What we’re reading (9/1)
“The World Is Still Short Of Everything. Get Used To It.” (New York Times). “The Great Supply Chain Disruption is a central element of the extraordinary uncertainty that continues to frame economic prospects worldwide. If the shortages persist well into next year, that could advance rising prices on a range of commodities. As central banks from the United States to Australia debate the appropriate level of concern about inflation, they must consider a question none can answer with full confidence: Are the shortages and delays merely temporary mishaps accompanying the resumption of business, or something more insidious that could last well into next year?”
“Fidelity Wants to Add 9,000 Jobs by Year-End” (Wall Street Journal). “Fidelity Investments plans to hire another 9,000 employees this year to help its businesses keep pace with the surge in demand for stock-trading and other personal-investing services…[d]rawn to the market’s rally, individual investors have changed the fortunes of the brokerage industry. The no-commission stock trades and low-fee investment funds now offered by many firms have brought in plenty of new clients. They also have thinned money managers’ profit margins and forced them to compete on price. Traditional products, like stock- and bond-picking mutual funds, have been leaking client money.”
“Social Security Won't Be Able To Pay Full Benefits By 2034, A Year Earlier Than Expected Due To The Pandemic” (CNN Business). “Social Security will have to cut benefits by 2034 if Congress does nothing to address the program's long-term funding shortfall, according to an annual report released Tuesday by the Social Security and Medicare trustees….[b]y that time, the combined trust funds for Social Security will be depleted and will be able to pay only 78% in promised benefits…[t]he Covid-19 pandemic and economic recession are to blame for moving up the depletion rate by a year, driven by the big drop in employment and resulting decline in revenue from payroll taxes. The trustees also project a higher mortality rate through 2023 and a delay in births in the short term.”
“Wealthy Lobbyists Have Already Slashed Biden’s Tax Reform by Three-Quarters” (New York Magazine). “[President] Biden campaigned on a proposal to increase taxes on the wealthy by roughly $3.5 trillion over a decade. Nobody in Washington currently believes he will sign a tax hike anywhere close to that magnitude. The current predictions floating around — Politico’s tax newsletter is one publication that has used this estimate — peg the total at around a trillion, give or take. The most striking thing about the decision by moderate Democrats to scale back Biden’s plan by some three-quarters is that we have no idea what the rationale is.”
“Demographics, Wealth, And Global Imbalances In The Twenty-First Century” (Adrien Auclert, et al., working paper). “We use a sufficient statistic approach to quantify the general equilibrium effects of population aging on wealth accumulation, expected asset returns, and global imbalances…our model predicts that population aging will increase wealth-to GDP ratios, lower asset returns, and widen global imbalances through the twenty-first century. These conclusions extend to a richer model in which bequests, individual savings, and the tax-and-transfer system all respond to demographic change.”
