For Tax Day 2026, here are some estimates of how progressive the US tax system is, drawing primarily from published academic work. While there is disagreement about exactly how progressive the tax system is (and should be), these papers all agree that as income rises, average tax rates rise. These estimates attempt to include, as best as possible, all federal, state, and local taxes, and to take account of tax incidence.
And here is a chart that I created, which comes from the appendix data for PSZ (2018), which is roughly comparable to the Auten-Splinter chart above. Note that it isn’t perfectly comparable: the income groups on the x-axis aren’t exactly the same, and the latest year in PSZ is 2014 rather than 2019 (they do have estimates for later years in updates to the work, but I am trying to stick with the published academic work). But they are roughly comparable:
Auerbach, Kotlikoff, and Koehler in the Journal of Political Economy take the additional step of computing lifetime average tax rates, rather than for a single year, showing the US tax system is even more progressive when considered this way. Note: they also include the value of transfers, which makes these results not directly comparable to the papers above:
Finally, here are two estimates from think tanks that work on tax policy. Even though the Tax Foundation is considered more right-leaning and ITEP is considered more left-leaning, both agree that the overall US tax code is progressive.
Vice President Vance’s recent trip to Hungary to stump for Viktor Orban was interesting for a number of reasons, but is not totally surprising. In many ways Orban’s “illiberal democracy” (his self-applied term) has many overlaps with MAGA Republican policy. Johan Norberg recently wrote a very good critique of Orban’s policies, and why the US should not follow further down the path or Orbanism.
I agree completely with Norberg’s analysis completely, though his focus is mostly on the decline in democracy, the rule of law, and personal freedoms in Hungary under Orban. Norberg does have several criticisms of Orban’s economic policies, but on the whole economic policy under Orban has been relatively unchanged: in the Human Freedom Index report Norberg cites, the “personal freedom” portion of the index declined 1.5 points on a 10-point scale under Orban, while the “economic freedom” portion only declined by 0.3 points.
What’s really interesting is that within the Economic Freedom of the World Index, Hungary’s highest scoring area of the five areas is “freedom to trade internationally,” where they ranked the 25th best country in the world in 2023. While MAGA Republicans might like the US to copy many of Hungary’s policies, they clearly do not in this case, as trade restrictions one of the signature economic policies of Trump (possibly his most important economic policy).
To be clear, the high ranking on free trade in Hungary is not due to any conscious policy choice of Orban’s administration. Instead, it is because Hungary is a member of the European Union, and therefore is part of the single market (meaning they have free trade with most of their trading partners) and part of the customs union (meaning they can’t set their own external trade policy). Indeed, it appears if Orban had his way, they would have much less free trade, as he is trying to hold up the EU-Mercosur trade agreement. Nonetheless, Orban’s hands are largely tied on trade policy.
Not only was Hungary ranked quite high on free trade in 2023, they were ranked higher than the US, as they have been for most of the past decade:
While the EFW data is generally only available with a significant lag, and therefore only through 2023 in the chart above, they did provide a special update for the US in mid-2025, given the radical changes in trade policies by the second Trump administration. That’s the blue dot you see floating down below with a score of 7.4. While that isn’t the final ranking for 2025 (they still don’t have the scores for 2024!), it gives an indication of roughly where the US will land in 2025, making it much less free trading than Hungary.
The EFW Area 4 score includes not just tariff rates, but also non-tariff barriers to trade, as well as capital controls and labor movement. What if we only focus on the tariff sub-score, since this is the part of trade policy Trump has altered the most?
On tariff policy alone, there wasn’t much difference between the US and Hungary in 2023 (indeed, if we look solely at tariff rates, the US was slightly better, with an average rate of 3.3% compared with 5.0% in Hungary). But with the radical change in rates in 2025, Fraser estimates that the US will drop significantly, giving it one of the highest average tariff rates in the world. This would be a massive difference between Hungary and the US on trade policy. We’ll have to wait for the complete data before making a final judgement, and indeed given that average tariff rates have changed more than 50 times under the second Trump administration already, it’s not even clear what our score will be for 2025. But it will almost certainly be worse than Hungary.
A recent viral Tweet shares a political cartoon from 1894, which shows a worker being squeezed by high rents and low wages. The Tweet claims “the problem has only gotten worse.”
134 years ago this cartoon was drawn, and in 134 years the problem has only gotten worse. pic.twitter.com/vvyLXXEe6s
Can this be true? Are workers today actually worse off than they were in 1894? At first blush, this seems obviously wrong. Here is a chart I created showing real (inflation-adjusted) wages since 1894. They are eight times higher today (I have combined two wage series and two price indices, so don’t take this as being perfect, but roughly accurate).
Figure 1
Whatever concerns we might have about high rents today, there must have been some other major improvements in the cost of living relative to wage increases since 1894, given that one hour of work can purchase about 8 times as many real goods and services today.
But is there a narrower case for the cartoon? What if we only focus on wages? We can do this by using a great new resource from the Philadelphia Fed, which provides some long-run data on housing prices in the US, for both purchasing a home and renters. The data series conveniently goes all the way back to 1890, so we can make the comparison with 1894 using the nominal rent index (it ends in 2006, but we can merge it with the modern CPI for rental housing). What if we compare this rental price series to the same wage series I used in the chart above?
Figure 2
The trend in this second chart is very troubling. Rents have increased much faster than nominal wages. While other goods and services may be more affordable, rents — which consume around 24 percent of household income for renters — are rising relative to wages. Sure, we can talk all day about how the quality has improved — larger apartments, indoor plumbing, modern safety features that didn’t exist in 1894 — yet still, renters can only rent what is available. And today rental housing is much more expensive than on April 1, 1894.
APRIL FOOLS!
The data was all correct, other than the fact that I tricked you by swapping the wage and rent lines. Wages have actually increased much faster than rents since 1894 (though they have increased roughly equal rates in recent decades). Sorry for that little trick, I’m a little surprised no one noticed. Perhaps I am just too well-known for being a straight shooter with data. Here is the real chart:
Today I am posting an update to the generational wealth chart that I have posted many times in the past. This update brings the data through the 3rd quarter of 2025 for the youngest cohort, which includes both Millennials and a growing part of Gen Z in the data from the Federal Reserve. I am somehow hesitant to post this chart, as it is starting to be data that is less useful as the younger generations age, for two reasons.
The first problem with the data is that the Fed is lumping everyone from ages 18-43 together as one generation. Given that the youngest Millennials were 29 in 2025, we are now including a significant part of Gen Z, which is OK in itself, but it becomes harder to compare with generations that encompass only 16 or 17 years of birth cohorts. Secondly, the data from the Fed’s Distributional Financial Accounts is only benchmarked every three years with the Fed’s more detailed Survey of Consumer Finances. Currently only the 2022 version of the survey is available, which is now probably a bit out of date. Based on past updates, it is entirely possible that it is underestimating wealth for the youngest cohort. But I think we will have much more certainty about this data once the 2025 SCF is available and used as a benchmark for the DFA data.
With all of those caveats aside, here is the updated chart:
As I am currently working on a book manuscript using the Survey of Consumer Finances, I will be very excited to finally have the 2025 data available. Until then, this is probably the best intergenerational comparison we can do, and it continues to look very positive for the youngest cohorts. With an average of almost $146,000 of wealth for the combined Millennial/Gen Z cohort, they are well ahead of where Gen X was even in their late 30s, and ahead of Boomers at around age 37 as well. All of this bodes well for young people, despite frequent expressions of pessimism, but we should hold off judgement until the 2025 data is fully updated.
In the (so far) short military engagement with Iran, crude oil and gasoline prices have jumped significantly. The three-week change in gasoline prices at the pump for US consumers was 27 percent, the largest three-week increase consumers in the US have ever seen (with data back through the 1990s). The four-week increase is also a record.
Despite this sharp increase, gasoline prices remain near the long-run average in terms of affordability: it takes about 7 minutes of work at the average wage to purchase a gallon of gasoline. To be sure, this is a big jump of where it had been earlier in 2026, at about 5 minutes of labor. Nonetheless, gasoline is still (for now!) more affordable than it was, relative to wages, for almost all of 2022 and 2023.
The following chart shows cumulative population growth in the US since 2010, from two sources: the natural population growth (birth minus deaths) and international migration:
In total, the US population has increased by about 30 million people since 2010. Cumulatively, about 55 percent of the growth has been from international migration, but there are two distinct periods within this 15-year timeframe. From 2010 to 2020, about 60 percent of the population growth was from natural population change, both cumulatively and in most of those years. From 2021 forward, 70-90 percent of the growth has been from international migration.
The flip in 2021 happens because both factors changed. First, the natural rate of population growth slowed dramatically, with just 146,000 people added to the population, compared with close to 1 million or more before the COVID pandemic. The decline in population growth is a result of gradually slowing birth rates, but also skyrocketing death rates in 2021-2022: about 3.4 million deaths per year, compared with about 2.8 million pre-pandemic. Second, international migration picked up dramatically, from around half a million people in 2019-2020, to an average of over 2 million per year from 2022-2024.
Note: the years in this data run from July to June, so when it says 2025 in the chart, this means from 7/1/2024 to 6/30/2025. Thus, we don’t yet have a full year of data under Trump. But even with the half year under Trump, which includes 6-7 months under Biden when the border policy was already being reversed, the latest year of data from Census suggests the US still had a net international migration of almost 1.3 million people. That’s half the number from 2024, but still well above pre-pandemic numbers. Keep in mind that these are estimates, subject to change, and estimating changes in the illegal immigrant population is often very difficult to do accurately. But these are probably the best estimates that we have right now.
What does the future hold? Of course, any future projection has to make assumptions about how both the birth rate and immigration rate will change over the coming years. But a recent estimate from CBO suggests that by around 2032-2033 the natural rate of population growth will essentially hit zero, and that by the early 2050s it will be so negative as to completely offset the projected immigration. In other words, total population growth could essentially be zero in the US by 2055 or so. That’s 30 years in the future, so take it with a grain of salt, as any small change in immigration, births, or deaths could throw that projection way off. But it seems like a fairly likely scenario.
Last week I had the opportunity to see (and touch!) some first edition copies of Adam Smith’s books, including The Wealth of Nations and The Theory of Moral Sentiments.
For an economist, of course this was a very cool experience. The books from the Remnant Trust were still in great condition, despite people like me handling these copies from time-to-time. The books were also beautiful editions, which got me thinking: how much did these cost to purchase when originally published?
According to John Rae’s Life of Adam Smith, the original price for The Wealth of Nations was 1 pound, 16 shillings. Average wages per day in England were somewhere around 15 pence per day (1 pence is 1/12 of a shilling), it would take close to 30 days of labor to purchase the book. But that’s assuming you spent all of your wage on books, which of course would have been impossible: a common laborer would have been spending 80-90% of their wages on food, beer, and rent. And that’s assuming no unexpected expenses or sickness. In reality, it might take a common laborer months, years, or maybe his entire life to save up for that book.
Today, of course we can read this book online for free, but what if you want a nice hardcover version? Amazon has several nice hardback versions available for just under $30. These are not quite as beautiful as the 1776 edition, but they would look nice in any library. Given that the average wage in the US today is close to $32, it would take less than one hour of labor to purchase the book. And thankfully the cost of necessities today is much lower than 1776, indeed much lower than 1900, so it would be much easier to set aside that one hour of wages relative to the past, and purchase yourself a little treat like a book written 250 years ago.
A recent essay by Jeffrey Tucker asks “Has Life Really Improved in Half a Century?” Specifically, Mr. Tucker is interested in measuring median income of families (he uses household income, but families are clearly what he is interested in).
Tucker grants that real median household income has increased by about 40 percent from 1984 to 2024 (if he had used family income instead, the increase is almost 50 percent). But… he says this is illusory. That’s because it now takes two incomes to achieve that median income, whereas it only took one income in the past:
“Adding another income stream to the household is a 100 percent rise in work expectations but it has yielded only a 20-plus percent rise in material income. The effective pay per hour of work for the household has fallen by 40 to 50 percent!”
(He makes a data error by saying that in 1976 real median household income was $68,000-$70,000, when it was actually $59,000 in 2024 dollars in 1976 — real income didn’t fall from 1976 to 1984!)
UPDATE 2/19/2026: the last GDPNow estimate from the Atlanta Fed is 3.0% and the Kalshi markets are now predicting 2.8%. I would expect this is a slightly better range than the 3.3-3.6% from my post written on 2/18/2026.
In April 2025 I wrote about several different forecasts for GDP growth. At the time the latest GDP quarter available was 2025Q1. We’ve had two more quarters of data since then, plus a highly anticipated report for Q4 coming out this Friday. How have these different predictions done recently? Here is the updated table from that prior post:
When I wrote the post in April 2025, I said that a simple average of the Atlanta Fed and Kalshi forecasts was the best simple predictor of the actual BEA advance figure. Based on the middle quarters of 2025, I think that continued to be true: each of them was the best estimate in one quarter, and perhaps just as importantly the NY Fed and WSJ survey of economists understated GDP growth pretty significantly.
There is still one more Atlanta Fed GDPNow update coming tomorrow before we get the actual BEA data on Friday, but based on where the numbers are now, we should expect Q4 to be around 3.4-3.5% (annualized) growth rate. This would put the total 2025 calendar year growth at around 2.3% — decent, but still below 2024’s 2.8% growth.
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