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
  • “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
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…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
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Monday, December 30, 2024

AI Summary. The authors estimate that geographical differences in cost of living are especially large for low-income US households, and that expensive cities offer college graduates a standard of living similar to affordable cities while offering less-educated households a lower one. A high school dropout household moving from the most affordable to the most expensive commuting zone would see consumption fall 18.5%.

Rebecca Diamond and Enrico Moretti University of California
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For non-college Americans, high local prices mean lower living standards. “A high school drop-out household moving from the least expensive commuting zone to the most expensive would experience an 18.5% decline in market consumption.” @rebeccardiamond

Do expensive cities lower living standards for less-educated workers?

Core argument: The authors estimate that a high school drop-out household moving from the most affordable US commuting zone to the most expensive one would see market consumption fall 18.5%.

We build local consumption price indices that vary by commuting zone (CZ) and income group. We find that geographical differences in cost of living are especially large for low-income households. When we estimate the standard of living that low- and high-skill households can expect in each US commuting zone once we account both for geographical variation in cost of living and also in expected income, we find marked differences between low- and high-skill households. For high-skill households, we find no relationship between expected consumption and cost of living, suggesting that college graduates living in cities with high costs of living enjoy a standard of living generally similar to college graduates living in cities with low cost of living. For high school graduates and high school drop-outs, we find a significant negative relationship between consumption and cost of living, indicating that expensive cities offer lower standard of living than more affordable cities. The differences are quantitatively large. A high school drop-out household moving from the most affordable commuting zone to the most expensive one would experience a 18.5% decline in market consumption.

Takeaways by Macro Roundup® AI

  1. The authors estimate that a high school drop-out household moving from the most affordable US commuting zone to the most expensive one would see market consumption fall 18.5%.
  2. Using local consumption price indices that vary by commuting zone and income group, the authors find geographical differences in cost of living are especially large for low-income households.
  3. The authors find no relationship between expected consumption and cost of living for high-skill households, while for high school graduates and drop-outs the relationship is significantly negative, implying expensive cities offer them a lower standard of living.

Related Articles:

  • Are Place-Based Policies Targeting The Wrong Distressed Areas? — The rise in geographic income inequality reflects the richest places pulling further ahead rather than the poorest falling behind, and even the lowest-income places have seen gains in inflation-adjusted income since 1980. Including government transfers or adjusting for local cost of living lowers measured geographic inequality but leaves the upward trend intact.
  • The U.S. Low-Wage Structure: A McWage Comparison — Using wage data from most U.S. McDonald's restaurants, the authors find that before the Covid-19 pandemic, differences in entry-level wages across states were strongly related to state minimum wages, with real wages rising only in the roughly half of states raising their minimums. The 2021 wage spike nearly eliminated those geographic differences and left the federal minimum wage near-irrelevant.
  • Trends in U.S. Spatial Inequality: Concentrating Affluence and a Democratization of Poverty — The authors find that rising U.S. geographic inequality is driven mainly by the concentration of affluence, with top income quantiles diverging across states while median household incomes across counties have dispersed more gradually. Poverty rates and bottom income quantiles have converged across areas, alongside equalization of means-tested transfers.

AI Summary. The author argues that a universal tariff would prompt enough dollar appreciation to make US exports more expensive abroad, reducing trade flows in both directions while leaving the trade deficit roughly unchanged. Attempting to offset the export drag through deregulation would shift production away from import-competing goods, again leaving a similar trade deficit.

Stan Veuger American Enterprise Institute
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.@stanveuger replies to @stevemmiran that though dollar appreciation would reduce tariffs’ upward pressure on US prices, trade volumes would fall “in both directions” [and] “the trade deficit would remain as before,” even if US productivity rises.

Do universal tariffs shrink the trade deficit once currencies adjust?

Core argument: The currency offset from tariffs will likely be minor for low, targeted tariff rates but not for universal tariffs, which is where Stephen Miran probably has the strongest cards.

While the currency offset will likely be minor for low, targeted tariff rates, that will not be the case for universal tariffs. This is where Miran probably has the strongest cards. [But due to the dollar appreciation] US firms will see their exports drop as their products are now more expensive in euro terms. As a result, while trade volumes in both directions would be reduced, the trade deficit would remain as before. US firms will see their exports drop as their products are now more expensive in euro terms [due to dollar appreciation]. Miran argues that “policymakers can in part alleviate any drag on exports by an aggressive deregulatory agenda, which helps make U.S. production more competitive.” This is too clever by half. If US firms started exporting more, this would move the economy away from producing import-competing goods and toward producing more exported goods, [offsetting] the reduction in imports [sought by] our mercantilist friends, [leaving] a similar trade deficit and similar trade volumes as we had before we started.

Takeaways by Macro Roundup® AI

  1. The currency offset from tariffs will likely be minor for low, targeted tariff rates but not for universal tariffs, which is where Stephen Miran probably has the strongest cards.
  2. Dollar appreciation would make US products more expensive in euro terms, cutting US exports and reducing trade volumes in both directions while leaving the trade deficit as before.
  3. Miran argues that aggressive deregulation can partly alleviate the drag on exports, but higher exports would shift production away from import-competing goods, leaving a similar trade deficit and similar trade volumes as before.

Related Articles:

  • A User’s Guide to Restructuring the Global Trading System — During the 2018–2019 U.S.–China trade war, the effective tariff rate on Chinese imports rose 17.9 percentage points while the renminbi depreciated 13.7% against the dollar, leaving after-tariff import prices in dollars up just 4.1%. The author argues this currency offset of more than three-fourths of the tariff explains why inflation pressure was negligible.
  • 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.
  • 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. Germany's fertility rate fell to 1.35 children per woman, below the United Nations' "ultra-low" threshold of 1.4, a level at which falling birth rates become difficult to reverse. Estonia and Austria also dropped below 1.4, joining nine European Union countries including Spain, Greece, and Italy, while France's rate fell to a record-low 1.67 and Finland's to 1.26.

Valentina Romei Financial Times
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Germany’s fertility rate fell to 1.35 in 2023, joining nine EU countries, including Spain and Italy, that fell below the UN’s “ultra-low” threshold of 1.4 in 2022.

How far have European fertility rates fallen below replacement levels?

Core argument: Germany's birth rate fell to 1.35 children per woman in 2023, below the UN's "ultra-low" threshold of 1.4, which characterises a scenario where falling birth rates become tough to reverse, according to official statistics.

Official statistics show Germany’s birth rate fell to 1.35 children per woman in 2023, below the UN’s “ultra-low” threshold of 1.4 — characterising a scenario where falling birth rates become tough to reverse. Estonia and Austria also passed under the 1.4 threshold, joining the nine EU countries — including Spain, Greece, and Italy — that in 2022 had fertility rates below 1.4 children per woman. Birth rates have fallen across Europe — even in countries such as Finland, Sweden, and France, where family-friendly policies and greater gender equality had previously helped boost the number of babies. In Finland, the birth rate was above the EU average until 2010, but it dropped to 1.26 in 2023, the lowest since the record began in 1776, according to official data. France had the highest birth rate at 1.79 children per woman in 2022, but the national figures showed it dropped to 1.67 last year, the lowest on record.

Takeaways by Macro Roundup® AI

  1. Germany's birth rate fell to 1.35 children per woman in 2023, below the UN's "ultra-low" threshold of 1.4, which characterises a scenario where falling birth rates become tough to reverse, according to official statistics.
  2. Estonia and Austria also fell below the 1.4 threshold, joining the nine EU countries — including Spain, Greece, and Italy — that had fertility rates below that level in 2022.
  3. Finland's birth rate dropped to 1.26 in 2023, its lowest since the record began in 1776, while France's fell from 1.79 in 2022 to 1.67, its lowest on record.

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 Global Fertility Crisis Is Worse Than You Think — Adjusting United Nations figures for lower recorded births, the author estimates the global fertility rate was 2.18, below the 2.21 replacement threshold. Population is not yet falling because women born in the 1990s and 2000s are having children while older generations live longer, so births still exceed deaths, with a projected peak in about 30 years.
  • Worldwide Efforts to Reverse the Baby Shortage Are Falling Flat — Hungary and Norway devote more resources to family support than almost any other country, yet have fertility rates of 1.5 and 1.4 children per woman, below the 2.1 replacement rate needed to keep population steady; the U.S. rate is 1.6. Demographers suggest reluctance to have children reflects a cultural rather than purely financial shift.

AI Summary. Germany recorded 6.43m more arrivals than departures over a decade, the largest inflow of any country outside the US, with migrants at 18.8% of the population versus 15.3% in the US. Noncitizens, 15% of the population, accounted for 41% of crimes, up from 28.7%, according to police statistics.

Bertrand Benoit Wall Street Journal
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In 2021 migrants made up 18.8% of the German population, compared to 15.3% for the US. Sixty percent of people in Germany who “depend on government benefits for income” are either foreign-born or second-generation migrants.

Has large-scale immigration strained Germany's welfare system and public safety?

Core argument: Germany recorded net migration of 6.43 million people between 2013 and 2023, according to Germany's Federal Statistics Office, the biggest inflow of any country outside the U.S., according to the United Nations.

Between 2013 and 2023, 6.43 million more people settled in Germany than left, according to Germany’s Federal Statistics Office—the biggest inflow of any country outside the U.S., according to the United Nations. Migrants, defined as people living for more than 12 months outside their country of birth, made up 18.8% of the population in Germany in 2021, compared with 15.3% in the U.S. in that year. In Germany, 42% of people under age 15 were either foreign-born or had at least one foreign-born parent—Germany’s definition of a statistical category it calls “people with a migration background”—as were 37% of people ages 15 to 24, according to government data for 2022. More than 60% of the people in Germany who depend on government benefits for income are foreign-born or are second-generation migrants. Noncitizens, who make up 15% of the population, perpetrated 41% of all crimes in 2023, up from 28.7% in 2014, according to police statistics.

Takeaways by Macro Roundup® AI

  1. Germany recorded net migration of 6.43 million people between 2013 and 2023, according to Germany's Federal Statistics Office, the biggest inflow of any country outside the U.S., according to the United Nations.
  2. Noncitizens, who make up 15% of Germany's population, perpetrated 41% of all crimes in 2023, up from 28.7% in 2014, according to police statistics.
  3. More than 60% of people in Germany who depend on government benefits for income are foreign-born or second-generation migrants, and government data for 2022 show 42% of people under age 15 were foreign-born or had at least one foreign-born parent.

Related Articles:

  • Germany Extends Temporary Controls To All Its Land Borders — Germany is extending temporary border controls to all of its land borders, expanding existing checks on its frontiers with Austria, the Czech Republic, Poland, and Switzerland. The interior ministry says the controls are intended to restrict irregular immigration and guard against Islamist terrorism and serious crime, and that 30,000 people have been turned away under the existing checks.
  • Germany Pauses Asylum Claims From Syrians — Germany has paused processing more than 47,000 asylum claims from Syrians following the fall of Bashar al-Assad's government, prioritising other asylum decisions while awaiting clarity on conditions in Syria. Germany is the largest host of Syrian refugees in the European Union, with close to 1mn people who fled the civil war.
  • Changing Sub-Saharan Africa’s Growth Trajectory — Sub-Saharan Africa's working-age population is growing nearly 3% a year, versus close to zero in much of the world, and is projected to exceed China's within about a decade and reach a quarter of the global total. With modest productivity growth near 2%, the region is likely among the world's fastest-growing.

AI Summary. Local officials in China are calling married women in their 20s and early 30s to ask about family plans, urge prenatal check-ups, and offer subsidies for additional children, with one resident reporting an Rmb100,000 ($14,000) offer for a second child. State-run outlets have promoted claims that childbirth benefits maternal health.

Eleanor Olcott, Nian Liu, and Wang Xueqiao Financial Times
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China is launching a campaign to encourage fertility and build a “birth-friendly society,” including a cold-calling campaign targeted at married women in their 20s and 30s. China’s 2024 fertility rate was ~1.

How far is China going to push women to have children?

Core argument: Chinese local officials have been calling married women in their 20s and early 30s across the country to ask about family plans, in some cases requesting they attend prenatal body checks.

Married women in their 20s and early 30s across the country have been receiving calls from local officials asking about their plans to start a family. In some instances, callers asked women to attend prenatal body checks. Other callers were more direct, offering subsidies to women who had more than one child. A Zhejiang resident who declined to be named said officials offered local women a Rmb100,000 ($14,000) subsidy for having a second child. “There is no explicit policy, but if you ask for it, the village will find you a way to get you the subsidy,” she said. The personalised lobbying comes against a background of an intensified media campaign hailing the benefits of childbirth. In recent months, the state-run People’s Daily and Life Times have promoted scientific voices saying childbirth is good for the mother’s health and can even help prevent cancer and treat certain diseases.

Takeaways by Macro Roundup® AI

  1. Chinese local officials have been calling married women in their 20s and early 30s across the country to ask about family plans, in some cases requesting they attend prenatal body checks.
  2. State-run outlets People's Daily and Life Times have promoted scientific voices saying childbirth benefits mothers' health, can help prevent cancer, and can treat certain diseases.
  3. A Zhejiang resident, who declined to be named, said officials offered local women a Rmb100,000 ($14,000) subsidy for having a second child, adding that no explicit policy exists but the village will find a way to provide it.

Related Articles:

  • East Asia’s Coming Population Collapse — United Nations projections show China's population falling 8%, Japan's 18%, South Korea's 12%, and Taiwan's 8% between 2020 and 2050, while the US population rises 12%. Working-age people per person over 65 are projected to drop to about 1.8 in China and 1.2 in Japan and South Korea.
  • Thoughts and Comments on Demographic Aging and Shrinking — As an arithmetic matter, the greying of societies is driven much more by smaller families than by longer lives, which the author attributes to a withering away of the family. Demographic simulations project that by 2040 couples in their 60s in China will likely have at least one living parent to care for, and many will have two or three.
  • A Revolution Is Coming for China’s Families — Prolonged below-replacement fertility in China is projected to produce a "kin crash" in which rising generations have fewer living relatives than ever before in Chinese history. The authors argue this shrinking of extended family networks will erode the Chinese family's role in protecting people from adversity and helping them seize opportunity.

AI Summary. China's hukou household registration system restricts migrant workers' access to local services such as healthcare, education, and home purchases in major cities. While two-thirds of Chinese live in cities, only 48% hold urban residency rights, leaving roughly 250m people excluded from many urban benefits; rural disposable income is about $3,000 per capita versus over $7,000 in cities.

Liyan Qi Wall Street Journal
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The hukou system that restricts internal migration in China is amplifying China’s fertility decline by separating migrant workers from their children. In 2020 67mm children were living separately from their parents.

Does China's household registration system shut urban migrants out of local services?

Core argument: Rural Chinese residents had about $3,000 in annual per capita disposable income in 2023, less than half the more than $7,000 of their urban peers, according to official data.

The hukou system was set up to prevent cities from becoming overrun. It limits migrant workers’ ability to put down roots in China’s biggest cities by restricting access to local services such as healthcare and education, or the right to buy an apartment. Rural residents have less than half the annual disposable income of their urban peers, about $3,000 per capita compared with more than $7,000 in cities, official data for 2023 shows. Even though 2/3 of Chinese now live in cities, only 48% have urban residency rights, suggesting that roughly a quarter of a billion people are shut out of many benefits in the cities where they work. “Only in China is the urban-rural divide entrenched by official policy and codified by law,” Scott Rozelle and Natalie Hell wrote in their 2020 book “Invisible China.”

Takeaways by Macro Roundup® AI

  1. Rural Chinese residents had about $3,000 in annual per capita disposable income in 2023, less than half the more than $7,000 of their urban peers, according to official data.
  2. While two-thirds of Chinese people live in cities, only 48% hold urban residency rights, leaving roughly a quarter of a billion people shut out of many benefits in the cities where they work.
  3. China's hukou system, set up to prevent cities from becoming overrun, limits migrant workers' access to local healthcare and education and the right to buy an apartment, a divide Scott Rozelle and Natalie Hell wrote in 2020 is entrenched by official policy and codified by law.

Related Articles:

  • 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.
  • 2023 Letter — Rising numbers of Chinese nationals are being apprehended at the US-Mexico border, with US officers encountering around 1,000 in one month early in the year and nearly 5,000 by November. Most Chinese emigrants leave through legal means, going primarily to Singapore, Japan, and Thailand.
  • China’s Age Of Malaise — More than 300,000 Chinese people emigrated in a single year, more than double the pace of a decade earlier, with some traveling overland through a half-dozen countries to reach the US. US authorities at the southern border recorded 17,894 encounters with Chinese migrants over ten months, a thirteenfold increase from the prior year.

AI Summary. Genetic sequencing of the H5N1 bird flu virus from a severely ill patient in Louisiana identified the D1.1 genotype and found low-frequency mutations in the hemagglutinin surface protein gene. Those mutations were absent from virus sequences in poultry on the patient's property, suggesting they emerged in the patient after infection.

CDC Staff Centers for Disease Control and Prevention
Date Posted:

A @CDCgov analysis of viral genomic sequences from a patient severely ill with bird flu in Louisiana suggests that mutations to a gene that plays a key role in human infection “emerged in the patient after infection.”

Do bird flu mutations emerge in patients after infection?

Core argument: CDC sequenced the HPAI A(H5N1) viruses from specimens of a Louisiana patient who became severely ill and identified them as the D1.1 genotype after comparison with sequences from dairy cows, wild birds, poultry, and previous human cases.

CDC has sequenced the influenza viruses in specimens collected from the patient in Louisiana who was infected with and became severely ill from HPAI A(H5N1) virus. The genomic sequences were compared to other HPAI A(H5N1) sequences from dairy cows, wild birds, and poultry, as well as previous human cases, and were identified as the D1.1 genotype. The analysis identified low frequency mutations in the hemagglutinin gene of a sample sequenced from the patient, which were not found in virus sequences from poultry samples collected on the patient’s property, suggesting the changes emerged in the patient after infection. [Hemagglutinin is a protein on the surface of the influenza A virus that plays a key role in the early stages of a viral infection.]

Takeaways by Macro Roundup® AI

  1. CDC sequenced the HPAI A(H5N1) viruses from specimens of a Louisiana patient who became severely ill and identified them as the D1.1 genotype after comparison with sequences from dairy cows, wild birds, poultry, and previous human cases.
  2. CDC found low-frequency mutations in the hemagglutinin gene of a sample from the Louisiana patient that were absent from poultry samples collected on the patient's property, suggesting the changes emerged in the patient after infection.
  3. Hemagglutinin, the influenza A surface protein in which CDC identified the mutations, plays a key role in the early stages of viral infection.

Related Articles:

Thursday, January 2, 2025

AI Summary. Fertility rates have fallen in nearly every country, but timing differed: some developed nations fell below the 2.1 replacement level as early as the 1970s, while others dropped to "lowest low" levels below 1.3. The author argues nations with rapid, discontinuous growth saw sharper declines as women's expectations outpaced tradition-bound men's willingness to share family time.

Claudia Goldin National Bureau of Economic Research
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.@PikaGold notes countries with birth rates now below 1.3 saw “rapid growth in GDP per capita after a long period of stagnation or decline” as women’s new labor market opportunities demanded more than the traditional male role in child-rearing.

Why have fertility rates fallen faster in rapidly growing economies?

Core argument: Fertility has fallen in virtually every nation, with some European, Asian, and North American countries dropping below the 2.1 replacement rate as early as the 1970s while others retained substantial rates into the 1990s.

Fertility levels have greatly decreased in virtually every nation in the world, but the timing of the decline has differed even among developed countries. In Europe, Asia, and North America, total fertility rates of some nations dipped below the magic replacement figure of 2.1 as early as the 1970s. But in other nations, fertility rates remained substantial until the 1990s but plummeted in the 1980s and 1990s becoming what is termed “lowest low,” with total fertility rates below 1.3. An important factor that distinguishes the two groups is their economic growth in the 1960s and 1970s. [Group 1] experienced relatively continuous economic growth in the twentieth century. [Group 2] experienced rapid economic growth in the post-1950s yet stagnant or declining economic activity before. Rapid economic growth has given women greater freedoms. But rapid economic change may lead to conflict when men are more swayed by traditions. What women require of men’s time to raise a family and be members of a modern labor market may exceed the time their more tradition-bound spouses, or future spouses, are willing to offer.

Takeaways by Macro Roundup® AI

  1. Fertility has fallen in virtually every nation, with some European, Asian, and North American countries dropping below the 2.1 replacement rate as early as the 1970s while others retained substantial rates into the 1990s.
  2. Countries whose fertility fell to "lowest low" levels below 1.3 in the 1980s and 1990s had rapid post-1950s economic growth preceded by stagnant or declining activity, unlike nations with relatively continuous twentieth-century growth.
  3. Rapid economic growth has given women greater freedoms, and rapid economic change may produce conflict when the time women require of men to raise a family while working in a modern labor market exceeds what more tradition-bound spouses will offer.

Related Articles:

  • The Global Fertility Crisis Is Worse Than You Think — Adjusting United Nations figures for lower recorded births, the author estimates the global fertility rate was 2.18, below the 2.21 replacement threshold. Population is not yet falling because women born in the 1990s and 2000s are having children while older generations live longer, so births still exceed deaths, with a projected peak in about 30 years.
  • 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.
  • East Asia’s Coming Population Collapse — United Nations projections show China's population falling 8%, Japan's 18%, South Korea's 12%, and Taiwan's 8% between 2020 and 2050, while the US population rises 12%. Working-age people per person over 65 are projected to drop to about 1.8 in China and 1.2 in Japan and South Korea.

AI Summary. The US is projected to account for a growing share of the rich world's labor force, youth, and highly educated talent, with continuing population and labor force growth and only moderate aging through 2050. Its fertility, though below replacement, exceeds that of East Asian and nearly all European countries, and sustained legal immigration is essential to this demographic advantage.

Nicholas Eberstadt American Enterprise Institute
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Nicholas Eberstadt @AEIecon argues that given its relatively high fertility rate relative to both East Asia and Europe, the US is primed to be the world’s youthful powerhouse by 2050. But to maintain this edge, the US must continue welcoming newcomers.

Does the US hold a demographic advantage over other rich countries?

Core argument: The US is on track to account for a growing share of the rich world's labor force, youth, and highly educated talent, with no other population better situated to translate population potential into national power through 2050.

The US in short is on track to account for a growing share of the rich world’s labor force, youth, and highly educated talent. No other population on earth is better situated to translate population potential into national power than the US today—and it looks as if that American demographic edge will be at least as great in 2050. Although the US is a sub-replacement society, it boasts higher fertility levels than any East Asian country, and almost all European states as well. In conjunction with strong immigration inflows, America’s comparatively strong birth trends make for a very different demographic trajectory from most other affluent Western societies, with continuing population and labor force growth and only moderate population aging in store through 2050. Maintaining public support for continuing legal immigration is essential to maintaining the US's demographic advantage

Takeaways by Macro Roundup® AI

  1. The US is on track to account for a growing share of the rich world's labor force, youth, and highly educated talent, with no other population better situated to translate population potential into national power through 2050.
  2. Although the US is a sub-replacement society, its fertility exceeds that of every East Asian country and almost all European states, which combined with strong immigration inflows yields continuing population and labor force growth and only moderate aging through 2050.
  3. Maintaining public support for continuing legal immigration is essential to preserving the American demographic advantage.

Related Articles:

  • The Global Fertility Crisis Is Worse Than You Think — Adjusting United Nations figures for lower recorded births, the author estimates the global fertility rate was 2.18, below the 2.21 replacement threshold. Population is not yet falling because women born in the 1990s and 2000s are having children while older generations live longer, so births still exceed deaths, with a projected peak in about 30 years.
  • 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 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. Africa is experiencing more conflicts than at any point since at least 1946, with 28 state-based conflicts identified across 16 of its 54 countries, double the count of a decade and a half ago. The continent now hosts nearly half the world's internally displaced people, about 32.5m, triple the level 15 years earlier.

Gabriele Steinhauser, Andrew Barnett, and Emma Brown Wall Street Journal
Date Posted:

At least 10% of the land mass of sub-Saharan Africa is at war today; the region will have 25% of the world’s working-age population by 2050. There were at least 32.5mm internally displaced people across the continent at the end of 2023.

Is Africa experiencing more conflicts than at any time since 1946?

Core argument: Uppsala University data analyzed by Norway's Peace Research Institute Oslo identify 28 state-based conflicts across 16 of Africa's 54 countries, more than in any other region and double the count of a decade and a half ago.

This corridor of conflict stretches across approximately 4,000 miles and encompasses about 10% of the total land mass of sub-Saharan Africa, an area that has doubled in just three years, according to an analysis by Verisk Maplecroft. Africa is now experiencing more conflicts than at any point since at least 1946, according to data collected by Uppsala University in Sweden and analyzed by Norway’s Peace Research Institute Oslo. This year alone, experts at the two institutes have identified 28 state-based conflicts across 16 of the continent’s 54 countries, more than in any other region in the world and double the count just a decade and a half ago. That tally doesn’t include conflicts that don’t involve government forces, for instance between different communities, and whose number has also doubled since 2010. The intensifying conflicts have displaced a record number of Africans—most of them inside their own countries. The continent is now home to nearly half of the world’s internally displaced people, some 32.5 million at the end of 2023. That figure has tripled in just 15 years.

Takeaways by Macro Roundup® AI

  1. Uppsala University data analyzed by Norway's Peace Research Institute Oslo identify 28 state-based conflicts across 16 of Africa's 54 countries, more than in any other region and double the count of a decade and a half ago.
  2. Verisk Maplecroft's analysis finds Africa's corridor of conflict stretches roughly 4,000 miles and covers about 10% of sub-Saharan Africa's land mass, an area that has doubled in three years.
  3. Africa is home to nearly half of the world's internally displaced people, some 32.5 million at the end of 2023, a figure that has tripled in 15 years.

Related Articles:

  • Changing Sub-Saharan Africa’s Growth Trajectory — Sub-Saharan Africa's working-age population is growing nearly 3% a year, versus close to zero in much of the world, and is projected to exceed China's within about a decade and reach a quarter of the global total. With modest productivity growth near 2%, the region is likely among the world's fastest-growing.
  • Exploring the Implications of Sub-Saharan Africa’s Demographic Explosion — Sub-Saharan Africa is projected to hold a quarter of the world's working-age population within a few decades and to surpass China's working-age population in roughly a decade. Even with modest productivity growth near 2%, the region's growth is estimated at 4.5–5.5%, raising its share of global output from about 3% while remaining small.
  • The World Is Becoming More African — United Nations forecasts project Africans will rise from 8% of the world's people in 1950 to one-quarter by 2100, with the continent holding the world's largest workforce within a decade. McKinsey & Company estimates Africa's per-person economic growth has averaged 1% annually since 1990, against India's 5% and China's 9%.

AI Summary. NVIDIA's share of all US capital spending is projected to approach two 20th-century peaks by 2026, and large cloud providers would need $400–500bn in new revenue to earn their traditional 50% gross margin on roughly $250bn of annual data center spending. After the dot-com collapse, Corning's fiber optic revenues did not surpass 2000 levels until 2018 in nominal terms.

Michael Cembalest J.P. Morgan
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Michael Cembalest argues that “hyperscalers” like Google, Microsoft, and Meta would need to generate an additional $400-500B in revenue to earn their traditional 50% gross margins on $250B in projected 2025 data center spending.

How much new revenue must AI data center spending generate?

Core argument: NVIDIA's share of all US capital spending is projected to approach the two 20th century peaks by 2026.

By 2026 NVIDIA’s share of all US capital spending will be close to the two 20th century peaks. Just as notable: the hyperscalers would need $400-$500 billion in new revenues to earn their traditional 50% gross margin on ~$250 billion of annual data center spending. The stakes are high. As a sign of what can go wrong after an era of excessive investment even when resulting infrastructure is eventually utilized in full, consider Corning and its fiber optic business. Corning earned ~$4 billion in the year 2000 in this segment, but after the dot-com collapse Corning didn’t surpass that revenue level again until 2018 in nominal terms, and revenues are still below year 2000 levels in real terms. Similarly, the number of undersea fiber optic cables deployed globally each year did not surpass year 2000 levels until 2020.

Takeaways by Macro Roundup® AI

  1. NVIDIA's share of all US capital spending is projected to approach the two 20th century peaks by 2026.
  2. Hyperscalers would need $400–$500 billion in new revenues to earn their traditional 50% gross margin on roughly $250 billion of annual data center spending.
  3. Corning earned about $4 billion from fiber optics in 2000 but did not surpass that level again until 2018 in nominal terms, with revenues still below 2000 levels in real terms.

Related Articles:

  • AI: To Buy, Or Not To Buy, That Is The Question — Valuations of AI-related stocks remain well below levels seen in past bubbles, with the median price-to-earnings and enterprise-value-to-sales ratios of the 7 largest technology companies roughly half those of the dominant 7 at the 2000 technology peak. But leading AI firms are no longer capital-light, and a major capital-spending boom threatens the high returns current valuations imply will continue.
  • Gen AI: Too Much Spend, Too Little Benefit? — The author argues generative AI is unlikely to drive revenue expansion because it helps employees find information faster rather than find better information. If AI's benefits remain limited to efficiency gains, competitors can adopt the same tools, so cost savings get arbitraged away rather than raising prices or margins.
  • A Severe Case of COVIDIA: Prognosis For An AI-Driven US Equity Market — Computing cycles move from infrastructure to platforms to applications, and NVIDIA data center revenues as a share of market-wide capital spending are projected to reach levels last seen at the 1969 mainframe peak and the dot-com boom. Large cloud providers spend more than twice as much training foundational models as running them for customers.

AI Summary. The average tenure of a Boeing engineer has fallen from 16.4 years to 12.6 years, according to data from the union representing 12,000 Boeing engineers, with tenure shortening in almost every age bracket. Analysts, recruiters and union officials describe this "brain drain" as a drag on operations that could make launching a new plane harder.

Claire Bushey Financial Times
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The mean tenure of Boeing engineers has fallen from 16.4 to 12.6 years over the last decade as job cuts and competition from space firms increase; the brain drain is threatening the institutional knowledge needed to design and build a new plane.

Is shorter engineer tenure hurting a planemaker's ability to build new aircraft?

Core argument: The average tenure of a Boeing engineer fell from 16.4 years to 12.6 years over the past decade, according to data from the Society of Professional Engineering Employees in Aerospace, the union representing 12,000 Boeing engineers.

The average tenure of a Boeing engineer has fallen over the past decade from 16.4 years to 12.6 years, according to data from the union representing 12,000 Boeing engineers, the Society of Professional Engineering Employees in Aerospace. Tenure shortened in almost every age bracket, with employees in their 20s and 30s averaging fewer years, as well as those in their late 40s through 65. The risk of this “brain drain”, as analysts, recruiters and union officials have described it, is that it drags on current operations and could make it harder for Boeing to launch its next new plane. “All of this experience is gone,” said Matt Kempf, SPEEA’s senior director for compensation and retirement. That raises concerns because “aerospace engineers aren’t made, they’re grown”. Boeing also held back on announcing a new plane, depriving engineers of a moonshot project to excite imaginations. The last “clean sheet” aeroplane was launched 20 years ago and became the 787.

Takeaways by Macro Roundup® AI

  1. The average tenure of a Boeing engineer fell from 16.4 years to 12.6 years over the past decade, according to data from the Society of Professional Engineering Employees in Aerospace, the union representing 12,000 Boeing engineers.
  2. Boeing engineer tenure shortened in almost every age bracket, including employees in their 20s and 30s and those from their late 40s through 65, according to SPEEA data.
  3. Analysts, recruiters and union officials have described a "brain drain" at Boeing that drags on current operations and could make launching its next new plane harder; Boeing's last "clean sheet" aeroplane was launched 20 years ago and became the 787.

Related Articles:

  • Space: The Missing Element of Your Strategy — Private-sector funding of space-related companies has topped $10bn, close to a tenfold rise over the past decade, though the US government remains the largest source of space funding. If current momentum continues, commercial funding for space ventures could surpass government funding within 20 years.
  • 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.

AI Summary. Tariffs raise the price of imported goods, transferring income from net importers to net exporters and taxing consumers to subsidize domestic producers. The author argues that tariffs on final goods would redirect U.S. demand toward domestic production, raising GDP, employment, and wages while lowering debt.

Michael Pettis Foreign Affairs
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.@michaelxpettis argues that tariffs would raise GDP: “By taxing consumption to subsidize production, modern-day tariffs would redirect a portion of US demand toward increasing the total amount of goods and services produced at home.”

Can tariffs on final goods raise GDP, employment, and wages?

Core argument: Tariffs transfer income from net importers to net exporters by raising the price of imported goods, which benefits the domestic producers of those goods.

Tariffs operate by transferring income from one part of the economy to another - in this case from net importers to net exporters - by raising the price of imported goods, which benefits the domestic producers of those goods. Because household consumers are net importers, tariffs are effectively a tax on consumers. But by raising the price of manufacturing and other tradable goods, tariffs [if levied on final goods rather than inputs] also act as a subsidy for domestic producers.By taxing consumption to subsidize production,modern-day tariffs would redirect a portion of U.S. demand toward increasing the total amount of goods and services produced at home. That would lead U.S. GDP to rise, resulting in higher employment, higher wages, and less debt. American households would be able to consume more, even as consumption as a share of GDP declined.

Takeaways by Macro Roundup® AI

  1. Tariffs transfer income from net importers to net exporters by raising the price of imported goods, which benefits the domestic producers of those goods.
  2. Because household consumers are net importers, tariffs function as a tax on consumers, while also acting as a subsidy for domestic producers when levied on final goods rather than inputs.
  3. By taxing consumption to subsidize production, tariffs would redirect a portion of U.S. demand toward domestic output, raising GDP, employment, and wages while lowering debt, with households consuming more even as consumption falls as a share of GDP.

Related Articles:

  • A User’s Guide to Restructuring the Global Trading System — During the 2018–2019 U.S.–China trade war, the effective tariff rate on Chinese imports rose 17.9 percentage points while the renminbi depreciated 13.7% against the dollar, leaving after-tariff import prices in dollars up just 4.1%. The author argues this currency offset of more than three-fourths of the tariff explains why inflation pressure was negligible.
  • 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.
  • 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. A fiscal expansion is likely to push the Federal Reserve to hold interest rates higher for longer, which would strengthen the dollar and widen the U.S. trade deficit, with economic weakness in Europe adding further dollar strength. Tariffs that are not offset by foreign retaliation also tend to raise the dollar's value, negating any effect on the trade deficit.

Paul Krugman Krugman Wonks Out
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.@paulkrugman argues the extension of the 2017 tax cuts and tariffs suggests that interest rates will be “much higher for longer than most people were expecting a few months ago, which will translate into a stronger dollar and a bigger trade deficit.”

Does fiscal expansion strengthen the dollar and widen the trade deficit?

Core argument: The current fiscal shock, though smaller than Reagan's, is probably large enough to induce the Fed to keep interest rates higher for longer than expected, strengthening the dollar and widening the U.S. trade deficit.

We may not be looking at a fiscal shock as big as Reagan’s, but it’s still probably enough to induce the Fed to keep interest rates much higher for longer than most people were expecting a few months ago, which will translate into a stronger dollar and a bigger trade deficit. Also strengthening the dollar: what looks like a spreading economic funk in Europe. Look at the charts: we start from both a level of the dollar and a trade deficit comparable to their peaks under Reagan. To the extent that tariffs do happen, and they aren’t offset by foreign retaliation, they will tend to, guess what, raise the value of the dollar, negating any effect on the trade deficit. So Trump, who believes that U.S. trade deficits represent a subsidy to other countries — no, that doesn’t make any sense, but so what? — seems likely to find himself presiding over a rising, not falling trade deficit.

Takeaways by Macro Roundup® AI

  1. The current fiscal shock, though smaller than Reagan's, is probably large enough to induce the Fed to keep interest rates higher for longer than expected, strengthening the dollar and widening the U.S. trade deficit.
  2. The dollar's level and the U.S. trade deficit both start comparable to their peaks under Reagan, with an apparent spreading economic funk in Europe adding further upward pressure on the dollar.
  3. Tariffs that are not offset by foreign retaliation tend to raise the dollar's value and negate any effect on the trade deficit, leaving Trump likely to preside over a rising rather than falling deficit.

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.
  • A User’s Guide to Restructuring the Global Trading System — During the 2018–2019 U.S.–China trade war, the effective tariff rate on Chinese imports rose 17.9 percentage points while the renminbi depreciated 13.7% against the dollar, leaving after-tariff import prices in dollars up just 4.1%. The author argues this currency offset of more than three-fourths of the tariff explains why inflation pressure was negligible.
  • Tariffs and Exchange Rates (and Stephen Miran) — The author argues that a universal tariff would prompt enough dollar appreciation to make US exports more expensive abroad, reducing trade flows in both directions while leaving the trade deficit roughly unchanged. Attempting to offset the export drag through deregulation would shift production away from import-competing goods, again leaving a similar trade deficit.