Edward Conard

Top Ten New York Times Bestselling Author

  • “…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
  • “…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
  • “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
  • “…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 is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “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
Upside of Inequality Oxford Unintended Consequences

AI Summary. US growth is projected to slow to about 2.2% from 4.1%, close to potential given the boost to labor force growth from recent immigration, while growth in other advanced G10 economies is projected to pick up from about -0.4% to +1.2%. Core inflation estimates point to two Federal Reserve rate cuts, with timing sensitive to incoming data.

Jan Hatzius Goldman Sachs
Date Posted:

Jan Hatzius @GoldmanSachs argues US Q1 growth of 2.2% is “close to potential given the boost to labor force growth from the recent immigration wave,” and continues to forecast rate cuts in July and November.

How does immigration-boosted labor supply shape US growth and rate cuts?

Core argument: US GDP growth is estimated to slow from 4.1% in 2023H2 to 2.2% in 2024H1, a pace close to potential given the boost to labor force growth from the recent immigration wave.

We estimate that US GDP growth will slow from 4.1% in 2023H2 to 2.2% in 2024H1. This would have looked quite strong prior to the pandemic but is now close to potential given the boost to labor force growth from the recent immigration wave. By contrast, we estimate that growth in other G10 economies will pick up from an average of -0.4% in 2023H2 to an average of +1.2% in 2024H1. Using CPI, PPI, and import prices, we estimate that core PCE increased 0.26% month-on-month, a pace well below the 0.36% average of the prior three months but probably not sufficient for a July cut if maintained in May and June. However, we also estimate that the market-based core PCE index—which was noted by Fed Chair Powell in a talk last week and which excludes imputed items such as portfolio management services and gambling—rose just 0.18%, a pace that would be quite consistent with a July cut if maintained. We continue to forecast cuts in July and November, but the timing remains sensitive to upcoming data.

Takeaways by Macro Roundup® AI

  1. US GDP growth is estimated to slow from 4.1% in 2023H2 to 2.2% in 2024H1, a pace close to potential given the boost to labor force growth from the recent immigration wave.
  2. Growth in other G10 economies is estimated to pick up from an average of -0.4% in 2023H2 to an average of +1.2% in 2024H1, in contrast to the US slowdown.
  3. Core PCE is estimated to have risen 0.26% month-on-month, below the 0.36% average of the prior three months but probably not low enough for a July cut, while the market-based core PCE index noted by Fed Chair Powell rose 0.18%.

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  • How Fast Can the Fed Ease? The Private Sector Response to Easier Conditions Will Be a Key Factor — US households have reduced debt over the past 20 years, leaving room to borrow more if incentives improve, while companies that issued debt at low rates hold large liquidity and healthy balance sheets. That gives businesses capacity to raise investment, and business surveys indicate capital-spending sentiment is already improving.
  • Is Nominal Wage Growth Starting to Slow? — Aggregate nominal wage income, which tracks closely with nominal gross domestic product, has grown at a yearly rate of just 4.5%—identical to the pre-pandemic pace—compared with almost 7% over the prior six months. The author argues that several consecutive slow months, rather than a one-off, suggest the deceleration could be significant.
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