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While many companies saw greater totals of patent grants during 2023, the overall grant rate for U.S. patents declined by 3.4%, returning to pre-pandemic issuance levels. That decline may be related to longer patent pendencies at the U.S. Patent and Trademark Office (USPTO), according to IFI CLAIMS chief executive Ronald Kratz. “The backlog for patent applications at the USPTO has been growing over the last couple of years,” Kratz stated in a press release. “They now have more than 750,000 unexamined applications, which could explain why grants are down.” More than 418,000 patent applications were filed during 2023, an all-time record at the USPTO, which Kratz said was a reflection of positive innovation activity in the United States.

For much of the past two decades big pharma has been a lost cause. Despised by the public, it became notorious for price-gouging, secretiveness and its neglect of global health problems. Big pharma also lost its lustre with investors, despite its bumper profits. They worried that a business model that relied too much on rent-seeking and too little on innovation was unsustainable, and that citizens would eventually revolt and demand more regulation—or even rip up the patent system that gives drugs firms a temporary monopoly over new medicines. As a result, in the five years before the covid crisis the pharmaceutical sector lagged behind America’s s&p 500 index.

The pandemic has reminded the world of the industry’s strengths—its capacity to innovate and provide drugs on a vast scale. Many of the big firms, such as Johnson & Johnson and Sanofi, are working on covid-19 vaccines and therapies. Scores of smaller companies are at work, too. On May 18th Moderna, an American biotech firm, said that its much-anticipated vaccine has shown positive early results (although some analysts questioned the validity of its tests). AstraZeneca, a big British firm that invests heavily in research and development (r&d), is working on a vaccine with scientists at Oxford University, helped by $1bn of new funding from America’s government. Even before the virus, the industry had started to invest more heavily. In the most recent quarter America’s 30 biggest firms boosted their r&d by a median of 6% year on year. Now medical innovation is back in fashion.

Anna Rothschild: But Sarpatwari told me pharmaceutical companies aren’t actually incentivized to solve the world’s biggest problems even now.

Ameet Sarpatwari: If you’re looking at what society needs, definitely there is a skew in terms of our system incentivizes the development of products that are less risky to make, and in which payers have an obligation to pay.

To assess the winners and losers in the fulfillment of national AI aspirations, we first assembled a country-level dataset that contained a myriad of details on each country’s technology infrastructure, public and private investments, the number of AI-related patents and conference papers it has produced, and the number of technology-savvy STEM graduates within the country. We determined that the data could be grouped into two overarching factors: a technology-related factor and a people-related factor. We then arrayed each country by its relative achievement on those dimensions (see Figure 1).

As shown, the U.S. is positioned in the lower right quadrant—the Technology Prepared quadrant—which reflects the combination of its world-leading technology infrastructure (in the 95th percentile) and a relatively dismal people readiness (45th percentile). While the U.S. leads the world in the technology infrastructure dimension, a number of countries, among them India (92nd percentile), Singapore (88th percentile), Germany (85th percentile), China 72nd percentile) and Russia (48th percentile), score better on the people dimension.

This paper investigates the effect of the US–China trade war on corporate innovation. We focus mainly on the US tariff shock and explore the Chinese retaliatory tariff shock in further tests. Using a unique and comprehensive data set of Chinese A-share listed firms from 2014 to 2021, on average, we find that increases in tariffs resulting from the trade war hinder corporate innovation in China. The negative relation between the trade war and corporate innovation is robust for the parallel trends test, the placebo test, and a set of robustness checks.

We also examine underlying mechanisms by which the trade war affects corporate innovation. The results show that market expansion and innovation input act as the underlying channels; that is, the trade war leads to reductions in market expansion, input capital, and labor of innovation, eventually hindering corporate innovation.

Despite all the good news, there’s one giant, inescapable reason why people don’t feel like the economy is as good as it actually is. Rent, and housing generally, is still too damn high. See here: The Consumer Price Index came in at on an annualized basis. Meaning prices on the everyday goods and services you buy are about 3.3% higher on average than they were a year ago. Prices for some items are even going down , after executives realized their customers had enough of their pricing power shenanigans. If you take a look at “supercore” CPI — the unofficial reading that excludes food, fuel and the cost of renting or owning a home — the picture is even rosier. Supercore prices were up just 1.9% from a year ago, right in the sweet spot that virtually every central bank in the world is aiming for Unfortunately, real life doesn’t let us just close our eyes and make the cost of food, gas and rent disappear. Shelter costs — which include rent and an estimated cost of homeownership — were up 5.4% from a year ago. That’s a slight improvement from April, and far lower than their peak of 8.2% in March last year. (Before the pandemic, shelter inflation typically rose around 3.5% a year.) “It’s an 18-wheeler riding its brakes down a mountain. We know where it’s headed, but it’s a slow descent,” said Jay Parsons, an economist and head of investment strategy at Madera Residential, a Texas-based apartment developer. The monthly fluctuations in the CPI are just part of the complex housing puzzle. The CPI doesn’t weigh the cost of buying a home, which is at the moment. “The housing situation is a complicated one,” said Fed Chair Jerome Powell on Wednesday, in his typically understated style. “Ultimately, the best thing we can do for the housing market is to bring inflation down so we can bring rates down, so that the housing market continues to normalize.” It’s not exactly breaking news but: Housing supply is low, mortgage rates have been hovering around 7% for months, and home prices have continued to rise to all-time highs. All of those factors have coalesced into a sticky market where no one can afford to move and even fewer can afford to buy. And if you are among the lucky ones who manages to find a place you can afford, buckle up, because the costs don’t stop at closing.

The Institute for Supply Management's manufacturing Purchasing Managers' Index (PMI) fell to 48.7 in May from 49.2 in April, falling below analyst expectations. Saxo Chief Global Equity Strategist Peter Garnry joins Catalysts to explain what this print could signal for the Federal Reserve's next interest rate decision. "We are facing a world where China is pushing on an export string, and that's really pressuring manufacturing both in Europe and the US," Garnry explains. He believes that the harder China pushes on its export policy, the harder the US and Europe will push back. "In the short run, it could cause lower goods inflation in the global economy. But longer run, the goods inflation will be higher because it will force the US and Europe to be more protectionist [in its] trade policies and put up tariffs around their economies," he adds. As Wall Street eyes the Fed's next rate move, Garnry says the Fed is grappling with a "two-lane economy," where one part is sensitive to interest rates while the other part remains resilient. Garnry predicts a rate cut later in the year and adds that the US needs to get past the presidential election to see how the market pivots.

The US economy started 2024 on a softer note than anticipated as elevated inflation and interest rates continued to weigh on the economy. While we do not forecast a recession in 2024, we do expect consumer spending growth to cool further and for overall GDP growth to slow to under 1% over the Q2 to Q3 2024 period. Thereafter, inflation should gradually normalize to the Fed’s 2-percent target in 2025 as quarterly annualized GDP growth rises toward its potential of near 2%. Interest rates should fall starting in late 2024 but may stabilize at levels exceeding the pre-pandemic average.

The US Federal Reserve has held interest rates in a target range between 5.25% and 5.5%, a 23-year high, as the world’s largest economy continues to fight stubbornly elevated inflation, Andrew Michael writes. The Fed’s rate-setting Federal Open Markets Committee (FOMC) announced today that it would maintain US borrowing costs at the same level as they have been since July 2023. Explaining its decision, voted for unanimously by the 12-member FOMC, the Fed said: “The Committee judges that risks to achieving its employment and inflation goals have moved toward better balance over the past year. The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.” Earlier on Wednesday, official consumer price index (CPI) figures from the US Bureau of Labor Statistics showed that annual US inflation rose by 3.3% in the year to May, down slightly on the figure of 3.4% recorded a month earlier.

The U.S. economy grew slower than previously expected in Q1 2024 as inflation re-accelerated and consumers dialed back their spending on durable goods. According to the product for the first quarter of 2024, the economy grew at an annualized rate of 1.3 percent during the period, a downward revision from the previous estimate of 1.6 percent, which had already undercut expectations. According to the BEA, the slowdown compared to Q4 2023, when real GDP increased had 3.4 percent, primarily reflected decelerations in consumer spending, exports and government spending as well as an increase in imports, which are a subtraction in the calculation of GDP. The downward revision compared to the advance estimate primarily reflects a stronger-than-expected deceleration in consumer spending, which was driven by a modest decline in spending on nondurable goods and a significant decline in durable goods spending, likely caused by sticky inflation and high interest rates.

As key actors in the healthcare innovation landscape, pharmaceutical and life sciences companies have been called on to develop medicines, vaccines and diagnostics for pressing public health challenges. The COVID-19 crisis is one such challenge, but there are many others. For example, MERS, SARS, Ebola, Zika and avian and swine flu are also infectious diseases that represent public health threats. Infectious agents such as anthrax, smallpox and tularemia could present threats in a bioterrorism context. The general threat to public health that is posed by antimicrobial resistance is also well-recognised as an area in need of pharmaceutical innovation. Innovating in response to these challenges does not always align well with pharmaceutical industry commercial models, shareholder expectations and competition within the industry. However, the expertise, networks and infrastructure that industry has within its reach, as well as public expectations and the moral imperative, make pharmaceutical companies and the wider life sciences sector an indispensable partner in the search for solutions that save lives. This perspective argues for the need to establish more sustainable and scalable ways of incentivising pharmaceutical innovation in response to infectious disease threats to public health. It considers both past and current examples of efforts to mobilise pharmaceutical innovation in high commercial risk areas, including in the context of current efforts to respond to the COVID-19 pandemic. In global pandemic crises like COVID-19, the urgency and scale of the crisis – as well as the spotlight placed on pharmaceutical companies – mean that contributing to the search for effective medicines, vaccines or diagnostics is essential for socially responsible companies in the sector. It is therefore unsurprising that we are seeing industry-wide efforts unfold at unprecedented scale and pace. Whereas there is always scope for more activity, industry is currently contributing in a variety of ways. Examples include pharmaceutical companies donating existing compounds to assess their utility in the fight against COVID19; screening existing compound libraries in-house or with partners to see if they can be repurposed; accelerating trials for potentially effective medicine or vaccine candidates; and in some cases rapidly accelerating in-house research and development to discover new treatments or vaccine agents and develop diagnostics tests. Pharmaceutical companies are collaborating with each other in some of these efforts and participating in global R&D partnerships (such as the Innovative Medicines Initiative effort to accelerate the development of potential therapies for COVID-19) and supporting national efforts to expand diagnosis and testing capacity and ensure affordable and ready access to potential solutions. The primary purpose of such innovation is to benefit patients and wider population health. Although there are also reputational benefits from involvement that can be realised across the industry, there are likely to be relatively few companies that are ‘commercial’ winners. Those who might gain substantial revenues will be under pressure not to be seen as profiting from the pandemic. In the United Kingdom for example, GSK has stated that it does not expect to profit from its COVID-19 related activities and that any gains will be invested in supporting research and long-term pandemic preparedness, as well as in developing products that would be affordable in the world’s poorest countries. Similarly, in the United States AbbVie has waived intellectual property rights for an existing combination product that is being tested for therapeutic potential against COVID-19, which would support affordability and allow for a supply of generics. Johnson & Johnson has stated that its potential vaccine – which is expected to begin trials – will be available on a not-for-profit basis during the pandemic. Pharma is mobilising substantial efforts to rise to the COVID-19 challenge at hand. However, we need to consider how pharmaceutical innovation for responding to emerging infectious diseases can best be enabled beyond the current crisis. Many public health threats (including those associated with other infectious diseases, bioterrorism agents and antimicrobial ressistance) are urgently in need of pharmaceutical innovation, even if their impacts are not as visible to society as COVID-19 is in the immediate term. The pharmaceutical industry has responded to previous public health emergencies associated with infectious disease in recent times – for example those associated with Ebola and Zika outbreaks. However, it has done so to a lesser scale than for COVID-19 and with contributions from fewer companies. Similarly, levels of activity in response to the threat of antimicrobial resistance are still low. There are important policy questions as to whether – and how – industry could engage with such public health threats to an even greater extent under improved innovation conditions.

Antimicrobial resistance is already causing huge harm – and the worst is yet to come.

To open the panel, Dr. Chan issued a serious warning about the size and scope of the AMR threat: “everyone will be affected if we do not address this problem.” AMR is already responsible for an estimated 700,000 global deaths each year, 50,000 of which take place in the US and Europe. Extensively drug-resistant (XDR) tuberculosis—cases where the most effective first- and second-line drugs are rendered useless—infected an estimated 47,000 people worldwide in 2014, only one ‘last-line’ antimicrobial is available to reliably treat gonorrhea, and few new antimicrobial drugs are in the development pipeline. According to the latest review, AMR could cause 10 million deaths each year by 2050, with knock-on effects draining many trillions from the global economy. Summers suggested that AMR and potential pandemics, alongside climate change and nuclear proliferation, represent the top three existential threats to life on earth as we know it. And as Dr. Chan explained, the worst-case scenario implies the end of modern medicine as we know it.

In 2016, the United States National Security Council drew up a playbook on fighting pandemics so that the next response to an epidemic was better handled than the response to the spread of Ebola. The same year, the G7 put tackling antimicrobial resistance (AMR) on the agenda.

Today, the twin global health security threats of viruses and bacteria are very real.

Since the early days of the Cold War, the United States has led the world in technology. Over the course of the so-called American century, the country conquered space, spearheaded the Internet, and brought the world the iPhone. In recent years, however, China has undertaken an impressive effort to claim the mantle of technological leadership, investing hundreds of billions of dollars in robotics, artificial intelligence, microelectronics, green energy, and much more. Washington has tended to view Beijing’s massive technology investments primarily in military terms, but defense capabilities are merely one aspect of great-power competition today—little more than table stakes. Beijing is playing a more sophisticated game, using technological innovation as a way of advancing its goals without having to resort to war. Chinese companies are selling 5G wireless infrastructure around the world, harnessing synthetic biology to bolster food supplies, and racing to build smaller and faster microchips, all in a bid to grow China’s power.

In the face of China’s technological drive, U.S. policymakers have called for greater government action to protect the United States’ lead. Much of the conventional wisdom is sensible: boost R & D spending, ease visa restrictions and develop more domestic talent, and build new partnerships with industry at home and with friends and allies abroad. But the real problem for the United States is much deeper: a flawed understanding of which technologies matter and of how to foster their development. As national security assumes new dimensions and great-power competition moves into different domains, the government’s thinking and policies have not kept pace. Nor is the private sector on its own likely to meet every technological need that bears on the country’s security.

The United States and China are in a growing competition, perhaps verging on conflict, but it is not a nineteenth century competition between empires for control of territory and resources. Unlike great power competition in previous centuries, the focal point is not military strength or territorial expansion. This conflict is over control of the modern levers of power—global rules and institutions, standards, trade, and technology. The ability to create new technologies, particularly digital technologies (given their importance for politics, security, and economic growth) have become key factors in the U.S.-China relationship, which is marked by close commercial cooperation and deep governmental distrust. This disparity creates unavoidable tensions.

The link between technology, innovation, national security, and international power is now widely recognized. When Vladimir Putin says that the country that leads in artificial intelligence (AI) “will be the ruler of the world,” it is hyperbole, but hyperbole that confirms that political leaders recognize that the ability to innovate is a potent source of national power. In the digital age, national security and national power have different requirements shaped by technological change and cyberspace.

You may see where this is going. New technologies threaten to create potentially destabilizing shifts in the balance of power.

For decades, stability in Europe and Asia has been supported by US military power. In recent years, however, the balance of power in Asia has begun to shift, as China has increased its military capabilities. Already, Beijing has become more assertive in the region, claiming contested territory in the South China Sea. And the results of Russia’s military modernization have been on full display in its ongoing intervention in Ukraine.

America has been the undisputed global leader in science and technology over the past century. But this global order is in flux. China’s extensive investments and years of strategic planning—including strengthening its intellectual property (IP) regimes—have enabled it to catch up to, and in some areas surpass, our capabilities in artificial intelligence (AI) and other emerging technologies. Congress is mulling over legislative proposals to counter China’s economic and geopolitical ambitions for technological dominance and the president is getting ready to announce a national AI strategy. IP reform must be a part of this sea change to ready the United States for the AI era.

The newly emerging technologies are vastly different from technologies of the past. AI provides computers the ability to learn on their own and make decisions that have traditionally required human intelligence. And when combined with other emerging technologies, its power will be truly dramatic. Quantum computers, for example, which are based on the behavior of energy and materials on the atomic and subatomic levels, can be millions of times faster than current classical computers. Just imagine military equipment driven by AI and operated by quantum computers. The country that gains the lead in these technologies will enjoy towering national security advantages, including in economic and military power.

The global economy has become more integrated, with China’s economy growing strongly—poised to soon take over the United States at market exchange rates and having already done so in terms of purchasing power parity. More importantly, China has become the top trading partner and creditor/investor for many countries. The size and penetration of the Chinese economy have rendered a strategy of containing China impractical and costly to all sides, and makes the US-China contention more protracted and difficult.

The West thus faces a dilemma: Efforts to decouple from China in order to limit its influence would hurt not only China but also Western countries and the global economy more broadly, but striking a trade deal with China to reduce tensions will likely help the Chinese economy perform better, making the strategic competition with Beijing more intractable.

The conclusions reached in this thesis demonstrate how economic considerations within states can figure prominently into the calculus for future conflicts. The findings also suggest that security issues with economic or financial underpinnings will transcend classical determinants of war and conflict, and change the manner by which rival states engage in hostile acts toward one another. The research shows that security concerns emanating from economic uncertainty and the inherent vulnerabilities within global financial markets will present new challenges for national security, and provide developing states new asymmetric options for balancing against stronger states.¶ The security areas, identified in the proceeding chapters, are likely to mature into global security threats in the immediate future. As the case study on South Korea suggest, the overlapping security issues associated with economic decline and reduced military spending by the United States will affect allied confidence in America’s security guarantees. The study shows that this outcome could cause regional instability or realignments of strategic partnerships in the Asia-pacific region with ramifications for U.S. national security. Rival states and non-state groups may also become emboldened to challenge America’s status in the unipolar international system.¶ The potential risks associated with stolen or loose WMD, resulting from poor security, can also pose a threat to U.S. national security. The case study on Pakistan, Syria and North Korea show how financial constraints affect weapons security making weapons vulnerable to theft, and how financial factors can influence WMD proliferation by contributing to the motivating factors behind a trusted insider’s decision to sell weapons technology. The inherent vulnerabilities within the global financial markets will provide terrorists’ organizations and other non-state groups, who object to the current international system or distribution of power, with opportunities to disrupt global finance and perhaps weaken America’s status. A more ominous threat originates from states intent on increasing diversification of foreign currency holdings, establishing alternatives to the dollar for international trade, or engaging financial warfare against the United States.

Potential Economic Consequences So, what’s the worst that could happen? While we can’t say for certain—there are too many unknown variables at this point and time—there are some consequences that often follow economic discontent and collapse. Hyperinflation The greatest worry most have is hyperinflation. This occurs when inflation rises rapidly each month, with the percentage rise being as high as 50% or more. Post-WWI Germany is a good example of hyperinflation. Another recent case is Venezuela. While the country has experienced double-digit inflation rates since the early 80s, poor government policies and socioeconomic stressors transformed regular inflation into hyperinflation. The ongoing political crisis and several policies, including evaluating the bolívar and lowering the minimum wage, led to inflation rates as high as 1,000,000%. Ultimately, hyperinflation leads to individuals being unable to buy anything. As prices eventually come down, so do wages, leading to an economic depression. Depression Economic collapse could lead to a full-scale depression—few jobs and little pay. While there are many examples of an economic depression, the collapse of the Soviet Union in the 1990s highlights what an economic collapse could mean. Poverty in the Post Soviet States increased 10x. Russia’s GDP was halved. Smaller states also saw their GDP plummet; some, such as Georgia, Kosovo, and Tajikistan, never recovered. The economic chaos also facilitates a rise in organized crime, mass migration, and extensive poverty. More Bank Failures It’s perfectly possible that an economic collapse—especially those under Project 2025—could lead to a complete collapse of the banking system. With many Americans using credit cards and payment methods, this could mean being locked out of their accounts. An increase in bank failures leads to further investor distrust of the economy. Even if the situation can be controlled, losing faith in the financial system and currency can lend itself to additional problems. Banks considered stable may go under if a panic ensues. Currency Devaluation Another significant consequence of economic collapse is that currencies are devalued. This can lead to hyperinflation or a currency crisis, further devaluing money—namely, the U.S. Dollar. It also further devalues the currency. If hyperinflation were to devalue the U.S. Dollar, the currency would become less favorable worldwide. Investors at home and abroad may prefer to trade in another, more stable currency. In other words, the US Dollar would no longer be the world standard in the international market. Lopsided International Agreements With an unstable economy, fewer countries may be willing to sign new trade agreements. Furthermore, increased economic stressors at home may result in officials signing deals that are not beneficial to Americans. As an economic powerhouse and superpower, the United States has been able to successfully advocate for its interests abroad, whether that be in diplomatic missions or trade agreements. If an economic collapse leads to a depression, currency devaluation, or other ills, our government may have less leverage in future deals. Lack of Infrastructure An absent economy translates into less spending, not just for people but for the government. Infrastructure projects will likely remain stagnant. Depending on how long it takes for the economy to bounce back and the effects of the collapse, funds on a state and federal level will be incredibly limited. As a result, money will likely be used only for emergencies or immediate needs—not on improving or repairing infrastructure. Furthermore, as climate change continues to fuel natural disasters worldwide, not to mention changes in flora, fauna, and resources, the government may not have the agility or financing to respond effectively. What Could This Look Like in Reality? It’s entirely possible—although unlikely—that none of the above consequences occur under an economic collapse. In addition, many of these consequences wouldn’t necessarily happen immediately.