“…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
“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
“…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
“…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
“…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 full-throated defense of economic dynamism.” - The Wall Street Journal
“…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
“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
“…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
“…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
“…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
“Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
AI Summary.Data-center capital spending is projected to rise from 1.4% of GDP to 3.1% within two years, about 0.85 percentage points a year, roughly twice the pace of the housing boom's fastest stretch (0.5 points a year) and far above telecom fiber's (about 0.15). In level, the buildout exceeds twice the fiber peak but remains under half the housing peak.
Torsten SløkApollo
Date Posted:
Sløk forecasts hyperscaler capex to peak at 3.2% of GDP, less than half housing’s 6.6% peak, but it is projected to rise ~70% more quickly – 0.85pp of GDP per year at its fastest, versus 0.5pp for housing.
How fast is the data-center buildout growing compared with past capex booms?
Core argument: Data-center capex is projected to rise from 1.4% of GDP in 2025 to 3.1% in 2027, adding 1.7 percentage points in two years, or roughly 0.85 percentage points a year.
In level, the ongoing data-center buildout sits between the fiber and housing cycles: more than twice the fiber peak, less than half the housing peak. In cumulative change, what matters is not the level of the share but how much it moves. On this measure, the data-center buildout is the bigger capex cycle. In speed, the contrast is sharper still, and it holds even when each cycle is measured over its own fastest stretch. Data-center capex adds 1.7 percentage points in just two years, from 1.4% of GDP in 2025 to 3.1% in 2027, or roughly 0.85 percentage points a year. Housing's quickest phase, from 5.1% in 2002 to 6.6% in 2005, ran at 0.5 percentage points a year, and telecom's at around 0.15. The AI cycle is building at close to twice the pace of the housing boom at its fastest.
Takeaways by Macro Roundup® AI
Data-center capex is projected to rise from 1.4% of GDP in 2025 to 3.1% in 2027, adding 1.7 percentage points in two years, or roughly 0.85 percentage points a year.
Housing's fastest stretch, from 5.1% of GDP in 2002 to 6.6% in 2005, ran at 0.5 percentage points a year and telecom's at about 0.15, leaving the data-center buildout at close to twice the pace of the housing boom at its quickest.
In level, the data-center buildout sits between the fiber and housing cycles at more than twice the fiber peak and less than half the housing peak, while ranking as the bigger capex cycle measured by cumulative change.
Related Articles:
The Market Is Asking Questions— Markets are weighing whether the trillions committed upfront to AI data centers, chips, and power will generate returns above the cost of capital before those assets depreciate. With the buildout increasingly funded by debt rather than internal cash flow and borrowing spreads widening, financing costs could rise until new data-center spending no longer clears its return hurdle.
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.
AI: The ROI Runway Could Be Long Outside the Tech Sector— AI company valuations rest on the assumption that profit margins across non-tech firms will eventually rise, but outside a handful of sectors adoption is slow, creating a divergence between front-loaded valuations and slower cash flows. If the per-use costs of AI models converge toward zero, revenue may be insufficient for all major cloud providers.
AI Summary.US inflation driven by energy prices, tariffs, and immigration restrictions is proving stickier than the Federal Reserve expected, limiting rate cuts, while the Treasury funds record deficits almost entirely with short-term bills to avoid pushing up long-term yields. The author argues rates stay higher for longer, so investment returns must come from operational improvement rather than valuation expansion.
Torsten SløkApollo
Date Posted:
The lack of fiscal space in the US implies to Sløk that a recession would not bring down rates. “Rates are staying higher for longer across the curve, and the traditional path to value creation through multiple expansion is largely closed.”
Do sticky inflation and bill-funded deficits keep rates higher for longer?
Core argument: The Treasury is funding record deficits almost entirely through T-bills to avoid pushing long yields higher, a strategy that cannot continue indefinitely; when coupon issuance eventually rises, the supply shock will push long yields higher.
In the front end, inflation driven by higher energy prices, tariffs, and immigration restrictions is proving stickier than the Fed expected, constraining how aggressively it can cut. At the long end, the fiscal trajectory is structurally bearish for bonds. The Treasury is already funding record deficits almost entirely through T-bills to avoid putting upward pressure on long yields, a strategy that cannot continue indefinitely. When coupon issuance eventually has to increase, the supply shock will push long yields higher, not lower. And in a recession, the deficit blows out further, requiring even more issuance at precisely the moment when market appetite for duration is most uncertain. The bottom line is that rates are staying higher for longer across the curve, and the traditional path to value creation through multiple expansion is largely closed. Value will have to come from the hard work of operational improvement, i.e., earnings growth, margin expansion, and cash generation, and not from the discount rate doing investors a favor.
Takeaways by Macro Roundup® AI
The Treasury is funding record deficits almost entirely through T-bills to avoid pushing long yields higher, a strategy that cannot continue indefinitely; when coupon issuance eventually rises, the supply shock will push long yields higher.
Inflation driven by higher energy prices, tariffs, and immigration restrictions is proving stickier than the Fed expected, constraining how aggressively the Fed can cut rates at the front end of the curve.
In a recession the deficit blows out further, requiring even more issuance when market appetite for duration is most uncertain, leaving rates higher for longer across the curve and largely closing the traditional path to value creation through multiple expansion.
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.
Data Update 5 for 2026: Risk and Hurdle Rates— A histogram of costs of capital across all publicly traded firms shows what typical, high, and low hurdle rates look like, with the cost of capital best understood as an opportunity cost—the return available elsewhere on equally risky investments. US dollar risk-free rates have remained near 4% for a fourth year.
Global Debt Report 2026— Gross central government borrowing across OECD countries rose 7% to a record $17tn, about 23% of GDP, and is projected to reach roughly $18tn, or 24% of GDP. The United States and Japan account for close to 80% of the area's refinancing requirements, with the US share rising from 57% to 70%.
AI Summary.Annual default rates of 10% for private credit direct lending are within the historical range, and with recovery assumptions implying roughly 50% losses given default, realized losses could run near 5% a year, or 10%+ for weaker credits. Many private credit funds are slow to mark down loans while allowing redemptions at 100 cents on the dollar.
Greg ObenshainVerdad
Date Posted:
Obenshain argues the stress in direct lending isn’t a default story but a flow story, which rhymes with how the junk bond market behaved in the early 1990s. “First, we need the outflows. Then the markdowns. Then come the defaults and the surprises.”
Are private credit funds valuing risky loans above what history supports?
Core argument: Annual default rates of 10% for private credit direct lending fall within the historical range, and at 50% loss given default that would imply realized default losses of 5% per year for a few years, rising to 10% or more for CCC-quality loans.
We don’t know where the default rate will go for private credit direct lending, but spikes to annual default rates of 10% are well within the historical range. And the highly levered, unitranche loans we are concerned with are not the same kind of secured loans that are in the Moody’s historic loss dataset. A better estimate may be losses on unsecured bonds, which have averaged 68%. If we split the difference, that would imply 50% losses given default. If default rates spike to 10%, realized default losses could run at 5% for a few years. For loans that are closer to CCC quality, those losses could run at or above 10% per year. These kinds of default losses are not unprecedented. According to Moody’s, the realized loss rate on single B bonds in 1990 was 8.5%, and in 1991 it was 8.3%. Right now, many private credit funds are slow to mark down their loans yet offer investors the ability to redeem their investments at 100 cents on the dollar. On average, single B debt does not trade at 100 cents on the dollar, and in times of stress can trade much lower. The redemption pressure we are seeing is completely rational. Private credit funds are offering to pay 100 cents on the dollar for assets that historically do not maintain that mark.
Takeaways by Macro Roundup® AI
Annual default rates of 10% for private credit direct lending fall within the historical range, and at 50% loss given default that would imply realized default losses of 5% per year for a few years, rising to 10% or more for CCC-quality loans.
Losses on unsecured bonds have averaged 68%, which may be a better estimate than Moody's historic secured-loan loss dataset for highly levered unitranche loans, with 50% loss given default splitting the difference.
Moody's puts the realized loss rate on single B bonds at 8.5% in 1990 and 8.3% in 1991, indicating such default losses are not unprecedented.
Related Articles:
JPMorgan Marking Down Loan Portfolios Of Private Credit Groups— JPMorgan has marked down the value of certain loans in private credit funds' portfolios that serve as collateral for the funds' borrowing from the bank, limiting how much it will lend against them. Unlike most banks, which require triggers such as missed interest payments, JPMorgan reserves the right to revalue those assets at any time.
Private Credit: Characteristics and Risks— Private credit loans are negotiated bilaterally outside traditional regulatory requirements and are illiquid because no secondary market exists, leaving investors expected to hold them to maturity or face steep losses if they need to exit. Scarce data on this growing form of nonbank lending makes assessing its risks difficult.
Has Private Credit Broken the High-Yield Spread Signal?— The high-yield bond market has stayed at about $1.4tn while private credit assets have grown to as much as $2tn, and the highest-rated BB portion of the high-yield index has risen from 41% to 51%. Private markets have shifted riskier borrowers out of high yield, making that index safer.
AI Summary.The direct lending market is roughly $2tn, or about 3% of total US household and business debt outstanding, compared with mortgages accounting for about 60% of total household and corporate debt at the peak of the housing bubble.
Torsten SløkApollo
Date Posted:
Is Database:
Database
Torsten Sløk notes the direct lending market is ~$2T or 3% of household and non-financial debt outstanding. To provide context, he shows that in 2006, on the eve of the crisis, mortgages accounted for ~60% of such debt.
Is direct lending too small to threaten the financial system?
Core argument: The direct lending market totals roughly $2 trillion, about 3% of total debt outstanding for US households and businesses.
The direct lending market is roughly $2 trillion, or about 3% of total debt outstanding for US households and businesses. By comparison, mortgages accounted for about 60% of total household and corporate debt at the peak of the housing bubble in 2006.
Takeaways by Macro Roundup® AI
The direct lending market totals roughly $2 trillion, about 3% of total debt outstanding for US households and businesses.
Mortgages accounted for about 60% of total US household and corporate debt at the peak of the housing bubble in 2006, compared with direct lending's roughly 3% share.
Related Articles:
JPMorgan Marking Down Loan Portfolios Of Private Credit Groups— JPMorgan has marked down the value of certain loans in private credit funds' portfolios that serve as collateral for the funds' borrowing from the bank, limiting how much it will lend against them. Unlike most banks, which require triggers such as missed interest payments, JPMorgan reserves the right to revalue those assets at any time.
Data Update 7 for 2026: Debt and Taxes— The author argues that companies are collectively over-investing in artificial intelligence and that markets will correct when that belief dissipates. Because debt, particularly private credit, now finances much of this investment, the author contends a correction would spread beyond equity holders and produce a banking-style crisis driven by non-bank lenders.
AI Summary.A US tax law expanded deductions for state and local taxes, overtime, tips and seniors retroactively, but withholding tables adjusted only later, so workers get both higher take-home pay and refunds. One analyst estimates this injects nearly $200bn, lifting first-half annualized growth by up to half a percentage point.
Greg IpWall Street Journal
Date Posted:
This year, fiscal policy, monetary policy, and credit policy are all “dialed toward stimulus, reflecting a single-minded focus by Trump and congressional Republicans on faster economic growth. The consequences will come later.”
Will fiscal, regulatory, and monetary stimulus combine to accelerate growth?
Core argument: Donald Schneider of Piper Sandler estimates the tax-and-spending law Trump signed in July will inject nearly $200 billion into the economy, as higher take-home pay and refunds on cuts retroactive to the start of 2025 combine, lifting first-half annualized growth by up to half a percentage point.
The tax-and-spending bill Trump signed into law in July delivers new or expanded tax deductions, in particular for state and local taxes, overtime, tips and seniors. Although those tax cuts were retroactive to the start of 2025, tax withholding tables were only adjusted at the start of this year. This will generate a double-barreled stimulus. Many workers will see both higher take-home this month and a refund on last year’s taxes when they file their returns. Donald Schneider, a policy analyst at Piper Sandler, sees this injecting nearly $200 billion into the economy, enough to boost first half annualized growth up to half a percentage point. He also sees stronger investment from the bill’s provisions allowing businesses to fully write off capital spending. Capital requirements are on course to be loosened. Trump just ordered Fannie and Freddie to buy $200 billion in mortgage bonds, which could lower mortgage rates by 0.1 to 0.25 percentage point, according to UBS. Fed officials now see rates falling from their current range of 3.5% to 3.75% by a quarter of a point this year, which would leave rates roughly at “neutral.” Trump doesn’t want neutral, he wants stimulative, and is adamant that the next chairman cut rates by a lot. His two leading candidates have agreed. Perhaps they won’t cut to 1%, as Trump wants. But expect a dovish bias from both.
Takeaways by Macro Roundup® AI
Donald Schneider of Piper Sandler estimates the tax-and-spending law Trump signed in July will inject nearly $200 billion into the economy, as higher take-home pay and refunds on cuts retroactive to the start of 2025 combine, lifting first-half annualized growth by up to half a percentage point.
Trump ordered Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds, which UBS estimates could lower mortgage rates by 0.1 to 0.25 percentage point, while capital requirements are on course to be loosened.
Fed officials see rates falling a quarter point this year from the current 3.5% to 3.75% range, leaving them roughly at neutral, while Trump presses for much deeper cuts and his two leading candidates for chairman have agreed.
Related Articles:
More on the “Neutral” Interest Rate (R*)— Private economists and Federal Reserve officials disagree about the level of the "neutral" interest rate—the inflation-adjusted short-term rate expected to prevail with the economy at full strength and stable inflation. Averaging model-based and market-based estimates puts the neutral real rate near 1.5%, and with expected inflation above the Federal Reserve's 2% target, the neutral nominal rate is correspondingly higher.
Trump Calls on Fannie and Freddie to Buy $200 Billion in Mortgage Bonds— Government-sponsored mortgage buyers Fannie Mae and Freddie Mac have been urged to purchase $200bn in mortgage bonds, roughly the room they have left under caps allowing each to hold up to $225bn of mortgage-backed securities against a combined $247bn held. The National Housing Conference estimates resuming such purchases could lower mortgage rates by a quarter-percentage point or more.
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%.
AI Summary.Higher-income American households have raised their cash relative to liabilities far more than lower-income households, with the top 1% up 37 percentage points and the bottom 60% up 8 percentage points since late 2019. Lower-income households instead increased holdings of housing and durable goods, and the ratio of nonfinancial assets to liabilities reached 299%, its highest since 1985.
Matt KleinThe Overshoot
Date Posted:
At ~3:1, the ratio of nonfinancial assets to liabilities is at its highest level since 1985. Since Covid, Americans in the bottom 60% have seen an ~43% rise in the value of durable goods owned relative to consumer credit owed, the highest across cohorts.
How do household balance sheet gains differ across income groups?
Core argument: U.S. households in the 80th–99th income percentiles have raised their cash-to-liability ratio by about 60 percentage points since the 2006 trough, versus about 20 percentage points for the bottom 60% of earners.
Americans in the 80th-99th percentiles of the household income distribution have increased their holdings of cash relative to liabilities by about 60 percentage points since the trough in 2006, while Americans in the bottom 60% increased their debt coverage by about 20 percentage points. Similarly, Americans in the top 1% of the income distribution increased their cash/liability ratio by 37 percentage points since 2019Q4, those in the 80-99% income cohort increased their debt coverage by 16 percentage points, and those in the bottom 60% did so by 8 percentage points. Lower-income Americans have instead focused on increasing their holdings of housing and durable goods—and limiting the growth in debt relative to income while spending more. The ratio of nonfinancial assets to liabilities has increased by 58 percentage points (to 299%) since 2019Q4, and is now at its highest since 1985. The increase in the ratio of real assets to liabilities is broadly similar across income cohorts, although the number for the top 1% is skewed by the relatively low levels of debt carried by the highest-earners. Americans in the bottom 60% have experienced the biggest increase in the value of durable goods owned vs. consumer credit owed.
Takeaways by Macro Roundup® AI
U.S. households in the 80th–99th income percentiles have raised their cash-to-liability ratio by about 60 percentage points since the 2006 trough, versus about 20 percentage points for the bottom 60% of earners.
Since 2019Q4, the top 1% of U.S. earners increased their cash/liability ratio by 37 percentage points, the 80–99% cohort by 16 percentage points, and the bottom 60% by 8 percentage points.
The U.S. ratio of nonfinancial assets to liabilities rose 58 percentage points to 299% since 2019Q4, its highest since 1985, with the bottom 60% seeing the largest increase in durable goods owned versus consumer credit owed.
Related Articles:
Top 10% of Earners Drive a Growing Share of US Consumer Spending— An analysis of Federal Reserve data found the top 10% of US earners accounted for 49.2% of total consumer spending, up from 48.5% the prior quarter and the highest share in data going back to 1989. Spending by the bottom 80%, those making under roughly $175,000, has merely kept pace with inflation.
US Households and Firms Are in Great Shape— Household and banking sector leverage in the US have declined significantly since 2008, while corporate leverage has moved sideways and federal government leverage has risen significantly. On this measure, the US private sector is in strong financial shape.
Our Thoughts on Large US Deficits and Their Impact on Bond Yields— Total borrowing in the US is about average despite high government deficits, as high public borrowing has contributed to the need for higher interest rates that have depressed private sector borrowing. Risk premiums on long-dated debt look about average, with no market signs that economic or debt limits are currently being hit.
AI Summary.The business hiring rate is very low by historical standards, not far above its level during the 2008-2009 financial crisis, and private job-postings data suggest the picture is getting worse. Consumer survey responses show a narrow 8-point gap between those saying jobs are plentiful and hard to get, while long-term unemployment has soared.
Paul KrugmanKrugman Wonks Out
Date Posted:
Non-government layoffs are not high, but business hiring is not far above its level during the 2008–2009 financial crisis. The number of labor market participants unemployed for more than 27 weeks rose from 1.45mm to 1.95mm between May and August 2025.
Is the labor market weaker than headline unemployment suggests?
Core argument: The Conference Board's spread between respondents saying jobs are "plentiful" versus "hard to get" narrowed to 8 points (27 versus 19), down from roughly 40 points in late 2019 before Covid.
The rate at which businesses are hiring is very low by historical standards, not far above its level during the 2008-2009 financial crisis. These data aren’t currently being updated because of the government shutdown, but we get a more up-to-date picture from private sources, such as job postings from Indeed.com, and they suggest that the picture is, if anything, getting worse. The influential monthly consumer survey conducted by the Conference Board asks people whether jobs are “plentiful” or “hard to get.” In late 2019, on the eve of Covid, almost half of respondents said jobs were plentiful, versus around 10% saying hard to get — a spread of around 40 points. In the latest Conference Board survey the spread was only 8 points, 27 versus 19. This tells us that American workers are very worried that if they should happen to lose their job, they’ll have a hard time finding another. And they’re right. Overall unemployment hasn’t risen that much, but the number of long-term unemployed — would-be workers who have been jobless for more than 6 months — had soared as of August, and has probably continued to rise since then.
Takeaways by Macro Roundup® AI
The Conference Board's spread between respondents saying jobs are "plentiful" versus "hard to get" narrowed to 8 points (27 versus 19), down from roughly 40 points in late 2019 before Covid.
The U.S. business hiring rate is very low by historical standards, not far above its level during the 2008–2009 financial crisis, and Indeed.com job postings suggest the picture is getting worse.
The number of Americans jobless for more than six months had soared as of August even as overall unemployment rose little, while the government shutdown has halted updates to official hiring data.
Related Articles:
Jobless Growth— Labor demand growth may be too weak to keep pace with even modest labor supply growth: the labor market is somewhat weaker than before the pandemic, job growth has turned negative outside healthcare, and firms are focused on using AI to cut labor costs. Economists estimate most employment losses in routine manual occupations since the 1970s occurred during recessions.
How America’s AI Boom Is Squeezing The Rest Of The Economy— About a sixth of America's 2% real GDP growth over the past year came from investment in computer and communications equipment and data centres, and one estimate puts the artificial intelligence boom's total contribution to growth at 40%. Average electricity bills rose 7%, attributed in part to data-centre demand, while housebuilding and non-AI business investment slumped and real consumption flatlined.
Honey, AI Capex Keeps Eating … Everything— The author estimates that AI-related capital spending contributed between 0.6% and 1.3% of a quarter's 3% U.S. GDP growth, based on information technology equipment and intellectual property investment data. Google, Amazon, Meta, and Microsoft alone spent about $69bn in the quarter, roughly half of all information technology equipment spending on an annualized basis.
AI Summary.The Federal Reserve lowered its benchmark interest rate by 25 basis points to 4–4.25% and signaled that another cut is very likely at the following meeting. The authors expect two additional 25 basis point cuts, followed by two more the next year bringing the rate to 3–3.25%, a path slightly more dovish than market pricing.
David MericleGoldman Sachs
Date Posted:
Yesterday’s 25bp cut leaves the Funds Rate at 4–4.25%. Goldman Sachs forecasts an additional two cuts in October and December 2025, followed by two cuts in 2026, leading to a terminal rate of 3.0–3.25%.
Are more interest rate cuts likely at upcoming meetings?
Core argument: The FOMC cut the federal funds rate by 25bp to 4-4.25% at its September meeting and signaled that another cut in October is very likely.
The FOMC lowered the funds rate by 25bp to 4-4.25% at its September meeting today and hinted that another rate cut is very likely in October. We continue to expect 25bp cuts in October and December—with a 50bp cut possible if the labor market weakens more than we expect—followed by two cuts next year to 3-3.25%. Our probability-weighted Fed path remains a bit more dovish than market pricing.
Takeaways by Macro Roundup® AI
The FOMC cut the federal funds rate by 25bp to 4-4.25% at its September meeting and signaled that another cut in October is very likely.
Goldman Sachs expects 25bp cuts in October and December, with a 50bp cut possible if the labor market weakens more than anticipated, followed by two cuts next year to 3-3.25%.
Goldman Sachs's probability-weighted Fed path remains somewhat more dovish than market pricing.
Related Articles:
Too Early— Markets are pricing interest-rate cuts about 70bps deeper than Federal Reserve officials' own projections, an outcome the author argues is unlikely with core inflation stabilized near 3%, wage growth at 4% versus 3% before the pandemic, and unemployment at a historically low 4.3%.
A Big, Not-So-Beautiful Inflation Picture— Wage growth for the lowest-paid quartile of US workers has slowed to just above the headline inflation rate, consistent with the view that companies are holding onto staff while showing little interest in bidding up pay for lower-skilled workers. With inflation not tamed and tariffs yet to feed through to employment and production decisions, the risk ahead is stagflation.
The Rising Tide of Government Interest Costs— A model of forward interest rate curves, projected deficits, and debt maturity structures estimates that government interest spending on marketable debt will rise across G10 economies by an average of 0.5 percentage points of GDP by 2029, with France, Japan, and the United States facing the largest increases.
