own 18% of the US stock market, leaving global equity portfolios and retirement allocations heavily exposed to a single company. Public markets contain both safe and risky investments, as do private assets.

Torsten Sløk Apollo
Date Posted:

At ~ $3.5T NVIDIA’s market cap is larger than the market cap of 5 of the G7 countries. Torsten Sløk warns “Global equity markets are basically leveraged to NVIDIA.”

Are global equity portfolios dangerously concentrated in one company?

Core argument: NVIDIA's market capitalization exceeds the combined total market cap of five of the G7 countries, leaving global equity markets, including retirement allocations to equities, effectively leveraged to NVIDIA.

NVIDIA is now bigger than the total market cap of five of the G7 countries. And foreigners own 18% of the US stock market. The bottom line is that global equity markets, including retirement allocations to equities, are basically leveraged to NVIDIA. Let’s hope the value of NVIDIA doesn’t decline significantly. The idea that public markets are safe and retirement savings in public markets are safe is misguided. Some investments in public markets are safe, and some are risky. Same for private assets. Some private investments are safe, and some private investments are risky.

Takeaways by Macro Roundup® AI

  1. NVIDIA's market capitalization exceeds the combined total market cap of five of the G7 countries, leaving global equity markets, including retirement allocations to equities, effectively leveraged to NVIDIA.
  2. Foreigners own 18% of the US stock market.
  3. The premise that public markets and retirement savings held in them are inherently safe is misguided, since both public and private markets contain a mix of safe and risky investments.

Related Articles:

  • Stock Market Concentration — Over 2014–2023 the 10 largest U.S. stocks averaged 19% of market capitalization while generating 47% of total economic profit, and by 2023 they were 27% of market capitalization and 69% of economic profit. The S&P 500 returned above its average when concentration was rising and below it when concentration was falling.
  • 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. Canada plans to admit about 395,000 permanent residents, nearly 20% fewer than the 485,000 expected this year, and set its first target for temporary immigrants such as international students and foreign workers, cutting their numbers by roughly 446,000 over two years. The government projects the population would fall 0.2% in each of the next two years.

Randy Thanthong-Knight Bloomberg
Date Posted:

Canada is planning to admit 20% fewer permanent immigrants next year and reduce temporary residents by 58%. The plan means Canada’s population would decline by 0.2% in each of the next two years, vs. 3% y/y growth in Q2 2024.

Will sharp immigration cuts shrink Canada's population?

Core argument: Canada will admit 395,000 permanent residents next year, nearly 20% fewer than this year's expected 485,000.

Canada will admit nearly 20% fewer permanent residents next year, or 395,000, compared to this year’s expected level of 485,000. The government also set its first-ever target for temporary immigrants. The group, which includes international students and foreign workers who have been a key driver of post-pandemic influxes, will see their numbers decline by about 446,000 in 2025 and 2026, compared to 2023 levels of about 800,000. Overall, the plan means Canada’s population would decline by 0.2% in each of the next two years, before rebounding with modest growth of 0.8% in 2027. That’s compared to annual growth of 3% in the second quarter of this year, one of the fastest rates in the world and on par with developing countries with high birth rates. Trudeau described the plan as a “pause” on population growth to allow all levels of government to catch up and make the necessary investments in health care, housing, and social services to accommodate more people in the future.

Takeaways by Macro Roundup® AI

  1. Canada will admit 395,000 permanent residents next year, nearly 20% fewer than this year's expected 485,000.
  2. Canada set its first-ever target for temporary immigrants, including international students and foreign workers, cutting their numbers by about 446,000 in 2025 and 2026 versus 2023 levels of roughly 800,000.
  3. Canada's population would decline 0.2% in each of the next two years before growing 0.8% in 2027, against 3% annual growth in the second quarter of this year, with Trudeau calling the plan a "pause" to let governments invest in health care, housing, and social services.

Related Articles:

  • A “Heat Dome” of Immigration — Canada has adopted some of the most aggressive immigration policies in the OECD, adding 1.273m residents in a year to reach a population of 41m — proportionally equivalent to the US admitting more than 10m immigrants annually. Canadians are increasingly angry as housing prices soar, sprawl expands, and traffic worsens.
  • Immigration Surge Fuels Male Population Boom in Canada — Canada's adult male population grew 3.4% over the past year versus 2.9% for women, the widest gap in nearly 50 years of records, as a higher share of male newcomers shifts the gender ratio. Among those aged 25 to 44, men outnumber women by 141,000, against a long-run average of zero.
  • Why is Canada’s Economy Falling Behind America’s? — The United States and Canadian economies have diverged, with American output expected to grow 11% over five years versus 6% in Canada. The International Monetary Fund projects Canadian national income per head will fall to 70% of the American level, down from roughly 80% in the decade before the pandemic.

AI Summary. China's National Bureau of Statistics reported that youth unemployment for 16-24 year-olds excluding students fell to 17.6% from 18.8%, roughly one in six, the third straight month above 17%. Authorities previously suspended publication of the rate after it reached an all-time high of 21.3%, resuming only after excluding enrolled students.

Xinyi Wu South China Morning Post
Date Posted:

Youth unemployment (16-24) in China declined in September to 17.6% down from 18.8% in August, a record high under the new methodology that excludes students. A previous approach that included students was suspended after hitting 21.3% in June 2023.

Is youth unemployment in China still elevated despite a monthly decline?

Core argument: China's September jobless rate for 16–24 year-olds excluding students fell to 17.6% from 18.8% in August, roughly one in six, according to the National Bureau of Statistics.

The September jobless rate for the 16-24 age group, excluding students, dipped to 17.6% – or roughly one out of every six in the target group – from August’s level of 18.8%, according to data released by the National Bureau of Statistics. It marked the third consecutive month that the indicator surpassed 17%. There had been a gradual improvement from March to June, when the rate fell to 13.2%. Beijing opted not to release the rate for the months of July to November last year after it had climbed to an all-time high of 21.3%. When the data set’s release resumed with December’s rate, authorities revealed that they had taken enrolled students out of the unemployment equation, bringing the rate down to 14.9%. China has reported a record-high 11.79 million college graduates this year, most of whom entered the job market this summer.

Takeaways by Macro Roundup® AI

  1. China's September jobless rate for 16–24 year-olds excluding students fell to 17.6% from 18.8% in August, roughly one in six, according to the National Bureau of Statistics.
  2. China's youth unemployment rate has exceeded 17% for three consecutive months, after a gradual improvement from March to June that brought it down to 13.2%.
  3. Beijing withheld the youth jobless rate from July to November last year after it hit an all-time high of 21.3%, resuming publication with December's rate of 14.9% once enrolled students were excluded.

Related Articles:

  • Why Has Youth Unemployment Risen So Much in China? — Young workers aged 15-24 are particularly vulnerable when economic growth slows, and China's youth unemployment rate does not appear to be an outlier relative to its income level among global peers. Mismatches between the skills graduates acquire in higher education and those employers demand may add to labor market frictions.
  • Xi Jinping Calls for Quality Jobs for Youth Instead of ‘Bitterness’ — China's leadership has ordered that providing "high-quality full employment" be an economic priority, with youth unemployment running at nearly three times the overall rate. Unemployment among 16-24 year-olds, excluding students, stood at 14.7% against an urban unemployment rate of 5%.
  • China’s Defeated Youth — Urban Chinese unemployment among those aged 16 to 24 has run above 20%, about double the pre-pandemic level for that age group, with over 70% of unemployed youth in one year calculated to be graduates. Sentiment analysis of social media indicates the mood of young Chinese is growing darker.

AI Summary. A presidential election forecast model shows Kamala Harris leading the national polling average by 1.3 points and the projected popular vote by 1.9 points, with the projection drawn mainly from state polls. The model treats the race as a toss-up, with state polling consistent with a trend toward Donald Trump and slightly more winning electoral maps for him.

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

Thursday’s @NateSilver538 update showed Harris’s national lead down to 1.3pp from a peak of 3.5pp on October 2. The model gave Trump a 53.7% chance of winning the electoral college.

Does a small popular vote lead guarantee an Electoral College win?

Core argument: Kamala Harris's lead in the Silver Bulletin national polling average has narrowed to 1.3 points, with more national polls showing her behind — which the forecast calls not a good sign given her likely Electoral College disadvantage.

We’ve been starting to see more national polls showing Kamala Harris behind — certainly not a good sign for her given her likely Electoral College disadvantage. Her lead in our national polling average is down to just 1.3 points. The good news for Harris is that our model doesn’t care that much about national polls; instead, our forecast of the popular vote, which is mainly based on extrapolations from state polls, has her up 1.9. And those state polls were a bit more mixed, though there was a lot of data in the Trump +1 range: still consistent with a race that we’d have to describe as a toss-up, but consistent with a trend toward Trump in recent weeks and just slightly more winning maps than Harris.

Takeaways by Macro Roundup® AI

  1. Kamala Harris's lead in the Silver Bulletin national polling average has narrowed to 1.3 points, with more national polls showing her behind — which the forecast calls not a good sign given her likely Electoral College disadvantage.
  2. The Silver Bulletin model gives national polls little weight, relying mainly on extrapolations from state polls, and its popular-vote forecast has Harris up 1.9 points.
  3. State polls were more mixed, with much data in the Trump +1 range, which the forecast describes as consistent with a toss-up, a trend toward Trump in recent weeks, and slightly more winning maps for Trump than Harris.

Related Articles:

  • Changing Opportunity: Sociological Mechanisms Underlying Growing Class Gaps and Shrinking Race Gaps in Economic Mobility — 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.
  • America’s Young Men Are Falling Even Further Behind — Labor force participation among US men ages 25 to 34 has not grown in a decade, standing at 89%, which one analysis of Bureau of Labor Statistics data estimates is more than 700,000 fewer participants than at 2004 rates; women's participation in that age group is up 6 percentage points over 10 years, to 79%.
  • Real Wage Growth: The Post-Pandemic Labor Market and Beyond — Real wage gains for non-managerial workers, roughly 80% of the private workforce, exceeded both those of all workers and projections based on pre-pandemic trends, which is attributed to labor market tightness and strong demand in low-wage sectors. This compression of wage inequality has persisted even as the labor market cooled and unemployment rose above 4%.

Monday, October 28, 2024

AI Summary. In an experiment randomly assigning preschool access and then randomly assigning elementary school classmates, the authors find that fade-out of preschool gains is linked to the share of classmates who also had preschool access. Each additional preschool classmate is estimated to raise cognitive skills by about 0.10 standard deviations.

John List and Haruka Uchida National Bureau of Economic Research
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List and Uchida find that the “fade-out effect” of early childhood education programs “is critically-linked to the share of classroom peers assigned to preschool access—with enough treated peers the classic fade-out effect is muted.” @Econ_4_Everyone @haruka__uchida

Do preschool classmates determine whether early education gains persist?

Core argument: Holding class size constant, one additional preschool-program classmate raises preschool children's cognitive skills by roughly 0.10 SD, linking the fade-out effect to the share of classroom peers assigned preschool access.

We first randomly assign preschool access to children, and then partner with the local school district to randomly assign the same children to classmates throughout elementary school. We find that the fade-out effect is critically-linked to the share of classroom peers assigned to preschool access. Preschool children benefit greatly from having other Preschool children in the same class. Holding constant the total number of students in class, one additional Preschool classmate significantly increases cognitive skills by roughly 0.10 SD. Immediately after program implementation, Preschool CHECC children had 0.13 standard deviations higher cognitive skills than control children (leftmost bar of Figure 3). Second, turning to the impacts of Preschool on cognitive skills during elementary school, the two rightmost bars of Figure 3 reveal that during grades 2-5, when Preschool children are exposed to many Preschool classmates, they have roughly 0.26 standard deviations higher cognitive skills than control children.

Takeaways by Macro Roundup® AI

  1. Holding class size constant, one additional preschool-program classmate raises preschool children's cognitive skills by roughly 0.10 SD, linking the fade-out effect to the share of classroom peers assigned preschool access.
  2. Immediately after program implementation, children randomly assigned preschool access scored 0.13 SD higher on cognitive skills than control children.
  3. During grades 2–5, when preschool children are exposed to many preschool classmates, they score roughly 0.26 SD higher on cognitive skills than control children.

Related Articles:

  • Perry Preschool at 50: What Lessons Should Be Drawn and Which Criticisms Ignored? — The authors argue that studies of the Perry Preschool and Carolina Abecedarian early childhood programs yield general lessons about quality resting on adult-child interactions rather than credentials or formal curricula. Across both programs, a one standard deviation increase in measured parenting is associated with a half standard deviation increase in midlife skills.
  • Paying Moms to Stay Home: Short and Long Run Effects on Parents and Children — The authors estimate that Finland's Home Care Allowance, which pays mothers to stay home with children under three, reduces maternal employment in the short and long run and is associated with lower early childhood cognitive test scores, less academic high school enrollment, and more youth crime.

AI Summary. France's government bond yield spread widened by 0.29 percentage points, more than Italy's 0.22 and Spain's 0.2, which the authors attribute to political uncertainty created by the calling of a snap national election. The French spread has remained elevated, while the Italian and Spanish spreads have come down.

Jesper Rangvid Rangvid's Blog
Date Posted:

Jesper Rangvid notes French politics are impacting yields suggesting bond vigilantes may be returning. “The developments serve as a cautionary signal for other nations with similarly unsustainable debt paths, including the US.”

Does political uncertainty raise a country's bond yield spread?

Core argument: France's yield spread widened by 0.29 percentage points between 7 June and 14 June 2024, exceeding Italy's 0.22 points and Spain's 0.2 points, following the 9 June conclusion of the European Parliament elections.

We see a sharp rise in all yield spreads following 9 June 2024, the final day of the 2024 European Parliament elections. Yet French yields increased the most. From the Friday preceding the elections (7 June) to the following Friday (14 June), the French yield spread widened by 0.29 percentage points, compared to 0.22 points for Italy and 0.2 points for Spain. The primary reason for this larger increase in French yields was President Macron’s announcement of a general election in France in response to the European Parliament election results, introducing further uncertainty to France’s political landscape. As Figure 1 indicates, the French yield spread has remained elevated since then, while the Italian and Spanish spreads have come down.

Takeaways by Macro Roundup® AI

  1. France's yield spread widened by 0.29 percentage points between 7 June and 14 June 2024, exceeding Italy's 0.22 points and Spain's 0.2 points, following the 9 June conclusion of the European Parliament elections.
  2. The authors attribute France's larger yield increase primarily to President Macron's announcement of a general election in response to the European Parliament results, which introduced further uncertainty to France's political landscape.
  3. The French yield spread has remained elevated since the June 2024 European Parliament elections, while Italian and Spanish spreads have come down.

Related Articles:

  • US Interest Burden Hits 28-Year High, Escalating Political Risk — US Treasury net interest payments reached $882bn in a fiscal year, equal to 3.06% of gross domestic product — the highest ratio since 1996 — and about 18% of federal revenues. The net interest bill exceeded Defense Department spending on military programs for the first time.
  • The Fiscal Impact of the Harris and Trump Campaign Plans — The national debt stands at 99% of Gross Domestic Product and is projected to reach 125% by 2035 under current law, exceeding the record 106% share set in 1946 within three years. Central estimates put debt at 134% of GDP under the Harris plan and 143% under the Trump plan.
  • When Does Federal Debt Reach Unsustainable Levels? — The authors estimate that U.S. debt held by the public cannot exceed roughly 200% of GDP even under favorable market conditions, and that under current policy the ratio reaches 175–200% within about 20 years. After that point, they argue, no tax increases or spending cuts could avert default or inflationary debt monetization.

AI Summary. The national debt stands at 99% of Gross Domestic Product and is projected to reach 125% by 2035 under current law, exceeding the record 106% share set in 1946 within three years. Central estimates put debt at 134% of GDP under the Harris plan and 143% under the Trump plan.

CRFB Staff Committee for a Responsible Federal Budget
Date Posted:

An updated @BudgetHawks forecast shows a rise in federal debt by 2035 from 125% of GDP under current law to 134% of GDP under Harris’s plan and 143% of GDP under Trump’s. The point estimates are flanked by wide confidence intervals. @MarcGoldwein

How much would rival campaign plans raise debt relative to GDP?

Core argument: Under the authors' central estimates, Trump's plan would push federal debt to 143% of GDP by FY 2035, an increase of 18% of GDP 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 percent 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 134% of GDP in FY 2035 – a 9% of GDP increase. We estimate President Trump’s plan would push debt to 143 percent of GDP in 2035 – an 18% of GDP increase.

Takeaways by Macro Roundup® AI

  1. Under the authors' central estimates, Trump's plan would push federal debt to 143% of GDP by FY 2035, an increase of 18% of GDP over the CBO current-law baseline of 125%.
  2. Harris's plan would raise debt to 134% of GDP in FY 2035 under the authors' central estimates, a 9% of GDP increase relative to current law.
  3. Federal debt stands at 99% of GDP and is projected to exceed its 1946 record of 106% within three years, rising from 102% at the start of FY 2026 to 125% by the end of 2035 under CBO's current-law baseline.

Related Articles:

  • The Fiscal Impact of the Harris and Trump Campaign Plans — 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%.
  • Assessing the Budgetary Effects of the Presidential Candidates’ Proposals — 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.
  • 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.

AI Summary. Analysis argues higher fiscal spending implies stronger nominal growth and higher inflation, contributing along with stronger-than-expected economic data to a higher expected path of Federal Reserve policy. The UK's violent rise in yields and currency depreciation after announcing fiscal expansion shows wealthy countries can face the emerging-market-style fiscal limits the analysis sees eventually reaching the US.

Joseph Wang Fed Guy Blog
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.@FedGuy12 cites online betting data and the 2-year yield and argues Treasury yields are rising as investors anticipate higher fiscal deficits in a second Trump term. Until a fiscal crisis arrives he expects that big deficits will boost equities.

Can wealthy countries hit emerging-market-style limits on fiscal expansion?

Core argument: The analysis argues a Trump victory would bring higher fiscal spending, implying stronger nominal growth and higher inflation, with the rising probability of a Trump win, alongside stronger than expected economic data, contributing to a higher expected path of Fed policy.

Analysis suggests that a Trump victory would bring even higher levels of fiscal spending, which implies stronger nominal growth and higher inflation. Along with stronger than expected economic data, the rising probability of a Trump win appears to be contributing to shift higher in the expected path of Fed policy. The UK discovered the limits of its fiscal policy without warning, and that moment will eventually arrive for the U.S. The former superpower saw its yields rise and currency depreciate violently in late 2022 after announcing plans for further fiscal expansion. That is a reaction often seen in emerging markets when investors flee the country over fiscal concerns. While fiscal crises are typically associated with emerging markets, it can also happen to wealthier countries that behave like developing countries. That is inevitably in the future of the U.S., but until then big deficits will be risk positive.

Takeaways by Macro Roundup® AI

  1. The analysis argues a Trump victory would bring higher fiscal spending, implying stronger nominal growth and higher inflation, with the rising probability of a Trump win, alongside stronger than expected economic data, contributing to a higher expected path of Fed policy.
  2. The UK's late-2022 announcement of further fiscal expansion was followed by violently rising yields and a depreciating currency, a reaction the analysis says is often seen in emerging markets when investors flee over fiscal concerns.
  3. The analysis holds that a fiscal crisis lies inevitably in the future of the U.S., since wealthier countries behaving like developing ones can face one, but until then big deficits will be risk positive.

Related Articles:

  • The Fiscal Impact of the Harris and Trump Campaign Plans — The national debt stands at 99% of Gross Domestic Product and is projected to reach 125% by 2035 under current law, exceeding the record 106% share set in 1946 within three years. Central estimates put debt at 134% of GDP under the Harris plan and 143% under the Trump plan.
  • 10 Facts About the US Treasury Market: Monitoring Demand For US Government Debt — US government debt is projected to rise from 100% to 200% of GDP, with deficits above $1tn annually over the next decade and $9tn of debt maturing within 12 months. Debt servicing costs equal 12% of total government outlays, and interest payments have doubled from about $1bn per day before the pandemic to nearly $2bn per day.
  • 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.

AI Summary. Research finds that profitability varies more among companies within the same industry than across industries, so a company's long-run performance is not primarily determined by which industry it operates in. Even in low-profitability industries, some companies earn returns well above their cost of capital.

Greg Obenshain Verdad
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.@GregObenshain cites a @mjmauboussin analysis that finds profitability varies more within industry than across industries, and argues “Industry is not destiny. Great companies can emerge from mediocre industries.”

Does a company's industry determine its long-run profitability?

Core argument: Mauboussin's study shows that profitability varies more within industries than across them, indicating that a company's long-run fate is not primarily determined by the industry it operates in.

Mauboussin’s study includes a chart that is difficult to unsee once you’ve seen it. This chart shows that profitability varies more within industry (the vertical bars) than across industries (the dots). Over the long run, the fate of a company is not primarily determined by its industry—a finding consistent with Chicago school research from the 1980s that dealt a death blow to structure-conduct-performance theory in antitrust law. Industries with higher overall profitability have more companies that are profitable, but even within industries with low profitability, there are still companies that have returns well above the cost of capital and some companies that have profitability substantially above. Industry is not destiny. Great companies can emerge from mediocre industries.

Takeaways by Macro Roundup® AI

  1. Mauboussin's study shows that profitability varies more within industries than across them, indicating that a company's long-run fate is not primarily determined by the industry it operates in.
  2. Even within low-profitability industries, Mauboussin finds companies earning returns well above the cost of capital, some substantially above, so great companies can emerge from mediocre industries.
  3. The finding that industry is not destiny is consistent with Chicago school research from the 1980s that dealt a death blow to structure-conduct-performance theory in antitrust law.

Related Articles:

  • Measuring the Moat: Assessing the Magnitude and Sustainability of Value Creation — Analysis of returns on invested capital by industry from 1963 to 2023 finds that variation in value creation within industries exceeds variation across industries, with every industry containing both value-creating and value-destroying companies. Adjusting returns for intangible investment pulls the highest and lowest results toward the middle, narrowing the distribution.
  • 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 census and American Community Survey microdata compares the average income of full-time workers in specific demographic groups and occupations with the national average for full-time workers, showing how each group's relative economic standing has shifted over the decades.

Emily Badger, Robert Gebeloff and Aatish Bhatia New York Times
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In 1980 white non-college men employed full-time earned 7% more than the average full-time US worker. In 2022, their inflation-adjusted income has remained relatively flat, and they earned less than women with a college degree.

How have demographic groups' incomes shifted relative to the national average?

Core argument: The Upshot measured the relative economic standing of demographic groups and occupations using income microdata from the decennial census and American Community Survey for 1980, 1990, 2000, and the 2010 and 2022 five-year samples.

To calculate the relative economic standing of various demographic groups and workers over time, The Upshot analyzed income reported in microdata from the decennial census and American Community Survey for the years 1980, 1990, 2000, and the 2010 and the 2022 five-year sample. The average full-time worker benchmark shown is the average personal income of full-time workers in America who worked at least 50 weeks and 35 hours per week in the previous year. Relative incomes for each demographic group or occupation are calculated by comparing the average income of full-time workers in that group to the national benchmark. A result of 1 represents a group with an average income comparable to the average full-time worker nationwide. A higher figure represents a group earning more on average than the typical full-time American worker; a lower number is a group earning less.

Takeaways by Macro Roundup® AI

  1. The Upshot measured the relative economic standing of demographic groups and occupations using income microdata from the decennial census and American Community Survey for 1980, 1990, 2000, and the 2010 and 2022 five-year samples.
  2. The Upshot's benchmark is the average personal income of American full-time workers who worked at least 50 weeks and 35 hours per week in the prior year, with each group's average income compared to that figure.
  3. A ratio of 1 in The Upshot's analysis marks a group earning about the same as the average full-time American worker, while higher values indicate groups earning more and lower values groups earning less.

Related Articles:

  • Understanding Trends in Worker Pay over the Past 50 Years — Productivity growth has been unequal across industries, across firms within industries, and across workers within firms, slowing growth in both the productivity and the pay of the median worker. The authors argue that working- and middle-class men earlier received "breadwinner rents"—pay above their marginal value to employers—and then endured slow wage growth as women's workforce participation rose.
  • Bringing Home the Bacon: Have Trends in Men’s Pay Weakened the Traditional Family? — Using the 25th percentile of pretax earnings among married sole-breadwinner fathers aged 25–29 as a marriageability threshold, the author estimates the share of young single men earning below it moved from 63% to 58% over four decades. Using an earlier baseline year instead yields a larger change, from 72% to 57%.
  • America is Still Working — US hours worked per person fell 7% between 2000 and 2022, a decline attributable entirely to the employment rate falling from 70% to 65%. Hours now sit roughly at their level in the first years after World War II, 23% below 1900.

AI Summary. Polling finds men aged 18 to 24 are far less likely to identify as feminist and liberal than men aged 25 to 29, and young men hold very different views from their female peers about how the world treats women. The author argues this divergence leaves young men's worldview less aligned with Democrats' current values and priorities.

Daniel Cox The Liberal Patriot
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Trump will likely improve on his 2020 performance of 41% with young men 18-29. @dcoxpolls notes the political consequences of a growing divergence btw young men and women “will be immediate, but the societal repercussions may be felt for years.”

Are the youngest men drifting away from liberal politics?

Core argument: Donald Trump won 41% of men aged 18–29 in 2020, and the author expects him to improve on that showing in 2024, coming close to or winning an outright majority of young male voters.

I’m inclined to believe that Trump will do well with young men in 2024; certainly, he is likely to improve on his 2020 performance, when he won 41% of men aged 18 to 29. And if he does not win an outright majority of young male voters, he will probably come close. In a poll conducted by the Survey Center on American Life this fall, men ages 18 to 24 were far less likely to identify as feminist and liberal than those ages 25 to 29. Early partisan attachments are malleable, but there’s a good reason to believe that the worldview of young men is less aligned with the current values and priorities of Democrats. Compared to their female peers, young men have very different views about how the world treats women. Regardless of the election’s outcome, the trajectories of young men and women appear less aligned than perhaps they have ever been. The political consequences of this growing divergence will be immediate, but the societal repercussions may be felt for years.

Takeaways by Macro Roundup® AI

  1. Donald Trump won 41% of men aged 18–29 in 2020, and the author expects him to improve on that showing in 2024, coming close to or winning an outright majority of young male voters.
  2. In a Survey Center on American Life poll, men aged 18–24 were far less likely to identify as feminist and liberal than men aged 25–29.
  3. The author argues that the trajectories of young men and women appear less aligned than perhaps ever before, with young men holding very different views from their female peers about how the world treats women.

Related Articles:

  • America’s Young Men Are Falling Even Further Behind — Labor force participation among US men ages 25 to 34 has not grown in a decade, standing at 89%, which one analysis of Bureau of Labor Statistics data estimates is more than 700,000 fewer participants than at 2004 rates; women's participation in that age group is up 6 percentage points over 10 years, to 79%.
  • The Politics of Progress and Privilege: How America’s Gender Gap Is Reshaping the 2024 Election — Survey data show 35% of Americans say the term "feminist" describes them somewhat or very well, down from 51% earlier. Women are more likely than men to identify as feminist (42% vs 27%), with the widest gap among those age 18–29, where 55% of women but 31% of men claim the label.
  • Post-Pandemic Recovery for America’s Prime Age Labor Force: A Tale of Two Sexes — Prime-age women's labor force participation climbed about 5 points above its pre-pandemic level over a decade, while prime-age men's rose barely a point, only just regaining pre-pandemic levels. Despite economic expansion and labor shortages, work rates for prime-age American men are barely as high as at the trough of the severe Reagan-era recession.