Edward Conard

Top Ten New York Times Bestselling Author

  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, February 4, 2025

AI Summary. Using registration and migration records for 212m U.S. voters, the authors find residential segregation between Democrats and Republicans increased at every geographic level from neighborhoods to Congressional districts. They attribute this less to partisans moving away from each other than to electorate turnover in Democratic-trending areas and party realignment in Republican ones.

Jacob Brown, Enrico Cantoni, Ryan Enos, Vincent Pons and Emilie Sartre National Bureau of Economic Research
Date Posted:

Over 2008-2020 residential segregation along party lines rose at all geographic levels. Increased concentrations of Democrats were driven by the rise of new, younger voters, and of Republicans by established voters’ switching to the GOP. @VinPons

Is rising partisan geographic segregation driven by voters moving apart?

Core argument: Using residential location and migration data for 212 million voters in U.S. states recording partisan registration between 2008 and 2020, the authors find residential segregation between Democrats and Republicans rose year over year at every geographic level, from neighborhoods to Congressional Districts.

Using data on the residential location and migration for every voter in U.S. states recording partisan registration between 2008–2020, we find that residential segregation between Democrats and Republicans has increased year over year at all geographic levels, from neighborhoods to Congressional Districts. We decompose the change in segregation into different sources. In Democratic trending places, the most impactful factors are the transformations of the American electorate: influxes of new Democratic-leaning young voters and older first-time registrants replacing voters who are dying or de-registering. In Republican areas, forces of partisan realignment are the most prominent factor driving partisan segregation: voters leaving the Democratic party and registering as Republicans or unaffiliated. Thus, rising geographic polarization is less about Democrats and Republicans fleeing from each other and more about macro-level forces shaping the types of people each party represents and the demographic composition of the U.S. electorate.

Takeaways by Macro Roundup® AI

  1. Using residential location and migration data for 212 million voters in U.S. states recording partisan registration between 2008 and 2020, the authors find residential segregation between Democrats and Republicans rose year over year at every geographic level, from neighborhoods to Congressional Districts.
  2. In Democratic-trending places, the authors identify transformations of the electorate as the most impactful driver of partisan segregation, with influxes of Democratic-leaning young voters and older first-time registrants replacing voters who die or de-register.
  3. In Republican areas, the authors find partisan realignment is the most prominent factor driving segregation, as voters leave the Democratic party to register as Republicans or unaffiliated, rather than Democrats and Republicans relocating away from each other.

Related Articles:

  • The Economic Geography Of The 2024 Elections — Counties where government transfer programs such as Social Security, Medicare, Medicaid, and unemployment insurance make up at least a quarter of personal income gave Trump 63% of the vote, while counties where transfers account for less than 15% gave Harris 56%. Transfers supplied 18% of total US personal income.
  • “Compensate the Losers?” Economic Policy and Partisan Realignment in the US — The authors argue that partisan realignment by education reflects Democrats' declining supply of "predistribution" policies such as job guarantees, higher minimum wages, protectionism, and stronger unions, which less-educated Americans favor while more-educated Americans prefer taxes and transfers. They estimate changing views of the parties' economic policies explain roughly half the shift.
  • The Demographic Detail of Donald Trump’s Victory — The foreign-born share of a county's population explains half the geographic variation in the electoral swing between the 2020 and 2024 US presidential elections, a stronger predictor than the white-working-class share was of earlier shifts. Because the level of the immigrant population aligns with voting patterns rather than its growth rate, the analysis suggests immigrants themselves changed their votes.

AI Summary. Government spending and fiscal deficits exceeding 23% and 6% of GDP late in the business cycle have absorbed savings and pushed mortgage rates to 7%, according to this argument. Higher rates have driven existing single-family home sales down 20% from their pre-pandemic peak, roughly the financial-crisis trough level.

Edward Conard Macro Roundup
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Who is paying for Biden’s blowout spending that exceeds 23% of GDP w/ 6% deficits that suck down savings, drive mortgage rates to 7%, and sales of existing homes down to their trough at the depths of the financial crisis—20% below their pre-COVID level.

Are government deficits pushing mortgage rates up and home sales down?

Core argument: Sales of existing family homes are down 20% from their pre-COVID peak, placing them approximately at the trough reached during the financial crisis.

Who is paying the price of the Biden administration's blowout spending? Unprecedented government spending and resulting fiscal deficits--which exceed 23% and 6% of GDP late in the business cycle--have sucked up savings, driven mortgage rates up to 7%, which in turn has driven sales of existing family homes down 20% from their recent pre-COVID peak. Home sales are now approximately at the trough of the financial crisis.

Takeaways by Macro Roundup® AI

  1. Sales of existing family homes are down 20% from their pre-COVID peak, placing them approximately at the trough reached during the financial crisis.
  2. Government spending exceeding 23% of GDP and fiscal deficits exceeding 6% of GDP late in the business cycle have absorbed savings and driven mortgage rates up to 7%, according to the author.
  3. The author attributes the 20% decline in existing home sales to mortgage rates rising to 7% as government borrowing consumed available savings.

Related Articles:

  • Inflation Adjusted House Prices 1.1% Below 2022 Peak — Inflation-adjusted US house prices are 1.1% below their 2022 peak, based on the Case-Shiller National Index. An affordability measure combining median income, house prices, and 30-year fixed mortgage rates shows the monthly principal-and-interest payment on the same house rose about 80% over three years, as prices climbed 18% and mortgage rates went from roughly 3.07% to 6.81%.
  • The Cost of Money is Part of the Cost of Living: New Evidence on the Consumer Sentiment Anomaly — Variation in the University of Michigan consumer sentiment index that inflation and unemployment cannot explain is strongly correlated with growth in consumer borrowing costs, such as mortgage and car loan rates. The authors estimate that including interest payments and homeownership costs in the consumer price index would raise measured inflation from 3% to 9%.
  • Why Housing May Be In for Another Cost Shock Next Year — The apartment market is projected to shift from renter-friendly to landlord-friendly over the next two to three years as new supply peaks and then falls below prior-cycle levels in every major market. With an estimated 20% of US construction workers undocumented, deportations combined with California rebuilding demand could create a construction labor deficit that raises building costs and rents.

AI Summary. The U.S. Army missed its recruiting goal by nearly 25%—about 15,000 troops a year—before meeting it after cutting the target by more than 10,000, while the Navy met goals by accepting lower-scoring recruits. A Pentagon study finds more than three-quarters of Americans aged 17–24 are ineligible to serve.

Dexter Filkins The New Yorker
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DoD found over 75% of Americans between 17 and 24 are ineligible for military service due to being “overweight, unable to pass the aptitude test, afflicted by physical or mental health issues, or disqualified by such factors as a criminal record.”

Are most young Americans ineligible for military service?

Core argument: The U.S. Army missed its recruitment goal by nearly 25%—about 15,000 troops a year—in 2022 and 2023, then met its target the following year only after cutting it by more than 10,000.

In 2022 and 2023, the Army missed its recruitment goal by nearly twenty-five percent—about fifteen thousand troops a year. It hit the mark last year, but only by reducing the target by more than ten thousand. The Navy has also fared badly: it failed to reach its goals in 2023, then met them in 2024 by filling out the ranks with recruits of a lower standard; nearly half measured below average on an aptitude exam. Recruiters are contending with a population that’s not just unenthusiastic but incapable. According to a Pentagon study, more than three-quarters of Americans between the ages of seventeen and twenty-four are ineligible, because they are overweight, unable to pass the aptitude test, afflicted by physical or mental-health issues, or disqualified by such factors as a criminal record.

Takeaways by Macro Roundup® AI

  1. The U.S. Army missed its recruitment goal by nearly 25%—about 15,000 troops a year—in 2022 and 2023, then met its target the following year only after cutting it by more than 10,000.
  2. The Navy failed to reach its recruiting goals in 2023 and met them in 2024 by accepting lower-standard recruits, with nearly half scoring below average on an aptitude exam.
  3. A Pentagon study finds more than three-quarters of Americans aged 17 to 24 are ineligible to serve because they are overweight, cannot pass the aptitude test, have physical or mental-health issues, or are disqualified by factors such as a criminal record.

Related Articles:

  • Do Adults Have the Skills They Need to Thrive in a Changing World? — An international assessment of adult skills describes numeracy proficiency levels ranging from counting objects and adding small whole numbers at the lowest level, to extracting information from tables and graphs and performing basic arithmetic with money and percentages at Level 1, up to analysing complex mathematical information and critically evaluating whether data support a claim at Level 5.
  • Toward An Understanding Of The Returns To Cognitive Skills Across Cohorts — The authors find that the estimated decline in labor market returns to pre-labor-market cognitive skills for white men across two U.S. youth cohorts depends critically on the widening and increased left-skewness of the test-score distribution, with declines appearing only at the lower end of that distribution.
  • US Attack Submarines to Counter China Are Running Up to Two Years Late — Deliveries of US Virginia-class attack submarines are running an estimated 24 to 36 months behind contracted dates, with builders General Dynamics and HII averaging roughly 1.2 submarines a year against a required two. The Navy projects the contractors will reach the two-a-year rate by 2028.

AI Summary. High European natural gas prices have contributed to inflation and prompted factory closures and relocations, with chemical giant BASF closing some production in Germany while making its largest-ever foreign investment in China, where energy costs up to two-thirds less, and fertilizer maker Yara halting ammonia output in Belgium.

Stanley Reed and Liz Alderman New York Times
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Russia currently provides 8% of natural gas consumed in Europe down from 35% in 2021. Natural gas prices in Europe are ~ 4x the price in the US, which is driving deindustrialization as industrial production shifts to countries with lower-cost energy.

Are high natural gas prices driving European factories to close or relocate?

Core argument: BASF is closing some production at its Ludwigshafen site in Germany while making the largest foreign investment in its history in China, where energy costs up to two-thirds less than in Europe.

Exorbitant gas costs contributed to soaring inflation and led factories that employed thousands in Europe to close or relocate to countries with cheaper energy. Some of the biggest European names are trimming their operations. The German chemical giant BASF said it would close some production at its site in Ludwigshafen near the border with France, while making the largest foreign investment in its history in China, where energy is up to two-thirds cheaper than in Europe. High natural gas prices have translated into higher costs for making ammonia, a crucial component in fertilizers. Yara International, a fertilizer giant based in Norway, is stopping ammonia production at its plant in Tertre, Belgium, potentially leading to more than 100 job losses. “High energy prices are a huge challenge for European competitiveness,” a spokeswoman said.

Takeaways by Macro Roundup® AI

  1. BASF is closing some production at its Ludwigshafen site in Germany while making the largest foreign investment in its history in China, where energy costs up to two-thirds less than in Europe.
  2. Yara International is halting ammonia production at its Tertre plant in Belgium, potentially costing more than 100 jobs, as high natural gas prices raise the cost of making ammonia for fertilizers.
  3. Exorbitant European gas costs contributed to soaring inflation and led factories employing thousands to close or relocate to countries with cheaper energy.

Related Articles:

  • Europe is Pricing Itself Out of Existence — Europe paid 166.3% more for its primary energy mix than it would have using conventional sources, equal to 5.6% of GDP rather than 3.37%, which the author argues largely explains minimal European growth. European Union primary energy consumption has fallen 17.47% from its peak, with renewables at 16.6% of the mix and renewable electricity priced at 5x conventional.
  • Germany Is Unraveling Just When Europe Needs It Most — After five years of stagnation, Germany's economy is 5% smaller than if its pre-pandemic growth trend had continued, and Bloomberg Economics estimates most of that shortfall will be hard to recover given the loss of cheap Russian energy and German automakers struggling against Chinese rivals.
  • The Future of European Competitiveness – A Competitiveness Strategy for Europe — A European Union competitiveness report attributes the EU's labour productivity growth gap with the US largely to weaker activity in information and communications technology and large-scale digital services; excluding main ICT sectors, EU productivity was broadly at par with the US from 2000-2019. It estimates Europe's investment share must rise about 5 percentage points of GDP.

AI Summary. China responded to new US tariffs with a 15% levy on less than $5bn of US energy imports, a 10% fee on American oil and agricultural equipment, an antitrust investigation into Google, and export controls on tungsten and other critical metals used in electronics, aviation, and defense.

Josh Xiao Bloomberg
Date Posted:

Bloomberg characterized China’s response to new US tariffs as “seemingly designed to avoid escalating.” China is taking antitrust actions against Google, adding export controls on strategic minerals, and new levies on US oil and agricultural equipment.

Is China's retaliation to US tariffs narrowly targeted?

Core argument: China imposed a 15% levy on less than $5 billion of US energy imports and a 10% fee on American oil and agricultural equipment, moments after new US tariffs took effect.

Beijing imposed a 15% levy on less than $5 billion of US energy imports and a moderate 10% fee on American oil and agricultural equipment on Tuesday, moments after new US tariffs entered effect. China said it will also investigate Google for alleged antitrust violations, although Alphabet Inc.’s search services have been unavailable in the country since 2010. New export controls on tungsten and other critical metals used in electronic, aviation, and defense industries were also added. President Xi Jinping’s response appeared carefully calibrated to avoid major blowback on China’s economy while showing Trump an ability to inflict damage on a range of fronts, including by disrupting the key minerals supply chain and hurting US companies with major operations on the mainland.

Takeaways by Macro Roundup® AI

  1. China imposed a 15% levy on less than $5 billion of US energy imports and a 10% fee on American oil and agricultural equipment, moments after new US tariffs took effect.
  2. Beijing added export controls on tungsten and other critical metals used in electronics, aviation, and defense industries, and said it will investigate Google for alleged antitrust violations, though Alphabet's search services have been unavailable in China since 2010.
  3. Xi Jinping's response appeared calibrated to avoid major blowback on China's economy while showing an ability to disrupt the key minerals supply chain and hurt US companies with major operations on the mainland.

Related Articles:

  • China Has a $1 Trillion Head Start in Any Tariff Fight — China accounts for roughly 27% of global industrial production, up from 24% in 2018, and the United Nations projects its share will reach 45% by 2030, supported by cheap loans and subsidies that help manufacturers undercut foreign rivals on price. China's goods surplus with the US stood at $360bn, 23% larger in dollar terms than in 2018.
  • What Trump’s Trade War Would Mean, in Nine Charts — Imports and exports make up about a quarter of U.S. gross domestic product, less than in Germany, Japan, and the United Kingdom, and U.S. imports come from a fairly broad set of countries. Trade accounts for roughly 70% of Canadian and Mexican output, giving the U.S. significant leverage in negotiations with both.
  • 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.

AI Summary. Developing countries' opening to world trade involved overhauling foreign exchange regimes — the exchange rate and allocation of foreign currency — as much as cutting tariffs and quotas, since their import restrictions originated in balance-of-payments management. Economists came to favor exchange rate adjustment over import controls, recognizing that controls hurt exports and that postponing devaluation only enlarged the eventual shock.

Douglas Irwin National Bureau of Economic Research
Date Posted:

.@D_A_Irwin argues that exchange rate reform during the 1990s, including the % of developing countries on dual or multiple exchange rates, was a reaction to shortages of foreign currency and a rejection of the distortionary quotas used to manage them.

How did developing countries open to trade beyond cutting tariffs?

Core argument: The paper identifies the balance-of-payments origin of the import restrictions that separated developing countries from the world economy during the 1985–1995 opening to trade.

The decade from 1985-1995 was a historic period in which the opening of developing countries to trade fundamentally transformed the world economy. This paper focuses on the balance of payments origin of the import restrictions that kept developing countries separated from the rest of the world. The process of opening up countries that had been largely closed to world trade involved extensive changes to the foreign exchange regime – the setting of the exchange rate and the disposition of foreign exchange – as much as changes to traditional trade policy instruments such as tariffs and quotas. Early in the postwar period, many development economists warned against devaluations and instead proposed multiple exchange rates to selectively encourage or discourage certain imports and exports. During the 1970s, economists came to recognize the costs of such import control regimes and their adverse effect on exports. Postponing a devaluation did not prevent its eventual occurrence but just ensured that the shock would be that much larger. As a result, more and more economists saw the benefits of exchange rate adjustment over import controls as a way of managing the balance of payments

Takeaways by Macro Roundup® AI

  1. The paper identifies the balance-of-payments origin of the import restrictions that separated developing countries from the world economy during the 1985–1995 opening to trade.
  2. Opening previously closed economies required extensive changes to foreign exchange regimes — the setting of the exchange rate and the disposition of foreign exchange — as much as changes to tariffs and quotas.
  3. Early postwar development economists warned against devaluation and proposed multiple exchange rates to selectively encourage or discourage imports and exports, but by the 1970s economists recognized that import control regimes harmed exports and that postponing devaluation only enlarged the eventual shock.

Related Articles:

  • China’s New Currency Peg — China's central bank effectively fixed the yuan's daily reference rate rather than letting it follow the market, stabilizing the currency but leaving an exchange rate that cannot be called flexible. The bank is targeting the yuan's value against the dollar rather than against a basket of currencies.

Wednesday, February 5, 2025

AI Summary. The Budget Lab estimates that a 10% tariff on Chinese goods raises the overall US price level by just over 0.1%, equivalent to an average decline in disposable income of $223 per household. The policy is projected to raise roughly $400bn over 10 years, less after accounting for a 0.1% lower level of GDP.

Ernie Tedeschi Yale University
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.@ernietedeschi estimates that the 10% China tariffs would raise prices by 0.1%, costing the average household $223/year. The policy is expected to raise $360 billion net of a projected 0.1% decline in GDP.

How much do tariffs on Chinese goods cost households and raise?

Core argument: The Budget Lab estimates the proposed 10% tariffs on China raise the overall price level by just over 0.1%, equivalent to an average decline in disposable income of $223 per household.

The Budget Lab estimates that the 10% China tariffs raise the overall price level by just over 0.1%, which is the equivalent of a decline in disposable income of $223 per household on average. The policy raises roughly $400 billion over 10 years, but less when the -0.1% lower level of GDP that results is taken into account.

Takeaways by Macro Roundup® AI

  1. The Budget Lab estimates the proposed 10% tariffs on China raise the overall price level by just over 0.1%, equivalent to an average decline in disposable income of $223 per household.
  2. The Budget Lab estimates the China tariffs raise roughly $400 billion over 10 years, though less once the resulting 0.1% lower level of GDP is taken into account.

Related Articles:

  • What Trump’s Trade War Would Mean, in Nine Charts — Imports and exports make up about a quarter of U.S. gross domestic product, less than in Germany, Japan, and the United Kingdom, and U.S. imports come from a fairly broad set of countries. Trade accounts for roughly 70% of Canadian and Mexican output, giving the U.S. significant leverage in negotiations with both.
  • 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.

AI Summary. China is the main trade partner for most countries in the world, a position the US held in 2000. Canada, China, and Mexico together account for 43% of US imports and 40% of US exports, and 41% of S&P 500 company revenue comes from abroad.

Torsten Sløk, Rajvi Shah, and Shruti Galwankar Apollo
Date Posted:

Torsten Sløk notes that 41% of the S&P 500’s revenue comes from abroad.

Has China replaced the US as most countries' main trade partner?

Core argument: Canada, China, and Mexico together account for 43% of US imports and 40% of US exports.

In 2000, the US was the main trade partner for most countries in the world. In 2020, China is the main trade partner for most countries in the world. Canada, China and Mexico make up 43% of US imports and 40% of US exports. 41% of revenue in S&P 500 companies comes from abroad.

Takeaways by Macro Roundup® AI

  1. Canada, China, and Mexico together account for 43% of US imports and 40% of US exports.
  2. The US was the main trade partner for most countries in the world in 2000, while China holds that position for most countries in 2020.
  3. Foreign markets generate 41% of revenue for S&P 500 companies.

Related Articles:

  • What Trump’s Trade War Would Mean, in Nine Charts — Imports and exports make up about a quarter of U.S. gross domestic product, less than in Germany, Japan, and the United Kingdom, and U.S. imports come from a fairly broad set of countries. Trade accounts for roughly 70% of Canadian and Mexican output, giving the U.S. significant leverage in negotiations with both.
  • 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.
  • China Hits Back Against Trump’s Tariffs With Targeted Actions — China responded to new US tariffs with a 15% levy on less than $5bn of US energy imports, a 10% fee on American oil and agricultural equipment, an antitrust investigation into Google, and export controls on tungsten and other critical metals used in electronics, aviation, and defense.

AI Summary. Comparing US counties that won large manufacturing plants with runner-up counties considered for the same plants, the author estimates that plant openings raised manufacturing and total employment but left average manufacturing pay and overall average pay unchanged, suggesting industrial policy's core goals may conflict with helping left-behind workers.

Andrew Garin National Bureau of Economic Research
Date Posted:

.@andy_garin notes that WWII-era government plants boosted earnings for disadvantaged workers, but “million-dollar plant” policies in the 1980s failed to lift wages, highlighting limits of approaches that lack upskilling of “left-behind” workers.

Do new manufacturing plants raise local employment without raising pay?

Core argument: Using the event study specification from a replication of Greenstone et al., the author estimates that manufacturing plant openings raised both manufacturing employment and total employment in treated counties, while average manufacturing pay and average pay overall did not change.

Arguably, that alignment was mostly coincidental in the case of WWII and not a consequence of explicit distributional objectives. In many other cases, the core objectives of industrial policy may be in tension with hopes of making meaningful improvements in the outcomes of left-behind workers. Greenstone et al. compare regions where large million dollar plants were sited during the 1980s and 1990s to the runner-up regions that were also under serious consideration for each plant. While the original study finds significant impacts of plant construction on productivity at neighboring establishments, the incidence on the local labor market is less clear. I follow the event study specification from a replication of Greenstone et al. to estimate the effects of manufacturing plant openings on county-level employment and pay. Whereas both manufacturing employment and total employment expanded in treated counties, average manufacturing pay and average pay more generally did not change.

Takeaways by Macro Roundup® AI

  1. Using the event study specification from a replication of Greenstone et al., the author estimates that manufacturing plant openings raised both manufacturing employment and total employment in treated counties, while average manufacturing pay and average pay overall did not change.
  2. Greenstone et al. compare regions where large "million dollar plants" were sited during the 1980s and 1990s with runner-up regions also under serious consideration, finding significant impacts of plant construction on productivity at neighboring establishments but less clear incidence on the local labor market.
  3. The author argues that any alignment between industrial policy and gains for left-behind workers was mostly coincidental in the WWII case rather than a product of explicit distributional objectives, and that industrial policy's core objectives may conflict with improving left-behind workers' outcomes.

Related Articles:

AI Summary. A budget package allowing up to $5.5tn of net deficit increases, largely through tax cuts, is estimated to add $6.5tn to the debt with interest over ten years, pushing debt from 100% of GDP to 133%. That 33 percentage-point rise is nearly double the 18-point increase projected under current law.

CRFB Staff Committee for a Responsible Federal Budget
Date Posted:

The House preliminary reconciliation bill would double the growth of the US debt-to-GDP ratio, leaving it at 133% of GDP in 2035 relative to the current 118% baseline. @MarcGoldwein

How much would a $5.5 trillion budget package raise debt-to-GDP?

Core argument: A budget resolution allowing up to $5.5 trillion of net deficit increases, largely through tax cuts, is estimated to add $6.5 trillion to the debt with interest by FY2035, pushing debt from 100% of GDP at the end of this year to 133% by 2035.

According to press reports, House lawmakers were recently considering a budget resolution with reconciliation instructions to allow up to $5.5 trillion of net deficit increases, largely through tax cuts. With interest, we estimate it would add $6.5 trillion to the debt by Fiscal Year (FY) 2035. As a result, debt would rise from 100% of Gross Domestic Product (GDP) at the end of this year to 133 percent by 2035. This 33pp increase is nearly double the current projected growth of 18pp under current law. In nominal dollars, the government is currently projected to borrow roughly $22 trillion over the next ten years. A $5.5 trillion reconciliation package would increase that by 30 percent, with debt nearing $59 trillion by 2035. Although these figures do not include potential dynamic effects, that feedback is likely to be modest – no more than $600 billion based on the most generous outside estimate, and possibly even deficit increasing.

Takeaways by Macro Roundup® AI

  1. A budget resolution allowing up to $5.5 trillion of net deficit increases, largely through tax cuts, is estimated to add $6.5 trillion to the debt with interest by FY2035, pushing debt from 100% of GDP at the end of this year to 133% by 2035.
  2. That projected 33-percentage-point rise in debt-to-GDP is nearly double the 18-percentage-point increase projected under current law, and would raise projected ten-year borrowing of roughly $22 trillion by 30%, with debt nearing $59 trillion by 2035.
  3. Dynamic economic feedback from a $5.5 trillion reconciliation package is likely to be modest — no more than $600 billion based on the most generous outside estimate, and possibly deficit increasing.

Related Articles:

  • The Budget and Economic Outlook: 2025 to 2035 — The Congressional Budget Office projects the federal deficit will grow from $1.9tn (6.2% of GDP) to $2.7tn by 2035, well above the 3.8% of GDP average of the past 50 years. Outlays are projected to rise to 24.4% of GDP, driven by growth in Social Security and Medicare spending and rising net interest costs, while revenues reach 18.3%.
  • Robust Fiscal Stabilization — The authors find that Congress reduced deficits in response to rising projected deficits from 1984 to 2003 but that this year-to-year response disappeared over 2004-2024. They estimate that holding the debt ratio below 250% with 95% probability would require gradual deficit reduction averaging 0.5%-1.2% of GDP over the next decade.
  • Long Rates Are Too High — A simple model of the relationship between long-term interest rates and Federal Reserve policy expectations shows 10-year rates sitting 40 basis points above what those expectations would predict, consistent with increases in term premium measures from the New York and San Francisco Federal Reserve Banks. Markets worry this extra premium reflects fears about fiscal sustainability.

AI Summary. Klarna says artificial intelligence saves it about $10m annually in marketing, cuts standard contract drafting by in-house lawyers from an hour to roughly 10 minutes, and powers a chatbot doing the work of 700 customer service agents while resolving cases about nine minutes faster. The company says headcount fell from about 5,000 to under 4,000.

Noam Scheiber New York Times
Date Posted:

The CEO of Swedish payments company Klarna expects that AI-driven automation will eventually reduce headcount from 5,000 in 2023 to 2,000. The company’s chatbot resolves service cases 9 minutes faster than human customer service agents.

How much can AI cut costs and headcount at a company?

Core argument: Klarna says it has saved the equivalent of $10 million annually by using A.I. for marketing, partly by reducing its reliance on human artists to generate advertising images.

According to Klarna, the company has saved the equivalent of $10 million annually using A.I. for its marketing needs, partly by reducing its reliance on human artists to generate images for advertising. The company said that using A.I. tools had cut back on the time that its in-house lawyers spend generating standard contracts — to about 10 minutes from an hour — and that its communications staff uses the technology to classify press coverage as positive or negative. Klarna has said that the company’s chatbot does the work of 700 customer service agents and that the bot resolves cases an average of nine minutes faster than humans (under two minutes versus 11). Sebastian Siemiatkowski, the chief executive of Klarna said that A.I. had allowed his company to largely stop hiring entirely as of September 2023, which he said reduced its overall headcount to under 4,000 from about 5,000. He said he expected Klarna’s work force to eventually fall to about 2,000 as a result of its A.I. adoption.

Takeaways by Macro Roundup® AI

  1. Klarna says it has saved the equivalent of $10 million annually by using A.I. for marketing, partly by reducing its reliance on human artists to generate advertising images.
  2. Klarna says its chatbot does the work of 700 customer service agents and resolves cases an average of nine minutes faster than humans, in under two minutes versus 11.
  3. Chief executive Sebastian Siemiatkowski said A.I. allowed Klarna to largely stop hiring as of September 2023, reducing headcount to under 4,000 from about 5,000, and he expects the work force to eventually fall to about 2,000.

Related Articles:

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AI Summary. An Economist/YouGov poll found 45% favor ending diversity, equity, and inclusion programs in schools and government while 40% oppose, with differences by gender, race, party, and age. A Reuters/Ipsos poll found 44% favor closing all federal diversity offices and firing the employees working on them, with 51% opposed.

Karlyn Bowman American Enterprise Institute
Date Posted:
Is Database:
Database

Karlyn Bowman cites a new Economist/YouGov survey finding that 45% of Americans favor ending DEI programs in schools and government and 40% oppose ending the programs. A Reuters poll showed 44% in favor, 51% opposed.

Do Americans support ending diversity, equity, and inclusion programs?

Core argument: An Economist/YouGov poll found 45% favor ending diversity, equity, and inclusion programs in schools and government, with 40% opposed, alongside deep gender, racial, and partisan differences.

A new Economist/YouGov poll found 45% in favor of ending diversity, equity, and inclusion programs (DEI) in school and government with 40% opposed. There were deep gender, racial, and partisan differences. Among age groups, only the youngest one opposed ending the programs, by a narrow 39% to 37% percent. A new Reuters/Ipsos poll found a similar 44% in favor of closing all federal government DEI offices and firing federal employees working on the issue, with 51% opposed.

Takeaways by Macro Roundup® AI

  1. An Economist/YouGov poll found 45% favor ending diversity, equity, and inclusion programs in schools and government, with 40% opposed, alongside deep gender, racial, and partisan differences.
  2. Among age groups in the Economist/YouGov poll, only the youngest opposed ending DEI programs, by a narrow 39% to 37%.
  3. A Reuters/Ipsos poll found 44% favor closing all federal government DEI offices and firing federal employees working on the issue, with 51% opposed.

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AI Summary. MIT chemists have developed a generative artificial intelligence model, ChromoGen, that predicts thousands of 3D genome structures in about 20 minutes on a single graphics processor, compared with months of laboratory experiments for a few dozen structures. The AI-generated structures matched experimentally determined conformations while capturing the diversity of possible 3D arrangements.

Anne Trafton MIT
Date Posted:

MIT chemists have developed a generative AI method to predict 3D genome structures in minutes rather than months, potentially advancing the understanding of gene expression and cellular functions.

Can generative AI predict 3D genome structures faster than experiments?

Core argument: MIT chemists' ChromoGen model generates 1,000 3D genome structures for a given region in 20 minutes on a single GPU, compared with roughly six months of experiments to obtain a few dozen structures in a cell type, according to graduate student Greg Schuette.

MIT chemists have come up with a new way to determine 3D genome structures, using generative artificial intelligence. Their technique can predict thousands of structures in just minutes “Whereas you might spend six months running experiments to get a few dozen structures in a given cell type, you can generate a thousand structures in a particular region with our model in 20 minutes on just one GPU,’ says graduate student Greg Schuette.The ChromoGen model combines a deep learning component that analyzes DNA sequences and chromatin accessibility data with a generative AI component trained on over 11 million chromatin conformations from Dip-C experiments. Researchers found the AI-generated structures matched experimentally determined conformations while capturing the inherent diversity of possible 3D arrangements. The team has made the model publicly available to explore mutations’ structural impacts and other genomic mysteries.”

Takeaways by Macro Roundup® AI

  1. MIT chemists' ChromoGen model generates 1,000 3D genome structures for a given region in 20 minutes on a single GPU, compared with roughly six months of experiments to obtain a few dozen structures in a cell type, according to graduate student Greg Schuette.
  2. ChromoGen pairs a deep learning component analyzing DNA sequences and chromatin accessibility data with a generative AI component trained on over 11 million chromatin conformations from Dip-C experiments.
  3. The MIT researchers found ChromoGen's AI-generated structures matched experimentally determined conformations while capturing the diversity of possible 3D arrangements, and they have made the model publicly available to explore mutations' structural impacts.

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