Newsletter: American M.B.A.s are Down, China’s Inflation Is Up and French Economists are On Top of the World

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U.S. business schools are feeling the squeeze of shifting American policies and a strong labor market, China’s soaring inflation is an opportunity for U.S. hog farmers, and the French are punching above their weight in the field of economics. Good morning and welcome to another full day of economic news.

Immigration, the Labor Market and an M.B.A.

Applications to some of America’s most elite business schools fell as universities struggled to attract international students and a hot domestic job market cooled the interest of many Americans in the traditional two-year M.B.A. path, Chip Cutter reports.

  • The declines affected some of the nation’s top-rated programs, including Harvard, Stanford and the Massachusetts Institute of Technology. Overall, applications to American M.B.A. programs fell for the fifth straight year, according to the Graduate Management Admission Council.
  • Shifts in U.S. immigration policy, trade and political tensions with China, as well as the growing attractiveness of technology-industry jobs that don’t require M.B.A. degrees, have recently dampened foreign students’ enthusiasm for business school.
  • “There’s perception, which we absolutely pick up in our data, that the U.S. is not a welcoming environment,” said Sangeet Chowfla, GMAC’s chief executive
  • Meanwhile, millennials, many of whom are saddled with debt loads from their undergraduate degrees, have proved more reluctant than previous generations to pursue the pricey degree.


The International Monetary Fund releases its world economic outlook at 9 a.m. ET. Look for a downgrade from the last forecast: The IMF’s new head last week spoke of a “synchronized slowdown” across the global economy.

The Atlanta Fed’s Raphael Bostic speaks on community development at 9 a.m. ET, the Kansas City Fed’s Esther George speaks on the U.S. payments system at 12:45 p.m. ET and the San Francisco Fed’s Mary Daly speaks in Los Angeles at 3:30 p.m. ET.


When Pigs Fly

Surging pork prices pushed China’s consumer inflation to a near six-year high in September, complicating Beijing’s effort to stimulate growth but also giving it an incentive to buy more agricultural goods from the U.S. The consumer-price index rose 3% in September from a year earlier, bumping up against Beijing’s inflation target of “around 3%.” The main factor: pork prices were up 69% from a year earlier. Outbreaks of African swine fever has severely hurt pig output in China, the world’s largest pork producer and consumer, Grace Zhu and Liyan Qi report.

Mo Money Mo Problems

The Federal Reserve has twice lowered short-term interest rates in recent months. Lenders are charging record-high margins on credit cards. The reason: Banks’ generous card rewards programs, offering free travel and other perks, have been eating into lenders’ profitability. To offset that pain, banks are charging cardholders more to borrow. The average annual percentage rate, or APR, on interest-charging credit cards is about 17%, according to Fed data. That is near its highest in more than two decades, AnnaMaria Andriotis reports.

Isn’t It Ironic

The capital markets and global economy are caught in a feedback loop amplified by U.S. politics and the U.S. dollar, Paul Vigna reports.

  • The U.S. is embroiled in a trade war with China, President Trump is under an impeachment inquiry, and the 2020 election already looks as bitter as 2016. Those U.S.-centric issues are causing havoc in the markets, driving investors to havens.
  • Because the dollar is one of those havens, it is being driven higher, not lower. That’s hurting the very investors trying to avoid the pain spread by U.S. issues in the first place.
  • The trade-weighted U.S. Dollar Index hit a record high in early September of 131.58, and one month later is near that level again.

Real World Economics

Three economists whose work on poverty alleviation has taken them out of universities and into remote villages, fields and schools around the world were awarded the Nobel Prize in economics Monday. The trio were recognized for their experimental work testing ways to improve education or health in the developing world.

  • Abhijit Banerjee, Massachusetts Institute of Technology. Born: 1961 in Mumbai, India
  • Esther Duflo, Massachusetts Institute of Technology. Born: 1972 in Paris, France
  • Michael Kremer, Harvard University. Born: 1964 in the U.S.


L’economie, C’est la Notre

Esther Duflo’s Nobel is the latest evidence that in cutting-edge economics, French-born economists hit above their weight. A trio of French economists is advancing the frontier on inequality and taxes: Thomas Piketty of the Paris School of Economics, and Emmanuel Saez and Gabriel Zucman of the University of California, Berkeley. Thomas Philippon at New York University is a leading researcher on competition policy, a field for which Jean Tirole of the Toulouse School of Economics won the Nobel in 2014. Olivier Blanchard, formerly of the MIT, is leading the rethink on the dangers of government debt. What is it about the French and economics? “The French typically know much more math than the American students when they start the Ph.D.,” Mr. Blanchard ventures in an email. “The result is that they tend to concentrate more on issues, whereas American students concentrate more on mastering the math.” Also: “Must be partly a coincidence.” —Greg Ip

La Dolce Visa

As rich people in the U.K. fret over Brexit and the possibility of an avowed socialist coming to power, Italy and other European countries are slashing taxes to tempt the jet set to relocate. Rich folks’ big concerns: Prime Minister Boris Johnson’s embattled government could give way to a high-tax Labour government led by Jeremy Corbyn, and Brexit’s impact on the economy. Countries like Italy, which has introduced favorable laws to compete with the U.K. for the rich, could stand to benefit. Advocates of the Italian option call it “la dolce visa,” a play on la dolce vita, or the sweet life, Simon Clark reports.

The First Step Is the Steepest

Women and men enter the workforce in roughly equal numbers. But men outnumber women nearly 2 to 1 when they reach that first step up—the manager jobs that are the bridge to more senior leaders. The upshot: Long before bumping into any glass ceiling, many women run into obstacles trying to grasp the very first rung of the management ladder—and not because they are pausing their careers to raise children. As a result, it’s early in many women’s careers, not later, when they fall dramatically behind men in promotions, blowing open a gender gap that widens every step up the chain, Vanessa Fuhrmans reports.


Want more on the latest Nobel winners?

George Mason University’s Alex Tabarrok offers an accessible review with deep-dive links into Banerjee, Duflo and Kremer’s work.

Bloomberg Opinion’s Noah Smith says the latest prize shows several important ways that the economics discipline is changing.

The Financial Times’s Martin Sandbu says recognition of the trio will help restore the profession’s relevance.

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