Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “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
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…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 comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, November 20, 2024

AI Summary. A century-long dataset on the socioeconomic backgrounds of US college students finds that lower-income students' representation at elite private and public colleges has remained at similarly low levels, even as their share of the overall college-going population rose sharply. Upper-income representation fell after World War II but has since returned to high levels.

Ran Abramitzky, Jennifer Kowalski, Santiago Pérez and Joseph Price National Bureau of Economic Research
Date Posted:

The share of students from the bottom income quintile at elite private and public colleges was steady at about 5% between 1915 and 2017. The share from the top quintile fell sharply from 1930-80 before reverting to 1915 levels. @seperez84 @joepricebyu

Has the socioeconomic makeup of elite US colleges changed over a century?

Core argument: Drawing on the largest dataset assembled on the socioeconomic backgrounds of American college students over the past century, the authors find that lower-income students' representation at elite private and public colleges has remained at similarly low levels, despite their rising share of all college-goers.

We assemble the largest dataset on the socioeconomic backgrounds of students at American colleges spanning the last 100 years. We document the following: First, despite a large increase in the share of lower-income students in the overall college-going population, the representation of these students at elite private or public colleges has remained at similarly low levels throughout the last century. Second, the representation of upper-income students at elite colleges decreased after World War II, but this group has regained its high representation since the 1980s. Third, while there has been no increase in the economic diversity of elite private and public colleges, these colleges have become more racially and geographically diverse. Fourth, two major policy changes in the history of American higher education, namely the G.I. Bill after World War II and the introduction of standardized tests for admissions, had little success in increasing the representation of lower- and middle-income students at elite colleges.

Takeaways by Macro Roundup® AI

  1. Drawing on the largest dataset assembled on the socioeconomic backgrounds of American college students over the past century, the authors find that lower-income students' representation at elite private and public colleges has remained at similarly low levels, despite their rising share of all college-goers.
  2. Upper-income students' representation at elite colleges declined after World War II but has regained its high level since the 1980s.
  3. The G.I. Bill and the introduction of standardized admissions tests had little success in increasing the representation of lower- and middle-income students at elite colleges, which became more racially and geographically diverse without becoming more economically diverse.

Related Articles:

AI Summary. The trade balance reflects the gap between national income and spending, so it will not change unless domestic saving and investment do. With foreign savings inflows averaging 3.9% of GDP while households and corporations ran savings surpluses, the author argues eliminating the external deficit requires shrinking the government's 6.7%-of-GDP deficit.

Martin Wolf Financial Times
Date Posted:

Martin Wolf argues that protectionism won’t balance US trade as household and corporate saving of 2.8% of GDP is offset by a government deficit of 6.7%. Domestic sectors must adjust, “with the biggest adjustment coming from these huge fiscal deficits.”

Does eliminating the trade deficit require shrinking the government deficit?

Core argument: Among US domestic sectors between the second quarter of 2021 and 2024, households ran a savings surplus averaging 2.3% of GDP and corporations 0.5%, while the government ran a deficit averaging 6.7% of GDP.

The balance of trade is the difference between aggregate incomes and spending (or savings and investment). So long as this is unchanged, the trade balance will be unchanged, too. The US has spent appreciably more than its income for a long time. This is shown in the consistent net supply of foreign savings, which averaged 3.9% of GDP, between the second quarter of 2021 and 2024. So domestic sectors must in aggregate have been running counterpart deficits. In fact, the surplus of savings over investment in the household sector averaged 2.3% of GDP and that of the corporate sector 0.5%. In sum, only the government ran a deficit, which averaged an enormous 6.7% of GDP. If one wants to eliminate the external deficits, domestic sectors must adjust in the opposite direction, towards higher surpluses of savings, with the biggest adjustment surely coming from these huge fiscal deficits.

Takeaways by Macro Roundup® AI

  1. Among US domestic sectors between the second quarter of 2021 and 2024, households ran a savings surplus averaging 2.3% of GDP and corporations 0.5%, while the government ran a deficit averaging 6.7% of GDP.
  2. Eliminating the US external deficit would require domestic sectors to move toward higher savings surpluses, with the largest adjustment coming from the fiscal deficit.

Related Articles:

  • How will Trumponomics Work Out? — With US federal debt at 100% of GDP and primary deficits projected near 3%, the measures under consideration would add 1–2 points, implying a sustained 4–5% primary deficit and rapid debt growth. Stabilizing the debt ratio would require an adjustment worth 16–20% of the federal budget.
  • 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.
  • Manufacturing Fetishism is Destined to Fail — The US goods trade deficit with China equals about 1% of GDP, while the overall US goods deficit has run near 4% of GDP since after the 2008 financial crisis. Eliminating it would raise domestic goods output, likely at the expense of services, but at most would return manufacturing employment shares to levels of a decade or two earlier.

AI Summary. Medicaid enrollment reached 87m people, boosted by pandemic legislation requiring states to keep people enrolled longer than normal and by additional states adopting the Affordable Care Act expansion, under which the federal government covers 90% of costs for expansion enrollees. The Congressional Budget Office projected states would receive nearly $60bn less in federal Medicaid funds year over year.

Sarah Kliff and Noah Weiland New York Times
Date Posted:

Medicaid now covers ~ 20% of all Americans and consumes 10% of Federal spending. States and the Federal government spent $880B on the program in 2023. Prior to ACA, the program largely covered children, mothers, and people with disabilities.

Will Medicaid enrollment growth reverse as federal funding falls?

Core argument: Medicaid enrollment rose to 87 million people under President Biden, after emergency pandemic legislation required states to keep enrollees on the program longer than normal.

Medicaid enrollment swelled to 87 million people under President Biden, with emergency pandemic legislation that required states to keep people on the program longer than normal. Some longtime holdout states also opted into the Affordable Care Act’s Medicaid expansion, which offered the coverage to adults with family earnings up to $43,000 a year for a family of four. The federal government pays states 90% of the costs for Obamacare expansion enrollees. The Congressional Budget Office has projected that in the fiscal year 2024 states are set to receive almost $60 billion less in federal Medicaid funds than they did in 2023.

Takeaways by Macro Roundup® AI

  1. Medicaid enrollment rose to 87 million people under President Biden, after emergency pandemic legislation required states to keep enrollees on the program longer than normal.
  2. The Congressional Budget Office projects states will receive nearly $60 billion less in federal Medicaid funds in fiscal year 2024 than in 2023.
  3. The federal government pays states 90% of the costs for Affordable Care Act expansion enrollees, coverage offered to adults with family earnings up to $43,000 a year for a family of four.

Related Articles:

  • Revisiting the Connection Between State Medicaid Expansions and Adult Mortality — Using synthetic control methods on eight state Medicaid expansions to parents and childless adults, the authors find no statistically significant effects on all-cause, healthcare-amenable, non-healthcare-amenable, or HIV-related adult mortality in any treated state or in the states combined.
  • Are Medicaid and Medicare Patients Treated Equally? — Tracking the same patients as they age from Medicaid into Medicare at 65, the authors find higher provider acceptance rates are associated with larger increases in primary care and specialist visits, especially new-patient specialist visits. They conclude Medicaid's smaller provider network plays a large role in limiting service provision.
  • Why Is Europe More Equal Than The United States — The US redistributes a larger share of national income to the bottom 50% than any European country, with net transfers of 6% of national income versus about 4% in Western and Northern Europe. Europe taxes and redistributes more overall, 47% of national income versus 35%, relying more on indirect taxes.

AI Summary. The International Energy Agency has revised its solar deployment forecasts upward every year this decade, with actual installations running as much as 3x higher than it predicted five years earlier. Costs for solar panels, wind, and batteries have fallen roughly 10% per year for decades, while inflation-adjusted fossil fuel prices are about the same as 140 years ago.

Nat Bullard Exponential View
Date Posted:

.@NatBullard argues that market forecasts for consistently improving technologies like semiconductors, solar panels, and batteries need to reflect heuristics such as Wright’s Law, not projections of recent trends.

Do energy forecasters underestimate solar because it behaves like technology?

Core argument: Actual global solar installations have run as much as three times higher than the International Energy Agency predicted five years earlier, and the agency has revised its solar deployment forecasts upwards every year this decade.

Every year this decade, the International Energy Agency has had to revise its solar deployment forecasts upwards. And not just by small amounts. Actual installations have been as much as three times higher than the agency predicted five years ago. Part of the confusion may lie in the fact that energy is transitioning from a commodity to a technology. Consistently improving technologies have historically followed predictable heuristics such as Wright’s Law or Moore’s Law. This is also happening in energy as evidenced by solar PV, wind, and batteries, where costs have fallen by around 10% per year for decades. Commodities such as fossil fuels, however, exhibit entirely different patterns – prices tend to be volatile in the short term, but show mean reversion over longer periods, making them more amenable to autoregressive forecasting models. In fact, the inflation-adjusted prices of fossil fuels are essentially the same today as they were 140 years ago.

Takeaways by Macro Roundup® AI

  1. Actual global solar installations have run as much as three times higher than the International Energy Agency predicted five years earlier, and the agency has revised its solar deployment forecasts upwards every year this decade.
  2. Solar PV, wind, and battery costs have fallen by around 10% per year for decades, following technology heuristics such as Wright's Law or Moore's Law rather than commodity price patterns.
  3. Inflation-adjusted fossil fuel prices are essentially the same today as they were 140 years ago, with short-term volatility and longer-run mean reversion that make them more amenable to autoregressive forecasting models.

Related Articles:

  • The Energy Transition Will Be Much Cheaper Than You Think — Economic models have overestimated adoption of carbon capture and storage while underestimating cost declines in solar panels and lithium batteries. Researchers modelling solar, wind, batteries and hydrogen electrolysers under "Wright's law" — where each doubling of production cuts unit costs by a fixed percentage — estimate emissions fall fast enough to meet the 1.5°C target at minimal cost.

AI Summary. Asian arms makers and naval shipbuilders are leading a global surge in defence stocks, with triple-digit share price gains for large South Korean and Japanese defence companies placing them among the top 20 gainers on the MSCI All-Country World index, as investors bet the region will lead a rearmament boom.

Joseph Cotterill Financial Times
Date Posted:

The stock price of Japan’s largest defense contractor, Mitsubishi Heavy Industries, is up 180% this year. Kawasaki Heavy, the second largest, is up 100%, and the largest South Korean defense contractor, Hanwha Aerospace, tripled in value this year.

Are Asian arms makers leading the global rally in defence stocks?

Core argument: Triple-digit share price gains for large South Korean and Japanese arms companies have pushed them into the top 20 gainers on the MSCI All-Country World index for 2024.

Asia’s arms makers and naval shipbuilders are leading a global surge in defence stocks this year as investors bet that the region’s companies are primed to lead a rearmament boom. Triple-digit share price increases for big arms companies listed in South Korea and Japan have pushed them into the top 20 gainers on the MSCI All-Country World index for 2024, as defence-related stocks have gone on the march globally from Norway to Brazil this year. The share moves underline a darkening in the global security order.

Takeaways by Macro Roundup® AI

  1. Triple-digit share price gains for large South Korean and Japanese arms companies have pushed them into the top 20 gainers on the MSCI All-Country World index for 2024.
  2. Asia's arms makers and naval shipbuilders are leading a global surge in defence stocks as investors bet the region's companies are positioned to lead a rearmament boom.
  3. Defence-related stocks have risen globally from Norway to Brazil, share moves that underline a darkening in the global security order.

Related Articles:

  • The US and Its Allies Face a $10 Trillion Reckoning in the Race to Rearm — World defense spending reached a record $2.2tn, and security officials say military budgets may need to reach Cold War levels of as high as 4% of economic output to deliver on NATO's plans. Bloomberg Economics calculates that US and Group of Seven allies hitting that level would mean over $10tn in additional commitments over a decade.
  • 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.
  • Global Defence Groups Hiring At Fastest Rate In Decades Amid Record Orders — A survey of 20 large and medium-sized US and European defence and aerospace companies found they plan to recruit tens of thousands of workers, with 10 of them seeking to add almost 37,000 positions, or nearly 10% of their combined workforce. Demand spans apprentices to executives, including engineers, software developers, cyber security analysts, welders, and mechanics.

AI Summary. SpaceX's Starship, the largest and most powerful rocket ever developed, is under contract as a lunar lander for NASA's effort to return people to the moon and is central to plans for a Mars settlement. SpaceX says the fully reusable design will be far cheaper to fly and will eventually replace its Falcon 9 and Falcon Heavy rockets.

Loren Grush and Hadriana Lowenkron Bloomberg
Date Posted:

The 6th launch of @SpaceX Starship was largely successful, including the first reignition of one of its Raptor engines during a flight test.

Will a fully reusable rocket lower launch costs and reach the moon?

Core argument: SpaceX launched Starship, the largest and most powerful rocket ever developed, with President Trump and Elon Musk looking on; the vehicle is under contract to serve as the lunar lander NASA will use to return people to the moon for the first time in half a century.

The largest and most powerful rocket ever developed, Starship is under contract to function as a lunar lander that NASA will use to put people back on the moon for the first time in half a century. It’s the centerpiece of Musk’s ambition to start a settlement on Mars. The vehicle is also meant to revolutionize SpaceX’s business plan. Designed to be fully reusable, Starship will be much cheaper to fly than any other rocket, according to SpaceX, and will eventually replace the company’s industry-leading Falcon 9 and Falcon Heavy rockets. But to meet that promise of delivering a fully reusable rocket, SpaceX must refine its technique for recovering all of the pieces of Starship after launch.

Takeaways by Macro Roundup® AI

  1. SpaceX launched Starship, the largest and most powerful rocket ever developed, with President Trump and Elon Musk looking on; the vehicle is under contract to serve as the lunar lander NASA will use to return people to the moon for the first time in half a century.
  2. SpaceX says the fully reusable Starship will be much cheaper to fly than any other rocket and will eventually replace the company's industry-leading Falcon 9 and Falcon Heavy vehicles.
  3. Meeting Starship's promise of full reusability requires SpaceX to refine its technique for recovering all of the rocket's pieces after launch, and the vehicle is the centerpiece of Musk's ambition to start a settlement on Mars.

Related Articles:

  • It’s Not a Space Race, It’s the Space Olympics — The US operates 81% of commercial satellites in orbit and 86% of global effective launch capacity, with NATO allies second in satellites at 11% and China second in launch capacity at 9%. China is pursuing mega satellite constellations and reusable rockets, in many cases copying approaches already proven by US companies.
  • Building an Enduring Advantage in the Third Space Age — The United States and China each logged their highest-ever annual launch rates, at 103 and 66 launches, while Russia fell to 19 and Europe recorded three. The US accounted for roughly half of global launches but 81% of effective launch capacity, since Falcon 9 and Falcon Heavy comprised 93% of US launches.
  • The Rockets Are Nifty, But It Is Satellites That Make SpaceX Valuable — SpaceX's reusable Falcon rockets can send a tonne into space at about a tenth of the cost of a decade ago, according to a Citigroup estimate. Analysis from BryceTech shows the company launched almost 7x as much mass into orbit as all private and national rivals combined in a quarter.

Thursday, November 21, 2024

AI Summary. Federal government net interest costs have nearly tripled from $345bn in fiscal 2020 and $352bn in 2021, rising by more than $100bn in 2022, more than $175bn in 2023, and $223bn in 2024. The increase followed Federal Reserve interest rate hikes and roughly $6tn of additional debt accumulated from COVID-19 relief measures.

Marc Goldwein Committee for a Responsible Federal Budget
Date Posted:

The Federal government’s net interest costs increased 285% over the last decade to $882B in the fiscal year ending September of 2024, reflecting both increased rates and the $6T increase in debt from covid relief measures. @MarcGoldwein

Have federal interest costs nearly tripled since rate hikes and COVID borrowing?

Core argument: Federal interest costs have nearly tripled since 2020, when interest totaled $345 billion, followed by $352 billion in FY 2021 amid the very low rates of the COVID-19 pandemic.

Over the past few years, interest costs borne by the federal government have risen dramatically. While interest totaled $345 billion in FY 2020 and $352 billion in 2021, when interest rates were very low due to the COVID-19 pandemic, that changed in 2022 when the Federal Reserve began raising interest rates, and we had accumulated an additional $6 trillion of debt from COVID relief measures. After rising by more than $100 billion between 2021 and 2022 and then by more than $175 billion between 2022 and 2023, net interest costs jumped $223 billion in 2024.

Takeaways by Macro Roundup® AI

  1. Federal interest costs have nearly tripled since 2020, when interest totaled $345 billion, followed by $352 billion in FY 2021 amid the very low rates of the COVID-19 pandemic.
  2. Net interest costs rose by more than $100 billion between 2021 and 2022, more than $175 billion between 2022 and 2023, and jumped $223 billion in 2024.
  3. The rise in federal interest costs began in 2022, when the Federal Reserve started raising interest rates and an additional $6 trillion of debt had accumulated from COVID relief measures.

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.
  • The Long-Term Budget Outlook Under Alternative Scenarios for the Economy and the Budget — The Congressional Budget Office projects that if private investment were more sensitive to federal deficits, debt held by the public would exceed 250% of GDP and real national income per person would be 18% ($21,300) lower than its baseline, with the average interest rate on federal debt 2pp higher.
  • Long-Term Interest Rates, Fiscal Policy, And The Term Premium — US fiscal policy is on an unsustainable path, with potential market flashpoints including a sovereign credit downgrade, weak Treasury auctions, a term premium that has been trending higher, and a weaker dollar if growth slows. A debt crisis is unlikely; gradually higher long-term interest rates and a steeper yield curve are more likely.

AI Summary. A study of more than 37,000 US banks from 1865 to 2023 finds that most bank failures follow a gradual, multi-year deterioration in solvency, as credit losses erode income and capital before a run or a supervisory closure. The authors reject runs on otherwise solvent banks as a plausible cause for at least 80% of failures before deposit insurance.

Sergio Correia, Stephan Luck, and Emil Verner Federal Reserve Bank of New York
Date Posted:

A study covering most US commercial banks from 1865 – 2023 finds that 80% of pre-FDIC bank failures resulted from “rising asset losses” and “deteriorating solvency,” not mere bank runs.

Do bank failures result from gradual solvency deterioration rather than runs?

Core argument: Drawing on more than 37,000 U.S. banks from 1865 to 2023, the authors reject bank runs as a plausible cause of failure for at least 80% of pre-FDIC failures, concluding runs on otherwise solvent banks were not a common cause.

This paper studies failing banks using data on more than 37,000 banks from the United States spanning 1865-2023. Our findings suggest that most bank failures are the result of a deterioration of a bank’s solvency - [which] is typically gradual and takes place over several years. The realization of credit risk reduces income and erodes capital buffers. The erosion of a bank’s profitability and capitalization ultimately results either in a bank run or a supervisory decision to close the bank, the former being more common in the historical data. Both depositors and supervisors seem to be slow to react to information about fundamentals, making bank failures highly predictable. [Though] our empirical approach does not allow us to identify the exact cause of failure, our evidence allows us to reject bank runs as a plausible cause of bank failure for a robust majority of at least 80% of pre-FDIC failures. Hence bank runs on otherwise solvent banks are not a plausible common cause of bank failures for most bank failures in the history of the U.S.

Takeaways by Macro Roundup® AI

  1. Drawing on more than 37,000 U.S. banks from 1865 to 2023, the authors reject bank runs as a plausible cause of failure for at least 80% of pre-FDIC failures, concluding runs on otherwise solvent banks were not a common cause.
  2. Most bank failures follow a gradual deterioration of solvency over several years, as the realization of credit risk reduces income and erodes capital buffers before a bank run or a supervisory closure.
  3. Depositors and supervisors appear slow to react to information about bank fundamentals, making bank failures highly predictable, with runs more common than supervisory closures in the historical data.

Related Articles:

  • Deposit Insurance, Uninsured Depositors, and Liquidity Risk During Panics — Commercial banks located near a post office that accepted federally insured deposits were more likely to close during the Great Depression, and this effect weakened sharply after deposit insurance was extended to commercial banks. The authors interpret this as a competitive liquidity effect arising from incomplete insurance coverage.
  • The Puzzling Persistence of Financial Crisis — Financial crises are costly, with average declines of 5.5% of real GDP and median fiscal costs of 16% of real GDP to resolve distressed banks. The authors identify four categories of causal factors: politically motivated risk subsidies such as government support for housing credit, shifts in investor risk preferences, investor learning, and fraud.
  • Credit Allocation and Macroeconomic Fluctuations — Credit expansions disproportionately channel credit to non-tradable sector firms and households, and the authors find that the sectoral allocation of credit predicts future GDP paths and the likelihood of systemic banking crises. Credit growth to non-tradable industries predicts boom-bust output patterns and elevated financial fragility, while credit to tradable industries is associated with higher future productivity growth.

AI Summary. The gap in the absolute number of births between states voting Democratic and those voting Republican has narrowed by 38%, from about 475,000 to roughly 294,000 births. The author argues that the economies and family-friendly cultures of Republican-voting states give them a fertility-rate advantage that, if current trends hold, could produce more total births within 15 years.

Brad Wilcox and Michael Pugh Deseret News
Date Posted:

The birth gap between blue and red states (based on 2020 results) has fallen by 38% since 2015, from 475k to 294k births in 2023. Red states’ family-friendly cultures and economies may lead to higher absolute births in the next 15 years. @BradWilcoxIFS

Are Republican-voting states closing the birth gap with Democratic-voting states?

Core argument: The gap in absolute births between states voting Democratic and Republican in the past presidential election fell 38%, from about 475,000 births in 2015 to roughly 294,000 in 2023.

The gap [in absolute number of births] between blue and red state has fallen by 38% since 2015. The birth gap between the states that voted Republican and Democratic in the past presidential election has fallen from about 475,000 births in 2015 to approximately 294,000 births in 2023. This is a testament to a dynamic where the economies and family friendly cultures in red states are not only giving them an advantage in their fertility rates but, if current trends hold, in absolute births in the next 15 years.

Takeaways by Macro Roundup® AI

  1. The gap in absolute births between states voting Democratic and Republican in the past presidential election fell 38%, from about 475,000 births in 2015 to roughly 294,000 in 2023.
  2. The author attributes the narrowing birth gap to economies and family-friendly cultures in red states, which give those states an advantage in fertility rates.
  3. The author projects that, if current trends hold, red states will gain an advantage in absolute births over blue states within the next 15 years.

Related Articles:

  • Young Families Have Continued Leaving Big Cities Post-Pandemic — Large urban counties have continued to lose population of young children even as their overall population growth resumed, driven by immigration. Birth rates in large urban counties have declined twice as fast as in rural counties over the past decade, and the number of children under five fell in 58% of all US counties.
  • The Marriage Paradox: Understanding And Remedying The Paradoxical Place Of Marriage In America — The U.S. marriage rate has fallen more than 60% since 1970, from 85.9 to 30.5 marriages per 1,000 unmarried Americans aged 15 and older, and the share of adults who are married has dropped from 72% to about 50%. Demographers project roughly one in three young adults may never marry.
  • The Age of Depopulation: Surviving a World Gone Gray — The United States remains the main outlier among developed countries resisting depopulation, with fertility of just over 1.6 births per woman — high for a rich country but below the 2.1 replacement threshold — plus steady immigration. The Census Bureau projects the U.S. population will peak around 2080 and decline continuously thereafter.

AI Summary. About two-thirds of U.S. crop-farm workers are foreign-born and 42% lack legal authorization to work, according to a Labor Department report, with immigrant labor concentrated in jobs such as picking fruit, applying pesticides, operating machinery, and slaughtering livestock. Agriculture trade groups are lobbying for expanded use of temporary work visas.

Patrick Thomas Wall Street Journal
Date Posted:

2/3 of US crop farm workers are foreign-born and 42% aren’t legally authorized to work in the country. Agriculture trade groups are seeking an expansion of temporary work visas to limit the impact of changes in immigration enforcement.

Does US food production depend on immigrant workers?

Core argument: About two-thirds of U.S. crop-farm workers are foreign-born and 42% are not legally authorized to work in the country, according to a Labor Department report.

America’s food-supply chain relies on a predominantly immigrant workforce for some of its most challenging jobs, such as picking fruit, applying pesticides on crops, operating machinery and slaughtering livestock. About two-thirds of U.S. crop-farm workers are foreign-born, and 42% aren’t legally authorized to work in the country, according to a Labor Department report. Agriculture trade groups are lobbying the incoming administration for the expanded use of temporary work visas. Some farms and meatpackers are forging deeper ties with recruiters who can ensure a steady labor supply.

Takeaways by Macro Roundup® AI

  1. About two-thirds of U.S. crop-farm workers are foreign-born and 42% are not legally authorized to work in the country, according to a Labor Department report.
  2. America's food-supply chain depends on a predominantly immigrant workforce for jobs including picking fruit, applying pesticides, operating machinery and slaughtering livestock.
  3. Agriculture trade groups are lobbying the incoming administration for expanded use of temporary work visas, while some farms and meatpackers forge deeper ties with recruiters who can ensure a steady labor supply.

Related Articles:

  • How Immigration Remade the U.S. Labor Force — The Congressional Budget Office estimates more than 9m people have migrated on net to the U.S. in recent years, nearly matching the prior decade's total and lifting population growth to almost 1.2% a year. Fewer than 30% are lawful permanent residents; without immigration, growth would be 0.2%.
  • Without Immigrants, US Working-Age Population Would Shrink — All net US employment growth since early 2020 has been among foreign-born workers, and without immigration the US working-age population would be shrinking — a pattern likely to persist for the rest of the decade. The jump in immigration appears to be enabling a soft landing that most economists had thought impossible.

AI Summary. Mexico's 2020 decree cutting car import tariffs from 20% to 0% has been followed by a surge of Chinese vehicles, with China shipping close to 500,000 cars to Mexico this year and displacing the United States as Mexico's top supplier. One in three new cars sold in Mexico this year will be built in China, up from 4% in 2020.

Michael Dunne Mexico News Daily
Date Posted:

1/3 of new cars sold in Mexico in 2024 were built in China up from 4% in 2020. China exported 500,000 cars to Mexico in 2024. @dunne_insights hat tip to @Brad_Setser

Have tariff cuts made China Mexico's top car supplier?

Core argument: One of every three new cars sold in Mexico this year will be built in China, up from 4% in 2020.

Back in 2020, Mexico decided to open the door wider to imports from China. A decree dropped import tariffs on cars from 20% to 0%. The idea was to give some Mexican car buyers access to low-cost electric vehicles (EVs). A tsunami of Chinese cars and trucks is pouring into Mexico — and flying out of showrooms. The P.R.C. will ship close to 500,000 vehicles to Mexico this year. China has blown past the United States to become Mexico’s number one supplier of cars. One of every three new cars sold in Mexico this year will be built in China. That’s up from just 4% in 2020.

Takeaways by Macro Roundup® AI

  1. One of every three new cars sold in Mexico this year will be built in China, up from 4% in 2020.
  2. China will ship close to 500,000 vehicles to Mexico this year, passing the United States as Mexico's number one supplier of cars.
  3. A 2020 Mexican decree cut import tariffs on cars from 20% to 0%, intended to give some Mexican buyers access to low-cost electric vehicles.

Related Articles:

  • EU to Impose Tariffs Up to 45% on Chinese Electric Vehicles — 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%.
  • 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.
  • Brazil, India, and Mexico are Taking on China’s Exports — Foreign direct investment into China fell to a 30-year low even as Chinese leaders launched an investment push in high-tech goods such as batteries and electric vehicles. Weak domestic demand for cars, chemicals, and steel has pushed Chinese goods into global markets, with average manufactured export prices down nearly 10% and export volumes near record levels.

AI Summary. Manufacturing still accounts for 20% of German gross value added, nearly twice France's share, but industrial production peaked in 2018 and has since fallen faster than elsewhere in the European Union, especially in energy-intensive sectors such as steelmaking. The Bundesbank estimates US tariffs could reduce German GDP by a percentage point.

Economist Staff The Economist
Date Posted:

German industrial production in 2023 was 5% below its 2014 level. Manufacturing still accounts for 20% of German gross value added.

Why is German industrial production falling faster than the rest of Europe?

Core argument: Manufacturing still accounts for 20% of German gross value added, almost twice the share in France, even though German industrial production peaked in 2018 and has since fallen faster than elsewhere in the EU, especially in energy-intensive sectors such as steelmaking.

High energy prices are a common grumble among firms in a country where manufacturing still accounts for 20% of gross value added. That remains almost twice the figure for France, even though industrial production peaked in 2018 and has since sagged more quickly than elsewhere in the EU, especially in energy-intensive sectors such as steelmaking. As German exports to China have declined, America has partly stepped into the breach. Some firms have been able to exploit opportunities opened by America’s decoupling from Chinese tech; others have grown fat on the subsidy bonanza triggered by the Inflation Reduction Act. But Mr Trump threatens all that. Not only do tariffs loom—the Bundesbank thinks they could lop a percentage point off German gdp—but new American restrictions could hit German manufacturers that use Chinese inputs. They will also accelerate Chinese exporters’ hunt for alternative markets, including Europe.

Takeaways by Macro Roundup® AI

  1. Manufacturing still accounts for 20% of German gross value added, almost twice the share in France, even though German industrial production peaked in 2018 and has since fallen faster than elsewhere in the EU, especially in energy-intensive sectors such as steelmaking.
  2. The Bundesbank estimates that American tariffs could cut German GDP by one percentage point, while new American restrictions could hit German manufacturers that use Chinese inputs.
  3. As German exports to China have declined, America has partly filled the gap, with some German firms exploiting America's decoupling from Chinese tech and others benefiting from Inflation Reduction Act subsidies.

Related Articles:

  • Why Europe’s Car Crisis Is Mostly Made In China — Volkswagen, which has never closed a factory in its German heartland, is weighing shutting three plants and cutting worker pay by 10% after warning on profits twice in a year. China has overtaken Japan as the world's largest car exporter, with Chinese manufacturers building advanced electric cars at costs said to be 30% below European rivals'.
  • Europe is Pricing Itself Out of Existence — Europe paid 166.3% more for its primary energy mix than it would have using conventional sources, equal to 5.6% of GDP rather than 3.37%, which the author argues largely explains minimal European growth. European Union primary energy consumption has fallen 17.47% from its peak, with renewables at 16.6% of the mix and renewable electricity priced at 5x conventional.
  • The Future of European Competitiveness – A Competitiveness Strategy for Europe — A European Union competitiveness report attributes the EU's labour productivity growth gap with the US largely to weaker activity in information and communications technology and large-scale digital services; excluding main ICT sectors, EU productivity was broadly at par with the US from 2000-2019. It estimates Europe's investment share must rise about 5 percentage points of GDP.

AI Summary. The Republican presidential candidate added about 2.5m votes relative to the prior election, while the Democratic candidate received about 7m fewer votes than her party's previous nominee. An analysis found she failed to add voters in three of the seven swing states and in 80% of US counties.

Ashley Wu, Lazaro Gamio, Robert Gebeloff, Elena Shao and Michael Bender New York Times
Date Posted:

A NYT analysis finds that Trump won 2.5mm more votes than in 2020 and Harris won 7mm fewer votes than Biden in 2020. Overall turnout was down 2.65%.

Did the election turn on Democratic vote losses rather than Republican gains?

Core argument: Kamala Harris earned about 7 million fewer votes than Joseph R. Biden Jr. did in 2020, a decline as consequential to the outcome as Donald Trump's gains.

Donald Trump improved on his totals, adding about 2.5 million more votes than four years ago. But just as consequential to the outcome were Kamala Harris’s losses: She earned about 7 million fewer votes compared with Joseph R. Biden Jr.’s performance in 2020. Ms. Harris failed to find new voters in three of the seven swing states and in 80% of counties across the country, a New York Times analysis shows. In the places where she matched or exceeded Mr. Biden’s vote totals, she failed to match Mr. Trump’s gains.

Takeaways by Macro Roundup® AI

  1. Kamala Harris earned about 7 million fewer votes than Joseph R. Biden Jr. did in 2020, a decline as consequential to the outcome as Donald Trump's gains.
  2. Donald Trump added about 2.5 million more votes than he received four years earlier.
  3. Kamala Harris failed to find new voters in three of the seven swing states and in 80% of U.S. counties, and where she matched or exceeded Joseph R. Biden Jr.'s totals she did not match Donald Trump's gains, a New York Times analysis shows.

Related Articles:

  • How Trump Won In Maps and Charts — Election data show the Republican candidate improved on his prior presidential margin in nearly 90% of US counties, with rural turnout strong and urban support for the Democratic candidate falling short. Exit polls indicate Asian, Black, Hispanic, and white voters all shifted toward him, while the Democrat gained only among voters over 65 and white college-educated women.
  • The Demographic Detail of Donald Trump’s Victory — The foreign-born share of a county's population explains half the geographic variation in the electoral swing between the 2020 and 2024 US presidential elections, a stronger predictor than the white-working-class share was of earlier shifts. Because the level of the immigrant population aligns with voting patterns rather than its growth rate, the analysis suggests immigrants themselves changed their votes.
  • The Economic Geography Of The 2024 Elections — Counties where government transfer programs such as Social Security, Medicare, Medicaid, and unemployment insurance make up at least a quarter of personal income gave Trump 63% of the vote, while counties where transfers account for less than 15% gave Harris 56%. Transfers supplied 18% of total US personal income.