Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…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
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, January 9, 2025

AI Summary. Resilient growth, persistent residual inflation, and Federal Reserve officials' greater comfort about employment risks explain the rebound in market-implied forward interest rates, rather than a shift in the term premium tied to fiscal, central-bank-independence, or constitutional concerns. The simultaneous rise in long-term rates and fall in short-term rates is normalizing a long-inverted yield curve.

Matt Klein The Overshoot
Date Posted:
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.@M_C_Klein argues that the recent rise in Treasury yields reflects “correcting bets on growth that were overly pessimistic.” “After being deeply inverted for years, the yield curve is finally starting to look normal again.”

Are growth and inflation, not term premium, lifting bond yields?

Core argument: U.S. growth ran 3.0% annualized in 2024Q2 and 3.1% in Q3 and is currently running at 2.7% for Q4, while the last percentage point of excess inflation has proven remarkably persistent.

Growth has held up nicely (3.0% annualized in 2024Q2, 3.1% annualized in Q3, and currently running at 2.7% for Q4), the last percentage point of excess inflation has proven to be remarkably persistent, and Fed officials have—rightly or wrongly—become more sanguine about the risks to employment. It should not be surprising that a reversion of the growth and inflation outlook led to a reversion in market-implied forward interest rates—especially since traders had long been betting that short rates would be somewhere in the 3-5% range ever since mid-2022, without much of a trend over the past few years. From this perspective, the simultaneous uptick in long-term rates and decline in short-rates looks exactly like the recalibration that Fed officials have said that they want. After being deeply inverted for years, the yield curve is finally starting to look normal again. Changes in the “term premium”, perhaps driven by concerns about the fiscal situation, Fed independence, or the integrity of the constitutional order, could conceivably be affecting longer-term yields, but it is unlikely that this explains movements in nearer-term forward rates.

Takeaways by Macro Roundup® AI

  1. U.S. growth ran 3.0% annualized in 2024Q2 and 3.1% in Q3 and is currently running at 2.7% for Q4, while the last percentage point of excess inflation has proven remarkably persistent.
  2. The simultaneous rise in long-term rates and decline in short rates looks like the recalibration Fed officials have said they want, with the yield curve starting to look normal again after years of deep inversion.
  3. Term premium changes tied to the fiscal situation, Fed independence, or the integrity of the constitutional order could conceivably affect longer-term yields, but are unlikely to explain movements in nearer-term forward rates.

Related Articles:

  • The Move in Long Rates Is Very Unusual — The Federal Reserve has cut its policy rate by 100 basis points while 10-year interest rates have risen by 100 basis points over the same stretch, a highly unusual divergence. Possible explanations include fiscal worries, weaker foreign demand for U.S. debt, or rate cuts that were not justified.
  • Is There an Insanity Premium on Interest Rates? — Stock and bond markets can diverge because equity investors are more driven by sentiment, as seen in social-media-fueled meme stocks that have no bond-market equivalent. The recent rise in stocks is narrow and largely tied to artificial intelligence, with the Dow Jones Industrial Average having surrendered nearly all of its post-election gain.
  • 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.

AI Summary. The estimated term premium on long-term U.S. Treasury bonds has swung from about -0.9 percentage points, when buyers sacrificed yield to lock in rates, to about +0.5 percentage points, where they demand extra compensation for giving up flexibility. The author argues this shift reflects market microstructure and investor positioning rather than bond vigilantes reacting to fiscal policy.

Brad DeLong Grasping Reality
Date Posted:

.@delong argues the increase in US yields is not driven by “bond vigilantes cleaning their weapons” but is likely a “market microstructure” story as investors seek to reduce exposure to duration risk.

Does the rising term premium reflect investor positioning rather than fiscal worries?

Core argument: The estimated U.S. Treasury term premium has swung from -0.9 percentage points in late spring 2023, when long-bond buyers gave up 0.9% per year to lock in yield, to +0.5 percentage points, with buyers now demanding an extra 0.5% per year.

In the late spring of 2023, the estimated term premium—the extra amount you needed to be paid to buy a long-term bond right now and so lose your ability to react when short-term rates changed—was -0.9%-points: buyers of the long Treasury Bond were willing to give up 0.9% per year in return to lock-in yield and avoid the fluctuations from the rollover strategy. Today the estimated term premium is +0.5%-points: buyers of the long Treasury Bond require an extra 0.5% per year in return to give up their freedom to react to changes in short-term interest rates. This smells to me much more like a “market microstructure” story than a “bond vigilantes cleaning their weapons at the advent of Trump 2.0” story. In the late spring of 2023 the marginal player and holder of long-term Treasuries was rehearsing the message “we locked in what looked like a very attractive yield”, while today the same guys are rehearsing the message “we preserved our freedom and avoided exposure to duration risk.”

Takeaways by Macro Roundup® AI

  1. The estimated U.S. Treasury term premium has swung from -0.9 percentage points in late spring 2023, when long-bond buyers gave up 0.9% per year to lock in yield, to +0.5 percentage points, with buyers now demanding an extra 0.5% per year.
  2. The term-premium swing resembles a market-microstructure story more than a case of bond vigilantes reacting to the advent of Trump 2.0.

Related Articles:

  • The Move in Long Rates Is Very Unusual — The Federal Reserve has cut its policy rate by 100 basis points while 10-year interest rates have risen by 100 basis points over the same stretch, a highly unusual divergence. Possible explanations include fiscal worries, weaker foreign demand for U.S. debt, or rate cuts that were not justified.
  • Is There an Insanity Premium on Interest Rates? — Stock and bond markets can diverge because equity investors are more driven by sentiment, as seen in social-media-fueled meme stocks that have no bond-market equivalent. The recent rise in stocks is narrow and largely tied to artificial intelligence, with the Dow Jones Industrial Average having surrendered nearly all of its post-election gain.
  • 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.

AI Summary. Wildfires burning in the Santa Monica and Malibu areas are destroying some of the most expensive real estate in the US, where median home values exceed $2m. AccuWeather estimates the damage and economic loss at $52bn to $57bn, which would rank the disaster among the worst in US history.

Brian Sullivan and Yasufumi Saito Bloomberg
Date Posted:
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The ongoing Los Angeles wildfires will cost somewhere between $52-57B, according to a preliminary estimate by AccuWeather.

How costly are wildfires burning through high-value urban real estate?

Core argument: AccuWeather estimates the Los Angeles wildfires will cause $52 billion to $57 billion in damage and economic loss, a total that would rank the blazes among the worst US disasters.

Blazes burning around Santa Monica and Malibu are consuming some of the most pricey real estate in the US, affecting areas where the median home value is more than $2 million, according to AccuWeather. The disaster will likely cause between $52 billion to $57 billion in damage and economic loss, the company said.

Takeaways by Macro Roundup® AI

  1. AccuWeather estimates the Los Angeles wildfires will cause $52 billion to $57 billion in damage and economic loss, a total that would rank the blazes among the worst US disasters.
  2. The fires burning around Santa Monica and Malibu are consuming some of the most expensive real estate in the US, in areas where AccuWeather puts the median home value above $2 million.

Related Articles:

  • The Uninsurable World: What Climate Change Is Costing Homeowners — Global insurance losses from natural catastrophes have topped $100bn for four straight years, a level once considered the mark of an exceptionally bad year, and US insurers have repriced risk with significant premium increases. Reinsurer Swiss Re predicts a growing number of areas where buying insurance becomes uneconomical.
  • As Insurers Around the U.S. Bleed Cash From Climate Shocks, Homeowners Lose — Insurers lost money on homeowners coverage in 18 states, up from 12 states five years earlier and eight a decade earlier, according to a New York Times analysis of financial data. In response, insurers are raising premiums by as much as 50% or more, cutting coverage, or exiting entire states.
  • The 30-Year Mortgage Wasn’t Designed For Climate Chaos — Economists warn that annual home insurance policies cannot always be reconciled with 30-year mortgages, noting that reinsurance costs rose more than 100% from 2017 to 2023 and insurers passed those costs to homeowners. The Insurance Information Institute reports insurers paid $1.11 in claims per dollar of premiums in 2023, with a fifth straight year of underwriting losses expected.

AI Summary. California's largest property insurer declined to renew 72,000 home and apartment policies statewide, including 69% of policies in one Pacific Palisades ZIP code, pushing homeowners toward the state's FAIR Plan insurer of last resort, which listed $458bn in exposure against about $2.5bn in reinsurance and $200m in surplus cash.

Leslie Kaufman Bloomberg
Date Posted:

LA fires represent an “existential test” for FAIR, California’s insurer of last resort, with an estimated $5.9B in exposure to Pacific Palisades alone. FAIR has $2.5B in reinsurance and $200mm cash.

Can a state insurer of last resort cover $458bn exposure?

Core argument: California's FAIR Plan listed exposure of $458 billion in September, up 61% from the previous year, against roughly $2.5 billion in reinsurance and $200 million in surplus cash reported in testimony last year.

State Farm California’s largest property insurer, announced in March that it would not renew 72,000 home and apartment policies statewide. Pacific Palisades was hit particularly hard. The agency canceled 69% of its policies in the neighborhood’s 90272 ZIP code. When Californians can’t find a traditional insurer to sell them a policy, they can turn to the FAIR Plan. In September, FAIR listed its exposure as $458 billion, up 61% from the previous year. In testimony last year, the FAIR plan reported it had only about $2.5 billion in reinsurance and $200 million in surplus cash. California Insurance Commissioner Ricardo Lara outlined a plan for such an emergency. At first, uncovered costs would be split between insurers and policy holders through additional assessments. Such assessments would have to be approved first by the commissioner, but they could be on any property or casualty policy, including auto.

Takeaways by Macro Roundup® AI

  1. California's FAIR Plan listed exposure of $458 billion in September, up 61% from the previous year, against roughly $2.5 billion in reinsurance and $200 million in surplus cash reported in testimony last year.
  2. State Farm, California's largest property insurer, announced in March it would not renew 72,000 home and apartment policies statewide, including 69% of its policies in the Pacific Palisades 90272 ZIP code.
  3. California Insurance Commissioner Ricardo Lara outlined an emergency plan under which uncovered costs would first be split between insurers and policyholders through assessments requiring his approval and applicable to any property or casualty policy, including auto.

Related Articles:

  • Allstate Approved to Raise Home Insurance Rates by 34% in Wildfire-Prone California — California regulators approved an average 34.1% home insurance rate increase for Allstate affecting about 350,000 policyholders, with some premiums rising as much as 650% and others falling by as much as 57%. Major insurers including State Farm and Farmers have pulled back from the state, citing wildfire costs and regulations that capped rate increases.
  • Wildfires and Real Estate Values in California — California recorded over 300,000 fire episodes between 1987 and 2022, with the size, intensity, and estimated costs of these episodes increasing in recent years. Proximity to past wildfires has been associated with larger adverse effects on property values in recent years, and the authors find insurance does little to offset those effects.
  • Growing Costs of Natural Disasters are Stressing Property Insurance Markets — U.S. home insurers posted $15.2bn in net underwriting losses, their worst performance since at least 2000, and are responding by raising premiums and withdrawing coverage. State "last-resort" public insurance plans, backed by a state's policyholders or taxpayers, reached a record of just over $1.3tn in exposure, signaling growing unavailability of private coverage.

AI Summary. East Asia's total population has peaked and is projected to decline for at least a generation, with the pace of decline likely accelerating each decade, while US population is projected to keep growing for decades. The author argues such sustained divergence can shift the global balance of power.

Nicholas Eberstadt American Enterprise Institute
Date Posted:
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Over the next 25 years, China’s working-age population will fall by over 20%, while the US’s will continue to grow. “Exponential decay of population numbers over a long period of time can transform the international stage and shift the global balance.”

Will diverging population trends shift the global balance of power?

Core argument: East Asia's total population has peaked and is set on a course for decline extending as far as demographers can project, likely gaining speed with each coming decade for at least a generation.

East Asia’s total population has just peaked. Now it is set on a course for decline: a decline extending as far as the demographer’s eye can see—and likely gaining speed with each with each coming decade for at least a generation, perhaps longer. In America, by contrast, population increase is still the order of the day, and demographic projections suggest that the US population will continue growing for decades, if not generations. Exponential decay of population numbers over a long period of time can transform the international stage and shift the global balance, it looks as if the US and East Asia are witnessing one of these transformations now.

Takeaways by Macro Roundup® AI

  1. East Asia's total population has peaked and is set on a course for decline extending as far as demographers can project, likely gaining speed with each coming decade for at least a generation.
  2. The US population continues to grow, and demographic projections suggest that growth will persist for decades, if not generations.
  3. Exponential decay of population numbers over a long period can transform the international stage and shift the global balance, and the US and East Asia appear to be witnessing one of these transformations.

Related Articles:

  • World Depopulation: Prospects and Implications — 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.
  • 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.
  • 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. Private companies are staking claims to radio spectrum on or from the Moon, with more than 50 applications filed with the International Telecommunication Union and commercial filings outnumbering those from governments and space agencies for the first time. About half of the 450 lunar missions forecast over a decade are expected to be private.

Oliver Hawkins and Peggy Hollinger Financial Times
Date Posted:

In 2024, commercial filings for lunar telecommunications spectrum outpaced those from governments for the first time according to an FT analysis.

Are private companies now outpacing governments in claiming lunar radio spectrum?

Core argument: More than 50 applications have been filed with the International Telecommunication Union since 2010 to use radio spectrum on or from the Moon, according to Financial Times research.

Private companies are staking claims to radio spectrum on the Moon with the aim of exploiting an emerging lunar economy, Financial Times research has found. More than 50 applications have been filed with the International Telecommunication Union since 2010 to use spectrum, the invisible highway of electromagnetic waves that enable all wireless technology, on or from the Moon. Last year the number of commercial filings to the global co-ordinating body for lunar spectrum outstripped those from space agencies and governments for the first time, according to FT research. The filings cover satellite systems as well as missions to land on the lunar surface. Of the 450 lunar missions forecast in the decade to 2033, about half will be by private companies, said Analysys Mason. According to the space consultancy’s latest Lunar Market report, those missions are expected to generate revenues of about $151bn, with 75% still from government contracts,

Takeaways by Macro Roundup® AI

  1. More than 50 applications have been filed with the International Telecommunication Union since 2010 to use radio spectrum on or from the Moon, according to Financial Times research.
  2. Commercial filings for lunar spectrum to the International Telecommunication Union outstripped those from space agencies and governments for the first time, according to Financial Times research, with filings covering satellite systems and missions to land on the lunar surface.
  3. Analysys Mason forecasts 450 lunar missions in the decade to 2033, about half by private companies, expected to generate revenues of about $151bn, with 75% still from government contracts.

Related Articles:

  • 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.
  • 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.
  • 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.

Friday, January 10, 2025

AI Summary. Because the elderly hold much more wealth than the young and on average do not draw it down much as they age, the authors' model projects no "great demographic reversal": population aging is estimated to push global rates of return down by about 1.07pp and raise global wealth from 456% to 498% of world GDP.

Adrien Auclert, Hannes Malmberg, Frédéric Martenet and Matthew Rognlie Review of Economic Studies
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Auclert, et al claim to refute the “great demographic reversal” hypothesis, finding that aging in the developed world will “increase wealth-to-GDP ratios [W/Y], lower asset returns [r], and widen global imbalances [NFA/GDP] through the twenty-first century.”

Does population aging push global interest rates down rather than up?

Core argument: The authors' model predicts that population aging will push global rates of return down through the twenty-first century, with a central estimate of −1.07pp, contrary to the "great demographic reversal" hypothesis that aging will lower savings rates and raise interest rates.

An influential hypothesis [the “great demographic reversal”] argues, based on the dissaving of the elderly, that aging will eventually push savings rates down and interest rates up. A key feature of age-wealth profiles [is that] the old hold much more wealth than the young, and on average do not dissave much as they age. This feature, which is remarkably robust across countries and time, interacts with large and heterogeneous increases in the old-age share to produce our compositional effects. Since the average effect is positive and large, our model predicts that there will be no great demographic reversal: through the twenty-first century, population aging will continue to push down global rates of return, with our central estimate being −1.07pp, and push up global wealth-to-GDP, with our central estimate being a 8.9 log point increase (from 456% to 498% of world GDP). Since the effect is heterogeneous across countries, our model also predicts large global imbalances [will continue].

Takeaways by Macro Roundup® AI

  1. The authors' model predicts that population aging will push global rates of return down through the twenty-first century, with a central estimate of −1.07pp, contrary to the "great demographic reversal" hypothesis that aging will lower savings rates and raise interest rates.
  2. The model's central estimate is an 8.9 log point rise in global wealth-to-GDP, from 456% to 498% of world GDP, arising from compositional effects as the old-age share increases.
  3. Age-wealth profiles, robust across countries and time, show the old hold much more wealth than the young and on average do not dissave much as they age; because the effect is heterogeneous across countries, the model predicts large global imbalances will continue.

Related Articles:

  • The Forever Labour Shortage — Research from the Bank for International Settlements finds that the young and the old are inflationary while the working-age population is disinflationary, because prime-age workers produce more supply than demand and dependents do the opposite. On this view, an ageing population and rising dependency will constrain supply and add to inflation.
  • Recent Movements in R*: The Most Important Interest Rate That You Have Never Heard Of — The natural rate of interest — the inflation-adjusted rate prevailing when the economy grows at trend with inflation at target — is unobservable and uncertain, but most estimates have risen and sit above pre-pandemic levels. The data lean toward a long-run natural rate higher than pre-pandemic and possibly above Federal Reserve projections.
  • Quo Vadis, r*? The Natural Rate Of Interest After The Pandemic — Estimates of the natural rate of interest across core advanced economies suggest it may have increased, though the estimates are widely dispersed and statistically uncertain. Low expected potential growth and rising longevity may weigh on the natural rate, while large fiscal deficits, age-related spending, and public investment needs for infrastructure, defense, and the green transition may push it up.

AI Summary. Comparing New Jersey restaurant menu prices with those in neighboring Pennsylvania, where the minimum wage was unchanged, the authors estimate that each $1 increase in the minimum wage raised the price of an item by 7.0 cents on average. Pass-through was larger for items requiring more employee preparation steps, adding 0.3 cents per additional step.

Kerry Papps and Michael Strain IZA Institute of Labor Economics
Date Posted:

.@MichaelRStrain @AEIecon evaluates minimum wage increases between 2019-24, and finds a $1 increase in the minimum wage increased the mean price of fast food items by 7¢, implying a “pass-through elasticity of around 0.13.”

How much do restaurant menu prices rise with the minimum wage?

Core argument: Using neighboring Pennsylvania, where the minimum wage was unchanged, as a control group in a difference-in-difference specification, the study finds substantially larger pass-through coefficients on items requiring more employee preparation steps.

In early 2019, New Jersey passed legislation raising the minimum wage to $15 over the following 5 years. The first phase of this took effect on July 1, 2019, when the minimum wage increased from $8.85 to $10, the second phase raised it to $11 on January 1, 2020, and the third phase raised it to $12 on January 1, 2021. The minimum wage was unchanged during this period in neighboring Pennsylvania, therefore this state provides an appropriate control group. Using a difference-in-difference specification, we find that these three rounds of minimum wage increases collectively raised the price of an item by 20.6 cents on average or that every $1 increase in the minimum wage raises prices by 7.0 cents. Prices should rise the most on items that are highly labor intensive and for which consumers have a greater taste for variety. Consistent with this, we find substantially larger pass through coefficients on items that require more steps by employees to prepare. For every additional preparation step, a $1 minimum wage increase raises the price of an item by an additional 0.3 cents.

Takeaways by Macro Roundup® AI

  1. Using neighboring Pennsylvania, where the minimum wage was unchanged, as a control group in a difference-in-difference specification, the study finds substantially larger pass-through coefficients on items requiring more employee preparation steps.
  2. For every additional preparation step, a $1 minimum wage increase raises an item's price by an additional 0.3 cents, consistent with larger increases on labor-intensive items.

Related Articles:

  • What’s Across the Border? Re-Evaluating the Cross-Border Evidence on Minimum Wage Effects — Earlier research using pairs of neighboring counties straddling state borders found no relationship between minimum wages and U.S. restaurant employment, but the authors show that result reverses when local economic areas are instead defined as multi-state commuting zones. Under that definition, they estimate an employment elasticity of −0.305 four years after a minimum wage change.
  • 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.
  • Do Minimum Wages Reduce Job Opportunities for Blacks? — The authors find evidence that higher minimum wages reduce employment among low-skill Black workers across every group examined — teens, high school dropouts, and young workers with at most a high school education — with larger effects for Black males, while such effects are not very detectable for whites.

AI Summary. Census data show immigration has become the main source of population growth in the South, including Florida and Texas, which previously grew primarily through domestic migration. California and New York, which lost population during the peak pandemic years, now rank third and fifth among states in numerical population gains, aided by greater immigration and reduced domestic out-migration.

William Frey Brookings Institution
Date Posted:

Since 2022, population growth in Florida and Texas has been driven primarily by immigration, which exceeds growth from internal migration. Since 2022, significant immigration in California and New York has offset negative internal migration.

Is immigration now the main driver of state population growth?

Core argument: Census data show immigration replaced domestic migration as the primary source of population growth in the South over the past two years, after domestic migration drove the region's gains during the peak pandemic years of 2020–22.

During the peak pandemic years (2020-22), the South’s population gains came primarily from domestic migration. Yet over the past two years, as domestic migration to the South decreased, the rise in immigration took over as the region’s primary growth contributor. In contrast, the Northeast and Midwest benefitted in the post-pandemic period from reduced domestic out-migration as well as increased immigration. The changing migration patterns are noticeable in the two Southern magnet states: Florida and Texas, which both flipped from gaining population primarily through domestic migration to gaining population primarily from immigration in the past two years. At the same time, California and New York—two states that are now among the top national population gainers—are benefitting from both greater immigration and reduced domestic out-migration. In the past year, the top two population-gaining states were Florida and Texas. At the same time, California and New York—two states that registered population declines during the peak pandemic years— not only gained population in 2023-24, but ranked third and fifth, respectively, among all states in numerical population gains.

Takeaways by Macro Roundup® AI

  1. Census data show immigration replaced domestic migration as the primary source of population growth in the South over the past two years, after domestic migration drove the region's gains during the peak pandemic years of 2020–22.
  2. Florida and Texas, the top two population-gaining states in the past year, both flipped from gaining population primarily through domestic migration to gaining primarily through immigration over the past two years.
  3. California and New York, which lost population during the peak pandemic years, ranked third and fifth among all states in numerical population gains in 2023–24, aided by greater immigration and reduced domestic out-migration.

Related Articles:

  • Immigrants Dominate U.S. Population Growth — 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.
  • 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.
  • 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.

AI Summary. Silicon Valley's largest start-ups are staying private longer, with Databricks, SpaceX, and OpenAI raising $10bn, $1.25bn, and $6.6bn respectively in private rounds. The seven largest private US companies are worth $695bn, according to Forge Global, with SpaceX and OpenAI alone valued at more than $500bn.

George Hammond Financial Times
Date Posted:

.@Forge_Global finds the seven largest privately-held US firms are worth $695B, with SpaceX and OpenAI alone valued at more than $500B. @FT

Are the largest start-ups staying private instead of going public?

Core argument: Databricks raised $10bn in December, the largest venture capital fundraising round of 2024, following SpaceX's $1.25bn raise in November and OpenAI's $6.6bn haul in October.

The hottest start-ups in Silicon Valley are finding ways of staying private for longer. Artificial intelligence and data analytics company Databricks raised $10bn in December, the largest venture capital fundraising round of 2024. That followed SpaceX’s $1.25bn raise in November, which made it the most valuable private start-up in the world, and OpenAI’s $6.6bn haul in October. Private markets have ballooned over the past few years. The seven largest private companies in the US are worth $695bn today, according to Forge Global, with SpaceX and OpenAI alone valued at more than $500bn.

Takeaways by Macro Roundup® AI

  1. Databricks raised $10bn in December, the largest venture capital fundraising round of 2024, following SpaceX's $1.25bn raise in November and OpenAI's $6.6bn haul in October.
  2. The seven largest private companies in the US are worth $695bn, with SpaceX and OpenAI alone valued at more than $500bn, according to Forge Global.
  3. SpaceX became the most valuable private start-up in the world after its November fundraising, as Silicon Valley's hottest start-ups find ways of staying private for longer.

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AI Summary. Catastrophe bonds, which insurers use to transfer risk to capital markets and which pay out only when cumulative losses over a year exceed a preset threshold, are unlikely to incur significant losses from wildfires in Los Angeles. The Swiss Re Global Cat Bond Index gained more than 17% in 2024, following a record near-20% return in 2023.

Gautam Naik Bloomberg
Date Posted:

While 12% of the $50B catastrophe bond market is exposed to wildfire risk, analysts project that losses on Los Angeles wildfires will be taken largely by primary insurers and junior reinsurance layers, with minimal impact on cat bonds.

Do catastrophe bonds absorb losses from major wildfires?

Core argument: The Swiss Re Global Cat Bond Index rose more than 17% in 2024 after investors largely dodged payouts from Hurricanes Helene and Milton, just shy of the record 20% gain in 2023.

The wildfires sweeping through Los Angeles are unlikely to trigger significant losses for catastrophe bonds designed to capture such risks. Cat bonds are typically used by insurers to offload unmanageable risks to the capital markets. Investors can be on the hook if a predefined catastrophe hits, but stand to reap huge profits if it doesn’t. Investors largely dodged payouts after Hurricanes Helene and Milton hit last year, with the Swiss Re Global Cat Bond Index soaring more than 17% in 2024, just shy of the 20% record seen in 2023. Losses are based on data points over a year and cat bonds only trigger when a cumulative loss threshold has been reached. That means there’s still the risk that subsequent natural catastrophes will result in losses, especially after last year’s hurricane season.

Takeaways by Macro Roundup® AI

  1. The Swiss Re Global Cat Bond Index rose more than 17% in 2024 after investors largely dodged payouts from Hurricanes Helene and Milton, just shy of the record 20% gain in 2023.
  2. The Los Angeles wildfires are unlikely to trigger significant catastrophe bond losses, and cat bonds pay out only once a cumulative loss threshold measured over a year is reached.
  3. Insurers use cat bonds to transfer unmanageable risks to capital markets, leaving investors exposed if a predefined catastrophe hits and able to reap large profits if it does not.

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