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
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “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
  • “…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
  • “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
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, February 27, 2025

AI Summary. Academic estimates compiled by The Economist indicate inheritances, after falling over the 20th century, were worth about 10% of GDP on average by the end of the 2010s, with roughly $6tn inherited across the rich world in a year. Falling family sizes mean each inheritance is spread across fewer heirs.

Economist Staff The Economist
Date Posted:
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As baby boomers die, inheritances as a share of US output are over 10% which is just off a post-WW II high. For every $100 paid in wages, the dead leave behind $20. Given fewer children per family, even this underestimates the “shift to an inheritocracy.”

Are inheritances becoming a bigger source of wealth?

Core argument: Academic estimates gathered by The Economist put annual inheritance flows at an average of 10% of GDP by the end of the 2010s, after values exceeded 20% of GDP in some countries in 1900 and then fell over the 20th century.

The Economist has gathered academic estimates on the annual “inheritance flow”—the value of what people pass on to heirs in art, cash, properties and the like—for a range of countries. In 1900 inheritances were worth over 20% of GDP in some countries, as people passed on vast stock portfolios and estates. The value of inheritances then fell in the 20th century, before more recently roaring back. By the end of the 2010s inheritances were worth, on average, 10% of GDP. This year people across the rich world will inherit on the order of $6trn. In America today, for every $100 employers pay a year in wages, the dead leave behind $20. Such figures, striking though they are, understate the shift to an inheritocracy. The average family size has fallen sharply in recent years. A given inheritance is therefore spread over fewer people. According to our calculations, baby-boomer deaths will rise until 2036, when in America 1.5m of them will pop their clogs. The value of housing and stocks will probably also rise, increasing the size of the pile to be passed on. In a world of higher interest rates, someone who inherits and puts the money in the bank or buys government bonds can do pretty well as a pure rentier.

Takeaways by Macro Roundup® AI

  1. Academic estimates gathered by The Economist put annual inheritance flows at an average of 10% of GDP by the end of the 2010s, after values exceeded 20% of GDP in some countries in 1900 and then fell over the 20th century.
  2. People across the rich world will inherit on the order of $6trn this year, and in America the dead leave behind $20 for every $100 employers pay annually in wages.
  3. The Economist calculates that baby-boomer deaths will rise until 2036, when 1.5m of them will die in America, while sharply falling average family size spreads a given inheritance over fewer people.

Related Articles:

AI Summary. The global economy is argued to be shifting from globalization to segmentation, as tariffs and geopolitical considerations limit trade, immigration restrictions tighten, and divergent industrial policies make business rules less predictable. Where globalization pushed inflation down, segmentation is argued to push up goods and labor costs, keeping interest rates structurally higher for longer.

Torsten Sløk Apollo
Date Posted:

Torsten Sløk argues that an increasingly segmented global economy burdened with tariffs, restricted immigration, and reduced competition is putting upward pressure on prices in goods and labor markets, making rates “structurally higher for longer.”

Does a shift from globalization to segmentation raise inflation and interest rates?

Core argument: The shift from globalization to a segmented world economy — driven by tariffs, immigration restrictions, and divergent industrial policies — is argued to produce permanently higher inflation everywhere, reversing the downward pressure globalization exerted on prices.

We have gone from a world of globalization where goods were flowing over borders, people were moving across borders, and the rules for businesses were harmonized across countries. In the new world, economies, markets, and policies are more segmented. Tariffs and geopolitical considerations limit the flow of goods. There are more restrictions on immigration. Countries have different industrial policies, which have made the rules for businesses more unpredictable and idiosyncratic. The consequence of moving from a global economy to a segmented economy is permanently higher inflation everywhere. Imported goods are more expensive, domestically produced goods are more expensive, less immigration makes domestic labor more expensive, and different industrial policies in different countries reduce competition. The bottom line is that globalization was putting downward pressure on inflation. Segmentation, or deglobalization, is putting upward pressure on inflation. For markets, the conclusion is straightforward. An increasingly segmented global economy is putting upward pressure on inflation in goods markets and labor markets, which will keep interest rates structurally higher for longer.

Takeaways by Macro Roundup® AI

  1. The shift from globalization to a segmented world economy — driven by tariffs, immigration restrictions, and divergent industrial policies — is argued to produce permanently higher inflation everywhere, reversing the downward pressure globalization exerted on prices.
  2. Segmentation raises costs through several channels: imported goods are more expensive, domestically produced goods are more expensive, reduced immigration makes domestic labor more expensive, and country-specific industrial policies reduce competition.
  3. Upward inflation pressure in goods and labor markets from an increasingly segmented global economy is expected to keep interest rates structurally higher for longer.

Related Articles:

  • The Surprising Resilience of Globalization: An Examination of Claims of Economic Fragmentation — China's exports have grown faster than its own economy, rising by about 3 percentage points as a share of its GDP, with a nearly $1tn surge over four years. Measured against the GDP of its trading partners, China's manufactured-goods surplus has increased by about three-quarters of a percentage point of world GDP to a record high.
  • Data Update 4 for 2025: Interest Rates, Inflation and Central Banks! — Interest rates are ultimately driven by macroeconomic fundamentals, with an "intrinsic risk-free rate" defined as the sum of the inflation rate and real GDP growth tracking the observed 10-year Treasury bond yield closely. On this view, central banks' influence comes from preferential access to data on those fundamentals, their capacity to alter them, and their credibility.
  • Capital Is Making a Comeback — Tangible investment in property, factories and equipment fell from 12.5% to 8.5% of private gross domestic product, while intangible investment in intellectual property, software and process knowledge rose from about 11.5% to 16.75%. The author argues demand for tangible capital investment will now have to rise.

AI Summary. Food stamp enrollment held above 41m recipients even as the US unemployment rate fell from 14.8% to 3.6%, unlike after the Great Recession when the share of the population receiving benefits declined from 15.2% to 11.4%. The authors estimate that share is more than double what economic conditions alone would project.

Matt Weidinger and Angela Rachidi American Enterprise Institute
Date Posted:
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Database

Even as the jobless rate has fallen to near-record lows, the share of the US population receiving SNAP benefits is stuck at an elevated 12.3%, “more than double what economic conditions alone would have projected over the past 20 years.”

Why has food stamp enrollment stayed high as unemployment fell?

Core argument: The US SNAP caseload held above 41 million recipients whether the unemployment rate was 14.8% in April 2020, averaged 6% in 2021, or 3.6% in 2023.

After an initial spike in response to the pandemic, the national SNAP caseload remained remarkably stable at over 41 million recipients, whether the US unemployment rate was 14.8% in April 2020 or an average of 6% in 2021 and 3.6 percent in 2023. After the Great Recession, the share of the US population receiving SNAP benefits peaked at 15.2% in 2013 (when the unemployment rate was almost twice the 2024 level) and then declined to 11.4% through 2019, as the unemployment rate trended toward historic lows. In a forthcoming report [we] find that the current share of the US population receiving SNAP benefits is more than double what economic conditions alone would have projected over the past 20 years. [Note that Figure 2 shows the unemployment rate at 4% in both 2001 and 2024, while the SNAP caseload doubled from 6% to 12%]. @Tqorourke @AngelaRachidi

Takeaways by Macro Roundup® AI

  1. The US SNAP caseload held above 41 million recipients whether the unemployment rate was 14.8% in April 2020, averaged 6% in 2021, or 3.6% in 2023.
  2. A forthcoming report finds that the share of the US population receiving SNAP benefits is more than double what economic conditions alone would have projected over the past 20 years.
  3. The SNAP participation share peaked at 15.2% of the US population in 2013 and declined to 11.4% through 2019, and at a 4% unemployment rate in both 2001 and 2024 the caseload share doubled from 6% to 12%.

Related Articles:

  • The Great “Transfer”-mation — Government transfers rose from 8.2% of Americans' total personal income in 1970 to 17.6% in 2022, making them the third largest income source after work and investments. The share of U.S. counties drawing a quarter or more of personal income from transfers rose from under 1% in 1970 to 53% in 2022.
  • Government Benefit Programs Already Do A Lot To Help Low Income Families — For a two-adult, three-child family, existing taxes and government benefits bring take-home resources to about $58,000 with no earnings, $79,000 with $20,000 of earnings, and $90,000 with $80,000 of earnings plus $15,000 in employer health premiums. A $75,000 gap in earnings and work-related benefits narrows to $11,000 in take-home pay.
  • How SNAP Expenditures Now Exceed $100 Billion Annually — The Supplemental Nutrition Assistance Program (food stamps) has grown from about $20bn a year to more than $100bn a year over two decades, an increase the authors argue cannot be explained by greater economic need. Unemployment was lower in 2017–2019 than at the prior economic peak, yet millions more people received benefits.

AI Summary. Survey data show 62% of U.S. adults identify as Christian, a 16-point decline from earlier readings, with Protestants at 40% and Catholics at 19%. Religiously unaffiliated adults — atheists, agnostics, and those saying "nothing in particular" — account for 29% of the population.

Gregory Smith, Alan Cooperman, Becka Alper, Besheer Mohamed, Michael Rotolo, Patricia Tevington, Justin Nortey, Asta Kallo, Jeff Diamant and Dalia Fahmy Pew Research Center
Date Posted:

.@pewresearch: The share of Americans who identify as Christian, now around 63%, is no longer declining, but younger people are less religious, with 43% of the 18-24 cohort unaffiliated, nearly matching the 46% who call themselves Christian.

Has the long decline in American Christian identification stopped?

Core argument: 62% of U.S. adults identify as Christians, down 9 percentage points since 2014 and 16 points since 2007, a decline that has slowed and may have leveled off.

62% of U.S. adults identify as Christians. That is a decline of 9 percentage points since 2014 and a 16-point drop since 2007. The largest subgroups of Christians in the United States are Protestants – now 40% of U.S. adults – and Catholics, now 19%. People who identify with all other Christian groups (including the Greek and Russian Orthodox Churches, the Church of Jesus Christ of Latter-day Saints, Jehovah’s Witnesses and many others) total about 3% of U.S. adults. 1.7% of U.S. adults say they are Jewish when asked about their religion, while 1.2% of respondents in the new survey are Muslim, 1.1% are Buddhist, and 0.9% are Hindu. Religiously unaffiliated adults – those who identify as atheists, agnostics or as “nothing in particular” when asked about their religion – account for 29% of the population.

Takeaways by Macro Roundup® AI

  1. 62% of U.S. adults identify as Christians, down 9 percentage points since 2014 and 16 points since 2007, a decline that has slowed and may have leveled off.
  2. Protestants at 40% of U.S. adults and Catholics at 19% are the largest Christian subgroups, while all other Christian groups combined total about 3%.
  3. Religiously unaffiliated adults — atheists, agnostics and those answering "nothing in particular" — account for 29% of the U.S. population, compared with 1.7% Jewish, 1.2% Muslim, 1.1% Buddhist and 0.9% Hindu.

Related Articles:

  • Opiates of the Masses? Deaths of Despair and the Decline of American Religion — The authors estimate that declines in religious attendance following repeals of laws restricting Sunday commerce explain an important part of the initial increase in middle-aged "deaths of despair" from suicide, liver disease, and poisoning. The effect appears driven by falling formal religious participation rather than by changes in belief or private activities such as prayer.
  • Religious Worship Attendance in America: Evidence from Cellphone Data — Smartphone location data for over 2m Americans indicate that 73% enter a place of worship at least once a year but only 5% attend weekly, far below the roughly 22% who report weekly attendance in surveys. Frequent attenders are less likely to visit strip clubs, liquor stores, and casinos.
  • Religious ‘Nones’ in America: Who They Are and What They Believe — Pew survey data indicate about 28% of U.S. adults are religiously unaffiliated, identifying as atheist, agnostic, or "nothing in particular." Most of these adults believe in God or a higher power, rarely attend religious services, say religion does some harm while many also see some good, and reject the idea that science can explain everything.

AI Summary. Gallup survey data indicate nearly one in 10 U.S. adults identify as LGBTQ, including nearly a quarter of adults aged 18 to 27, more than half of whom identify as bisexual. Identification is about 21% among liberals versus 3% among conservatives, and women are nearly twice as likely as men to identify as LGBTQ.

Claire Cain Miller and Francesca Paris New York Times
Date Posted:

Gallup finds a sharp generational and gender divide on sexual identity: For Gen Z (18-27), 31% of women and 12% of men identify as LGBTQ for an average of 23%, compared with 3% for Baby Boomers, and 9.3% for Americans overall.

How many U.S. adults identify as LGBTQ, and who most often?

Core argument: Nearly 10% of U.S. adults identify as LGBTQ, rising to nearly 25% among Generation Z adults aged 18 to 27, according to Gallup's analysis of 14,000 adults across its telephone surveys last year.

Nearly one-quarter of adults in Generation Z, defined by Gallup as those 18 to 27, identify as L.G.B.T.Q., according to the analysis, which included 14,000 adults across all of Gallup’s telephone surveys last year. More than half of these L.G.B.T.Q. young adults identify as bisexual. Among all respondents, 1.3%identified as transgender, up from 0.6% in 2020. In the surveys, there were large differences in L.G.B.T.Q. identification by political ideology. Twenty-one percent of liberals identified this way, compared with 3% of conservatives. There were also significant gender differences: Women were almost twice as likely as men to identify as L.G.B.T.Q. In Gen Z, 31% did, compared with 12% of men.

Takeaways by Macro Roundup® AI

  1. Nearly 10% of U.S. adults identify as LGBTQ, rising to nearly 25% among Generation Z adults aged 18 to 27, according to Gallup's analysis of 14,000 adults across its telephone surveys last year.
  2. Gallup found that 1.3% of all respondents identified as transgender, up from 0.6% in 2020, while more than half of LGBTQ young adults identified as bisexual.
  3. LGBTQ identification varied by ideology and gender in Gallup's surveys: 21% of liberals identified this way compared with 3% of conservatives, and 31% of Gen Z women compared with 12% of men.

Related Articles:

  • Declining Life Satisfaction and Happiness Among Young Adults in Six English-speaking Countries — Eleven studies find declines in life satisfaction and happiness among young adults in the US, Australia, Canada, Ireland, New Zealand, and the UK. In these countries life satisfaction now rises with age across the lifespan, as young people's life satisfaction dropped sharply while that of people 45 and over stayed flat.
  • Is There Really a Generational Difference in Identifying as Lesbian, Gay, or Bisexual? — General Social Survey data show that increases among young American adults appear in same-sex sexual behavior as well as in identification, with 20% reporting a same-sex partner versus 18.5% identifying as lesbian, gay, or bisexual. The increases are larger among 27- to 41-year-olds.
  • Sexless America: Young Adults Are Having Less Sex — The share of heterosexual men reporting no female sexual partners in the past year rose, driven mainly by fewer men reporting exactly one partner, with no change among men reporting large numbers of partners. The decline is concentrated in approximately monogamous sex, reflecting later or forgone marriage.

AI Summary. Japan recorded 720,988 births, a 5% drop from the prior year and the lowest since records began 125 years ago, with births declining for nine straight years despite government financial incentives for couples to have more children. Combined with a record 1.6mn deaths, Japan's population shrank by almost 900,000 people net of immigration.

Harry Dempsey and Leo Lewis Financial Times
Date Posted:

In 2024, Japan’s population continued to shrink, with births falling to a historic 125-year low of 720,988 while deaths rose to a record 1.6 million for a net native population decline of ~ 900,000.

Are government incentives failing to stop falling births and shrinking population?

Core argument: Japan recorded 720,988 births in 2024 according to preliminary government figures, a 5% drop from the prior year and the lowest since record-keeping began in 1899 during the Meiji era.

The number of babies born in Japan last year fell to the lowest level since records began 125 years ago as the country’s demographic crisis deepens and government efforts to reverse the decline continue to fail. Japan recorded 720,988 births in 2024, according to preliminary government figures published on Thursday. The number has declined for nine straight years and appears to be largely unaffected by financial and other government incentives for married couples to produce more children. The 2024 figure is a 5% drop from the previous year and the lowest since records began during Japan’s Meiji era in 1899. Combined with a record 1.6mn deaths last year, the figures mean Japan’s population shrank by almost 900,000 people, net of immigration figures.

Takeaways by Macro Roundup® AI

  1. Japan recorded 720,988 births in 2024 according to preliminary government figures, a 5% drop from the prior year and the lowest since record-keeping began in 1899 during the Meiji era.
  2. Japan's births have declined for nine straight years and appear largely unaffected by financial and other government incentives for married couples to have more children.
  3. Combined with a record 1.6mn deaths in 2024, Japan's population shrank by almost 900,000 people, net of immigration.

Related Articles:

  • The Power of Demography and the Fate of East Asia — 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.
  • 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.
  • East Asia’s Coming Population Collapse — United Nations projections show China's population falling 8%, Japan's 18%, South Korea's 12%, and Taiwan's 8% between 2020 and 2050, while the US population rises 12%. Working-age people per person over 65 are projected to drop to about 1.8 in China and 1.2 in Japan and South Korea.

AI Summary. South Korea's fertility rate rose from 0.72 to 0.75 births per woman, its first increase in nine years, though it remains the world's lowest and far below the 2.1 needed for a stable population. Officials partly attributed the rise to an increase in marriages following the pandemic.

Song Jung-a Financial Times
Date Posted:

South Korea’s fertility rate rose to 0.75 in 2024 vs. 0.72 in 2023, the first increase in 9 years. Officials partly attributed the rise to a post-pandemic increase in marriage; there were 222,422 marriages last year, the highest number since 2019.

Can a rise in marriages lift the world's lowest fertility rate?

Core argument: South Korea's fertility rate rose from 0.72 in 2023 to 0.75 last year, according to the national statistics office, the first increase since 2015, when the rate stood at 1.24.

South Korea’s fertility rate has risen for the first time in nine years, as a surge in marriages after the pandemic has spurred hopes that the world’s fastest-ageing society may have turned a corner. The country’s fertility rate — the average number of babies a woman is expected to have in her lifetime — increased from 0.72 in 2023 to 0.75 last year, according to the latest data from the national statistics office. Although the rate remains the lowest in the world and far below the 2.1 needed to ensure a broadly stable population, this is the first rise since 2015, when it was 1.24. Officials partly attributed the rise to an increase in the number of marriages after the pandemic. There were 222,422 marriages last year, the highest number since 239,159 in 2019.

Takeaways by Macro Roundup® AI

  1. South Korea's fertility rate rose from 0.72 in 2023 to 0.75 last year, according to the national statistics office, the first increase since 2015, when the rate stood at 1.24.
  2. South Korea's fertility rate remains the lowest in the world and far below the 2.1 needed to ensure a broadly stable population, despite the increase.
  3. Officials partly attributed the rise to an increase in marriages after the pandemic, with 222,422 marriages last year, the highest number since 239,159 in 2019.

Related Articles:

  • Small Businesses Are Lowering South Korean Fertility — Just 14% of South Korean jobs are at companies with over 250 employees—the lowest share in the OECD, versus 58% in the US—and studies find small Korean service firms are about 30% as productive as large ones, compared with 84% in the Netherlands and 90% in Germany. The author argues this low productivity yields very low wages, depressing fertility.
  • The Relationship Recession is Going Global — 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.
  • The End of Children — South Korea's fertility rate of 0.7 is the lowest of any nation and may be the lowest in recorded history; if sustained, each generation would be about a third the size of the one before, with every 100 people of childbearing age producing roughly 12 grandchildren. Annual births fell from 1m in 1970 to 230,000 in 2023.

Friday, February 28, 2025

AI Summary. Trade deficits create American jobs when demand for investment exceeds domestic savings, because offshore savings fund otherwise unfunded domestic investment—but that has not been the case for decades. Instead, risk-averse offshore savings offered at near-zero interest rates funded a one-time rise in subprime consumption and a deficit-financed increase in government handouts.

Edward Conard Wall Street Journal
Date Posted:

.@EdwardConard WSJ LTE argues trade deficits predominantly increased debt-financed consumption, not US business investment, allowing chronic surplus countries to export their paradox of thrift & resulting unemployment to the US. @aeiecon @michaelxpettis

Do trade deficits create American jobs by funding domestic investment?

Core argument: Phil Gramm and Donald Boudreaux argue that when American investment demand exceeds domestic savings, trade deficits create American jobs by funding otherwise unfunded domestic investment with offshore savings.

In their op-ed “Trump’s Myth of the Trade Deficit,” Phil Gramm and Donald Boudreaux correctly note that when American demand for investment exceeds domestic savings, trade deficits create American jobs by funding otherwise unfunded domestic investment with offshore savings. But that hasn’t been the case for decades. Risk-averse offshore savings proffered at near-zero interest rates didn’t fund increased business investment. They funded a one-time increase in subprime consumption before the financial crisis and an enormous deficit-financed increase in handouts after the financial crisis. We borrowed and gave away goods made by offshore workers who would have been unemployed when their savings exceeded investment. Even if we had insisted that Americans work to pay back their borrowed income, it wouldn’t have increased employment. It would have re-employed workers who lost their jobs when we bought goods made by offshore workers who lent us their savings rather than buying our goods—an identity that’s hard to recognize when lower wages equilibrate employment.

Takeaways by Macro Roundup® AI

  1. Phil Gramm and Donald Boudreaux argue that when American investment demand exceeds domestic savings, trade deficits create American jobs by funding otherwise unfunded domestic investment with offshore savings.
  2. That mechanism has not held for decades, as risk-averse offshore savings offered at near-zero interest rates funded a one-time increase in subprime consumption before the financial crisis and deficit-financed handouts afterward, not increased business investment.
  3. Requiring Americans to work to repay borrowed income would not have raised employment but would have re-employed workers who lost jobs when the U.S. bought goods from offshore workers who lent their savings rather than buying American goods.

Related Articles:

  • A User’s Guide to Restructuring the Global Trading System — During the 2018–2019 U.S.–China trade war, the effective tariff rate on Chinese imports rose 17.9 percentage points while the renminbi depreciated 13.7% against the dollar, leaving after-tariff import prices in dollars up just 4.1%. The author argues this currency offset of more than three-fourths of the tariff explains why inflation pressure was negligible.
  • 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.
  • China’s Very Bad, No Good Trillion-Dollar Trade Surplus — China's high investment rates face diminishing returns and the government is unwilling to promote higher consumer spending, so it compensates for weak domestic demand with large trade surpluses supported by a weaker currency. The author argues this attempt to export its policy failure will provoke a protectionist backlash from Europe, the UK, and others.

AI Summary. The US announced an additional 10% tariff on Chinese goods, citing China's alleged role in drug supply, on top of an earlier 10% duty and alongside broader measures spanning technology and investment. China vowed to take "all necessary measures" in response.

Bloomberg Staff Bloomberg
Date Posted:

China and the US moved closer to a trade war, as Beijing vowed to respond to Trump’s threat to raise tariffs in March from 10% to 20%. Trump also said he would impose postponed 25% tariffs on Canada and Mexico, adding the EU to the equation as well.

Will China retaliate against new US tariffs on its goods?

Core argument: Trump announced an additional 10% tariff on Chinese goods effective March 4, citing China's alleged role in drug supply, on top of a prior 10% duty imposed earlier in the month.

Trump announced an additional 10% tariff would take effect March 4, citing China’s alleged role in [drug] supply. The new levies follow a previous 10% duty implemented earlier this month and represent part of Trump’s broad salvos that span technology and investment. The levies are set to take effect on Tuesday, one day before President Xi Jinping heads into the party’s biggest political meeting of this year, the National People’s Congress, where his lieutenants will unveil their economic blueprint for 2025.

Takeaways by Macro Roundup® AI

  1. Trump announced an additional 10% tariff on Chinese goods effective March 4, citing China's alleged role in drug supply, on top of a prior 10% duty imposed earlier in the month.
  2. China vowed to take "all necessary measures" against the new US tariffs, which form part of Trump's broader salvos spanning technology and investment.
  3. The tariffs take effect one day before Xi Jinping heads into the National People's Congress, where his lieutenants will unveil China's economic blueprint for 2025.

Related Articles:

  • Economic and Fiscal Effects of the February 2025 Proposed Tariffs on China — 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.
  • Are We Still on the Path to Equilibrium? — If the Federal Reserve delivers the normalization toward its projected long-term neutral policy rate, market-cap-weighted US asset yields would offer a near-normal risk premium over cash. If instead demand stabilizes at a higher level with tight capacity and fading disinflationary forces, policy could not ease as much as markets discount, so asset yields would likely rise and prices fall.
  • We Are All Mercantilists Now — The postwar free-trade system depended on American soft power and broad respect for its rules, and as countries defected to mercantilist policies each defection pushed others to respond in kind. China's economic size and its use of currency management, public procurement, state subsidies and protectionism to build leading industries in electric vehicles, solar power and batteries broke the existing order.

AI Summary. Using integrated U.S. macroeconomic and financial accounts, the authors find that fluctuations in expected cash flows to corporate owners, rather than expected rates of return, have been the dominant driver of swings in U.S. corporate market valuations. They attribute most valuation fluctuations to changes in the share of corporate output flowing to owners as pure rent.

Andrew Atkeson, Jonathan Heathcote and Fabrizio Perri National Bureau of Economic Research
Date Posted:

Stock market volatility since 1929 can be reconciled with the relative stability of macro variables if fluctuations in corporate valuations are attributed to changes in “factorless income” rather than expected returns. @Jonheathcote @fab_perri

What drives swings in U.S. corporate market valuations?

Core argument: Fluctuations in expected cash flows to firm owners, rather than fluctuations in expected rates of return, have been the dominant driver of swings in U.S. corporate market valuations since 1929.

We examine how to quantitatively reconcile the high volatility of market valuations of U.S. corporations with the relative stability of macroeconomic quantities since 1929. Macroeconomic and financial variables are measured in a consistent fashion using the Integrated Macroeconomic Accounts (IMA) of the United States, which combine NIPA data on macroeconomic flows and stocks with comprehensive data drawn from the Financial Accounts of the United States on financial flows and balance sheets with equity measured at market value. [These data] offer an internally consistent set of income statements, cash flow statements, and market value balance sheets for major sectors of the U.S. economy. We find that fluctuations in expected cash flows to firm owners have been the dominant driver of those fluctuations in value; fluctuations in expected rates of return have played a smaller role. We attribute most of the fluctuations in valuations to fluctuations in the share of corporate output flowing to owners of corporations in the form of factorless income, the share of corporate output that flows to firm owners as a pure rent.

Takeaways by Macro Roundup® AI

  1. Fluctuations in expected cash flows to firm owners, rather than fluctuations in expected rates of return, have been the dominant driver of swings in U.S. corporate market valuations since 1929.
  2. Most valuation fluctuations are attributed to changes in the share of corporate output flowing to owners as factorless income, the portion accruing to firm owners as pure rent.
  3. The analysis measures macroeconomic and financial variables consistently using the Integrated Macroeconomic Accounts of the United States, which combine NIPA flows and stocks with Financial Accounts financial flows and balance sheets where equity is measured at market value.

Related Articles:

  • The Impact of Rates Higher for Longer on the Capital Structure — Higher interest rates transmit through a higher cost of capital that reduces capital spending and hiring while redistributing value from equity holders to debt holders, since equity bears the higher debt-servicing costs. The author argues companies with earnings and cash flow outperform those without, making value more attractive than growth.
  • Updating Our Long-Term Return Forecast For US Equities to Incorporate the Current High Level of Market Concentration — The authors estimate the S&P 500 will deliver an annualized nominal total return of 3% over the next 10 years, roughly 1% in real terms, modeling long-term returns as a function of starting valuation, market concentration, frequency of economic contractions, corporate profitability, and interest rates. The index returned 13% annualized over the past decade, above its 11% long-term average.
  • US Exceptionalism: Drivers of Equity Outperformance and What’s Needed for a Repeat — US companies need about 7% earnings-per-share growth to deliver a normal 4% equity risk premium above the risk-free rate, versus about 3% for other developed markets, with the highest expectations embedded in technology and the largest US tech firms. Chinese companies could generate a 4% risk premium over Chinese bonds with no earnings growth.

AI Summary. Survey data show the share of Republican men agreeing that women should return to their traditional roles rose from 28% to 48%, and among Republican women from 23% to 37%. The authors argue the two parties are divided less by gender itself than by their attitudes about gender roles.

Michael Tesler, John Sides and Colette Marcellin New York Times
Date Posted:

Almost a majority (48%) of GOP men believe “women should return to their traditional gender roles,” up from 28% in 2022; 37% of Republican women agree, up from 23% in 2022. By comparison only 11% of Democratic women agree. @johnmsides

Are the parties divided more by attitudes about gender than by gender?

Core argument: In the Views of the Electorate Research Survey, the share of Republican men agreeing that women should return to their traditional roles rose from 28% in May 2022 to 48% in November 2024.

Surveys from 2024 show that support for traditional gender roles is increasing. Perhaps unsurprisingly, this is happening primarily among Republicans. Perhaps more surprisingly, it is happening among Republican women as well as among Republican men. The rise in gender traditionalism derives more from politics than it it does from gender. In the Views of the Electorate Research Survey, the percentage of Republican men who agree that women should return to their traditional roles increased from 28% in May 2022 to 48% in November 2024. Among Republican women, there was an increase from 23% to 37%. Although there is a lot of focus on the longstanding gender gap between men and women in voting, the two parties are actually divided less by gender than by their attitudes about gender.

Takeaways by Macro Roundup® AI

  1. In the Views of the Electorate Research Survey, the share of Republican men agreeing that women should return to their traditional roles rose from 28% in May 2022 to 48% in November 2024.
  2. Republican women also shifted toward gender traditionalism in the same survey, with agreement rising from 23% to 37%.
  3. The rise in gender traditionalism derives more from politics than from gender, with the two parties divided less by gender than by their attitudes about gender.

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  • Bachelors Without Bachelor’s: Gender Gaps in Education and Declining Marriage Rates — Marriage rates for college-educated women have remained stable over the past fifty years even as the relative supply of college-educated men declined, with the overall decline in marriage driven almost entirely by fewer marriages between non-college women and non-college men. The education gap in women's marriage rates is larger in areas where non-college men face the highest joblessness and incarceration.
  • Post-Pandemic Recovery for America’s Prime Age Labor Force: A Tale of Two Sexes — Prime-age women's labor force participation climbed about 5 points above its pre-pandemic level over a decade, while prime-age men's rose barely a point, only just regaining pre-pandemic levels. Despite economic expansion and labor shortages, work rates for prime-age American men are barely as high as at the trough of the severe Reagan-era recession.
  • Romantic Recession: How Politics, Pessimism, and Anxiety Shape American Courtship — 52% of single American women say they would be less likely to date a supporter of Donald Trump, compared with 36% of single men, with 47% of men saying it would make no difference. The gap widens with education: 73% of college-educated single women report such hesitancy, versus under half of those without a degree.

AI Summary. Federal Medicaid outlays have risen 207% since 2008 and 51% since 2019, with Medicaid climbing to 10% of federal outlays from 7% between 2007 and 2023 while the Social Security and Medicare shares held stable. The Congressional Budget Office projects Medicaid spending will increase by $2.4tn through 2035, so an $880bn reduction would still leave a $1.5tn increase.

The Editorial Board Wall Street Journal
Date Posted:

Washington should rely on state block grants and impose ‘per-capita caps’ on Medicaid spending, argues the WSJ Editorial Board, noting the 3pp growth in its share of federal outlays has outpaced Medicare, Social Security and defense since 2007.

Is Medicaid spending growing faster than Social Security and Medicare?

Core argument: Federal Medicaid outlays have risen 207% since 2008 and 51% since 2019, outpacing growth in Social Security and Medicare.

Medicaid spending is out-pacing even Social Security and Medicare. Federal Medicaid outlays have increased 207% since 2008 and 51% since 2019. Medicaid spending as a share of federal outlays rose to 10% from 7% between 2007 and 2023, while the share of Social Security and Medicare remained stable. Medicaid outlays are on track to increase by $2.4 trillion through 2035 under the Congressional Budget Office baseline projections. So shaving $880 billion from that baseline would still amount to a $1.5 trillion increase in Medicaid spending.

Takeaways by Macro Roundup® AI

  1. Federal Medicaid outlays have risen 207% since 2008 and 51% since 2019, outpacing growth in Social Security and Medicare.
  2. Medicaid's share of federal outlays climbed to 10% in 2023 from 7% in 2007, while the shares taken by Social Security and Medicare remained stable.
  3. Congressional Budget Office baseline projections have Medicaid outlays increasing by $2.4 trillion through 2035, so cutting $880 billion from that baseline would still leave a $1.5 trillion increase.

Related Articles:

  • Medicaid May Face Big Cuts and Work Requirements — Medicaid enrollment reached 87m people, boosted by pandemic legislation requiring states to keep people enrolled longer than normal and by additional states adopting the Affordable Care Act expansion, under which the federal government covers 90% of costs for expansion enrollees. The Congressional Budget Office projected states would receive nearly $60bn less in federal Medicaid funds year over year.
  • The Great “Transfer”-mation — Government transfers rose from 8.2% of Americans' total personal income in 1970 to 17.6% in 2022, making them the third largest income source after work and investments. The share of U.S. counties drawing a quarter or more of personal income from transfers rose from under 1% in 1970 to 53% in 2022.
  • 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.