“…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
“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
“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 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
“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
“…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
“…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
“A full-throated defense of economic dynamism.” - The Wall Street Journal
“…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
“Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
“Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
“…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
AI Summary.Purchasing managers' surveys show the US manufacturing contraction has extended into a third year, with factory employment down 0.6% over the year to November. Surveys indicate manufacturing export orders and import volumes contracted strongly following the announcement of high tariffs, and factory managers report confusion and difficulty making long-term plans.
Economist StaffThe Economist
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There is little evidence of reshoring as measured by the US manufacturing purchasing managers’ index, which shows that new export orders and imports have been contracting since 2022, and have downticked sharply since Liberation Day.
Have tariffs revived US manufacturing?
Core argument: U.S. manufacturing employment fell 0.6% in the year to November, and the manufacturing contraction indicated by purchasing managers' surveys is entering its third year after the two-year recession that preceded Trump's January inauguration.
By the time Mr. Trump took office in January, America had been in a two-year manufacturing recession, according to purchasing managers’ surveys. Nearly a year on, however, the Trumpian manufacturing renaissance is conspicuous by its absence. The two-year manufacturing contraction is now hitting its third year, and factories have continued to shed jobs; employment fell by 0.6% in the year to November. Surveys suggest that export orders and import volumes for manufacturing have registered a strong contraction since Mr. Trump announced high tariffs on “Liberation Day” in April, one that goes beyond the wider weakness in manufacturing. Factory bosses report confusion and difficulty making long-term plans.
Takeaways by Macro Roundup® AI
U.S. manufacturing employment fell 0.6% in the year to November, and the manufacturing contraction indicated by purchasing managers' surveys is entering its third year after the two-year recession that preceded Trump's January inauguration.
Surveys indicate manufacturing export orders and import volumes have contracted strongly since Trump announced high tariffs on "Liberation Day" in April, a decline beyond the broader weakness in manufacturing.
Factory bosses report confusion and difficulty making long-term plans, and the Trumpian manufacturing renaissance is absent nearly a year into Trump's term.
Related Articles:
Does Manufacturing Matter?— Manufacturing capacity carries military and geopolitical importance, as shown by economic warfare over products like semiconductors and magnets. The policy-relevant question is not whether manufacturing is geopolitically useful but how much should be spent boosting it given resource constraints, and whether to target defense, dual-use, chokepoint, or broad civilian production.
The Incidence of Tariffs: Rates and Reality— The authors estimate that tariff pass-through into US import prices was 80% in 2018–2019 and 94% more recently, while exchange-rate pass-through was low in both periods. Because imported inputs matter for US manufacturing, they argue much of the tariff burden falls on US producers, roughly a 1–2 percentage-point tax on manufacturing.
America is Losing Blue Collar Jobs— US industrial employment has fallen by 65,000 over the past year and is down 123,000 from its early-2025 peak, with manufacturing and transportation accounting for most losses and construction job gains slowing to 52,000 from 191,000 the prior year. The author attributes the decline to tariffs raising input costs, immigration enforcement hitting construction, and cuts to industrial policy subsidies.
AI Summary.Analysis of U.S. register data finds that employment levels in places exposed to Chinese import competition more than fully rebound, while employment-to-population ratios stay depressed and manufacturing employment continues to shrink. The authors find the recovery comes almost entirely from young adults and foreign-born immigrants taking first jobs in lower-wage service sectors, with both in- and out-migration remaining depressed.
David Autor, David Dorn, Gordon Hanson, Maggie Jones and Bradley SetzlerNational Bureau of Economic Research
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US regions hit by China trade shocks rebounded in jobs but not in employment rates: recovery came from young workers and immigrants entering low-wage roles in health care, education, retail, and hospitality while manufacturing jobs kept shrinking.
How do places hit by import competition regain employment?
Core argument: Using U.S. register data for 2000–2019, employment levels more than fully rebound in places exposed to Chinese import competition after 2010, while employment-to-population ratios remain depressed and manufacturing employment further atrophies.
This chapter analyzes the distinct adjustment paths of U.S. labor markets (places) and U.S. workers (people) to increased Chinese import competition during the 2000s. Using comprehensive register data for 2000–2019, we document that employment levels more than fully rebound in trade-exposed places after 2010, while employment-to-population ratios remain depressed and manufacturing employment further atrophies. The adjustment of places to trade shocks is generational: affected areas recover primarily by adding workers to non-manufacturing who were below working age when the shock occurred. Entrants are disproportionately native-born Hispanics, foreign-born immigrants, women, and the college-educated, who find employment in relatively low-wage service sectors such as medical services, education, retail, and hospitality. Contrary to standard models, trade shocks reduce geographic mobility, with both in and out migration remaining depressed through 2019. The employment recovery stems almost entirely from young adults and foreign-born immigrants taking their first U.S. jobs in affected areas.
Takeaways by Macro Roundup® AI
Using U.S. register data for 2000–2019, employment levels more than fully rebound in places exposed to Chinese import competition after 2010, while employment-to-population ratios remain depressed and manufacturing employment further atrophies.
The adjustment of trade-exposed U.S. places is generational, with recovery coming primarily from workers who were below working age when the shock occurred entering non-manufacturing jobs in relatively low-wage services such as medical services, education, retail, and hospitality.
Contrary to standard models, trade shocks reduce geographic mobility, with both in- and out-migration remaining depressed through 2019, and the employment recovery stems almost entirely from young adults and foreign-born immigrants taking their first U.S. jobs in affected areas.
Related Articles:
The China Shock Revisited: Job Reallocation and Industry Switching in U.S. Labor Markets— Using U.S. Census Bureau administrative data, the authors find that rising Chinese import penetration shifted jobs from manufacturing to services far more in high human capital areas, where within-firm industry switching occurs almost exclusively, producing a net positive employment effect; in low human capital, manufacturing-dependent areas, service gains barely offset manufacturing losses.
Manufacturing Jobs Boom Not Reaching Places Hit By The China Shock— U.S. manufacturing job growth since the pandemic is occurring disproportionately in counties least exposed to Chinese import competition in the 2000s, according to an analysis of federal employment and wage data. The counties hardest hit by that import competition still have fewer manufacturing jobs than before the pandemic.
Trading Places: Mobility Responses of Native and Foreign-Born Adults to the China Trade Shock— U.S. local labor markets more exposed to import competition from China saw substantially larger net reductions in their foreign-born populations, with no significant reduction among native-born residents. Within exposed areas, foreign-born and native-born workers had comparably sized declines in employment-to-population ratios.
AI Summary.Measuring U.S. manufacturing concentration by domestic production alone shows the top 20 firms' share rising, but including imports and excluding exports leaves the top 20 firms' share of total U.S. sales flat. The authors argue the falling market share of U.S. firms suggests their market power may have declined.
Mary Amiti and Sebastian HeiseFederal Reserve Bank of New York
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A @NewYorkFed note argues that overall market concentration across 169 manufacturing industries has remained flat from 1992 to 2012 as foreign competition has put less competitive US firms out of business, increasing domestic production concentration.
Does counting imports change whether U.S. manufacturing concentration has risen?
Core argument: The top 20 U.S. manufacturing firms' production concentration — their sales as a share of U.S. production, excluding imports but including exports — rose between 1992 and 2012.
Previous studies have focused on what we refer to as production concentration, which is measured as the sales of the largest U.S. producers as a share of total production in the U.S. It does not take account of imported goods, but does include U.S. firms’ exports. As shown in the chart, the production concentration of the top twenty firms has increased between 1992 and 2012 (blue line). For questions related to market power in the product market, we need to take into account the sales of foreign exporters in the United States (and exclude U.S. firms’ sales abroad). We refer to this measure of concentration as market concentration. The chart [based on confidential census data] shows that the largest [20] firms’ (which could be U.S. or foreign) share of total sales (inclusive of sales by foreign firms) in U.S. manufacturing industries has been flat in the aggregate (red line). Our finding that U.S. firms’ market share has fallen suggests that the market power of U.S. manufacturing firms may actually have declined over the past few decades.
Takeaways by Macro Roundup® AI
The top 20 U.S. manufacturing firms' production concentration — their sales as a share of U.S. production, excluding imports but including exports — rose between 1992 and 2012.
Market concentration, which includes sales by foreign exporters in the United States and excludes U.S. firms' sales abroad, has been flat in the aggregate for the largest 20 firms in U.S. manufacturing industries, based on confidential census data.
The authors find U.S. firms' market share has fallen, which suggests the market power of U.S. manufacturing firms may have declined over the past few decades.
Related Articles:
Why American Manufacturing is Increasingly Inefficient— Labor productivity in U.S. manufacturing has been in secular decline since 2011, the first decade-long fall in the available data, even as services drove overall output growth. More than a third of the manufacturing slowdown since 2011 is accounted for by computers and electronics, a sector whose gains had soared in the 1990s and 2000s.
The Concentration Conundrum; What To Do About Market Dominance— The largest US stocks make up a bigger share of the equity market than during the 2000 technology bubble, yet their valuations are lower than in earlier bubble episodes including the Nifty 50 of the early 1970s and Japan's late-1980s bubble. Today's dominant companies are also more profitable with stronger balance sheets.
Rising Markups and Declining Business Dynamism: Evidence From the Industry Cross Section— Across industries, larger increases in markups are not associated with larger declines in business dynamism—measured by new business entry rates and gross job or worker flows—and the correlation may even be positive. The authors conclude that rising markups as commonly measured are not a major explanatory factor behind declining dynamism.
AI Summary.The authors find that the combined effect of U.S.-China trade war import tariffs, retaliatory tariffs, and farm subsidies on employment in exposed U.S. locations was at best a wash and possibly mildly negative, while residents of tariff-protected areas became less likely to identify as Democrats and more likely to vote Republican.
David Autor, Anne Beck, David Dorn, and Gordon HansonNational Bureau of Economic Research
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Tariffs implemented during the 2018-2019 trade war were “at best a wash, and may have been mildly negative” in terms of employment, but increased political support for Trump in the 2020 election. @davidautor
Do tariffs boost employment and political support in protected areas?
Core argument: The authors estimate the combined predicted employment effect of import tariffs, retaliatory tariffs, and farm subsidies from the 2018–2019 U.S.-China trade war ranged from a 0.2% loss to a 0.2% gain in the employment rate across most commuting zones.
We evaluate whether the U.S.-China tariff war of 2018–2019 succeeded in meeting then-President Trump’s stated goal of bringing back jobs to America and generating support for Trump and the Republican party. We find consistent evidence on both questions. The net effect of import tariffs, retaliatory tariffs, and farm subsidies on employment in locations exposed to the trade war was at best a wash, and it may have been mildly negative. Conversely, the trade war appears to have been successful in strengthening support for the Republican party. Residents of tariff-protected locations became less likely to identify as Democrats and more likely to vote for President Trump. Figure 4 plots the predicted employment effects of tariffs and subsidy variables against their predicted impacts for the GOP vote share in the presidential election, with commuting zones (CZ) aggregated into 40 bins based on their x-axis values. The figure indicates that the combined predicted employment effect of import tariffs, retaliatory tariffs and agricultural subsidies is small, ranging from a 0.2% loss to a 0.2% gain in the employment rate in most CZs. Conversely, predicted Republican vote share gains are more sizable, reaching values of 0.5% to 1.0% for most CZs. A striking pattern in Figure 4 is that local exposure to the trade war appears to have benefited the Republican party even in regions where the combined effect of tariffs and subsidies predicts no employment gain or even a modest employment loss. Voters thus appear to have responded favorably to the extension of tariff protections to local industries, even though the ensuing retaliatory measures were economically damaging.
Takeaways by Macro Roundup® AI
The authors estimate the combined predicted employment effect of import tariffs, retaliatory tariffs, and farm subsidies from the 2018–2019 U.S.-China trade war ranged from a 0.2% loss to a 0.2% gain in the employment rate across most commuting zones.
Predicted Republican presidential vote share gains reached 0.5% to 1.0% for most commuting zones, and residents of tariff-protected locations became less likely to identify as Democrats and more likely to vote for Trump.
The authors find that trade-war exposure appears to have benefited the Republican party even in regions where tariffs and subsidies predict no employment gain or a modest employment loss, suggesting voters responded favorably to tariff protections for local industries.
Related Articles:
The World’s Rust Belts: The Heterogeneous Effects of Deindustrialization on 1,993 Cities in Six Countries— A study of 1,993 cities in France, Germany, Italy, Japan, the UK and the US finds former manufacturing hubs lost employment on average after each country's manufacturing peak, though a large share fully recovered. After the peak, hubs with a higher initial share of college-educated workers grew significantly faster.
Labor Market Conflict and the Decline of the Rust Belt— The authors argue that persistent labor market conflict in the Rust Belt's main industries lowered investment and productivity growth, shifting employment to the rest of the country, and estimate it accounts for roughly half the decline in the region's share of US manufacturing employment. Rising foreign competition plays a more modest quantitative role.
Are Manufacturing Jobs Still Good Jobs? An Exploration of the Manufacturing Wage Premium— Manufacturing average hourly wages, once about 3% above private-sector wages, have grown more slowly than private-sector wages, erasing the manufacturing wage premium for most manufacturing jobs. The authors estimate that declining unionization accounts for more than 70% of that drop, an effect that remains significant after controlling for worker and sector characteristics.
