Edward Conard

Top Ten New York Times Bestselling Author

  • “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
  • “…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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “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
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “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 represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “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
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Friday, June 16, 2023

AI Summary. Investors are paying a sizable premium for artificial intelligence exposure: the 32 stocks in a generative AI exchange-traded fund have returned 77% this year, with the 22 holdings projected to have positive earnings trading at an average price-to-earnings ratio of 31x and the other 10 at effectively infinite ratios.

Michael Cembalest J.P. Morgan
Date Posted:

Michael Cembalest @jpmorgan notes “the AI hype machine is in full swing right now.” Thirty-two stocks in the $CHAT Generative AI ETF have returned 77% this year with a mean P/E of 31x. 

How large a premium are investors paying for AI exposure?

Core argument: The 32 stocks in the $CHAT Generative AI ETF have returned 77% this year, which the author cites as evidence that investors are paying a sizable premium for AI exposure.

Investors are paying a sizable premium for AI exposure. One example: the 32 stocks in the $CHAT Generative AI ETF have returned 77% this year. The 22 $CHAT ETF stocks that have positive earnings projected for the next 12 months trade at an average P/E of 31x. The other 10 $CHAT ETF stocks have infinite P/Es, either due to negative earnings or trivially positive earnings that create nonsense P/E ratios over 100x. The large language model revolution is going to have to live up to the high end of expectations to justify this. I have seen estimates that AI will eventually add ~10% to the fair value of the S&P 500 due to some combination of augmented employee productivity and staff reductions, but I’m not sure how one would measure that. 

Takeaways by Macro Roundup® AI

  1. The 32 stocks in the $CHAT Generative AI ETF have returned 77% this year, which the author cites as evidence that investors are paying a sizable premium for AI exposure.
  2. Of the $CHAT ETF's 32 holdings, the 22 with positive projected earnings over the next 12 months trade at an average P/E of 31x, while the other 10 have negative or trivially positive earnings producing infinite or over-100x P/Es.
  3. The author argues the large language model revolution must meet the high end of expectations to justify these valuations, and notes estimates that AI will eventually add roughly 10% to the S&P 500's fair value through productivity gains and staff reductions.

AI Summary. A national study matched over 6,500,000 student-level observations, including more than 1,853,000 charter school students, against comparable students in the traditional public schools they would otherwise have attended, drawing on data covering 81% of tested US public school students. Learning outcomes are reported in days of learning relative to the average traditional public school student's year of progress.

Margaret Raymond and Meghan Mazzola Stanford University
Date Posted:

A new study of national charter schools by Margaret Raymond and Meghan Mazzola shows that, in a sample matched for student quality, charter school students experience the equivalent of 25 days more learning relative to non-charter school students.

Do charter school students learn more than comparable public school students?

Core argument: The National Charter School Study III assembled over 6,500,000 student-level observations, drawn from more than 1,853,000 charter students and a matched comparison group, to compare charter outcomes with the traditional public schools those students would otherwise have attended.

In this report, we look at students in charter schools compared to the experience they would have had in the traditional public schools (TPS) they would otherwise have attended.  Using both student and school level data, our resulting data set included 81% of tested public school students in the United States, making it one of the largest data sets of student-level observations created to date. We used this information to create a matched student data set with over 6,500,000 student-level observations from over 1,853,000 charter students and a matched comparison group. We present our findings about learning outcomes measured in days of learning. The measure uses a benchmark of learning: the average student in TPS will obtain a year’s learning in a year’s time. If a student makes more (or less) progress [during a 180 day school year,] we present that as additional (or fewer) days of learning. 

Takeaways by Macro Roundup® AI

  1. The National Charter School Study III assembled over 6,500,000 student-level observations, drawn from more than 1,853,000 charter students and a matched comparison group, to compare charter outcomes with the traditional public schools those students would otherwise have attended.
  2. The study's data set covered 81% of tested public school students in the United States, which the authors describe as one of the largest student-level observation data sets created to date.
  3. The study reports learning outcomes in days of learning, benchmarking the average traditional public school student at a year's learning in a year's time and expressing charter results as additional or fewer days within a 180-day school year.

AI Summary. Most of the rich world's decline in inflation had already occurred before the fastest period of growth in world trade and global supply chains ended, and the gap between goods and services inflation stayed constant despite goods being far more traded. Items facing low-cost Chinese competition, such as clothing and footwear, are roughly 5% of the eurozone consumer price basket.

Alan Beattie Financial Times
Date Posted:

.@alanbeattie argues geopolitical fracturing won’t be inflationary as the deflationary pressure associated with “hyperglobalisation” was overstated.

Did globalization drive the rich world's decline in inflation?

Core argument: In the eurozone, apparel and footwear account for about 5% of the consumer price basket, compared with 15% for housing and utilities and 10% for restaurants and hotels.

The “hyperglobalisation” period when world trade and global value networks grew most rapidly ran from the late 1990s until shortly before the global financial crisis began in 2008. By that point the fall in inflation in the rich world had largely already happened. Given that goods are much more highly traded than services, you’d have expected rising inflation differentials between the two. In fact, the gap remained constant until after the financial crisis, when services inflation actually fell while goods inflation rose. As a rough sense check of the impact of cheaper imports, those goods subject to low-cost Chinese competition like clothing, shoes and electronics make up quite small parts of the consumer price basket. In the eurozone, apparel and footwear are about 5% of the total, compared with 15% for housing and utilities and 10% for restaurants and hotels.

Takeaways by Macro Roundup® AI

  1. In the eurozone, apparel and footwear account for about 5% of the consumer price basket, compared with 15% for housing and utilities and 10% for restaurants and hotels.
  2. The "hyperglobalisation" era of fastest growth in world trade and global value networks ran from the late 1990s until shortly before the 2008 global financial crisis, by which point most of the rich world's fall in inflation had already occurred.
  3. Despite goods being far more highly traded than services, the goods-services inflation gap stayed constant until after the financial crisis, when services inflation fell while goods inflation rose.

AI Summary. About 40–45% of China's manufacturing output comes from exports and 55–60% from domestic demand, making the sector mainly domestically oriented while still relying substantially on external demand. Estimates extending the data beyond the available database suggest the export share has picked up, reflecting a pandemic-era export boom.

Andrew Batson The Tangled Woof
Date Posted:

.@andrewbatson notes China’s growing dependence on external demand as measure by manufacturing value-added output.  China accounts for 31% of global of manufacturing value-added.

How much of China's manufacturing output depends on exports?

Core argument: About 40–45% of China's manufacturing output has come from exports and 55–60% from domestic demand, a split established in 2009 by China's property-and-infrastructure stimulus responding to the 2008 global financial crisis.

In recent years, about 40-45% of China’s manufacturing output has come from exports, while 55-60% has come from domestic demand. This pattern was established in 2009 by China’s massive property-and-infrastructure stimulus in response to the 2008 global financial crisis. Since then, the level of investment activity in the economy has stayed very elevated. So, we can say that China’s manufacturing sector is indeed mainly oriented to domestic demand, but it’s definitely true that the contribution from exports is quite large. A 55-45 split in an economy of China’s size is a pretty significant reliance on external demand. And that reliance has increased more recently. The current edition of the OECD TiVA database ends in 2018; extending the estimates to 2022 shows that the export contribution has probably picked up quite a bit due to the pandemic export boom.  

Takeaways by Macro Roundup® AI

  1. About 40–45% of China's manufacturing output has come from exports and 55–60% from domestic demand, a split established in 2009 by China's property-and-infrastructure stimulus responding to the 2008 global financial crisis.
  2. A 55-45 domestic-export split in an economy of China's size represents significant reliance on external demand, even though China's manufacturing sector is mainly oriented to domestic demand.
  3. The OECD Trade in Value Added database ends in 2018, and extending the estimates to 2022 suggests the export contribution has probably picked up considerably because of the pandemic export boom.

AI Summary. The number of countries with fertility rates below the 2.1 replacement level rose from 98 in 2010 to 124 in 2021, more than half of those with available data, and all 15 of the world's largest economies are below replacement. Fertility is now falling among less-educated women too.

Economist Staff The Economist
Date Posted:

Fertility is declining globally.  In all of the world’s 15 largest economies, fertility is under the replacement rate. @TheEconomist

Are fertility rates falling below replacement across most of the world?

Core argument: The number of nations and territories with fertility rates below the 2.1 replacement rate rose from 98 in 2010 to 124 in 2021, more than half of those with available data, according to the United Nations.

In 2010, there were 98 nations and territories with fertility rates below 2.1 (known as the replacement rate) according to the United Nations. In 2021, that number had risen to 124, or more than half the countries for which data were available. The world’s 15 largest economies all have fertility rates below the replacement rate. Educated women have for decades tended to have fewer children. But fertility among the less educated is now falling. On a global level the link between national incomes and fertility rates has also weakened. India’s fertility rate, for example, fell below 2.1 in 2020, despite a gross domestic product of less than $3,000 per person.

Takeaways by Macro Roundup® AI

  1. The number of nations and territories with fertility rates below the 2.1 replacement rate rose from 98 in 2010 to 124 in 2021, more than half of those with available data, according to the United Nations.
  2. All 15 of the world's largest economies have fertility rates below the replacement rate, and fertility is now falling among less educated women as well as the educated women who have for decades tended to have fewer children.
  3. India's fertility rate fell below 2.1 in 2020 despite a gross domestic product of less than $3,000 per person, as the global link between national incomes and fertility rates has weakened.

Tuesday, June 20, 2023

AI Summary. The EU economy was somewhat larger than the US in 2008 ($16.2tn versus $14.7tn), but by 2022 the US had grown to $25tn while the EU and UK combined reached only $19.8tn. The dollar's status as the world's reserve currency allows the US to finance its ambitions without unsettling markets.

Gideon Rachman Financial Times
Date Posted:

In 2008, the EU economy was 10% larger than the US economy. Today, the US economy is 1/3 larger than the EU and the UK. The US is 50% larger than the EU net the UK. @gideonrachman

In 2008, the EU economy was 10% larger than the US economy. Today, the US economy is 1/3 larger than the EU and the UK. ...

Is Europe's economy falling further behind America's?

Core argument: The US economy grew from $14.7tn in 2008 to $25tn by 2022, while the EU's $16.2tn economy in 2008 reached only $19.8tn combined with the UK by 2022, according to Jeremy Shapiro and Jana Puglierin of the European Council on Foreign Relations.

In 2008, the EU and the US economies were roughly the same size. But since the global financial crisis, their economic fortunes have dramatically diverged. As Jeremy Shapiro and Jana Puglierin of the European Council on Foreign Relations point out: “In 2008 the EU’s economy was somewhat larger than America’s: $16.2tn versus $14.7tn. By 2022, the US economy had grown to $25tn, whereas the EU and the UK together had only reached $19.8tn.” The dollar’s status as the world’s reserve currency gives the Americans the ability to finance their ambitions, without spooking the markets. As one European industrialist puts it: “They can just swipe the credit card.”

Takeaways by Macro Roundup® AI

  1. The US economy grew from $14.7tn in 2008 to $25tn by 2022, while the EU's $16.2tn economy in 2008 reached only $19.8tn combined with the UK by 2022, according to Jeremy Shapiro and Jana Puglierin of the European Council on Foreign Relations.
  2. The EU's economy was somewhat larger than America's in 2008, but the two economies diverged after the global financial crisis.
  3. The dollar's status as the world's reserve currency lets the US finance its ambitions without spooking markets, which one European industrialist describes as the ability to "just swipe the credit card.".

AI Summary. Europe's growth slowdown reflects a widespread drop in productivity growth rather than changes in physical capital accumulation, with human capital growth also mattering but varying by country. The productivity decline is larger than in the US: in countries such as the UK and France, productivity growth fell from about 2% to near zero or negative.

Dietrich Vollrath Economic Growth Blog
Date Posted:

.@DietzVollrath argues that Europe’s slow growth, like the US’s slowing growth, is largely driven by a slowdown in human capital growth related to the aging of baby boomers.

Is Europe's growth slowdown driven by falling productivity growth?

Core argument: Productivity growth in the UK and France tracked about 2% per year until roughly 2006 and then dropped close to zero, at times turning negative, a far more dramatic decline than in the US.

Changes in the accumulation of physical capital were not important for Europe's growth slowdown. Changes in human capital growth were important for Europe's growth slowdown, but that effect varies by country. This also doesn't tell me whether it was demographics (as in the US) or some other factor in human capital, like changes in education or working hours. A significant source of the growth slowdown in Europe is due to a drop in productivity growth, pretty much universally. This drop is larger than in the US. If you look at the US, productivity growth rises up until about 2005, and then starts to abate. But if you look at the UK or France, as examples, their productivity growth just sort of tracks 2% up until about 2006, and then it drops down close to zero percent per year, and at times is negative. That's a far more dramatic drop in productivity growth than the US.

Takeaways by Macro Roundup® AI

  1. Productivity growth in the UK and France tracked about 2% per year until roughly 2006 and then dropped close to zero, at times turning negative, a far more dramatic decline than in the US.
  2. A drop in productivity growth is a significant and nearly universal source of Europe's growth slowdown, and that drop is larger than the US decline, where productivity growth rose until about 2005 before abating.
  3. Changes in physical capital accumulation were not important for Europe's growth slowdown, while changes in human capital growth were important, with effects varying by country and no distinction between demographics, education, or working hours.

AI Summary. The yield on three-month US Treasury bills reached 5.3%, matching the expected 12-month forward earnings yield on the S&P 500 after the Federal Reserve held its policy rate at 5–5.25% while signaling most officials expected two more increases. The index has risen more than 15%, leaving investors uneasy about future returns.

Mary McDougall and Daria Mosolova Financial Times
Date Posted:

The yield on three-month Treasurys, the S&P 500 forward earnings and US investment grade debt have converged at 5.3%.

Do higher short-term Treasury yields reduce the incentive to hold stocks?

Core argument: The yield on three-month US Treasury bills was 5.3%, the same level as the expected 12-month forward earnings yield across the S&P 500.

The yield on three-month US Treasury bills was 5.3%this week after the Federal Reserve held interest rates at between 5 and 5.25% but signaled that most of its officials expected a further two rate rises this year. That is the same level as the expected 12-month forward earnings yield across the S&P 500, which has risen by more than 15% since January. Although it is one of the best half-years for the index in two decades, it has left investors nervous about the potential for future returns.

Takeaways by Macro Roundup® AI

  1. The yield on three-month US Treasury bills was 5.3%, the same level as the expected 12-month forward earnings yield across the S&P 500.
  2. The Federal Reserve held interest rates at between 5 and 5.25% while signaling that most of its officials expected two further rate rises this year.
  3. The S&P 500 has risen by more than 15% since January, one of the best half-years for the index in two decades, yet investors remain nervous about the potential for future returns.

AI Summary. Most consumers' nominal incomes continue to rise faster than before the pandemic without commensurate increases in output or offsetting changes in saving. Excluding volatile pay changes for managerial workers and lower-paid workers in the industries hit hardest by the pandemic, hourly pay has risen at about a 5% annual rate in almost every month.

Matt Klein The Overshoot
Date Posted:

There has been no disinflation since mid-2021 as idiosyncratic supply shocks have faded. The current inflation is being driven by strong nominal wage growth without productivity gains. @M_C_Klein

Is wage growth keeping inflation above the Fed's target?

Core argument: Excluding volatile wage changes for managerial workers and lower-paid workers in the industries hit hardest by the pandemic, hourly pay has risen at a 5% yearly rate in almost every month for nearly a year.

The underlying issue is that most consumers’ nominal incomes continue to rise faster than they did before, without any commensurate increases in output or offsetting changes in saving. Strip out the volatile wage changes for managerial workers and the lower-paid workers in industries hit hardest by the pandemic, and the result (red lines below) is that hourly pay has been rising at a 5% yearly rate almost every month for nearly a year.

Takeaways by Macro Roundup® AI

  1. Excluding volatile wage changes for managerial workers and lower-paid workers in the industries hit hardest by the pandemic, hourly pay has risen at a 5% yearly rate in almost every month for nearly a year.
  2. Most consumers' nominal incomes continue to rise faster than they did before, without commensurate increases in output or offsetting changes in saving, which is identified as the underlying issue.
  3. The period of "easy disinflation" is mostly over, leaving the Federal Reserve to grapple with what comes next.

AI Summary. Using data from a Fortune 500 firm that hired both remote and on-site workers, the authors estimate that shifting on-site workers to remote lowered their hourly calls by 4% relative to already-remote workers, accounting for one third of the productivity gap; worker selection explained the other two thirds.

Natalia Emanuel and Emma Harrington Federal Reserve Bank of New York
Date Posted:

Using evidence from call center workers @NataliaHEmanuel @emma_k_h find that remote work lowered workers’ productivity, but the majority of the gap between onsite and remote work was driven by negative worker selection into remote work. @NewYorkFed

How much of the remote work productivity gap reflects worker selection?

Core argument: Hourly calls of on-site workers who went remote around Covid-19 office closures fell 4% relative to already-remote workers at an American Fortune 500 firm, indicating negative treatment effects accounted for one third of the productivity gap.

We ask two questions: how does remote work affect productivity, and how productive are the workers who choose remote jobs? To quantify each factor, we use data from an American Fortune 500 firm that hired both remote and on-site workers prior to Covid-19. Around the office closures of Covid-19, the hourly calls of on-site workers going remote fell by 4% relative to that of already-remote workers, indicating that negative treatment effects accounted for one third of the productivity gap. After the offices were closed, workers who initially chose remote jobs were 8% less productive than those who initially chose on-site jobs, even though all workers were working at home. Thus, two thirds of the initial productivity gap was due to worker selection.

Takeaways by Macro Roundup® AI

  1. Hourly calls of on-site workers who went remote around Covid-19 office closures fell 4% relative to already-remote workers at an American Fortune 500 firm, indicating negative treatment effects accounted for one third of the productivity gap.
  2. After offices closed and all workers were at home, employees who had initially chosen remote jobs were 8% less productive than those who initially chose on-site jobs, attributing two thirds of the initial gap to worker selection.
  3. Data from an American Fortune 500 firm that hired both remote and on-site workers before Covid-19 separates how remote work affects productivity from how productive the workers who choose remote jobs are.

AI Summary. Nearly one in four people in Canada are immigrants, the largest share among the Group of Seven nations. At its current pace of population growth, Canada — the smallest G-7 country by population — would double its residents in about 26 years and exceed Italy, France, the UK and Germany.

Randy Thanthong-Knight Bloomberg
Date Posted:

Canada’s population is now 40mm people, nearly 25% of them born abroad as Canada’s population growth rate hits 2.7% the highest among advanced economies. @markets

Does mass immigration give Canada an edge in the global labor race?

Core argument: Nearly one in four people in Canada are immigrants, the largest proportion among the Group of Seven nations.

Nearly one in four people in Canada are now immigrants, the largest proportion among the Group of Seven nations. At the current pace of growth, the smallest G-7 country by population would double its residents in about 26 years, and surpass Italy, France, the UK and Germany by 2050.

Takeaways by Macro Roundup® AI

  1. Nearly one in four people in Canada are immigrants, the largest proportion among the Group of Seven nations.
  2. At its current pace of growth, Canada, the smallest G-7 country by population, would double its number of residents in about 26 years.
  3. Canada's population is projected to surpass those of Italy, France, the UK and Germany by 2050.

AI Summary. The S&P 500 index and net Federal Reserve bond-buying are highly correlated, which the author argues makes central bank liquidity a crucial driver of stock prices. On that view, continued balance-sheet shrinkage raises downside risks for equities.

Torsten Sløk Apollo
Date Posted:

Torsten Sløk @apolloglobal notes a high correlation between Fed net QE and the S&P500. He suggests that Fed liquidity provided through the Bank Term Funding Programs has been a crucial driver of the stock market.

Does central bank liquidity drive stock prices?

Core argument: The S&P 500 has risen more than 10% since the collapse of Silicon Valley Bank, a period in which the Federal Reserve has been adding liquidity.

Since SVB collapsed, the Fed has been adding liquidity, and the S&P500 is up more than 10%. The high correlation between Fed net QE and the S&P500 seen in the chart below suggests that Fed liquidity is a crucial driver of the stock market. With the Fed turning more hawkish and continuing QT, the downside risks to equities are growing.

Takeaways by Macro Roundup® AI

  1. The S&P 500 has risen more than 10% since the collapse of Silicon Valley Bank, a period in which the Federal Reserve has been adding liquidity.
  2. The high correlation between Fed net quantitative easing and the S&P 500 suggests that Fed liquidity is a crucial driver of the stock market.
  3. With the Federal Reserve turning more hawkish and continuing quantitative tightening, the downside risks to equities are growing.

AI Summary. A report from a Texas water conservation district shows water levels in the Ogallala Aquifer, spanning eight U.S. High Plains states, have dropped consistently over the past five years. The aquifer supplies water for about 30% of U.S. irrigation, farms producing a quarter of national agricultural output, and drinking water for 82% of residents within its boundaries.

Jayme Lozano Carver The Texas Tribune
Date Posted:

Water levels in the Ogallala Aquifer which provides water for 30% of the US’s irrigation systems has fallen consistently for the past five years. @TexasTribune

Water levels in the Ogallala Aquifer which provides water for 30% of the US’s irrigation systems has fallen...

Are water levels in a major farm-belt aquifer declining?

Core argument: The Ogallala Aquifer supplies water for about 30% of U.S. irrigation systems, supporting farms and ranches that account for a quarter of national agricultural production.

On the heels of Texas’ worst drought in a decade, a report from the High Plains Underground Water Conservation District shows water levels in the Ogallala Aquifer, also known as the High Plains Aquifer, have dropped consistently in the region over the last five years. With only a finite amount of water to be shared throughout the U.S. High Plains region — Texas, Colorado, New Mexico, Kansas, Nebraska, Oklahoma, Wyoming and South Dakota — the Ogallala running dry could have devastating consequences nationwide. The aquifer provides water for about 30% of the nation’s irrigation systems, boosting up the farms and ranches that supply a quarter of the nation’s agricultural production. And for 82% of the people who live within the aquifer’s boundaries, it supplies their drinking water too.

Takeaways by Macro Roundup® AI

  1. The Ogallala Aquifer supplies water for about 30% of U.S. irrigation systems, supporting farms and ranches that account for a quarter of national agricultural production.
  2. A report from the High Plains Underground Water Conservation District shows Ogallala Aquifer water levels in its Texas region declined consistently over five years, following Texas' worst drought in a decade.
  3. The Ogallala Aquifer provides drinking water for 82% of the people living within its boundaries, which span Texas, Colorado, New Mexico, Kansas, Nebraska, Oklahoma, Wyoming and South Dakota.

AI Summary. US venture capitalists have backed more than 200 defence and aerospace deals worth nearly $17bn in a five-month span, exceeding the sector's total annual fundraising in 2019, according to PitchBook data. US venture investment in defence start-ups rose from under $16bn in 2019 to $33bn in 2022.

Tabby Kinder Financial Times
Date Posted:

In the first five months of 2023, US venture capital funds invested nearly $17B in more than 200 deals. This was more than the sector raised in all of 2019. @PitchBook

Is venture capital investment in defence start-ups rising sharply?

Core argument: US venture capitalists agreed more than 200 defence and aerospace deals worth nearly $17bn in the first five months of this year, exceeding what the sector raised during all of 2019, according to PitchBook data.

US venture capitalists have agreed more than 200 defence and aerospace deals in the first five months of this year worth nearly $17bn — more than the sector raised during the entire of 2019, according to data from PitchBook. US venture investment in defence start-ups surged from under $16bn in 2019 to $33bn in 2022, PitchBook data shows. Investors piled a record $14.5bn into such start-ups in the first quarter of this year.

Takeaways by Macro Roundup® AI

  1. US venture capitalists agreed more than 200 defence and aerospace deals worth nearly $17bn in the first five months of this year, exceeding what the sector raised during all of 2019, according to PitchBook data.
  2. PitchBook data show US venture investment in defence start-ups rose from under $16bn in 2019 to $33bn in 2022.
  3. Investors put a record $14.5bn into defence start-ups in the first quarter of this year, according to PitchBook.