My WSJ OpEd argues that mining the tech frontier motivates America’s talent to take more risk by increasing expected after-tax payoffs, producing a 70X difference in the value of newly created companies—laughably missed by tax elasticity studies #AEIEcon

.@DLeonhardt reports a sharp partisan gap in learning loss: 8 of the 10 states with the biggest math declines since 2019 - likely due to prolonged school closures - voted Democratic, while 8 of the 10 smallest shortfalls voted Republican.

Labor force participation for prime-age (25-54) females rose from 74.7% in Jan. 2021 to 78.2% in Sept. 2024. Hispanic women represented only 17% of the prime-age female population but accounted for ⅓ of the increase. @sffed

Cows in Nevada have been infected with a new variant of H5N1, D1.1, which was responsible for the first US death from bird flu this year. This suggests a 2nd spillover from birds to cows beyond the B3.13 variant that has infected herds in 16 states.

Valerie Ramey examines case studies from the US, Singapore, and Australia and finds that temporary transfers like tax rebates “likely provided little or no macroeconomic stimulus in advanced economies,” contradicting influential micro studies.

Jesús Fernández-Villaverde @AEIecon argues that AI is unlikely to deliver viable solutions for old-age care, and proposes that "the US should restructure its entire economic policy toward a family-oriented approach that facilitates marriage."

CPI rose 0.5% in January, the fastest rate since August 2023, bringing CPI to 3% year over year and core CPI to 3.3% year over year. Shelter accounted for ~ 30% of the increase.

Torsten Sløk argues that “higher for longer” rates shift value towards firms that have cash flow to service their debt while making risk-taking more challenging for new ventures with “no earnings, no revenue, and no cash flow.”

In lieu of Friday’s Valentine Day this week, I decided to report on Jason Furman’s “Dear John” criticism of the Biden Administration’s economic policy, “The Post-Neoliberal Delusion,” using his own words, which were published in yesterday’s edition of “Foreign Affairs.”

Elon Musk says Fed Gov spndg exceeded real GDP growth since 2019 by $800B, from Medicaid ($137B), social services ($125B), SS & Medicare ($77B), and interest ($381B). While retiree-related expense only increased 3%, non-retirees expenses ballooned 30%.

China’s marriage registrations fell to a record low of 6.1M in 2024, down 50% from the 2013 peak. Birth rates in 2024 hit their second-lowest level since the PRC’s founding in 1949, and China’s population shrank for the third straight year.

.@M_C_Klein argues the final stretch to 2% inflation could be the hardest: inflation has been running ~1pp above 2017-2019 levels, with wage growth at 4.5% vs. 3% pre-pandemic, outpacing productivity growth.

Bonney et al show that in Norwegian data there is a large “child penalty” for female, but not male, entrepreneurs. “Female-owned businesses experience a substantial decline in profits, steadily decreasing to 30% below baseline ten years post-childbirth.”

Brazil is spending a fiscally “unsustainable” 7% of GDP on debt service. @stanveuger @mikkel_dav argue that the US may be on the same path to “fiscal dominance,” where “management of the debt will ultimately happen through bouts of elevated inflation.”

At the start of 2025, the median cost of capital for an American firm is 8.5% @AswathDamodaran argues that investments should be driven by “growth and profit prospects,” and that “hurdle rates are not where business/valuation battles are won or lost.”

The capex of Meta, Google, Microsoft, and Amazon is forecast to grow to at least $320B this year, up 30% y/y, “to remain at the forefront of AI large language model research.”

Chinese researchers claim to have developed a method for tracking submarines via their magnetic fields. “The future lies in merging physics with AI. Magnetic wakes add another layer to the kill web – a system where even ghosts leave traces.” @SCMPNews

.@kpomerleau argues that mandatory exclusion of high-tax foreign income for Global Intangible Low-Tax Income (GILTI) calculations would “reduce incentives to shift mobile assets to foreign jurisdictions” and raise $68.5-72.9B in 2025-35.@kpomerleau

“US stocks on average trade at 22 times earnings, a near 60% premium over Europe.” As EU firms choose to list in the US, “headquarters, management and hiring can be pulled away too” and Europe “loses out on the next generation of ideas and companies.”

.@dylan522p @SemiAnalysis_ notes that DeepSeek’s efficiency gains are accelerating the decline in AI inference costs, tracking the trend from GPT-4 to DeepSeek-V3 and notes, “By the end of the year do not be shocked if costs fall another 5x.”