Also: Barriers to Building More Housing and AI’s Impact

AEIDataPoints-Banner ([link removed] )

Expert analysis made easy. Breaking down the news with data, charts, and maps.

Edited by Brady Africk and Carter Hutchinson

Happy Thursday! In today’s newsletter, we examine the declining social lives of noncollege-educated Americans, how regulatory barriers affect the US housing supply, and AI’s effect on the American economy.

Don’t forget—subscribe ([link removed] ) and send DataPoints to a friend!

For inquiries, please email [email protected] (mailto:[email protected]) .

1. Cultivating Community ([link removed] )

06.04_Cox ([link removed] )

Topline: In 1990, roughly half of noncollege-educated Americans reported having at least six close friends, about as many as those with a four-year degree reported. But by 2024, only 17 percent of noncollege Americans had as many close friends as their college-educated peers. More starkly, in 2024, 24 percent of noncollege Americans reported having no close friends. Despite these figures, AEI’s Daniel A. Cox writes ([link removed] ) that the social situation, particularly for American men, is not hopeless. Many survey participants express a genuine desire for more meaningful connections, as opposed to an affinity for isolation.

Religious Participation: One primary lifestyle characteristic that differentiates noncollege Americans with lots of friends from those without is religious participation. Noncollege Americans with six or more friends are twice as likely as those with none to say they attend religious services regularly. Many church attendees benefit from their commitment both spiritually and because it gives them a sense of belonging. Work can have a similarly positive impact as a source of meaning and purpose.

Relational Foundation: Lacking a robust relational foundation is particularly difficult for individuals who don’t have many close friends when they need to navigate periods of suffering and loss. The waning role of community-building institutions can be catastrophic for many Americans, who are forced to do tasks entirely by themselves that they once depended on schools, churches, workplaces, social clubs, and civic organizations to help them with. Cox writes that a diminished relational foundation is less the result of individual character flaws than the result of larger systemic failures.

“We need a culture that instills a sense of mutual obligation—a recognition that we are responsible for more than our own welfare, reputation, and brand. Community is built through the receipt and provision of help and support. But fewer of us are willing to ask for or offer it.”

—Daniel A. Cox ([link removed] )

More on Social Connection
([link removed] )

2. Housing Supply Solutions ([link removed] )

06.04_Peter+Pinto ([link removed] )

Topline: Housing construction has declined since 2022 but shows signs of stabilization. While financing is often cited as the dominant constraint on housing supply, AEI’s Tobias Peter and Edward J. Pinto explain ([link removed] ) that the recent pattern of construction does not support that view. Instead, they identify how regulatory barriers can affect project feasibility as much as or more than financing costs do. In certain markets, regulatory requirements like permitting delays, land-use restrictions, inclusionary zoning, and approval uncertainty may be substantial enough to affect whether housing projects can move forward, regardless of the cost.

Regulation Versus Financing: Capital availability is not always the dominant barrier across markets, and regulation is not the binding constraint in every US housing market. These two housing supply constraints, financing and regulation, require different solutions. If capital availability is the central constraint on supply, the policy response should emphasize public financing interventions like federal credit support, subsidies, and guarantees. If regulatory barriers are the central constraint, the better response is to eliminate these barriers to reduce the costs, delays, uncertainty, and restrictions.

Supply Solutions: A housing development’s chances of success improve when costs, delays, uncertainty, and regulatory burdens are reduced. State governments hold the primary responsibility for expanding the housing supply through decreased regulation, since they have authority over local land use. Peter and Pinto find that 25 states have introduced bills this year that could expand the housing supply by limiting exclusionary zoning, allowing more housing types, permitting smaller lots and more flexible building forms, or preventing local approval processes from becoming open-ended veto points. Federal policy can also affect the housing supply through program requirements, environmental review, labor rules, immigration policy, energy and accessibility standards, trade policy, infrastructure funding, and the conditions attached to federal financing.

“The central issue, therefore, is not whether financing matters. It does. The real question is whether financing is the primary constraint preventing housing production.”

—Tobias Peter ([link removed] ) and Edward J. Pinto ([link removed] )

More on the Housing Supply
([link removed] )

3. Is AI Changing the Economy Yet? ([link removed] )

06.04_Pethokoukis ([link removed] )

Topline: Different measures of the economy paint varying pictures of an artificial intelligence boom, writes ([link removed] ) AEI’s James Pethokoukis. Labor productivity has outpaced total factor productivity (TFP) relative to 2022, which indicates it might be too early to adopt the optimistic view of AI as an important general-purpose technology for all sectors of the economy.

Measuring Productivity: Two economic measures suggest that AI has already become so broadly used as to reshape the entire American economy. First, the tremendous amount of business investment in AI technology and infrastructure indicates the potential for widespread impact. Second, labor productivity, or worker output per hour, has accelerated in recent years. Labor productivity measures how efficiently workers use available capital—equipment, software, and other tools. However, TFP is not, at present, keeping pace with labor productivity.

AI and the Economy: TFP measures how efficiently the economy uses all inputs together—labor and capital. Unlike labor productivity, TFP reflects genuine improvements in processes and technology, making it the standard indicator of the economy’s underlying innovativeness. TFP and labor productivity are telling two different stories right now about AI’s impact. If AI was already broadly used across the economy, not just in tech or data sectors, one would expect both measures to be keeping pace.

“Alas, only labor productivity is moving strongly, which suggests AI is still in the ‘better tools’ phase, not yet the ‘transforms everything’ phase.”

—James Pethokoukis ([link removed] )

More on AI and the Economy
([link removed] )

Dive into More Data

06.04_CDOT ([link removed] )

China's and Japan’s Military Strike Ranges ([link removed] )

More on China’s Military
([link removed] )

06.04_Pomerleau ([link removed] )

America’s Changing Exports, Imports, and Trade Balance ([link removed] )

More on Trade
([link removed] )

Special thanks to Henry Long, Rosalie Blacklock, Drew Kirkpatrick, and Hannah Bowen.

Thanks for reading. We will be back with more data next Thursday!

For more data insights, subscribe today ([link removed] ) .

Email us (mailto:[email protected]) with data questions or ideas.

Ensure delivery ([link removed] ) | Subscribe ([link removed] )

American Enterprise Institute for Public Policy Research

Robert Doar, President

1789 Massachusetts Ave. NW, Washington, DC 20036

202.862.5800 | www.aei.org ([link removed] )

Unsubscribe from the link below. ([link removed] )

Facebook ([link removed] )

X ([link removed] )

LinkedIn ([link removed] )

YouTube ([link removed] )

Instagram ([link removed] )

Podcast Logo New_Gray ([link removed] )

Donate to AEI ([link removed] ) in support of defending and promoting freedom, opportunity, and enterprise.

This message is for: [email protected] | Manage preferences or Unsubscribe ([link removed] )