Edward Conard

Top Ten New York Times Bestselling Author

  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…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 should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


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
Date Posted:
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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.

Related Articles:

  • The Alchemists — 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.
  • State of Private Markets: Q3 2024 — More than 20% of new venture investments on the Carta platform were down rounds, in which startups raise capital at reduced valuations, one of the highest quarterly shares since at least 2019. Venture-backed valuations have undergone a reset after reaching all-time highs, and the average interval between priced rounds has lengthened.
  • Number of US Venture Capital Firms Falls As Cash Flows to Tech’s Top Investors — The number of venture capital firms investing in US-headquartered companies fell to 6,175 from a peak of 8,315, with more than half of the $71bn raised by US venture firms going to just nine firms. The concentration has left start-ups such as SpaceX, OpenAI, Databricks and Stripe able to stay private far longer while thinning funding options for smaller companies.

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.

Related Articles:

  • $52 Billion Cost Would Rank LA Fires Among Worst US Disasters — 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.
  • Los Angeles Fires Become Existential Test for California’s Stopgap Insurer — 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.
  • 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.

Monday, January 13, 2025

AI Summary. Using a century of monthly U.S. building permit data for all states and the 60 largest metro areas, the authors find volatility in residential building permit growth predicts aggregate and cross-sectional stock and corporate bond return volatility, even after controlling for corporate and household leverage and debt service ratios.

Gustavo Cortes and Cameron LaPoint Working Paper
Date Posted:
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US data since 1919 shows that volatility in building permits foreshadows financial market volatility. “Cities and states with more elastic housing supply consistently predict financial market downturns at 12-month horizons.” @cslapoint @CortesGustavoS

Does housing construction volatility predict stock and bond market volatility?

Core argument: Volatility in residential building permit growth predicts aggregate and cross-sectional stock and corporate bond return volatility, according to a hand-collected century-long database of monthly permit quantities and valuations for all U.S. states and the 60 largest MSAs.

Does the housing market lead the financial cycle? We address this question by creating a new hand-collected database spanning a century of monthly building permit quantities and valuations for all U.S. states and the 60 largest MSAs. We show that the option to build embedded in permits renders volatility in residential building permit growth (BPG) a strong predictor of aggregate and cross-sectional stock and corporate bond return volatility. This predictability remains even after conditioning on a battery of factors, including corporate and household leverage [thus arising] independently of the credit cycle] and firms’ exposure through their network of plants to other localized physical risks like natural disasters conditional on measures of corporate and household leverage and debt service ratios. Cities and states with more elastic housing supply consistently predict financial market downturns at 12-month horizons, resulting in new trading strategies to hedge against overbuilding risk.

Takeaways by Macro Roundup® AI

  1. Volatility in residential building permit growth predicts aggregate and cross-sectional stock and corporate bond return volatility, according to a hand-collected century-long database of monthly permit quantities and valuations for all U.S. states and the 60 largest MSAs.
  2. The predictive power of building permit growth volatility persists after conditioning on corporate and household leverage and debt service ratios, which the authors argue makes it independent of the credit cycle, and on firms' plant-network exposure to localized physical risks such as natural disasters.
  3. Cities and states with more elastic housing supply predict financial market downturns at 12-month horizons, which the authors use to construct trading strategies hedging against overbuilding risk.

Related Articles:

  • Credit Allocation and Macroeconomic Fluctuations — Credit expansions disproportionately channel credit to non-tradable sector firms and households, and the authors find that the sectoral allocation of credit predicts future GDP paths and the likelihood of systemic banking crises. Credit growth to non-tradable industries predicts boom-bust output patterns and elevated financial fragility, while credit to tradable industries is associated with higher future productivity growth.
  • The Great Mortgaging: Housing Finance, Crises, and Business Cycles — In advanced economies, about two-thirds of bank activity now involves channeling savings into household real estate purchases, so banks' business model resembles that of real estate funds. The authors find non-mortgage lending has held steady relative to GDP while mortgage booms have been a key source of post-war financial instability, with busts followed by slower growth even absent crises.
  • The Price of Housing in the United States — Real housing price appreciation in the United States has varied widely across regions, with West Coast cities rising earlier while prices in other regions remained comparable in real terms to decades earlier. The authors find essentially no relationship between real price growth and zoning restrictiveness in the earliest period studied, and progressively steeper gradients in later periods.

AI Summary. The term premium on 10-year government notes — the extra yield investors demand for holding longer-term debt — stands at a more than decade high, and a Federal Reserve model shows it accounting for an increasingly larger share of overall yields. Yields on longer-dated debt have climbed faster than short-term yields.

Michael Mackenzie and Ye Xie Bloomberg
Date Posted:

Since the start of 2023, the mean 10-year yield has been 4.1%, relative to 4.8% from 1998-2007 and 2.4% from 2008-2022.

Are investors demanding more extra yield to hold long-term government debt?

Core argument: The term premium on 10-year notes — the extra yield investors demand for holding longer-term debt — stands at a more than decade high.

The so-called term premium on 10-year notes — the extra yield investors demand to accept the risk of taking on longer-term debt — is now at a more than decade high and, according to a Fed model, has become an increasingly bigger component of overall yields. Yields on longer-dated debt have climbed faster than those of their short-term counterparts, a sign of concern for the long-term outlook.

Takeaways by Macro Roundup® AI

  1. The term premium on 10-year notes — the extra yield investors demand for holding longer-term debt — stands at a more than decade high.
  2. A Federal Reserve model shows the term premium has become an increasingly larger component of overall yields.
  3. Yields on longer-dated debt have climbed faster than those on short-term counterparts, a sign of concern for the long-term outlook.

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.
  • There Is No “Reverse Conundrum” Driving Up Bond Yields — 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.
  • 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. Analysts pushed back their Federal Reserve forecast to two rate cuts this year and one the next after a strong employment report eased concerns about labor market softening, with an unchanged terminal rate of 3.5–3.75%. That view is more dovish than market pricing because they expect inflation to keep falling toward 2%.

David Mericle, Will Marshall, and Bill Zu Goldman Sachs
Date Posted:

Goldman Sachs now expects two cuts this year (in June and December, down from its previous three), and one more in 2026. Mericle, et al forecast the terminal FFR will be 3.5-3.75%, 100+ bps higher than 2.16% in 2019, but well under 5.02% in 2007.

Does a strong employment report delay expected interest rate cuts?

Core argument: The authors pushed back the final three rate cuts in their Fed forecast after the strong December employment report, now expecting two cuts this year in June and December and one more in 2026, versus three this year previously.

We pushed back the final three rate cuts in our Fed forecast on Friday morning in response to the strong December employment report, which alleviated some of the lingering concerns about recent labor market softening. We now expect two cuts this year in June and December and one more in 2026 (vs. three this year previously) to an unchanged terminal rate of 3.5-3.75%. Our baseline forecast remains somewhat more dovish than market pricing mainly because we are more optimistic than many that the underlying inflation trend will continue to fall toward 2%.

Takeaways by Macro Roundup® AI

  1. The authors pushed back the final three rate cuts in their Fed forecast after the strong December employment report, now expecting two cuts this year in June and December and one more in 2026, versus three this year previously.
  2. The authors' terminal rate forecast remains unchanged at 3.5–3.75% despite the revised timing of the remaining cuts.
  3. The authors' baseline forecast remains somewhat more dovish than market pricing, mainly because they are more optimistic than many that the underlying inflation trend will continue to fall toward 2%.

Related Articles:

  • Fed Officials Really Don’t Want a Downturn — Federal Reserve officials project that inflation will not return to their 2% target until 2027 and that short-term interest rates will settle near 3-3.25%, above prior expectations. The projections suggest policymakers are willing to accept more inflation, faster real growth, and lower interest rates to keep unemployment from rising.
  • Economic Policy Before and After the 2024 Election — Market expectations for the Federal Reserve's interest-rate path have shifted, with the expected endpoint moving from about 2.8% to 3.8%. The author argues that enacting the campaign agenda—larger deficits from tax cuts, tariffs on all imports, a weaker currency, mass deportations, and pressure on central-bank independence—would produce a substantially larger inflation shock.
  • Larry Summers and Bob Rubin Join Our CIOs to Discuss the Surprising Economic Cycle — Adopting the Simpson-Bowles fiscal consolidation when interest rates were at zero would have risked excessive disinflation, since long rates had no room to fall to provide an offsetting expansionary impulse. After the large run-up in debt and rise in real interest rates, the developing fiscal situation risks inflationary pressure, Treasury market disruption, or crowding out of private investment.

AI Summary. Most of the decline in birth rates reflects a fall in the number of couples rather than childbearing decisions within couples; had US marriage and cohabitation rates held constant over the past decade, the US fertility rate would be higher today than it was then. The drop in relationship formation is steepest among the poorest and appears globally.

John Burn-Murdoch Financial Times
Date Posted:
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.@jburnmurdoch argues that recent declines in fertility are due more to a decline in marriage and cohabitation than couples’ decisions to have smaller families. “The central demographic story of modern times is the rising rates of singledom.”

Are falling birth rates driven by fewer couples forming?

Core argument: Most of the decline in birth rates stems from a marked fall in the number of couples rather than from childbearing decisions within couples, with the drop in relationship formation steepest among the poorest.

Most of the fall in birth rates is coming not from the decisions made by couples, but from a marked fall in the number of couples. Had US rates of marriage and cohabitation remained constant over the past decade, America’s total fertility rate would be higher today than it was then. The central demographic story of modern times is not just declining rates of childbearing but rising rates of singledom: a much more fundamental shift in the nature of modern societies. The drop in relationship formation is steepest among the poorest. The trend is global. From the US, Finland, and South Korea to Turkey, Tunisia and Thailand, falling birth rates are increasingly downstream of a relationship recession among young adults. Baby bonuses put the cart before the horse when a growing share of people are without a partner. Even in parts of Sub-Saharan Africa, similar trends may be under way.

Takeaways by Macro Roundup® AI

  1. Most of the decline in birth rates stems from a marked fall in the number of couples rather than from childbearing decisions within couples, with the drop in relationship formation steepest among the poorest.
  2. Had US marriage and cohabitation rates held constant over the past decade, America's total fertility rate would be higher today than it was then.
  3. The relationship recession among young adults spans the US, Finland, South Korea, Turkey, Tunisia and Thailand, with similar trends possibly under way in parts of Sub-Saharan Africa, and baby bonuses put the cart before the horse when a growing share of people lack a partner.

Related Articles:

  • The Anti-Social Century — Americans spend less time with other people than in any period with reliable data back to 1965, with in-person socializing down more than 20% from 2003 to 2023 according to the Bureau of Labor Statistics' American Time Use Survey. Among unmarried men and people under 25, the decline exceeded 35%.
  • 1 in 3: A Record Share of Young Adults Will Never Marry — The share of Americans who have ever married is at historic lows at ages 35 and 45, with about 60% of 35-year-old men ever-married compared with 90% in 1980. The author projects that one-third of men and women reaching age 45 by 2050 will never have married.
  • The Data is Clear: People Are Having Less Sex — Survey data show every age group now reports less frequent sexual activity than counterparts in earlier decades, with roughly an 8 percentage point decline across age groups. Among people around age 25, the share reporting sex at least monthly fell from over 80% to 72%, while the peak years remain ages 30 to 40.

AI Summary. China's goods trade surplus reached a record $992bn, 21% above the prior year, driven by record exports alongside weak imports held down by sluggish domestic consumption and falling commodity prices. China sells more goods than it buys from more than 165 countries, with record surpluses versus Southeast Asian nations and nearly $250bn with the European Union.

Bloomberg Bloomberg Staff
Date Posted:

China ran a $1T dollar trade surplus in 2024, up 21% y/y. The bilateral surplus with the US fell to $361B – the lowest in 3 years, though well above pre-pandemic levels and the surplus with ASEAN countries reached a record level.

Is China's record trade surplus driven by weak domestic demand?

Core argument: China's trade surplus reached $992 billion in 2024, 21% higher than the prior year, on record exports combined with weak imports held down by sluggish domestic consumption and falling commodity prices, according to the customs administration.

The surplus jumped to an unprecedented $992 billion in 2024, according to a statement from the customs administration on Monday, 21% higher than the previous year. That was the result of record exports but also the continued weakness of imports, which have been dragged down by sluggish domestic consumption and falling commodity prices. China now sells more goods to more than 165 countries than it buys from them, according to Bloomberg calculations based on government data. The surplus with the US fell to $361 billion last year, the lowest in three years, but that was still well above the pre-pandemic levels. The surplus with the 10 Southeast Asian nations in ASEAN soared to a record, and that with the European Union rose to almost $250 billion.

Takeaways by Macro Roundup® AI

  1. China's trade surplus reached $992 billion in 2024, 21% higher than the prior year, on record exports combined with weak imports held down by sluggish domestic consumption and falling commodity prices, according to the customs administration.
  2. China's surplus with the US fell to $361 billion in 2024, the lowest in three years but still well above pre-pandemic levels, while its surplus with the 10 ASEAN nations hit a record and that with the European Union rose to almost $250 billion.
  3. China sells more goods to more than 165 countries than it buys from them, according to Bloomberg calculations based on government data.

Related Articles:

  • China’s Stunning 2024 Export Growth — Chinese export volumes are up 13% year-over-year while import volumes are up only 2%, a gap that with exports at about 20% of GDP implies a net exports contribution to Chinese growth of close to 2% of GDP. Falling Chinese export prices mean export volumes are growing much faster than the dollar value of exports.
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AI Summary. A White House economist argues that retaliatory tariffs by other nations can nullify the welfare benefits of tariffs for the US, and proposes deterring retaliation by declaring American defense commitments less binding for countries that retaliate. The US has no defense alliance with Mexico, Vietnam, or China, which account for half the US trade deficit.

Greg Ip Wall Street Journal
Date Posted:

.@greg_ip highlights CEA-designate @SteveMiran’s argument that retaliatory tariffs can be deterred by leveraging American security provisions; i.e. “the U.S. might not defend Japan, South Korea, or a fellow NATO member that retaliated.”

Can defense commitments be used to deter retaliatory tariffs?

Core argument: Miran acknowledged that "retaliatory tariffs by other nations can nullify the welfare benefits of tariffs for the U.S.," a scenario in which both sides lose, as when China, the European Union, Mexico, and Canada retaliated in 2018.

If other countries retaliate, as China, the European Union, Mexico, and Canada did in 2018, the tariff is no longer optimal: Both sides lose. “Retaliatory tariffs by other nations can nullify the welfare benefits of tariffs for the U.S.,” Miran acknowledged. To deter retaliation, he wrote that the Trump administration could “declare that it views joint defense obligations and the American defense umbrella as less binding or reliable for nations which implement retaliatory tariffs.” In other words, the U.S. might not defend Japan, South Korea, or a fellow NATO member that retaliated. The U.S. has no defense alliance with Mexico, Vietnam, or China which account for half the U.S. trade deficit.

Takeaways by Macro Roundup® AI

  1. Miran acknowledged that "retaliatory tariffs by other nations can nullify the welfare benefits of tariffs for the U.S.," a scenario in which both sides lose, as when China, the European Union, Mexico, and Canada retaliated in 2018.
  2. Miran wrote that the Trump administration could deter retaliation by declaring that it views joint defense obligations and the American defense umbrella as "less binding or reliable" for nations that implement retaliatory tariffs.
  3. Mexico, Vietnam, and China account for half the U.S. trade deficit, and the United States has no defense alliance with any of them.

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AI Summary. Satellite images of a Chinese state-owned shipyard show six barge-like vessels with extendable ramps under construction, which analysts said could help an invasion force land heavy equipment such as tanks and artillery over Taiwan's mudflats, seawalls and concrete wave-breaking blocks onto firm ground.

Kathrin Hille Financial Times
Date Posted:

China is building at least 6 barges that can serve as mobile piers designed to give the PLA the capacity to conduct an amphibious assault on Taiwan. The barges are similar to the Mulberry harbors constructed for the Normandy invasion.

Is China building mobile piers to land heavy equipment on Taiwan?

Core argument: Satellite images reviewed by the Financial Times show six barge-like vessels with extendable ramps under construction at China's state-owned Guangzhou Shipyard, in three sizes, the largest 183 metres long with an eight-pylon design and a ramp extending another 128 metres.

Satellite images captured on Friday and reviewed by the Financial Times show six barge-like vessels equipped with extendable ramps under construction at China’s state-owned Guangzhou Shipyard. The vessels could help the People’s Liberation Army transport heavy military equipment such as tanks and artillery across mudflats or seawalls onto firm ground. Long stretches of the country’s coast are cliffs, reefs and rocks, while its flat western seaboard is lined with mudflats in which heavy equipment could easily get stuck. Most of the coastline is also separated from inland areas by concrete seawalls or wave-breaking concrete blocks. Shore-based lifting equipment such as the new barges could help an invasion force overcome such obstacles, analysts said. The satellite images showed mobile piers of three different sizes. The largest, with eight pylons, was 183 metres long and had a ramp extending another 128 metres.

Takeaways by Macro Roundup® AI

  1. Satellite images reviewed by the Financial Times show six barge-like vessels with extendable ramps under construction at China's state-owned Guangzhou Shipyard, in three sizes, the largest 183 metres long with an eight-pylon design and a ramp extending another 128 metres.
  2. The mobile piers could help the People's Liberation Army move heavy equipment such as tanks and artillery across mudflats or seawalls onto firm ground, analysts said.
  3. Long stretches of Taiwan's coast are cliffs, reefs and rocks, while its flat western seaboard is lined with mudflats in which heavy equipment could get stuck, and most of the coastline is separated from inland areas by concrete seawalls or wave-breaking blocks.

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