Edward Conard

Top Ten New York Times Bestselling Author

  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
Upside of Inequality Oxford Unintended Consequences
Econ Summary Highlights Debate

Wednesday, October 14, 2026

AI Summary. The United States generates almost twice as much economic output per dollar invested as China, the opposite of what would be expected from a mature developed economy versus a fast-growing economy catching up. The gap points to overexuberance in Chinese investment.

Robin Rivaton and Ben Southwood Works In Progress
Date Posted:

The US generates ~2x as much output per dollar of capital as China. Rivaton and Southwood argue that relentless competition among Chinese subnational governments, who account for ~85% of public expenditure, drives industrial growth at the cost of reduced capital efficiency.

Does China get less economic output per dollar invested than America?

Core argument: The United States obtains nearly twice as much GDP from every dollar invested as China does, measured by the capital efficiency ratio of output to invested capital stock.

Overexuberance is visible in economic data. Interest rates that banks pay to depositors are capped, giving banks artificially cheap capital. Entrepreneurs may be backed to attempt extremely unlikely, borderline schemes. The capital efficiency ratio measures how much output a country gets out of the capital stock it has invested – how many dollars of GDP a country can buy with a dollar of investment. The United States gets almost twice as much economic output out of every dollar it invests as China does, precisely the opposite of what we would expect from a developed country with a mature economy versus a rapidly growing country playing catch up.

Takeaways by Macro Roundup® AI

  1. The United States obtains nearly twice as much GDP from every dollar invested as China does, measured by the capital efficiency ratio of output to invested capital stock.
  2. China’s capital efficiency inverts the expected pattern, in which a rapidly growing catch-up economy would extract more output per dollar of investment than a mature developed economy.
  3. Overexuberance is visible in Chinese macroeconomic data, with China’s investment generating less economic output per dollar than that of the United States.

Related Articles:

  • The Year of the Trojan Fire Horse: China’s Imbalanced Economy and Unrelenting Mercantilism — About 30% of Chinese industrial companies are unprofitable "zombies" kept alive by subsidies far larger than those elsewhere, rather than exiting amid falling industrial producer prices. Countries with large increases in manufactured imports from China also saw slowdowns in domestic manufacturing, including declining manufacturing shares of output across most of Southeast Asia.
  • Xi’s Superpower Ambitions Fuel a Dangerous Debt Spiral in China — China's credit to the nonfinancial sector—corporate, government and household borrowing—topped 300% of gross domestic product, 60 percentage points above its end-2019 level and larger than in the US, according to the Bank for International Settlements. The International Monetary Fund estimates broad Chinese government debt, including local financing vehicles, reached 127% of GDP, up from 98% in 2020.
  • Is China’s High-Quality Investment Output Economically Viable? — China's technological progress and infrastructure do not refute claims of overinvestment, since overinvestment often produces real physical assets and technological gains yet still counts as overinvestment when it generates less real value than the resources, subsidies, and transfers it consumes. When such losses are capitalized, assets are carried above their real economic value.

AI Summary. China's exports rose 36% from a year earlier and imports 31%, widening its monthly trade surplus to almost $134bn and putting the annual surplus on track to exceed the $1.2tn record. High-tech shipments jumped almost 64%, which Bloomberg Economics estimates accounted for about half of total export growth.

James Mayger and Paul Abelsky Bloomberg
Date Posted:

China’s goods trade surplus is on track to exceed 2025’s $1.2T. China’s trade surplus with the EU is up 21% y/y.

Is China's trade surplus heading to a new record on export growth?

Core argument: China’s exports rose 36% year-over-year in September, the fastest pace since February, while imports rose 31%, widening the monthly trade surplus to almost $134 billion and exceeding every forecast in a Bloomberg survey of economists.

China’s export growth surged the most since February to drive global imbalances to new highs, with its trade surplus this year on track to exceed the $1.2 trillion record set in 2025. Shipments abroad soared 36% last month from a year earlier and imports jumped 31%, data released by China’s General Administration of Customs showed on Wednesday. As a result, the surplus for September widened to almost $134 billion, exceeding every forecast in a Bloomberg survey of economists. The imbalance has continued to balloon since US President Donald Trump ramped up tariffs soon after reclaiming the White House at the start of last year, showing the limits of the policy in the middle of the AI buildout. Shipments of high-tech products soared almost 64% in September, which Bloomberg Economics estimates contributed around half of China’s total export growth.

Takeaways by Macro Roundup® AI

  1. China’s exports rose 36% year-over-year in September, the fastest pace since February, while imports rose 31%, widening the monthly trade surplus to almost $134 billion and exceeding every forecast in a Bloomberg survey of economists.
  2. China’s trade surplus this year is on track to exceed the $1.2 trillion record set in 2025, with the imbalance continuing to grow after US President Donald Trump raised tariffs at the start of last year.
  3. Chinese shipments of high-tech products soared almost 64% in September, contributing around half of total export growth, according to Bloomberg Economics estimates.

Related Articles:

  • The World Should Not Ignore China’s Undervalued Currency — China's reported current account surplus of about 4% of GDP is roughly 3 percentage points above the International Monetary Fund's estimated norm, implying a currency undervaluation of about 20%. Adjusting for surging gold imports and a misreported investment income deficit would lift the surplus to about 6% of GDP and the estimated undervaluation to 30–35%.
  • World Economic Outlook: Resilience Under Strain, Urgent Choices — Global current account balances widened to about 3.8% of world GDP, driven mainly by a rise in China's surplus to about 0.6% of world GDP (3.7% of China's GDP) and larger surpluses across other Asian economies, while the United States remained the largest deficit economy at about 1% of world GDP. Imbalances are projected to remain elevated.
  • Understanding Global Imbalances — The US, China, Germany, and Japan account for roughly two-thirds of global current account imbalances, with the US deficit at 4% of GDP financed by capital inflows into dollar assets. The average duration of a surplus or deficit spell roughly doubled since the 1980s, building large net foreign asset and liability positions.

AI Summary. A survey of 396 enterprises finds only 11% forecast their AI spending within 10% of actual, down from 15% a year earlier, while 62% say an unexpected AI cost altered a business decision and one in four delayed or canceled an AI initiative. 81% report moderate-to-high gross margin impact from AI costs.

Torsten Slok Apollo
Date Posted:

Slok flags a survey of 396 enterprises that found AI adaptation hasn’t improved gross margins in aggregate, with 81% of firms noting a “moderate-to-high gross margin impact” from their AI spending, while 63% saw a 6 to 15pp decrease.

Are companies losing control of their AI spending forecasts?

Core argument: Only 11% of the 396 enterprises surveyed by Mavvrik and Benchmarkit forecast their AI spending within 10% of actual, down from 15% a year earlier.

A new survey by Mavvrik and Benchmarkit of 396 enterprises finds that companies are adopting AI faster than they are building the financial controls to keep its costs in check. Only 11% of firms forecast their AI spending within 10% of actual, down from 15% last year. The survey also shows that those misses are changing decisions, with 62% of firms saying an unexpected AI cost altered a business decision and one in four delaying or canceling an AI initiative. The impact is showing up in profitability too, with 81% of companies reporting moderate-to-high gross margin impact from AI costs, including 63% who see a 6 to 15 percentage point decrease.

Takeaways by Macro Roundup® AI

  1. Only 11% of the 396 enterprises surveyed by Mavvrik and Benchmarkit forecast their AI spending within 10% of actual, down from 15% a year earlier.
  2. In the Mavvrik and Benchmarkit survey, 62% of firms said an unexpected AI cost altered a business decision, and one in four delayed or canceled an AI initiative.
  3. The survey reports that 81% of companies see moderate-to-high gross margin impact from AI costs, including 63% citing a 6 to 15 percentage point decrease.

Related Articles:

  • Tech’s Trillion-Dollar Internal Inconsistency — Wall Street analysts covering technology project the sector's operating cash flow will more than double to roughly $2.4tn by 2028, a gain of over $1.2tn, while analysts covering the rest of the S&P 500 — technology's customers — project those firms will add far less cash flow. These sector-by-sector forecasts are internally inconsistent.
  • How Much Revenue Does The AI Buildout Need In 2030? — The authors estimate AI capital spending of $560bn in 2026 and, in a high-investment case, $3.5tn of net AI capital in service by 2030, requiring roughly $1.3tn in annual infrastructure revenue once depreciation, operating costs and a 15% return are covered. That implies 7.4x growth from current annualized revenues, with downstream revenues of $1.9–2.6tn.
  • Writing Code vs. Shipping Code: Productivity Effects Across Generations of AI Coding Tools — The authors estimate that AI coding tools raise developers' task-level productivity by about 40% with autocomplete, 140% including synchronous agents, and 180% with asynchronous agents, with larger effects for less active developers. Gains attenuate up the production chain: synchronous agents raise lines of code 741% and pull requests 65% but releases only 20%.

AI Summary. Across 12 middle-income countries, call-center employment grew in line with other white-collar office work before the spread of AI chatbots but has since stagnated or declined even as other white-collar jobs held up. The authors argue this divergence makes artificial intelligence's role hard to dismiss.

Caelan Wilkie-Rogers Revelio Labs
Date Posted:

A Revelio Labs analysis finds global call center employment is now 5.3% under its December 2023 peak. Call center employment started diverging from other white collar work in middle income countries around November 2022, when ChatGPT was released.

Is AI reducing call center employment in middle-income countries?

Core argument: Across 12 middle-income countries, call-center employment showed sluggish growth or outright declines after ChatGPT’s release, while other white-collar office and administrative roles remained fairly robust.

Across the 12 middle-income countries, the pattern is recognizable: in the pre-ChatGPT era, call-center headcount generally kept pace with other office and administrative, "white-collar" roles. In the post-ChatGPT era, we see sluggish growth or outright declines in call centers—even as the rest of white-collar work looks fairly robust. So, although we cannot observe which firms replace people with chatbots, this divergence in headcounts between call centers and the rest of their labor markets makes AI’s potential role in this trend hard to wave off. Moreover, call centers’ high-volume, scripted work is exactly the profile the International Labour Organization flags as most exposed in these countries. The industry is shrinking because hiring slowed, not because separations picked up.

Takeaways by Macro Roundup® AI

  1. Across 12 middle-income countries, call-center employment showed sluggish growth or outright declines after ChatGPT’s release, while other white-collar office and administrative roles remained fairly robust.
  2. Before ChatGPT, call-center headcount in these 12 middle-income countries generally kept pace with other office and administrative employment.
  3. The ILO flags high-volume, scripted work—the profile of call-center jobs—as most exposed in these middle-income countries, though which firms replace workers with chatbots cannot be observed.

Related Articles:

  • AI’s Most Exposed Industry Keeps Hiring — Call center employment in the Philippines has reached nearly 2m workers and has grown every year since 2016, including through the artificial intelligence boom. As AI lowers the cost per customer interaction, companies are buying more of these services rather than fewer — an example of Jevons paradox.
  • Looking for the Ladder — The article argues that the hiring downturn in occupations most exposed to generative AI reflects interest-rate sensitivity rather than AI itself, since roughly 38% of workers in the most AI-exposed quintile work in information, finance and insurance, and professional and technical services, versus under 2% in the least-exposed quintile.
  • The Early Impacts of AI on Employment among Recent College Graduates — An expanded unemployment measure for young college graduates — including those outside the labor force who report wanting a job — averaged 10.4% in the most recent summer, the highest of the five summers compared and 0.3 percentage points above the prior high. Estimated associations with occupational AI exposure are positive but not statistically significant.

AI Summary. A study of US private firms finds that a one-standard-deviation rise in a firm's financing shortfall is associated with a 45% higher likelihood of going public. After an initial public offering, disagreement among lenders about a firm's default risk falls, borrowing costs drop by 45 basis points, and debt rises more than 50% relative to comparable firms by year three.

Andres Almazan, Nathan Swem, Sheridan Titman and Gregory Weitzner National Bureau of Economic Research
Date Posted:

A study of 100k+ private nonfinancial firms (2012–23), including 433 IPOs, suggests listing improves access to debt as well as equity. After listing, lenders’ risk assessments converge and bank borrowing costs fall 45 basis points, controlling for assessed risk.

Do financing shortfalls drive private firms to go public?

Core argument: A one-standard-deviation increase in a US private firm’s financing deficit is associated with a 45% higher likelihood of going public, controlling for size, growth, leverage, investment, and industry–location–time effects.

A one-standard-deviation increase in a firm’s financing deficit is associated with a 45% higher likelihood of going public [controlling for size, growth, leverage, investment, and industry–location–time effects]. Consistent with a reduction in asymmetric information, we find that dispersion in PD [probability of default as perceived by disparate market participations] drops,beginning immediately after the IPO. [Note that] we calculate PD dispersion only for banks present prior to the IPO]. We find that after controlling for these risk assessments, firms’ borrowing costs drop by 45 bps after going public. [controlling for bank–firm and bank–quarter fixed effects]. Figure 7 shows that in the first year, there is a statistically significant drop in leverage of about 4 pp.. However, the point estimate returns to zero by year three. Figure 6 shows that IPO firms increase their debt by more than 50% relative to control firms by year three following the IPO. [An important caveat is that our post-IPO estimates capture both treatment and selection effects].

Takeaways by Macro Roundup® AI

  1. A one-standard-deviation increase in a US private firm’s financing deficit is associated with a 45% higher likelihood of going public, controlling for size, growth, leverage, investment, and industry–location–time effects.
  2. Dispersion in the probability of default perceived by banks present before the IPO drops immediately after it, and after controlling for these risk assessments, firms’ borrowing costs fall 45 basis points following the IPO, with bank–firm and bank–quarter fixed effects.
  3. IPO firms’ leverage falls a statistically significant 4 percentage points in the first year, with the point estimate returning to zero by year three, while their debt rises more than 50% relative to control firms by year three; these post-IPO estimates capture both treatment and selection effects.

Related Articles:

  • A Catalyst For The AI Bubble Break — Historically, controlling for valuations, a 1% rise in the share of the market represented by initial public offerings has been associated with roughly a 4% decline in prices. With large artificial-intelligence company listings expected and share issuance exceeding buybacks, equity supply could shift from shrinking about 1% a year to growing near 5%, implying returns roughly 20% below average.
  • The Coming Mega-IPO Flow & Funding Problem of 2026 — Adjusted for inflation, SpaceX alone would rank as the second-largest initial public offering ever, behind Saudi Aramco, and three such listings together would exceed the entire 1995–2000 dot-com wave. Funding that equity supply requires selling existing holdings, and index rule changes make passive funds forced buyers, pressuring large-cap technology stocks.
  • The Deep End: 2025 Alternative Investments Review — In venture capital, only consistently investing with top-quartile managers outperformed the S&P 500, while the median manager at best matched public equity markets and fourth-quartile managers destroyed value relative to equities. Fees are part of the issue: an 11.7% annualized NASDAQ 100 return falls to 7.4% under a 2%/20% fee structure.

AI Summary. US consumer prices rose 3.7% year over year in September, up from 3.4% in August and above economists' 3.6% forecast, with core prices excluding food and energy up 2.6%. Prices rose faster than average hourly earnings, which increased 3%, meaning many Americans' real incomes are falling.

Konrad Putzier Wall Street Journal
Date Posted:

Inflation accelerated in September, rising to 3.7% annualized from August’s 3.4%. Real average hourly earnings fell .7% year over year.

Is inflation accelerating faster than wages, cutting real incomes?

Core argument: U.S. consumer prices rose 3.7% in September from a year earlier, the Labor Department said, up from August’s 3.4% and above the 3.6% expected by economists surveyed by The Wall Street Journal.

Consumer prices were up 3.7% in September from a year earlier, the Labor Department said Wednesday, hotter than August’s gain of 3.4%. That was above the 3.6% rise expected by economists surveyed by The Wall Street Journal. Core prices excluding food and energy rose 2.6%, above forecasts for a 2.5% increase. Month over month, core prices rose by 0.3%, surprising economists who had expected a 0.2% increase. High prices have been a political flashpoint for Americans, who have grown fed up with five years of inflation. Prices rose much faster in September than average hourly earnings, which increased 3% from a year earlier. That means many Americans are seeing their real incomes fall.

Takeaways by Macro Roundup® AI

  1. U.S. consumer prices rose 3.7% in September from a year earlier, the Labor Department said, up from August’s 3.4% and above the 3.6% expected by economists surveyed by The Wall Street Journal.
  2. Core prices excluding food and energy rose 2.6% year over year in September, above forecasts of 2.5%, and 0.3% month over month against expectations of 0.2%.
  3. September prices rose much faster than average hourly earnings, which increased 3% from a year earlier, meaning many Americans are seeing real incomes fall.

Related Articles:

  • Do Voters Punish Inflation or Pay Cuts? Inflation and Real Wages in U.S. Elections — An analysis of U.S. counties estimates that where wages grew faster than prices, voters supported the incumbent party more, while counties with larger real wage losses than average shifted more toward the opposition. A one-standard-deviation larger real wage loss is associated with shifts of roughly 0.10 and 0.19 percentage points in vote share and margin.
  • Sticky Wage Norms and the Real Wage Cost of Unexpected Inflation — Firms set nominal wage increases by round-number rules—about 42% of increases below 6% fell within 0.01 percentage points of a whole or half number—and these rules rose only from about 2.7% to 3.5% as inflation peaked near 7%, contributing to falling real wages for job stayers.
  • The Cost of Money is Part of the Cost of Living: New Evidence on the Consumer Sentiment Anomaly — Variation in the University of Michigan consumer sentiment index that inflation and unemployment cannot explain is strongly correlated with growth in consumer borrowing costs, such as mortgage and car loan rates. The authors estimate that including interest payments and homeownership costs in the consumer price index would raise measured inflation from 3% to 9%.

Tuesday, October 13, 2026

AI Summary. Foreign investors made roughly $1.5tn in net purchases of US equities from the start of 2024 through July, with chipmaking economies like South Korea and Taiwan helping fund American tech firms' AI buildout. Bloomberg Economics estimates about 20% of foreign US equity holdings were AI-related in 2025, versus roughly 10% in 2019.

Shawn Donnan, Estelle Ou and Jorgelina Do Rosario Bloomberg
Date Posted:

The profits of South Korean and Taiwanese firms are flowing into AI-related US equities. A Bloomberg analysis found ~20% of all foreign holdings of US equities were in AI-related sectors, up from ~10% in 2019.

Are foreign investors funding America's AI buildout?

Core argument: Foreign investors held roughly $4.9 trillion of US-listed shares in AI-centered industries at the end of June, a sum roughly equivalent to Germany’s annual GDP, according to Bloomberg Economics’ analysis of Treasury data.

The AI boom is creating massive demand for high-end chips and new pools of savings in places that make them like South Korea and Taiwan which are flowing to fund American tech companies and their $9 trillion AI build out. Foreign investors made roughly $1.5 trillion in net purchases of US equities alone since the beginning of 2024 through the end of July. A Bloomberg Economics analysis of Treasury data shows that in 2025 roughly 20% of all foreign holdings of US equities were in AI-related sectors, up from roughly 10% in 2019. That number has grown with soaring valuations since then. But even assuming that 20% level, foreign investors had about $4.9 trillion of exposure to US-listed shares of companies in industries at the center of the AI boom at the end of June. That’s roughly equivalent to Germany’s annual GDP.

Takeaways by Macro Roundup® AI

  1. Foreign investors held roughly $4.9 trillion of US-listed shares in AI-centered industries at the end of June, a sum roughly equivalent to Germany’s annual GDP, according to Bloomberg Economics’ analysis of Treasury data.
  2. AI-related sectors accounted for roughly 20% of all foreign holdings of US equities in 2025, up from roughly 10% in 2019, per Bloomberg Economics’ analysis of Treasury data.
  3. Foreign investors made roughly $1.5 trillion in net purchases of US equities from the start of 2024 through the end of July, with savings from chipmaking economies such as South Korea and Taiwan flowing to American tech companies and their $9 trillion AI build-out.

Related Articles:

  • Califoreboding — A basket of 42 AI stocks accounts for 60%-80% of all S&P 500 earnings growth, price returns and capital spending, while 60% of S&P 500 stocks sit 20% or more below their highs and only 30% outperform the index. AI-related construction spending has risen 38%, the only positive trend as manufacturing, commercial real estate and residential construction decline.
  • Financing the AI Buildout — The authors estimate roughly 57 gigawatts of operating US data center capacity against a planned development pipeline of about 509 gigawatts, which is not a completion forecast since projects may be delayed, scaled back, or abandoned. Their central scenario has 182.8 gigawatts of added capacity becoming operational through 2032, 117.2 gigawatts completed later, and 226.9 gigawatts never completed.
  • One Hundred Years in the U.S. Stock Markets — Over a century, U.S. publicly traded stocks generated roughly $91tn in shareholder wealth enhancement, with returns strongly positively skewed and dominated by a relatively small number of high-performing firms. Because most possible outcomes fall below the mean in a skewed distribution, the authors argue financial planning should focus on median outcomes or the full distribution.

AI Summary. Global current account balances widened to about 3.8% of world GDP, driven mainly by a rise in China's surplus to about 0.6% of world GDP (3.7% of China's GDP) and larger surpluses across other Asian economies, while the United States remained the largest deficit economy at about 1% of world GDP. Imbalances are projected to remain elevated.

IMF Staff International Monetary Fund
Date Posted:

Global current account balances increased further in 2025 to ~3.8% of global GDP. The IMF calculates the rise was driven by a sharp increase in China’s surplus to ~.6% of global GDP (3.7% of China’s). The US deficit was ~1% of global GDP.

Are global current account imbalances widening as China's surplus grows?

Core argument: Global current account balances widened to about 3.8% of world GDP in 2025, continuing the upward trend since the pandemic and reversing the post-global-financial-crisis decline.

Global current account balances increased further in 2025 to about 3.8% of world GDP, continuing the upward trend observed since the pandemic and reversing the decline following the global financial crisis. The widening was driven primarily by a sharp increase in China’s surplus, which increased to about 0.6% of world GDP (3.7% of China’s GDP), alongside larger surpluses in several Asian economies, whereas the euro area surplus narrowed and oil exporters’ surpluses declined. At the same time, the United States remained the world’s largest deficit economy, with a current account deficit of about 1% of world GDP. Early 2026 trade data indicate that global imbalances are expected to increase slightly this year and are projected to remain elevated in 2027, with further increases in trade surpluses in China and other Asian exporters and weaker balances in the United States and the euro area.

Takeaways by Macro Roundup® AI

  1. Global current account balances widened to about 3.8% of world GDP in 2025, continuing the upward trend since the pandemic and reversing the post-global-financial-crisis decline.
  2. China’s surplus rose to about 0.6% of world GDP (3.7% of China’s GDP), driving the widening alongside larger surpluses in several Asian economies, while the euro area surplus narrowed and oil exporters’ surpluses declined.
  3. The United States remained the world’s largest deficit economy at a current account deficit of about 1% of world GDP, and early 2026 trade data indicate global imbalances are expected to increase slightly in 2026 and remain elevated in 2027.

Related Articles:

  • Understanding Global Imbalances — The US, China, Germany, and Japan account for roughly two-thirds of global current account imbalances, with the US deficit at 4% of GDP financed by capital inflows into dollar assets. The average duration of a surplus or deficit spell roughly doubled since the 1980s, building large net foreign asset and liability positions.
  • Who Will Win The War Of Neo-Mercantilists? — China's manufacturing export surplus is around 2% of world GDP, roughly twice the largest surplus Japan ever ran, while domestic demand has stalled. Unexplained negative net income of about $125bn on its $4tn in net foreign assets, versus an expected $100bn surplus, supports the argument that the renminbi is about 30% undervalued.
  • The U.S. Trade Deficit: Myths and Realities — Taxing capital inflows would weaken the dollar but could raise domestic interest rates and depress investment, harming long-term growth, while an interest rate cut absent recession would be inflationary and erode any real depreciation needed to durably improve the trade balance. Fiscal restraint could weaken the dollar and reduce the trade deficit.

AI Summary. Goldman Sachs estimates that artificial intelligence–related stocks account for 57% of Chinese equity trading turnover and that nearly $5tn in AI-related market value has been created, including $2tn from new listings. China also holds dominant shares of the physical supply chain, including 97% of humanoid robot shipments, 75% of electric vehicle production, and 90% of rare-earth refining.

Paul Kedrosky Applied Complexity
Date Posted:

China accounts for 77% of global token usage, but only 22% of token spending, according to a GS analysis. Kedrosky notes, “This is what widespread AI adoption at low prices looks like. And it is the channel through which Chinese competition will pressure prices elsewhere.”

How large is AI's footprint in Chinese markets and supply chains?

Core argument: AI-related stocks account for 57% of trading turnover in Chinese equities, and Goldman estimates almost $5 trillion in AI-related market value has been created since the DeepSeek moment, including $2 trillion from IPOs.

AI-related stocks now represent 57% of trading turnover in Chinese equities. Since the DeepSeek moment, Goldman estimates almost $5 trillion in AI-related market value has been created, including $2 trillion from IPOs. AI dominates Chinese equity markets even more than it does U.S. markets. It's a one-factor world. China shipped 97% of humanoid robots in the first half of 2026. Alongside China’s 75% share of EV production and 80% of battery production, China basically owns the physical side of AI and AI-adjacent technologies. The industrial base behind the AI buildout is already concentrated in China: 60% of global transformer production capacity, 60% of PCB and optical-module production, 77% of new foundry capacity, and 90% of rare-earth refining. There are more than 880 AI-related companies focused mainly on China’s domestic market, with $3.2 trillion in market value. To put it in context, this is nearly half the total market of the Nasdaq at the peak of the dot-com frenzy.

Takeaways by Macro Roundup® AI

  1. AI-related stocks account for 57% of trading turnover in Chinese equities, and Goldman estimates almost $5 trillion in AI-related market value has been created since the DeepSeek moment, including $2 trillion from IPOs.
  2. China shipped 97% of humanoid robots in the first half of 2026, alongside a 75% share of EV production and 80% of battery production.
  3. China holds 60% of global transformer production capacity, 60% of PCB and optical-module production, 77% of new foundry capacity, and 90% of rare-earth refining, concentrating the industrial base behind the AI buildout.

Related Articles:

  • Who’s Afraid of Chinese Models? — Demand for frontier artificial intelligence models exceeds supply because computing capacity is scarce, allowing chip suppliers and their customers to resell compute at high margins. The author argues alarm over Chinese models is overblown, expecting the inference market to grow faster than training costs so labs can thrive at lower prices.
  • Semiquincententacles — Leading artificial-intelligence labs are moving to usage-based token pricing on a cost-plus basis that includes total ownership costs, pushing token prices higher and giving some enterprises reason to migrate to cheaper open models. Frontier models remain necessary for cybersecurity, distillation training, agents, and scientific discovery, where maximum performance is required.
  • Why .400 Hitters Disappeared — and What It Means for AI — Artificial intelligence models' capability gains are shrinking in percentage terms, falling from about 15% relative to the baseline early on to roughly 10% for the same absolute increment, narrowing the gap between frontier and good-enough models. The author argues this points to a commoditizing market where price, not minor model differences, becomes the main differentiator, pressuring frontier firms' margins.

AI Summary. China's credit to the nonfinancial sector—corporate, government and household borrowing—topped 300% of gross domestic product, 60 percentage points above its end-2019 level and larger than in the US, according to the Bank for International Settlements. The International Monetary Fund estimates broad Chinese government debt, including local financing vehicles, reached 127% of GDP, up from 98% in 2020.

Brian Spegele Wall Street Journal
Date Posted:

Credit to the Chinese nonfinancial sector was over 300% of GDP in 2025, 60pp above its 2019 level, driven by borrowing and slower GDP growth. It has risen by more than $43T since late 2012.

How much has China's debt risen relative to GDP?

Core argument: China’s credit to the nonfinancial sector topped 300% of GDP last year, 60 percentage points above end-2019 and far above the U.S. level, according to the Bank for International Settlements.

Last year, China’s credit to the nonfinancial sector—a broad measure of corporate, government and household borrowings—topped 300% of gross domestic product, 60 percentage points higher than at the end of 2019 and now far bigger than in the U.S. It has jumped by more than $43 trillion since Xi took office in late 2012, according to the Bank for International Settlements. China’s government says its debts are under control. Central government borrowings were only around 30% of GDP in recent years, small compared with federal debts in the U.S. A broader gauge of overall Chinese government debt—including official local borrowings as well as the debts of these local government financing vehicles—ballooned to an estimated 127% of GDP last year, according to the International Monetary Fund, up from 98% in 2020.

Takeaways by Macro Roundup® AI

  1. China’s credit to the nonfinancial sector topped 300% of GDP last year, 60 percentage points above end-2019 and far above the U.S. level, according to the Bank for International Settlements.
  2. Chinese nonfinancial-sector credit has risen by more than $43 trillion since Xi Jinping took office in late 2012, according to the Bank for International Settlements.
  3. The International Monetary Fund estimates broad Chinese government debt, including official local borrowings and local government financing vehicles, reached 127% of GDP last year, up from 98% in 2020, while central government borrowings were around 30% of GDP.

Related Articles:

  • Why Global Imbalances Matter — Countries running persistent trade surpluses, such as China, Germany and Japan, have built their economies around an excess supply of tradeable goods and services, leaving them dependent on deficit countries to absorb it. That dependence gives deficit countries bargaining power and exposes surplus countries to pressure to expand domestic demand.
  • Using China’s Central Government Balance Sheet to “Clean up” Local Government Debt Is a Bad Idea — The International Monetary Fund attributes more than half of the rise in the global debt-to-GDP ratio since 2008 to China, whose ratio is exceeded only by Japan's among major economies and is unusually high for a middle-income country. The author argues this debt reflects extensive unrecognized losses hidden in collective balance sheets, and that delaying recognition raises the eventual cost.
  • Is China’s High-Quality Investment Output Economically Viable? — China's technological progress and infrastructure do not refute claims of overinvestment, since overinvestment often produces real physical assets and technological gains yet still counts as overinvestment when it generates less real value than the resources, subsidies, and transfers it consumes. When such losses are capitalized, assets are carried above their real economic value.

AI Summary. China's export growth accelerated after its currency depreciated, which the author argues is evidence that exchange rate moves, not just domestic demand, drive its trade surplus. Because Chinese domestic demand growth no longer pulls in imports, the author contends there is no realistic path to balanced trade without a stronger renminbi.

Brad Setser Council on Foreign Relations
Date Posted:

China’s export growth accelerated following the RMB’s depreciation in 2022, underscoring the role of exchange rates as a factor in external adjustment. Since rising domestic demand no longer lifts imports, Setser argues, reducing China’s trade surplus will require a stronger RMB.

Does balancing China's trade require a stronger currency?

Core argument: China requires a 1.5 percentage point contribution from net exports to growth each year, putting it on a collision course with trading partners absent a currency correction that supports more balanced trade even without trade restrictions.

The best evidence that exports responded to changes in the currency, and not simply to changes in the path of China’s internal demand, is the acceleration in China’s export growth after the RMB’s depreciation over the course of 2022. Those who believe the path of internal demand is critical to rebalancing and that exchange rate moves are secondary need to explain how an acceleration in domestic demand would, on its own, lead China’s external accounts to adjust. One important, stylized fact about China is that domestic demand growth is no longer feeding over to import growth (ex-gold, that is). Bottom line: China, which needs a 1.5 percentage point contribution from net exports every year, is on a collision course with its trading partners without a currency correction that provides the basis for more balanced trade even in the absence of trade restrictions. And there isn’t a realistic path towards balance that doesn’t involve a stronger RMB; there aren’t, as Paul Krugman once put it, immaculate transfers.

Takeaways by Macro Roundup® AI

  1. China requires a 1.5 percentage point contribution from net exports to growth each year, putting it on a collision course with trading partners absent a currency correction that supports more balanced trade even without trade restrictions.
  2. The acceleration in China’s export growth following the renminbi’s depreciation over 2022 is the best evidence that exports responded to the currency rather than to the path of China’s internal demand.
  3. Domestic demand growth in China no longer feeds through to import growth, excluding gold, and no realistic path toward external balance avoids a stronger renminbi.

Related Articles:

  • The Year of the Trojan Fire Horse: China’s Imbalanced Economy and Unrelenting Mercantilism — About 30% of Chinese industrial companies are unprofitable "zombies" kept alive by subsidies far larger than those elsewhere, rather than exiting amid falling industrial producer prices. Countries with large increases in manufactured imports from China also saw slowdowns in domestic manufacturing, including declining manufacturing shares of output across most of Southeast Asia.
  • Why the World Needs to Force China’s Yuan to Revalue — Goods prices have fallen in China since the pandemic while rising in developed markets, driving the inflation-adjusted yuan exchange rate sharply lower and increasing China's competitiveness. Goldman Sachs economists estimate China's price discount versus foreign peers at 32% in electric vehicles, 38% in refrigerators and 53% in shoes.
  • The World Should Not Ignore China’s Undervalued Currency — China's reported current account surplus of about 4% of GDP is roughly 3 percentage points above the International Monetary Fund's estimated norm, implying a currency undervaluation of about 20%. Adjusting for surging gold imports and a misreported investment income deficit would lift the surplus to about 6% of GDP and the estimated undervaluation to 30–35%.

Friday, October 9, 2026

AI Summary. A basket of 42 AI stocks accounts for 60%-80% of all S&P 500 earnings growth, price returns and capital spending, while 60% of S&P 500 stocks sit 20% or more below their highs and only 30% outperform the index. AI-related construction spending has risen 38%, the only positive trend as manufacturing, commercial real estate and residential construction decline.

Michael Cembalest J.P. Morgan
Date Posted:

Since January 2024, JPM’s 42 AI-related stocks drove 67% of S&P 500 returns, 58% of earnings growth, and 81% of capital spending. Cembalest notes, “the technology share of GDP growth has risen from almost zero in 2022 to ~33%,” and only 20% of states are outpacing national GDP growth, the lowest level since 1979.

How concentrated are US market and economic gains in AI?

Core argument: A basket of 42 AI stocks accounts for 60%–80% of all S&P earnings growth, price returns and capital spending since January 2024, with AI primarily benefitting AI supply chain companies rather than the companies adopting it.

A basket of 42 AI stocks accounts for 60%-80% of all S&P earnings growth, price returns and capital spending since Jan 2024. At the same time, 60% of S&P 500 stocks are down 20% or more from their all-time highs despite the market being close to all-time highs. Only 30% of stocks are outperforming the S&P 500, one of the lowest figures since 1991. AI is primarily benefitting AI supply chain companies rather than the companies adopting it. The technology share of GDP growth has risen from almost zero to 2022 to ~33%. Only 20% of US states are growing faster than the national average, almost the lowest figure since 1979. AI accounts for the only positive trend in US construction spending, having risen by 38% since January 2024. Unfortunately the other three main categories are down since then (manufacturing -28%, commercial real estate -13% and residential -6%). That’s why the decline in planned data center projects is something to watch.

Takeaways by Macro Roundup® AI

  1. A basket of 42 AI stocks accounts for 60%–80% of all S&P earnings growth, price returns and capital spending since January 2024, with AI primarily benefitting AI supply chain companies rather than the companies adopting it.
  2. 60% of S&P 500 stocks are down 20% or more from their all-time highs even as the index sits near record levels, and only 30% of stocks are outperforming the S&P 500, one of the lowest figures since 1991.
  3. AI accounts for the only positive trend in US construction spending, rising 38% since January 2024, while manufacturing is down 28%, commercial real estate 13% and residential 6%.

Related Articles:

  • Financing the AI Buildout — The authors estimate roughly 57 gigawatts of operating US data center capacity against a planned development pipeline of about 509 gigawatts, which is not a completion forecast since projects may be delayed, scaled back, or abandoned. Their central scenario has 182.8 gigawatts of added capacity becoming operational through 2032, 117.2 gigawatts completed later, and 226.9 gigawatts never completed.
  • How Much Revenue Does The AI Buildout Need In 2030? — The authors estimate AI capital spending of $560bn in 2026 and, in a high-investment case, $3.5tn of net AI capital in service by 2030, requiring roughly $1.3tn in annual infrastructure revenue once depreciation, operating costs and a 15% return are covered. That implies 7.4x growth from current annualized revenues, with downstream revenues of $1.9–2.6tn.
  • One Hundred Years in the U.S. Stock Markets — Over a century, U.S. publicly traded stocks generated roughly $91tn in shareholder wealth enhancement, with returns strongly positively skewed and dominated by a relatively small number of high-performing firms. Because most possible outcomes fall below the mean in a skewed distribution, the authors argue financial planning should focus on median outcomes or the full distribution.

AI Summary. An artificial intelligence investment boom that is insensitive to interest rates is drawing capital, electricity and labor away from rate-sensitive sectors such as housing and autos, which the author argues will force the Federal Reserve to hold rates higher for longer. The durable fix is expanding power, chip and infrastructure supply.

Torsten Sløk Apollo
Date Posted:

Sløk warns the rate-insensitive AI buildout has triggered unbalanced growth in the US economy by crowding out capital, electricity, and labor from vulnerable sectors like housing and autos.

Does a rate-insensitive AI boom force the Fed to keep rates higher?

Core argument: The AI boom’s insensitivity to interest rates is draining capital, power and labor from rate-sensitive sectors such as housing and autos, producing a “Dutch disease” dynamic in the US economy.

AI's rate-insensitive boom is draining capital, power and labor from vulnerable sectors like housing and autos. Trapped between inflation driven by the AI boom and weakness in rate-sensitive industries, the Fed will have to keep interest rates higher for longer. Because monetary policy cannot resolve this sectoral imbalance, the only durable fix is expanding the supply of power, chips and infrastructure.

Takeaways by Macro Roundup® AI

  1. The AI boom’s insensitivity to interest rates is draining capital, power and labor from rate-sensitive sectors such as housing and autos, producing a “Dutch disease” dynamic in the US economy.
  2. Caught between AI-driven inflation and weakness in rate-sensitive industries, the Federal Reserve will have to hold interest rates higher for longer.
  3. Monetary policy cannot resolve the imbalance between AI and rate-sensitive sectors, leaving expansion of the supply of power, chips and infrastructure as the only durable fix.

Related Articles:

  • Financing the AI Buildout — The authors estimate roughly 57 gigawatts of operating US data center capacity against a planned development pipeline of about 509 gigawatts, which is not a completion forecast since projects may be delayed, scaled back, or abandoned. Their central scenario has 182.8 gigawatts of added capacity becoming operational through 2032, 117.2 gigawatts completed later, and 226.9 gigawatts never completed.
  • AI Set to be Largest CapEx Cycle Ever … and Soon Majority Externally Financed — Hyperscaler and data-center investment is tracking toward $1.5tn annually by 2030, which in real terms would exceed the 2005-06 housing boom, the 1990s fiber peak, and the 1882 railroad peak combined. External debt and equity are projected to fund close to 90% of the buildout, making it dependent on credit markets.
  • The Macro Implications of the AI Capex Boom — Artificial intelligence capital spending is estimated to add roughly 1.4 percentage points to US growth in one year and about 1.5 points the next, comparable to business investment's contribution during the tech bubble. A material part of that estimate reflects profits at Nvidia and a few other chipmakers that are unlikely to be recycled back into the economy.

AI Summary. Since 1982, real growth in the median U.S. wage has trailed growth at both the top and bottom of the wage distribution, with higher and lower percentiles outperforming the middle.

Cardiff Garcia and Ben Glasner Agglomerations
Date Posted:

Garcia and Glasner document the striking observation that inequality across the wage distribution rose mainly during the long overall wage stagnations of 1982–1996 and 2001–2014. Wage growth was both faster and more broadly shared in 1996–2001 and 2014–2020.

Has median wage growth lagged both the top and bottom?

Core argument: Real growth of the median U.S. wage has trailed growth at both the higher and lower ends of the wage distribution since 1982.

Figure 4 zooms into the First Long Wage Stagnation from December 1982 to 1996: negative growth for the 10th percentile wage and hardly any growth for the three middle wage categories. Meanwhile the 90th percentile wage climbed away from all the others despite itself growing by less than 1% a year. Figure 5 shows the more recent Second Long Wage Stagnation. The median wage averaged just 0.36% growth per year. And because the growth of the 75th and 90th percentile firmly outpaced the growth of the others, wage inequality climbed sharply. From 2015 through the start of 2020, wages climbed all across the distribution, [while] the widening between the 90th percentile wage and the other wages slowed. The escape from wage stagnation once again arrived as the labor market continued tightening. In the late 1990s boom, the median wage climbed an annualized 2.6%. The eras in which the median wage climbed at the steepest angle were those in which all the other wages climbed with it. [Finally], real growth of the median wage has trailed behind the growth of the other wage categories since 1982.

Takeaways by Macro Roundup® AI

  1. Real growth of the median U.S. wage has trailed growth at both the higher and lower ends of the wage distribution since 1982.
  2. Figure 10 presents three wage ratios: the 90th percentile to the median, the 90th percentile to the 10th, and the median to the 10th.

Related Articles:

  • Baby Busts and Growth Booms: Demographic Change and the Macroeconomy — A 1pp lower birth rate 20 years earlier is associated with 22 log points higher output per worker 20 years later and 29 log points higher after 40 years, about 0.73pp faster annual growth. The authors find lower birth rates are also associated with more labor-saving patents, larger high-tech shares, and higher productivity growth.
  • The Pig In The Python: US Decennial Labor Flows And Economic Opportunity, 1910–2040 — The surge of baby boomers, women, and immigrants entering the US labor force between 1960 and 1980 was difficult for the economy to absorb, and young workers' wages fell sharply after peaking in the early 1970s. The author argues those entrants kept occupying jobs and suppressing demand for new workers until retirement.
  • The Unexpected Compression: Competition at Work in the Low Wage Labor Market — Labor market tightness produced an unexpected compression in the US wage distribution, with disproportionate wage growth at the bottom reducing the college wage premium and reversing nearly 40% of the rise in 90-10 wage inequality since 1980. The authors attribute this in part to increased competition for low-wage workers.

AI Summary. Inflation-adjusted gross domestic product per person has grown at a 1.9% annual pace over the past 10 years, above the 1.7% of the 2010s and 0.8% of the 2000s and just below the 2.1% of the 1980s and 1990s. Avoiding prolonged recessions has supported household incomes and wages.

Justin Fox Bloomberg
Date Posted:

Real median household income and real wages have risen since the mid-2010s, as real GDP per capita grew 1.9% annually over the past decade. Average real weekly earnings have grown since 2010, after falling substantially between 1973 and 1990.

Have incomes and output per person grown faster than in recent decades?

Core argument: U.S. per-capita GDP has grown at a 1.9% annual inflation-adjusted pace over the past 10 years, exceeding the 1.7% of the 2010s and 0.8% of the 2000s.

Some of the increase in both household incomes and wages can be chalked up to steady economic growth. Per-capita gross domestic product has risen at a 1.9% annual, inflation-adjusted pace over the past 10 years, which doesn’t sound like much but is better than in the 2010s (1.7%) and 2000s (0.8%) and only slightly below the 2.1% growth rate of the 1980s and 1990s and 2.2% of the 1970s.Avoiding recessions — and ensuring that the unusual pandemic-caused downturn in 2020 was short-lived — has done a lot for Americans’ incomes.

Takeaways by Macro Roundup® AI

  1. U.S. per-capita GDP has grown at a 1.9% annual inflation-adjusted pace over the past 10 years, exceeding the 1.7% of the 2010s and 0.8% of the 2000s.
  2. The 1.9% per-capita GDP growth rate of the past decade sits only slightly below the 2.1% pace of the 1980s and 1990s and the 2.2% pace of the 1970s.
  3. Avoiding recessions and keeping the pandemic-caused 2020 downturn short-lived has done a lot for Americans’ incomes, with steady economic growth accounting for some of the rise in household incomes and wages.

Related Articles:

  • What Six Years of Inflation Mean for the Midterms — US consumer prices have risen almost 29% over the past six years, about 3x the pace of the prior six years, and on average prices have risen faster than wages over that period.
  • Income in the United States: 2025 — Median U.S. household income rose 2.6% to $87,460, the highest level on record in data going back to 1967. Median income increased 3% for White households, 2.9% for non-Hispanic White households, and 4.8% for Black households, while changes for Asian and Hispanic households were not statistically significant.
  • US Focus: The Effect Of Soaring Profits — US nominal pre-tax corporate profits in the national accounts grew 23% over the past year, a pace not seen outside post-recession spikes since the mid-2000s. Wider margins were the key driver, as domestic profit growth far exceeded the 8% rise in corporate value added, pushing margins near all-time highs while the labor share hit new lows.

AI Summary. The Congressional Budget Office projects that if interest rates run 1.5 percentage points above its economic forecast, deficits would be $6tn larger over 2026–2036, reflecting a $4.9tn rise in net interest costs and $1.1tn in added debt-service costs. Debt held by the public would reach 133.1% of GDP in 2036, 12.9 percentage points above its baseline.

CBO Staff Congressional Budget OffIce
Date Posted:

If interest rates rise 150bp above CBO’s current extended baseline over 2026–2036 (which would leave the 10-year Treasury with a mean yield of 5.8% over that period), deficits would be $6T larger over the period.

How much would higher interest rates add to deficits and debt?

Core argument: CBO projects that interest rates 150 basis points above its economic forecast would make deficits a total of $6 trillion larger over the 2026–2036 period than in its baseline projections.

[If] interest rates are 150 basis points higher than those in CBO’s economic forecast—deficits are a total of $6 trillion larger over the 2026–2036 period than they are in the agency’s baseline projections. That increase in deficits is attributable to a $4.9 trillion increase in net interest costs resulting from higher interest rates on the amount of debt in CBO’s baseline projections and a $1.1 trillion increase in debt-service costs. In 2036, debt held by the public reaches 133.1% of GDP—12.9 percentage points more than debt that year in CBO’s baseline projections.

Takeaways by Macro Roundup® AI

  1. CBO projects that interest rates 150 basis points above its economic forecast would make deficits a total of $6 trillion larger over the 2026–2036 period than in its baseline projections.
  2. The $6 trillion deficit increase comprises a $4.9 trillion rise in net interest costs on the debt in CBO’s baseline projections plus a $1.1 trillion increase in debt-service costs.
  3. Under the higher-interest-rate scenario, CBO projects debt held by the public reaches 133.1% of GDP in 2036, 12.9 percentage points above its baseline projection for that year.

Related Articles:

  • The Budget and Economic Outlook: 2026 to 2036 — The Congressional Budget Office projects the federal deficit will grow from $1.9tn (5.8% of GDP) to $3.1tn (6.7%) over a decade, above the 3.8% averaged over the past 50 years, with rising net interest costs driving much of the increase. Federal debt held by the public is projected to rise from 101% to 120% of GDP.
  • How Might Fiscal Policy Respond to the Rise of Artificial Intelligence? — The Congressional Budget Office estimates that a permanent 0.5 percentage point increase in annual productivity growth would lower publicly held federal debt after 30 years by 39% of GDP, offsetting roughly half the projected rise from 101% of GDP to 175%. Higher revenue and slower spending growth outweigh higher interest costs.
  • Soaring Bond Yields, Gaping Deficits and Towering Debts: What Could Go Wrong? — An analysis of 22 rich countries estimates that if each refinanced its entire debt at current five-year bond yields, Britain would need the largest primary surplus to stabilize its debt-to-GDP ratio, about 1.5%, followed by Italy at 1.4%, France at 1.2% and America at 1%.

AI Summary. In Spain, immigrant households work less, earn less, pay less in taxes, and are more likely to use social assistance than native households at every level of education. Non-EU-origin households are almost three times as likely to receive social assistance, with 6% of highly educated non-EU households receiving it versus 4.4% of all native households.

Nicholas Eberstadt American Enterprise Institute
Date Posted:

Eberstadt argues immigration at scale may not postpone the crisis of the European welfare state. In Spain, non-EU immigrant households are ~3x more likely to receive social assistance than natives at every education level, and draw larger amounts when they do.

Do immigrant households in Spain use more social assistance than natives?

Core argument: At every educational level, non-EU-origin households in Spain are almost three times as likely as native Spanish households to receive government social assistance, and average social assistance follows the same pattern.

Spain’s immigrants work less, earn less, pay less in taxes, and use more social assistance benefits. Maybe the nostrum that mass immigration is helping postpone the crisis of the European welfare state needs to be examined more carefully. Immigrant households are much more likely to utilize social program benefits than Spanish nationals, regardless of educational attainment. At every educational level, non-EU-origin households are almost three times as likely to be taking government social assistance as native Spaniards; so too average social assistance. Hardly less noteworthy: The incidence of social assistance, and average benefits per household, for high-education non-EU households (6%) is higher than for native Spanish households of all educational backgrounds (4.4%) even though most Spanish natives lack higher education.

Takeaways by Macro Roundup® AI

  1. At every educational level, non-EU-origin households in Spain are almost three times as likely as native Spanish households to receive government social assistance, and average social assistance follows the same pattern.
  2. High-education non-EU households in Spain take social assistance at a 6% rate, above the 4.4% rate for native Spanish households of all educational backgrounds, even though most Spanish natives lack higher education.
  3. Spain’s immigrants work less, earn less, pay less in taxes, and use more social assistance benefits, which invites closer examination of the claim that mass immigration is helping postpone the crisis of the European welfare state.

Related Articles:

  • Depopulation Globally and in the Asia-Pacific: The Shape of Things to Come — Population aging and fertility below replacement levels are connected to a revolution in family structure in which families grow smaller, fewer people marry, and voluntary childlessness becomes common across countries. As a result, families become less able to bear the demands that may be placed on them.
  • Quo Vadis, Hispania? Part One — Official Spanish data show births exceeded deaths by barely 200,000 over the first quarter of the 21st century—less than 0.5% of Spain's population at the start—while immigration accounted for 98% of the country's population growth, the largest increase of any European Union member. Deaths have exceeded births since 2015.
  • Quo Vadis Hispania? Part Two — Spain's first- and second-generation immigrant population totals at least 12mm—nearly 9.5mm immigrants and over 2.5mm descendants—out of a population of roughly 49mm. The authors estimate over a third of Spain's under-40 population and nearly two-fifths of children under 5 are immigrants or the children of immigrants.