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


Thursday, December 19, 2024

AI Summary. The Census Bureau estimates immigrants accounted for 84% of U.S. population growth over a one-year period, with about 2.7m net arrivals, alongside a falling birthrate and a death rate elevated by an aging population. The bureau estimates the U.S. grew by 8.5m over four years, with immigrants making up the vast majority.

Paul Overberg, Jon Kamp and Max Rust Wall Street Journal
Date Posted:

The Census Bureau estimates that 2.7mm immigrants accounted for 84% of US population growth in the 12 months ending June 2024. Over the past four years, the US population grew by 8.5mm, with immigrants making up the vast majority.

How much of US population growth comes from immigration?

Core argument: Immigrants accounted for 84% of U.S. population growth in the year ended June 30, the Census Bureau said, amid a surge in legal and illegal arrivals, a falling birthrate and a death rate propped up by an aging population.

Newcomers accounted for 84% of U.S. growth in the year ended June 30, the Census Bureau said Thursday, continuing a trend since the Covid-19 pandemic. This was fueled by a surge in legal and illegal arrivals, a falling birthrate and a death rate propped up by an aging population. The Census Bureau estimates include major revisions to earlier estimates that are intended to better capture a surge in immigration. The bureau estimates about 2.7 million net arrivals for the most recent year. The bureau also more than doubled its net immigration estimate for the prior year to about 2.3 million. The agency now estimates the U.S. grew by 8.5 million over the past four years, with immigrants accounting for the vast majority.

Takeaways by Macro Roundup® AI

  1. Immigrants accounted for 84% of U.S. population growth in the year ended June 30, the Census Bureau said, amid a surge in legal and illegal arrivals, a falling birthrate and a death rate propped up by an aging population.
  2. The Census Bureau estimates about 2.7 million net immigrant arrivals in the most recent year and more than doubled its prior-year net immigration estimate to about 2.3 million, part of revisions intended to better capture the surge.
  3. The Census Bureau estimates the U.S. grew by 8.5 million over the past four years, with immigrants accounting for the vast majority, a trend continuing since the Covid-19 pandemic.

Related Articles:

  • Recent Immigration Surge Has Been Largest in U.S. History — An analysis of government data finds the recent U.S. immigration surge is the largest on record, with net migration averaging 2.4m people a year from 2021 to 2023 and the foreign-born share of the population reaching 15.2% in 2023, up from 13.6% in 2020. About 60% of immigrants arriving since 2021 entered without legal authorization.
  • The Demographic Outlook: 2024 to 2054 — The Congressional Budget Office projects the US population will grow from 342mm in 2024 to 383mm in 2054, an average 0.4% a year — less than half the 0.9% pace of the prior five decades. Immigration accounts for about 70% of growth over the next decade and for all population growth beginning in 2040.
  • The Cost of Illegal Immigration — The US foreign-born population rose by 6.6mm to 51.6mm over a roughly three-year span, lifting immigrants to 15.6% of the population, above the prior records of 14.8% in 1890 and 14.7% in 1910. The authors estimate about 13.7mm illegal immigrants now live in the US, a net increase of 3.7mm.

AI Summary. Using digitized industry-level US tariff data from 1870–1900 matched to state-level manufacturing census data for over 80 industries, the authors estimate that tariffs reduced labor productivity. They argue the results are consistent with weaker international competition allowing less efficient firms to survive, reduced incentives to innovate, and lobbying for protection misallocating resources.

Alexander Klein and Christopher Meissner National Bureau of Economic Research
Date Posted:

In a study of over 80 US manufacturing industries from 1870-1909 @cmicmeissner concludes that higher tariff rates reduced labor productivity. “The era’s high tariffs are unlikely to have helped the US become a globally competitive manufacturer.”

Did high tariffs raise or lower American manufacturing productivity?

Core argument: Using an instrumental variable strategy on 1870–1900 U.S. data, the authors find that tariffs reduced labor productivity in manufacturing, with negative and significant coefficients for textiles, metals, paper, transportation, chemicals, and petroleum.

We develop an industry-level database of tariffs spanning three decades (1870-1900) by digitizing the universe of tariff-lines and imports from official data in benchmark years. We match these data to state-level Census of Manufactures data for over 80 highly dis-aggregated manufacturing industries. Using an instrumental variable strategy, results show that tariffs reduced labor productivity. Generally, when labor productivity is the dependent variable, the coefficients on tariffs are negative and significant (Textiles, Metals, Paper, Transportation, Chemicals and Petroleum) or statistically insignificant (Consumer Goods, Tobacco, Glass, and Machinery/Electrical). Our results are consistent with several, not mutually incompatible, explanations. One is that tariffs weakened international competition, and in so doing, allowed smaller, less efficient firms to operate. Second, firms in a less competitive environment may have been less likely to invest in new products and processes. Finally, firms and industries may have lobbied to obtain protection which could have led to an economic misallocation of resources.

Takeaways by Macro Roundup® AI

  1. Using an instrumental variable strategy on 1870–1900 U.S. data, the authors find that tariffs reduced labor productivity in manufacturing, with negative and significant coefficients for textiles, metals, paper, transportation, chemicals, and petroleum.
  2. The authors build an industry-level tariff database for 1870–1900 by digitizing the universe of tariff-lines and imports in benchmark years, matching them to state-level Census of Manufactures data for over 80 disaggregated manufacturing industries.
  3. Tariff coefficients are statistically insignificant for consumer goods, tobacco, glass, and machinery/electrical, and the authors offer several compatible explanations: weakened international competition allowing smaller, less efficient firms to operate, reduced investment in new products and processes, and lobbying for protection that misallocated resources.

Related Articles:

  • Can Trump Reduce the Trade Deficit? — A world of widespread tariffs would also shrink international capital flows, and because the US trade deficit is the counterpart of large capital inflows, reduced capital mobility would narrow that deficit. The author argues this would occur largely by reducing overall investment in the US economy.
  • Help for the Heartland? The Employment and Electoral Effects of the Trump Tariffs in the United States — The authors find that the combined effect of U.S.-China trade war import tariffs, retaliatory tariffs, and farm subsidies on employment in exposed U.S. locations was at best a wash and possibly mildly negative, while residents of tariff-protected areas became less likely to identify as Democrats and more likely to vote Republican.
  • Fiscal, Macroeconomic, and Price Estimates of Tariffs Under Both Non-Retaliation and Retaliation Scenarios — The authors estimate the modeled tariff proposals would raise $1.2tn–$4.4tn over 10 years, or 0.3–1.2% of average GDP, with foreign retaliation cutting that revenue by 12–26%. They project consumer prices initially rise 1.2–5.1%, equal to $1,900–$7,600 of lost disposable income per household, with real GDP contracting 0.5–1.4% in the medium term.

AI Summary. The Federal Reserve has cut interest rates by 100 basis points amid growth of 3.0% and 2.8% over the past two quarters, with the Atlanta Federal Reserve projecting 3.2% growth in the fourth quarter, above the Congressional Budget Office's 2% long-run estimate. The authors put 40% odds on rate hikes and see significant downside risk to the 60/40 stock-bond portfolio.

Torsten Sløk Apollo
Date Posted:

Torsten Sløk projects “a 40% probability that the Fed will raise interest rates in 2025,” citing a strong economy, potential for inflationary fiscal expansion, and other policy shifts.

Do rate cuts in a strong economy threaten the 60/40 portfolio?

Core argument: The authors put a 40% probability on the Fed raising interest rates in 2025, after the Fed cut rates by 100 bps this year.

The Fed has now cut interest rates 100 bps this year. In a strong economy where growth over the past two quarters has been 3.0% and 2.8%, the Atlanta Fed expects GDP growth in the fourth quarter to be 3.2%, well above the CBO’s 2% estimate of long-run US growth. The strong economy, combined with the potential for lower taxes, higher tariffs, and restrictions on immigration, has increased the risk that the Fed will have to hike rates in 2025. We see a 40% probability that the Fed will raise interest rates in 2025. For investors, it is starting to look similar to 2022—too high inflation, rising interest rates, and falling stock prices. The bottom line is that there are significant downside risks to the 60/40 portfolio as we enter 2025.

Takeaways by Macro Roundup® AI

  1. The authors put a 40% probability on the Fed raising interest rates in 2025, after the Fed cut rates by 100 bps this year.
  2. US growth of 3.0% and 2.8% over the past two quarters, plus the Atlanta Fed's 3.2% fourth-quarter projection, runs well above the CBO's 2% estimate of long-run US growth.
  3. The authors see significant downside risks to the 60/40 portfolio entering 2025, citing a setup resembling 2022 of too-high inflation, rising interest rates, and falling stock prices, with potential lower taxes, higher tariffs, and immigration restrictions adding risk.

Related Articles:

  • Inflation Rising Again — The decline in inflation has stalled, with Federal Reserve and market-implied inflation measures above the 2% target and short- and long-run consumer inflation expectations moving higher. The author argues this uptrend, alongside strong economic momentum, points to an inflation rebound rather than a softening that would justify rate cuts.
  • Our Thoughts on Large US Deficits and Their Impact on Bond Yields — Total borrowing in the US is about average despite high government deficits, as high public borrowing has contributed to the need for higher interest rates that have depressed private sector borrowing. Risk premiums on long-dated debt look about average, with no market signs that economic or debt limits are currently being hit.
  • Economic Policy Before and After the 2024 Election — Market expectations for the Federal Reserve's interest-rate path have shifted, with the expected endpoint moving from about 2.8% to 3.8%. The author argues that enacting the campaign agenda—larger deficits from tax cuts, tariffs on all imports, a weaker currency, mass deportations, and pressure on central-bank independence—would produce a substantially larger inflation shock.

AI Summary. Federal Reserve officials project that inflation will not return to their 2% target until 2027 and that short-term interest rates will settle near 3-3.25%, above prior expectations. The projections suggest policymakers are willing to accept more inflation, faster real growth, and lower interest rates to keep unemployment from rising.

Matt Klein The Overshoot
Date Posted:

Fed officials expect the terminal rate will settle between 3-3.25%, not far below the current level of 4.25-4.5%. @M_C_Klein notes the Fed is more focused on the labor market than their 2% inflation target.

Are policymakers willing to tolerate higher inflation to prevent rising unemployment?

Core argument: Fed officials project inflation will not return to the 2% goal until 2027 under appropriate monetary policy, with short-term rates settling around 3–3.25%, not far below the current 4.25–4.5%.

Monetary policymakers admitted that inflation is more entrenched than they had previously believed, and that short-term interest rates will need to be higher for longer. “Under appropriate monetary policy,” inflation will not return to the Fed’s 2% goal until 2027. When that finally happens, officials expect that short-term interest rates will settle down around 3-3.25%—not much lower than the current level of 4.25-4.5%. “Appropriate” short-term interest rates in 2025 and 2026 are now expected to be 50 basis points higher than when the previous batch of projections were released in mid-September, while short rates in 2027 are expected to be roughly 25 basis points higher. But the latest projections also revealed something else that was missed in the negative market reaction: the median policymaker seems willing to accept almost any outcome that prevents unemployment from getting worse. Comparing the Fed’s latest projections to those from mid-June shows that officials are now happy to accept more inflation, faster real growth, and lower interest rates—whatever it takes to keep the jobless rate capped.

Takeaways by Macro Roundup® AI

  1. Fed officials project inflation will not return to the 2% goal until 2027 under appropriate monetary policy, with short-term rates settling around 3–3.25%, not far below the current 4.25–4.5%.
  2. Appropriate short-term rates for 2025 and 2026 are now projected 50 basis points higher than in the mid-September projections, and 2027 rates roughly 25 basis points higher.
  3. Compared with the mid-June projections, Fed officials appear willing to accept more inflation, faster real growth, and lower interest rates to keep the jobless rate from rising.

Related Articles:

  • Inflation Rising Again — The decline in inflation has stalled, with Federal Reserve and market-implied inflation measures above the 2% target and short- and long-run consumer inflation expectations moving higher. The author argues this uptrend, alongside strong economic momentum, points to an inflation rebound rather than a softening that would justify rate cuts.
  • Our Thoughts on Large US Deficits and Their Impact on Bond Yields — Total borrowing in the US is about average despite high government deficits, as high public borrowing has contributed to the need for higher interest rates that have depressed private sector borrowing. Risk premiums on long-dated debt look about average, with no market signs that economic or debt limits are currently being hit.
  • Economic Policy Before and After the 2024 Election — Market expectations for the Federal Reserve's interest-rate path have shifted, with the expected endpoint moving from about 2.8% to 3.8%. The author argues that enacting the campaign agenda—larger deficits from tax cuts, tariffs on all imports, a weaker currency, mass deportations, and pressure on central-bank independence—would produce a substantially larger inflation shock.

AI Summary. At Newport News Shipbuilding, half of welders now have less than four years' experience, down from an average of 20 years three decades ago, and inexperience reduces productivity and adds delays. Shipbuilding wages starting at $17 an hour no longer carry a premium over local retail and warehouse jobs paying up to $24.

Greg Ip Wall Street Journal
Date Posted:

Labor constraints at shipyards are leading to supply constraints and quality issues as American warship tonnage under construction is projected to rise from 68,000 in 2014 to 167,000 by 2034. @greg_ip

Are shipbuilding wages too low to retain experienced welders?

Core argument: Half of Newport News Shipbuilding's welders have less than four years' experience, versus an average of 20 years three decades ago, and inexperience reduces productivity and adds delays.

Thirty years ago the average welder at Newport News Shipbuilding had 20 years of experience. Today, half have less than four years’ experience. Inexperience reduces productivity and adds delays. Newport News recently reported that around 20 welders had skipped a crucial step, leading to substandard welds on aircraft carriers and submarines. Under contracts negotiated before the pandemic inflation, salaries here start at $17 an hour, exceed $20 within a year, and top $30 for more senior craftsmen. That once represented a significant premium to unskilled jobs in the region. Not now. Local fast-food restaurants pay up to $16 an hour, and Target is advertising warehouse jobs at up to $24. Chris Kastner, chief executive of Huntington Ingalls Industries [noted] “The spread between the shipbuilding manufacturing wage and basic wage in services such as retail essentially disappeared. So it’s just much easier for someone to leave and do a less demanding job.”

Takeaways by Macro Roundup® AI

  1. Half of Newport News Shipbuilding's welders have less than four years' experience, versus an average of 20 years three decades ago, and inexperience reduces productivity and adds delays.
  2. Newport News Shipbuilding reported that roughly 20 welders skipped a crucial step, producing substandard welds on aircraft carriers and submarines.
  3. Newport News shipbuilding salaries, set by contracts negotiated before pandemic inflation, start at $17 an hour and top $30 for senior craftsmen, while local fast-food work pays up to $16 and Target advertises warehouse jobs at up to $24.

Related Articles:

  • China’s Shipyards Are Ready for a Protracted War. America’s Aren’t — China produced more than half of the world's commercial shipbuilding output, while Europe accounts for about 5% and the US next to nothing, with most of the remainder built in South Korea and Japan. Analysts argue that in a protracted conflict China's wartime-scale yards could quickly accelerate production, replace lost ships, and repair damaged ones.
  • Nearly 40% of US Attack Submarines Are Out of Commission for Repairs — US Navy data show 18 of its 49 attack submarines — 37% — are out of commission for repairs because of naval shipyard delays, up from 28% and well above the 20% industry best practice. The report argues this leaves the US at a disadvantage against China's numerically larger fleet.
  • 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. A Louisiana resident hospitalized with avian influenza is the first severe human bird flu case in the US, with the patient having been exposed to sick and dead birds in backyard flocks. California declared a state of emergency over an outbreak spreading among dairy cows, giving agencies more flexibility on staffing and contracting.

Ilena Peng and Gerry Smith Bloomberg
Date Posted:

There have been 61 human cases of bird flu detected in the US since April; a Louisiana resident has now been hospitalized with the first “severe” human case of avian influenza in the US.

Is bird flu causing severe human illness and emergency declarations?

Core argument: A Louisiana resident hospitalized with avian influenza is the first severe human bird flu case in the US, with exposure to sick and dead birds in backyard flocks and the infection source still under investigation.

A Louisiana resident has been hospitalized with bird flu, marking the first severe human case of avian influenza in the US, while California declared a state of emergency to respond to the growing outbreak among dairy cows. The Louisiana patient had exposure to sick and dead birds in backyard flocks, and an investigation into the source of the infection is still ongoing. There have been 61 human cases of bird flu detected in the US since April, with most patients reporting mild symptoms. California Governor Gavin Newsom declared an emergency to help contain an outbreak that’s been spreading among dairy cows. The move gives state and local agencies more flexibility around staffing, contracting, and other rules to support the response. More than half of the US bird flu infections in humans have occurred in California, where nearly 650 herds have been affected.

Takeaways by Macro Roundup® AI

  1. A Louisiana resident hospitalized with avian influenza is the first severe human bird flu case in the US, with exposure to sick and dead birds in backyard flocks and the infection source still under investigation.
  2. The US has detected 61 human bird flu cases since April, with most patients reporting mild symptoms, and more than half of those infections have occurred in California.
  3. California Governor Gavin Newsom declared a state of emergency over an outbreak spreading among dairy cows, giving state and local agencies more flexibility on staffing and contracting, with nearly 650 herds affected.

Related Articles:

Friday, December 20, 2024

AI Summary. US counties with higher Republican presidential vote shares have higher fertility rates: counties where Trump won under 25% of the vote had a median total fertility rate of 1.31 births per woman, versus 1.84 in counties where he won over 75%. The authors estimate this geographic relationship has strengthened by 85% over 12 years.

Grant Bailey and Lyman Stone Institute for Family Studies
Date Posted:

In 2012, a 10% increase in a county’s GOP vote share was associated with a 0.05 increase in its total fertility rate, compared to 0.09 in 2024. The 20% most GOP counties in 2024 have a fertility rate of 1.76, the most Democratic 1.37. @lymanstoneky

Do more Republican-voting counties have higher fertility rates?

Core argument: Counties where Trump won more than 75% of the 2024 vote had a median total fertility rate of 1.84, versus 1.31 in counties where he won less than 25%, such as D.C.

Counties that voted for Trump tended to have much higher fertility rates than those that did not. This relationship is quite strong. For every 10% increase in votes for Trump in 2024, there is an expected increase of 0.09 babies in a woman’s lifetime. While 0.09 babies does not sound like much, the effect of this Republican advantage shows most prominently at the tail ends of county votes. Counties that had less than 25% of their vote share for Trump, such as D.C., had a median total fertility rate of 1.31. In contrast, counties that had more than 75% of their vote share for Trump had a median total fertility rate of 1.84. This relationship between voting Republican and having more babies is growing stronger over time. In 2012, a 10% increase in votes for Romney within a county saw an expected increase of 0.05 in the total fertility rate, compared to 0.09 in 2024. In the past 12 years, the geographic relationship between voting Republican and having more babies has grown by 85%.

Takeaways by Macro Roundup® AI

  1. Counties where Trump won more than 75% of the 2024 vote had a median total fertility rate of 1.84, versus 1.31 in counties where he won less than 25%, such as D.C.
  2. Every 10% increase in a county's 2024 Trump vote share is associated with an expected increase of 0.09 births in a woman's lifetime.
  3. The geographic relationship between voting Republican and higher fertility has grown 85% over 12 years, rising from an expected 0.05 increase in total fertility rate per 10% Romney vote share in 2012 to 0.09 in 2024.

Related Articles:

  • 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.
  • The Geography of Fertility—Where Are the Babies? — 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.
  • More Crowding, Fewer Babies: The Effects of Housing Density on Fertility — Longitudinal data show that more years spent living with parents is associated with having fewer children, with four extra years of coresidence implying roughly 0.15 to 0.3 fewer children regardless of local housing density. The association persists when comparing individuals with similar lifetime income, early test scores, desired family size, and marital histories.

AI Summary. Video-first platforms like TikTok and Instagram reward charisma, energy and delivery over being first with news, a shift that favors political outsiders and upstart media outlets less tied to establishment politicians and freer to publish what mainstream outlets would not. Research finds the newest class of news influencers lean slightly right, and even those with other politics are anti-establishment.

John Burn-Murdoch Financial Times
Date Posted:

30% of American and British adults consume no conventional news media. @jburnmurdoch argues social media, and its further “pivot to video” vs. text, is “unfavourable to an educated centrist establishment, but a boon to populists and radicals.”

Does video-first social media favor political outsiders over establishment media?

Core argument: Text-based social media favored mainstream journalism because pithy writing helped and chronological feeds rewarded news, while the pivot to video shifts the balance toward charisma, energy and delivery over being first.

These platforms are fundamentally different. Text-based social media still favoured mainstream journalism, partly because pithy writing helps — and the chronological feed rewarded news. With the pivot to video, the balance tilts the other way. On TikTok and Instagram, the currency is charisma, energy and delivery: being first is less important than being hyper-engaging. This is another thumb on the scale for political outsiders. The upstart media is by definition less cosy with establishment politicians, and independence from big legacy brands also means it is free to host and publish what mainstream media would not. Research shows the most recent class of news influencers lean slightly right in terms of their politics, but even those with different politics are anti-establishment.

Takeaways by Macro Roundup® AI

  1. Text-based social media favored mainstream journalism because pithy writing helped and chronological feeds rewarded news, while the pivot to video shifts the balance toward charisma, energy and delivery over being first.
  2. Video platforms such as TikTok and Instagram put a thumb on the scale for political outsiders, since upstart media is less cozy with establishment politicians and free to publish what mainstream outlets would not.
  3. Research indicates the most recent class of news influencers leans slightly right politically, and even those with different politics are anti-establishment.

Related Articles:

  • The Distribution of Social Capital Across Individuals and its Relationship to Income — Classifying 129 inherently social activities, the authors find social capital rises with post-tax, post-transfer income but at a diminishing rate, with the association strongest for black individuals and weakest for Hispanic individuals. Individuals receiving a greater share of income from government sources tend to have lower social capital, even after accounting for demographics.
  • Will Trumpism Outlast Trump? — The rise of the populist right is not specific to the US, with Brexit preceding Trump and radical right parties in or near power across much of Europe. The left has measurably become the party of the upper echelons, leaving the right free to appeal to the lower-status majority.
  • How The Ivy League Broke America — Americans without a four-year college degree earn about $1m less over their lifetimes and live about eight years less than college graduates, and they have higher rates of obesity, divorce, out-of-wedlock births, and opioid deaths. Nearly a quarter report having no close friends, compared with 10% of college graduates.

AI Summary. The authors estimate that country pairs whose maritime routes were shortened by the Suez Canal saw lower shipping costs and times and significantly faster trade growth than unaffected pairs, with the gains persistent and taking about five years to fully materialize. They argue the canal functioned as a global public good associated with pure trade creation rather than trade diversion.

David Jacks, Christopher Meissner, and Nikolaus Wolf National Bureau of Economic Research
Date Posted:

.@cmicmeissner et al find that the opening of the Suez Canal led to a 72% increase in bilateral trade for affected country pairs relative to unaffected pairs. The boost to steam shipping spilled over to reduced shipping costs on non-Suez routes as well.

How much do shorter shipping routes boost trade growth?

Core argument: Country pairs affected by the Suez Canal, such as British India and the United Kingdom, saw lower shipping costs and times and significantly faster trade growth from 1865 to 1900 than unaffected pairs like the United Kingdom and the United States.

Using multiple sources of data on bilateral trade, we find that country pairs that were affected by the Suez Canal (e.g., British India and the United Kingdom) experienced lowershipping costs/times and significantly faster growth in trade from 1865 to 1900 relative to pairs that were unaffected by the opening of the canal (e.g., the United Kingdom and the United States). We do so by running an event study on the canal’s opening in the context of a structural gravity equation [which relates the volume of trade to the inverse square of distance], ruling out the role of pre-trends and finding that the rise in trade for affected country pairs was persistent over time but took roughly five years to fully come into play. Across different sub-samples, time horizons, and sources of data, we find quantitatively similar results. We additionally document how the Suez Canal differentially affected trade on the basis of the proportional changes in maritime distances it induced and how the Suez Canal was effectively a global public good. [We argue that rather than trade diversion,] the canal was associated with pure trade creation .

Takeaways by Macro Roundup® AI

  1. Country pairs affected by the Suez Canal, such as British India and the United Kingdom, saw lower shipping costs and times and significantly faster trade growth from 1865 to 1900 than unaffected pairs like the United Kingdom and the United States.
  2. An event study of the canal's opening within a structural gravity equation rules out pre-trends and finds the trade increase for affected pairs was persistent, taking roughly five years to fully materialize.
  3. The Suez Canal's effect on trade varied with the proportional changes in maritime distances it induced, and the authors argue it functioned as a global public good associated with pure trade creation rather than trade diversion.

Related Articles:

  • Economic Perspectives on Infrastructure Investment — US infrastructure projects cost more than international counterparts, averaging $1,601m per mile versus a global average of $478m, with a median of $965m per mile compared with $299m outside the US. Contributing factors include complex project designs, regulatory delays, elevated labor costs, and procurement and project management inefficiencies, while land costs are a minor component.
  • The Economics of Public Investment Crowding in Private Investment — Goods with strong positive externalities—such as lower carbon emissions, supply chain resilience, and national security—can be underprovided by markets because private producers do not capture all the social benefits. Government support that lowers firms' production costs can correct this shortfall, de-risk new technologies, and make domestic manufacturing cost-competitive.
  • Investment in Infrastructure and Trade: The Case of Ports — Modeling US ports with queueing theory and demand estimation, the authors estimate that port infrastructure investment yields substantial trade and welfare gains only if well targeted—net of costs, returns are positive at a minority of US ports. They also find sizable spillovers, as upgrading one port decongests others, and that macroeconomic volatility can substantially alter returns and their geography.

AI Summary. China's one-year government bond yield fell to 0.92%, its lowest level since 2009, while the 10-year yield declined to 1.74% after falling below 2%.

Arjun Neil Alim, Cheng Leng and William Sandlund Financial Times
Date Posted:

The yield on the Chinese 1-year government bond fell below 1% for the first time since 2009, and the 10-year dropped to 1.74%, down from 2.84% at the start of the year.

Are China's bond yields falling to multi-year lows?

Core argument: China's one-year government bond yield fell to 0.92%, its lowest level since 2009 and its first drop below 1% since that year.

The yield on one-year bonds fell to 0.92%, marking its lowest level since 2009, while 10-year yields dropped 0.03 percentage points to 1.74% after breaching 2% at the start of the month. The 10-year note yielded 2.56% at the start of the year, while the 30-year note yielded 2.84%.

Takeaways by Macro Roundup® AI

  1. China's one-year government bond yield fell to 0.92%, its lowest level since 2009 and its first drop below 1% since that year.
  2. China's 10-year bond yield fell 0.03 percentage points to 1.74%, after breaching 2% at the start of the month and yielding 2.56% at the start of the year.
  3. China's 30-year bond yielded 2.84% at the start of the year, above the 2.56% start-of-year yield on the 10-year note.

Related Articles:

  • Prices Won’t Stop Falling in China, and Beijing Is Grasping for Solutions — Prices for goods leaving Chinese factories have fallen year-over-year for 26 consecutive months, and China's gross domestic product deflator, a broad gauge of economy-wide prices, has been negative for six straight quarters, the longest stretch since the late 1990s. As falling prices sap profitability, companies could delay investment or cut jobs, and buyers could postpone purchases expecting further declines.
  • Chinese Bond Market Grapples With ‘Japanification’ — Yields on 30-year Chinese government bonds have fallen from 4% in late 2020 to 2.21% as China cuts interest rates and investors move into safe assets, while Japan's long-term yields have risen above China's to 2.27%. Chinese core inflation, excluding fuel and food, was 0.2% annually versus 2.3% in Japan.
  • The Wealth of Working Nations — Because of population aging, growth in GDP per capita and GDP per working-age adult have diverged across advanced economies; from 1998 to 2019 Japan's accumulated growth per working-age adult was 31.9% versus 29.5% in the US. The authors find a standard neoclassical growth model calibrated to each country's working-age population tracks output per working-age adult in most economies.

AI Summary. Cows at 645 California dairies have tested positive for the H5N1 bird flu virus over roughly four months. Milk from infected cows contains very high levels of the virus, and experts believe contaminated vehicles, equipment, and workers help spread it from farm to farm; the Food and Drug Administration says pasteurized milk and eggs are safe to consume.

Soumya Karlamangla, Orlando Mayorquín and Jesus Jiménez New York Times
Date Posted:

645 dairies in California have tested positive for H5N1; the virus has spread so quickly in 4 mouths that dairy farmers are calling it “Covid for cows.”

How is bird flu spreading rapidly through dairy herds?

Core argument: Cows at 645 California dairies have tested positive for H5N1 avian flu in about four months, a pace of spread that has led dairy farmers to call the outbreak "Covid for cows.".

In just about four months, cows in 645 dairies in California have tested positive for H5N1. The virus is spreading so quickly that dairy farmers are calling it “Covid for cows.” Consuming eggs and pasteurized milk won’t make people sick, according to the Food and Drug Administration. (Raw milk from infected cows, however, has been deemed unsafe, and California recently recalled raw milk products after the virus was detected in samples.) Milk from infected cows has very high levels of the virus, and experts believe that contaminated vehicles, equipment and workers play a role in spreading the virus from farm to farm. Those who milk cows can face high risks because the virus is highly concentrated in infected milk, which can splash into workers’ eyes, said Michael Payne, a veterinary medicine expert at the University of California, Davis.

Takeaways by Macro Roundup® AI

  1. Cows at 645 California dairies have tested positive for H5N1 avian flu in about four months, a pace of spread that has led dairy farmers to call the outbreak "Covid for cows.".
  2. The Food and Drug Administration says eating eggs and drinking pasteurized milk will not make people sick, while raw milk from infected cows has been deemed unsafe, and California recalled raw milk products after the virus was detected in samples.
  3. Milk from infected cows carries very high levels of H5N1, and Michael Payne, a veterinary medicine expert at the University of California, Davis, said workers who milk cows face high risks because infected milk can splash into their eyes.

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