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
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…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
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…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


Tuesday, February 25, 2025

AI Summary. A modeled 25% tariff on all automotive, pharmaceutical, and semiconductor imports is estimated to raise the average effective tariff rate by 5.2 percentage points, to its highest level since 1965, and to raise $980bn over a decade without retaliation or $900bn with it. The authors project lower US real output in both the short and long run.

Ernie Tedeschi Yale University
Date Posted:

Trump’s proposed 25% tariffs on autos, pharma, and semiconductors could raise more than $900 billion in revenue over the next 10 years but would cost the economy roughly $30 billion a year in lost output. @ernietedeschi

How much revenue would sector-specific tariffs raise, and at what output cost?

Core argument: The Budget Lab estimates a 25% tariff on all automotive, pharmaceutical, and semiconductor imports would raise the average effective tariff rate by 5.2 percentage points, to its highest level since 1965.

The Budget Lab modeled a 25% tariff on all automotive, pharmaceutical, and semiconductor imports. The illustrative proposal is the equivalent of a rise in the average effective tariff rate of 5.2pp, bringing it to its highest level since 1965. Were it to remain in place, the policy would raise $980 billion over 2026-35 conventionally-scored without retaliation (0.3% of GDP on average over 10 years), and $900 billion with retaliation (0.2% of GDP). The proposal reduces the short- and long-run level of US real GDP. In calendar year 2025, real GDP growth is 0.2pp lower without retaliation and 0.3 percentage point with. In the long-run, US output is still -0.8 to -0.12% lower without retaliation and almost twice as much with. That’s the equivalent of the US economy being permanently smaller by $23-$35 billion annually in 2024 dollars.

Takeaways by Macro Roundup® AI

  1. The Budget Lab estimates a 25% tariff on all automotive, pharmaceutical, and semiconductor imports would raise the average effective tariff rate by 5.2 percentage points, to its highest level since 1965.
  2. The Budget Lab projects the tariffs would raise $980 billion over 2026–35 conventionally scored without retaliation (0.3% of GDP on average over 10 years) and $900 billion with retaliation (0.2% of GDP).
  3. The Budget Lab estimates 2025 real GDP growth would be 0.2 percentage point lower without retaliation and 0.3 percentage point lower with it, leaving the US economy permanently smaller by $23–$35 billion annually in 2024 dollars.

Related Articles:

  • A User’s Guide to Restructuring the Global Trading System — During the 2018–2019 U.S.–China trade war, the effective tariff rate on Chinese imports rose 17.9 percentage points while the renminbi depreciated 13.7% against the dollar, leaving after-tariff import prices in dollars up just 4.1%. The author argues this currency offset of more than three-fourths of the tariff explains why inflation pressure was negligible.
  • Tariffs and Exchange Rates (and Stephen Miran) — The author argues that a universal tariff would prompt enough dollar appreciation to make US exports more expensive abroad, reducing trade flows in both directions while leaving the trade deficit roughly unchanged. Attempting to offset the export drag through deregulation would shift production away from import-competing goods, again leaving a similar trade deficit.
  • Trump Widens Trade Fight to Include Global Taxes and Regulation — The US has directed economic officials to calculate new country-by-country "reciprocal" tariffs based on the total tariff, tax, regulatory, currency and other barriers facing US exports, treating value-added taxes as a trade barrier. If value-added tax rates are added to existing tariff rates, India would face the highest rate at 29%, followed by Brazil and the European Union.

AI Summary. Using micro data on rental properties, the authors document that low-rent housing earns substantially higher total returns than high-rent housing, with annual returns 1.74% higher in Belgium, 3.6% in the Netherlands, and 3.86% in the United States. They argue risk-based explanations cannot account for the full gap, pointing instead to limits to arbitrage in the low-end rental market.

Sven Damen, Matthijs Korevaar, and Stijn Van Nieuwerburgh National Bureau of Economic Research
Date Posted:

Despite significantly higher returns for low-income housing in the US and two European countries, institutional investors shy away from the market, limiting investment and leaving poor tenants facing steeper rents. @damensven @SVNieuwerburgh

Does low-rent housing earn higher returns than high-rent housing?

Core argument: Annual total returns on rental housing are higher for low-rent than high-rent properties by 1.74% in Belgium, 3.6% in the Netherlands, and 3.86% in the United States, according to the authors' micro data.

We document a strong negative relationship between the level of rents and the return to rental housing. An investment in houses in the cheapest 10% of the market earns returns that are substantially higher than an investment in the most expensive 10%. Using high-quality micro data, we show that this relationship holds robustly across housing market settings and time periods. It is present in gross and net rental yields as well as in capital gain yields. Combining net yields with capital gain yields, we arrive at the total return on rental properties. Annual returns are 1.74% higher in Belgium, 3.6% in the Netherlands, and 3.86% in the United States for low-rent than high-rent properties. Investors in low-end properties earn significantly higher returns. We argue that natural risk-based explanations such as systemic risk, regulatory risk, or idiosyncratic cash-flow risk associated with underdiversified portfolios are unlikely to explain the entire return gap. Rather, there appear to be limits to arbitrage that plague the low-tier rental market segment. Most landlords display strong local bias and lack the resources to scale up due to financial constraints. The largest institutional landlords who could arbitrage away the returns are held back by reputation concerns and potential diseconomies of scale. This equilibrium allows for medium-scale geographically-concentrated investors to earn excess returns, at the expense of low-income tenants.

Takeaways by Macro Roundup® AI

  1. Annual total returns on rental housing are higher for low-rent than high-rent properties by 1.74% in Belgium, 3.6% in the Netherlands, and 3.86% in the United States, according to the authors' micro data.
  2. The authors document a strong negative relationship between rent levels and rental housing returns, with houses in the cheapest 10% of the market earning substantially higher returns than the most expensive 10%, in gross and net rental yields and capital gain yields.
  3. The authors argue that risk-based explanations such as systemic, regulatory, or idiosyncratic cash-flow risk are unlikely to explain the entire return gap, pointing instead to limits to arbitrage from landlords' local bias, financial constraints, and institutional landlords' reputation concerns.

Related Articles:

  • The Determinants Of Declining Internal Migration — A 10% increase in wages where people live is associated with 3.5% less migration, while a 10% increase in destination wages is associated with 7.8% more migration; a 10% rise in destination home prices is associated with 2.6% less migration. The authors find wage responses alone would have raised migration rates, but housing-related factors more than offset them.
  • Where is Standard of Living the Highest? Local Prices and the Geography of Consumption — The authors estimate that geographical differences in cost of living are especially large for low-income US households, and that expensive cities offer college graduates a standard of living similar to affordable cities while offering less-educated households a lower one. A high school dropout household moving from the most affordable to the most expensive commuting zone would see consumption fall 18.5%.
  • Housing and the American Worker — Wages net of housing costs were once substantially higher in high-density areas than low-density areas for workers both with and without college education, but over the past half-century that urban wage premium has persisted only for college-educated workers, not for those with a high school degree or less.

AI Summary. The US Treasury aims to cut the federal deficit to 3% of GDP by 2028, paired with 3% sustained growth and an additional 3m barrels a day of oil production, arguing this and deregulation will lower long-term interest rates. The 10-year Treasury yield has traded between 4.3% and 4.7%, above the roughly 3.8% seen earlier.

Liz Capo McCormick, Enda Curran, and Gregory Korte Bloomberg
Date Posted:

At 4.3%, the 10-year is off recent highs of ~4.7%. “Not many on Wall Street are stating the case too loudly for Musk and Bessent engineering lower yields. There are small signs, though, that investors aren’t entirely ruling it out.”

Will deficit cuts and faster growth push long-term Treasury yields lower?

Core argument: The 10-year Treasury yield has swung between 4.3% and 4.7% since Trump took office, up from just under 4.3% on the eve of his election and around 3.8% in the summer, when Musk first floated the Department of Government Efficiency to Trump.

Since Trump took office, the 10-year yield has swung between 4.3% and 4.7%. This is up both from where it was on the eve of his election (just under 4.3%) and from back in the summer, when Musk first floated the idea to Trump of creating a group, the Department of Government Efficiency, to gut spending (around 3.8%). To try to push the rate down, Bessent’s goal is, with Musk’s help, to trim the deficit to 3% of GDP by 2028 and then to pair it with 3% sustained economic growth and boosting oil production by 3 million barrels a day. This, as well as deregulation, [Bessent] sees as set to trigger lower long-term rates. Not many on Wall Street are stating the case too loudly for Musk and Bessent engineering lower yields. There are small signs, though, that investors aren’t entirely ruling it out. US Treasuries in recent weeks have outperformed similar maturity interest-rate swaps. “The bond markets do not currently reflect the savings that I’m confident we can achieve,” [Musk said] “If you’re shorting bonds, I think you’re on the wrong side of the bet.”

Takeaways by Macro Roundup® AI

  1. The 10-year Treasury yield has swung between 4.3% and 4.7% since Trump took office, up from just under 4.3% on the eve of his election and around 3.8% in the summer, when Musk first floated the Department of Government Efficiency to Trump.
  2. Bessent's goal is to trim the deficit to 3% of GDP by 2028, paired with 3% sustained economic growth and oil production up 3 million barrels a day, which along with deregulation he sees as triggering lower long-term rates.
  3. Musk said the bond markets do not currently reflect the savings he is confident of achieving and that investors shorting bonds are on the wrong side of the bet, while US Treasuries have recently outperformed similar-maturity interest-rate swaps.

Related Articles:

  • 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.
  • The Move in Long Rates Is Very Unusual — The Federal Reserve has cut its policy rate by 100 basis points while 10-year interest rates have risen by 100 basis points over the same stretch, a highly unusual divergence. Possible explanations include fiscal worries, weaker foreign demand for U.S. debt, or rate cuts that were not justified.
  • Data Update 4 for 2025: Interest Rates, Inflation and Central Banks! — Interest rates are ultimately driven by macroeconomic fundamentals, with an "intrinsic risk-free rate" defined as the sum of the inflation rate and real GDP growth tracking the observed 10-year Treasury bond yield closely. On this view, central banks' influence comes from preferential access to data on those fundamentals, their capacity to alter them, and their credibility.

AI Summary. A review of 695 hedge funds holding $3.1tn in gross equity positions ($2.0tn long, $1.1tn short) finds Amazon, Meta, Microsoft, Nvidia, Alphabet, and Apple remain the most popular long positions. Hedge funds trimmed the "Magnificent 7" on net, adding only to Tesla.

Ben Snider, Jenny Ma, David Kostin, Ryan Hammond, Daniel Chavez and Kartik Jayachandran Goldman Sachs
Date Posted:

Despite a modest drop in Magnificent 7 investments, Goldman Sachs finds that the most popular positions for 695 hedge funds with $3.1T of equity positions remain large-cap tech.

Are hedge funds still crowding into the largest technology stocks?

Core argument: The Hedge Fund Trend Monitor covers 695 hedge funds holding $3.1 trillion of gross equity positions, split between $2.0 trillion long and $1.1 trillion short.

This Hedge Fund Trend Monitor analyzes 695 hedge funds with $3.1 trillion of gross equity positions ($2.0 trillion long and $1.1 trillion short). The mega-caps continue to sit atop our list of the most popular hedge fund long positions. AMZN, META, MSFT, NVDA, GOOGL, and AAPL remain as the six most popular stocks. Hedge funds trimmed positions on net in the Magnificent 7 during 4Q. Except for TSLA, which funds added to during 4Q, the Magnificent 7 still sit atop of our Hedge Fund VIP list of the most popular long positions.

Takeaways by Macro Roundup® AI

  1. The Hedge Fund Trend Monitor covers 695 hedge funds holding $3.1 trillion of gross equity positions, split between $2.0 trillion long and $1.1 trillion short.
  2. AMZN, META, MSFT, NVDA, GOOGL, and AAPL remain the six most popular hedge fund long positions, with mega-caps atop the list.
  3. Hedge funds trimmed Magnificent 7 positions on net during 4Q, except for TSLA, which funds added to, and the Magnificent 7 still sit atop the Hedge Fund VIP list of most popular long positions.

Related Articles:

  • On Bubble Watch — Data from J.P. Morgan Asset Management covering monthly observations over a 27-year period show a strong relationship between the S&P 500's starting price-to-earnings ratio and its annualized return over the following ten years, with higher starting valuations consistently followed by lower returns. Purchases at a multiple near today's 22x were followed by ten-year returns between +2% and -2%.
  • US Exceptionalism: Drivers of Equity Outperformance and What’s Needed for a Repeat — US companies need about 7% earnings-per-share growth to deliver a normal 4% equity risk premium above the risk-free rate, versus about 3% for other developed markets, with the highest expectations embedded in technology and the largest US tech firms. Chinese companies could generate a 4% risk premium over Chinese bonds with no earnings growth.
  • Concentration & Correction – What To Do Next — The authors argue the equity market decline is a correction rather than the start of a sustained bear market, with valuations having reached very high levels, particularly in the US, where stocks remain expensive relative to history even excluding large-cap technology. They contend US market and technology-sector dominance reflects superior fundamentals rather than a bubble built on irrational exuberance.

AI Summary. Apple's pledge to spend more than $500bn in the U.S. over four years, including domestic suppliers and a facility making servers for its artificial-intelligence services, may largely reflect spending already expected. Wall Street projects nearly $1.3tn in total global spending over four years, and roughly 40% of that equals about $505bn.

Dan Gallagher Wall Street Journal
Date Posted:

Apple’s plans to spend $500B on capital investment and operating expenses in the US over the next four years reflect modest growth from the company’s 2021 to 2024 baseline.

Does a large U.S. investment pledge represent new spending?

Core argument: Apple announced plans to spend more than $500 billion in the U.S. over the next four years, including outlays with domestic suppliers and a manufacturing facility for servers supporting its Apple Intelligence service, plus a Detroit facility to train U.S. manufacturers.

Apple announced plans Monday morning to spend more than $500 billion in the U.S. over the next four years. The outlay will include money spent with domestic suppliers and on the opening of a manufacturing facility to produce the servers needed to support the company’s artificial-intelligence service, called Apple Intelligence. The company also said it plans to open a facility in Detroit to train “the next generation of U.S. manufacturers.” Unclear, though, is how much of the planned spending is actually new. Apple has spent about $1.1 trillion over the past four fiscal years on total operating expenses and capital expenditures—and Wall Street expects nearly $1.3 trillion in total spending over the next four years, according to consensus estimates by Visible Alpha. While Apple doesn’t break out its expenses per geography, about 43% of its revenue comes from the Americas region, which it defines as North and South America. Assuming the U.S. constitutes the large bulk of that number, and if spending is about in line with revenue, then a rough figure of 40% of projected global spending through the 2028 fiscal year equates to about $505 billion.

Takeaways by Macro Roundup® AI

  1. Apple announced plans to spend more than $500 billion in the U.S. over the next four years, including outlays with domestic suppliers and a manufacturing facility for servers supporting its Apple Intelligence service, plus a Detroit facility to train U.S. manufacturers.
  2. Wall Street consensus estimates from Visible Alpha put Apple's total global spending at nearly $1.3 trillion over the next four years, compared with about $1.1 trillion in operating expenses and capital expenditures over the past four fiscal years.
  3. About 43% of Apple's revenue comes from the Americas, and applying a rough 40% share to projected global spending through fiscal 2028 yields roughly $505 billion, leaving unclear how much of the pledged U.S. investment is new.

Related Articles:

  • Microsoft Dropped Some AI Data Center Leases, TD Cowen Says — Microsoft has voided data center leases totaling a couple of hundred megawatts of capacity and stopped converting preliminary agreements into formal leases, according to brokerage TD Cowen's checks with supply chain providers. TD Cowen also says Microsoft is redirecting some planned international spending to the US, suggesting a material slowdown in international leasing.
  • A Severe Case of COVIDIA: Prognosis For An AI-Driven US Equity Market — Computing cycles move from infrastructure to platforms to applications, and NVIDIA data center revenues as a share of market-wide capital spending are projected to reach levels last seen at the 1969 mainframe peak and the dot-com boom. Large cloud providers spend more than twice as much training foundational models as running them for customers.
  • Are We on the Brink of an AI Investment Arms Race? — Spending on AI chips and data centers was a bit below $100bn in 2023, around 0.4% of US GDP, and the broader set of companies exposed to AI-related investment has not yet seen a major jump in sales. The authors argue the underlying dynamics point to a spending surge large enough to shape the business cycle.

AI Summary. China's leadership held a high-level symposium with private sector entrepreneurs, including leaders in technology and emerging industries, which can produce short-term boosts to confidence, household consumption, and business activity. The author argues that without shifting the growth model toward a higher household share of GDP—requiring transfers from businesses or governments—such confidence-boosting will not sustainably raise domestic demand.

Michael Pettis China Financial Markets
Date Posted:

Xi’s belated public embrace of China’s entrepreneurs won’t restore robust growth until policy changes to raise household spending and domestic demand. @michaelxpettis

Can boosting private sector confidence sustainably raise China's domestic demand?

Core argument: Xi Jinping spoke at a high-level symposium of private sector entrepreneurs on February 17, the first meeting of its kind since 2018, attended by leading figures from China's technology and emerging sectors.

On February 17, Chinese President Xi Jinping set off a frisson of economic excitement by speaking at a high-level symposium of private sector entrepreneurs. The first meeting of its kind since 2018, it was attended by some of the leading lights of China’s technology and emerging sectors. The right kind of pep talks may indeed create short-term boosts to confidence, which in turn can create short-term boosts to household consumption and spur businesses to eagerly respond. However, the structural view of the decline in consumption growth implies that without a transformation of the growth model toward a higher household share of GDP—which inevitably requires either explicit or implicit transfers from businesses or governments, showing why it is so difficult to pull off)—confidence-boosting pep talks won’t create sustainable increases in domestic demand.

Takeaways by Macro Roundup® AI

  1. Xi Jinping spoke at a high-level symposium of private sector entrepreneurs on February 17, the first meeting of its kind since 2018, attended by leading figures from China's technology and emerging sectors.
  2. The right kind of pep talks may create short-term boosts to confidence, which can in turn lift household consumption and spur businesses to respond.
  3. The structural view of China's declining consumption growth implies that without shifting the growth model toward a higher household share of GDP—which requires explicit or implicit transfers from businesses or governments—confidence-boosting talks won't sustainably raise domestic demand.

Related Articles:

  • 2023 Letter — Rising numbers of Chinese nationals are being apprehended at the US-Mexico border, with US officers encountering around 1,000 in one month early in the year and nearly 5,000 by November. Most Chinese emigrants leave through legal means, going primarily to Singapore, Japan, and Thailand.
  • Chinese Venture Capitalists Force Failed Founders On To Debtor Blacklist — More than 80% of venture and private equity deals in China contain redemption clauses requiring companies, and often founders personally, to buy back investors' shares with interest if targets such as an initial public offering timeline or revenue goals are missed, according to estimates by law firm Lifeng Partners.
  • DeepSeek FAQ — Consumers and businesses stand to gain most from a future of effectively free AI products, along with big consumer tech companies, since a world of free AI makes product and distribution the decisive advantages they already hold. China also benefits, and the United States faces a choice between expanding chip export restrictions and permission-based regulation or allowing itself to compete.

Wednesday, February 26, 2025

AI Summary. South Korea's fertility rate of 0.7 is the lowest of any nation and may be the lowest in recorded history; if sustained, each generation would be about a third the size of the one before, with every 100 people of childbearing age producing roughly 12 grandchildren. Annual births fell from 1m in 1970 to 230,000 in 2023.

Gideon Lewis-Kraus The New Yorker
Date Posted:

South Korea’s current fertility rate of 0.7 implies “Every 100 contemporary Koreans of childbearing age will produce, in total, about 12 grandchildren.” Gideon Lewis-Kraus notes “population loss is an apocalypse on an installment plan.”

How quickly does a fertility rate of 0.7 shrink each generation?

Core argument: South Korea's fertility rate of 0.7 is the lowest of any nation in the world and may be the lowest in recorded history.

South Korea has a fertility rate of 0.7. This is the lowest rate of any nation in the world. It may be the lowest in recorded history. If that trajectory holds, each successive generation will be a third the size of its predecessor. Every hundred contemporary Koreans of childbearing age will produce, in total, about twelve grandchildren. The country is an outlier, but it may not be one for long. Middle-aged Koreans remember a time when children were plentiful. In 1970, a million Korean babies were born. An average baby-boomer classroom had seventy or eighty pupils, and schools were forced to divide their students into morning and afternoon shifts. It is as though these people were residents of a different country. In 2023, the number of births was just two hundred and thirty thousand.

Takeaways by Macro Roundup® AI

  1. South Korea's fertility rate of 0.7 is the lowest of any nation in the world and may be the lowest in recorded history.
  2. If South Korea's fertility trajectory holds, each successive generation will be a third the size of the one before it, with every 100 Koreans of childbearing age producing about 12 grandchildren.
  3. Korean births fell from a million in 1970, when baby-boomer classrooms held seventy or eighty pupils and schools ran morning and afternoon shifts, to 230,000 in 2023.

Related Articles:

  • The Age of Depopulation: Surviving a World Gone Gray — The United States remains the main outlier among developed countries resisting depopulation, with fertility of just over 1.6 births per woman — high for a rich country but below the 2.1 replacement threshold — plus steady immigration. The Census Bureau projects the U.S. population will peak around 2080 and decline continuously thereafter.
  • East Asia’s Coming Population Collapse — United Nations projections show China's population falling 8%, Japan's 18%, South Korea's 12%, and Taiwan's 8% between 2020 and 2050, while the US population rises 12%. Working-age people per person over 65 are projected to drop to about 1.8 in China and 1.2 in Japan and South Korea.
  • Korea Finance Nominee Likens Aging Demographics to Titanic Iceberg — South Korea's finance minister nominee argues the country's aging population requires immediate preparation, noting efforts to raise the world's lowest fertility rate would take at least 30 years to yield benefits. A shrinking workforce is a major cause of South Korea's declining potential growth rate, with births per woman at 0.78.

AI Summary. 23% of recent Harvard Business School graduates were still seeking work three months after graduation, up from 10% in 2022, with similar trends at other top programs. The author argues employers are prioritizing relevant experience and specific skills such as data analysis, digital marketing, and AI literacy over general business degrees.

Brent Orrell American Enterprise Institute
Date Posted:

Brent Orrell @AEIecon notes that 23% of last year’s Harvard MBA class had not found a job three months after graduation, vs.10% in 2022. He speculates “Flatter corporate hierarchies mean fewer chairs for people with general business knowledge.”

Are employers valuing specific skills over general business degrees?

Core argument: 23% of recent Harvard Business School graduates were still looking for work three months after graduation, up from 10% in 2022, according to a Wall Street Journal article, with other top-rated programs reporting similar trends.

According to a recent Wall Street Journal article, 23% of recent Harvard Business School grads were still looking for work three months after graduation. In 2022, that figure was only 10%. Other top-rated programs report similar trends. What’s going on? Fundamentally, a rapid evolution is occurring in the labor market. Initially triggered by the COVID-19 pandemic, the economy has been shifting toward automation, remote work, and gig-based employment models. Contrary to what an MBA program might offer, companies are evaluating their organization structures and placing a greater emphasis on relevant job experience and specific skill sets—such as data analysis, digital marketing, AI literacy, and big data—over general business knowledge. Moreover, as employers increasingly recognize the value of non-traditional credentials (e.g., specialized certifications, coding bootcamps, etc.), while eliminating lots of management roles, the playing field is now more level, calling into question the value of the vaunted MBA.

Takeaways by Macro Roundup® AI

  1. 23% of recent Harvard Business School graduates were still looking for work three months after graduation, up from 10% in 2022, according to a Wall Street Journal article, with other top-rated programs reporting similar trends.
  2. Employers are placing greater emphasis on relevant job experience and specific skills such as data analysis, digital marketing, AI literacy, and big data over the general business knowledge an MBA program offers.
  3. Growing employer recognition of non-traditional credentials such as specialized certifications and coding bootcamps, combined with the elimination of many management roles, calls into question the value of the MBA.

Related Articles:

  • The Rapid Adoption of Generative AI — A nationally representative U.S. survey found 39% of people aged 18-64 used generative AI, with more than 24% of workers using it in the prior week and nearly one in nine using it every workday. The authors estimate 0.5-3.5% of U.S. work hours are currently assisted by generative AI.
  • Why Do Wages Grow Faster for Educated Workers? — College graduates sort into professional, non-routine occupations where wages rise much more with job tenure, and the author estimates this occupational sorting explains at least half of the life-cycle growth in the college wage premium. That premium is estimated at 22% at age 26, 49% at age 40, and 56% at age 60.

AI Summary. China's post-pandemic balance-of-payments methodology reports a substantially smaller surplus than its customs trade data, on the rationale that contract manufacturers making goods for foreign firms with offshore intellectual property record inflated export prices. Chinese export prices for smartphones of $300–400 per phone sit near estimated manufacturing costs and well below global wholesale prices, undercutting that rationale.

Brad Setser Council on Foreign Relations
Date Posted:
Is Database:
Database

.@Brad_Setser argues that after a 2022 change in China’s balance of payments methodology, China’s official numbers substantially underreport its surplus. For 2024, he estimates a $800B surplus vs. China’s official figure of $400B.

Does China's export price data support its smaller reported trade surplus?

Core argument: Chinese export prices for made-in-China smartphones to the U.S., the EU and Japan all fall in the $300–400 per phone range, clearly below the global wholesale or retail price.

After the pandemic, China adopted a new methodology for estimating its BoP surplus that substantially reduces the surplus reported in the balance of payments relative to the underlying customs surplus. China claimed that contract manufacturers producing in China for foreign companies with offshore IP (e.g., Apple) were reporting an inflated exports number in the customs exports data; the number in the customs data was supposedly the global wholesale price for a product like the iPhone, not the actual price that the contract manufacturer received from a firm like Apple. But for mobile phones—by far the largest single category of Chinese exports produced onshore by contract manufacturers, China’s story wasn’t in China’s own data. The export price for Chinese-made smartphones to the U.S., the EU and Japan are all in the range of $300-400 per phone. A recent report found that iPhone 15s generally cost over $450 to make, and iPhone 14s were generally closer to $400. U.S. smartphone imports from China are almost entirely Apple phones. And $400 is clearly well below the global wholesale or retail price. What seems to be a technical debate over how Hon Hai’s made-in-China smartphones enter the Chinese customs and BoP data turns out to have rather large consequences.

Takeaways by Macro Roundup® AI

  1. Chinese export prices for made-in-China smartphones to the U.S., the EU and Japan all fall in the $300–400 per phone range, clearly below the global wholesale or retail price.
  2. China's post-pandemic balance of payments methodology substantially reduces its reported surplus relative to the underlying customs surplus, on the claim that contract manufacturers for foreign firms with offshore IP reported inflated export values.
  3. A recent report found that iPhone 15s generally cost over $450 to make and iPhone 14s closer to $400, while U.S. smartphone imports from China are almost entirely Apple phones.

Related Articles:

  • China’s Record Manufacturing Surplus — China's manufacturing trade surplus has reached about 2% of world GDP, exceeding the peak surpluses of export powerhouses like Japan and Germany, and shows no signs of shrinking as policy continues to emphasize advanced manufacturing capacity. The main offsetting manufactured-goods deficit is in the United States rather than commodity exporters.
  • China’s Stunning 2024 Export Growth — Chinese export volumes are up 13% year-over-year while import volumes are up only 2%, a gap that with exports at about 20% of GDP implies a net exports contribution to Chinese growth of close to 2% of GDP. Falling Chinese export prices mean export volumes are growing much faster than the dollar value of exports.
  • The Dangerous Myth of Deglobalization — China's manufacturing surplus rose by about 1 percentage point of global GDP over a four-year span and is far larger than those of Germany and Japan. China's $800bn goods trade surplus depends on the large U.S. trade deficit, which is still indirectly financed by China through the large offshore dollar stockpiles held by Chinese exporters.

AI Summary. Shares in the six largest US defence companies have fallen 4% on average, while Europe's top defence groups, led by Germany's Rheinmetall, have risen almost 40%. South Korean firms have also gained from Europe's rearmament, with Hanwha Aerospace up more than 70% on demand from NATO members including Poland and Romania.

Sylvia Pfeifer, Clara Murray and Steff Chávez Financial Times
Date Posted:

Investors are betting on Pentagon cuts and remilitarization in Europe, as the average value of US defense contractors has fallen 4% since Trump’s inauguration, while suppliers in Europe are up 40% and in South Korea, over 70%.

Are US defence stocks lagging European and South Korean rivals?

Core argument: Shares in the six largest US defence companies have fallen 4% on average since Trump returned to the White House, while Europe's top defence groups, led by Germany's Rheinmetall, have surged almost 40% over the same period.

Shares in the six largest US defence companies have fallen 4% on average since Trump returned to the White House, while those of Europe’s top defence groups, led by Germany’s Rheinmetall, have surged almost 40% in the same period. South Korea’s defence companies have also emerged as winners as they tap into Europe’s rearmament drive. Shares in Hanwha Aerospace, the country’s largest player which has benefited from demand from Nato countries such as Poland and Romania, have risen more than 70%.

Takeaways by Macro Roundup® AI

  1. Shares in the six largest US defence companies have fallen 4% on average since Trump returned to the White House, while Europe's top defence groups, led by Germany's Rheinmetall, have surged almost 40% over the same period.
  2. Shares in Hanwha Aerospace, South Korea's largest defence company, have risen more than 70%, with the group benefiting from demand from Nato countries such as Poland and Romania.
  3. South Korea's defence companies have emerged as winners by tapping into Europe's rearmament drive.

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AI Summary. China, Iran, North Korea, and Russia are challenging the regional foundations of Eurasian stability and forming alignments based on hostility to a liberal international system that constrains illiberal rulers. The article argues that international order flows from power and cannot be preserved without it.

Hal Brands Foreign Affairs
Date Posted:

.@HalBrands argues that Trump intuitively understands that “order flows from power and can hardly be preserved without it,” offering an opportunity to challenge revanchist powers who are on the move.

Does preserving international order depend on the exercise of power?

Core argument: China, Iran, North Korea, and Russia are attacking the regional foundations of Eurasian stability, forging alliances based on hostility to a liberal system that threatens illiberal rulers and inhibits their neo-imperial ambitions.

All around Eurasia’s vibrant, vital periphery, revanchist states are on the move. China, Iran, North Korea, and Russia are attacking the regional foundations of Eurasian stability. They are forging alliances based on hostility to a liberal system that threatens illiberal rulers and inhibits their neo-imperial dreams. War or the threat of war has become pervasive. The norms of a peaceful, prosperous world are under assault. The recurring terror of the last century was that Eurasian aggressors might make the world unfit for freedom by making it safe for predation and tyranny. That danger has flared anew today. Trump isn’t the ideal defender of an imperiled American order. Indeed, one suspects he hardly thinks about international order at all. Trump is a hard-line nationalist who pursues power, profit, and unilateral advantage. He thinks in zero-sum terms and believes the United States has long been made a sucker by the entire world. Yet Trump intuitively understands something that many liberal internationalists forget: order flows from power and can hardly be preserved without it.

Takeaways by Macro Roundup® AI

  1. China, Iran, North Korea, and Russia are attacking the regional foundations of Eurasian stability, forging alliances based on hostility to a liberal system that threatens illiberal rulers and inhibits their neo-imperial ambitions.
  2. War or the threat of war has become pervasive around Eurasia's periphery, reviving the last century's recurring terror that Eurasian aggressors could make the world unfit for freedom by making it safe for predation and tyranny.
  3. Trump is a hard-line nationalist who pursues power, profit, and unilateral advantage and thinks in zero-sum terms, yet he intuitively understands that order flows from power and can hardly be preserved without it.

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  • Can Europe Defend Itself Without America? — European members of NATO have increased defense spending by almost a third in real terms to $476bn, with 23 of NATO's 32 members meeting the alliance's target of spending 2% of GDP on defense, according to NATO. NATO's secretary-general argues the 2% target is insufficient, though tight budgets, high public debt, and competing priorities constrain further increases.
  • The US and Its Allies Face a $10 Trillion Reckoning in the Race to Rearm — World defense spending reached a record $2.2tn, and security officials say military budgets may need to reach Cold War levels of as high as 4% of economic output to deliver on NATO's plans. Bloomberg Economics calculates that US and Group of Seven allies hitting that level would mean over $10tn in additional commitments over a decade.

AI Summary. The World Health Organization has reported an outbreak of an unidentified illness in northwestern Democratic Republic of Congo, with 53 deaths out of 431 reported cases and nearly half of the deaths in one cluster occurring within 48 hours of symptom onset. Ebola and Marburg viruses have been ruled out, and the cause remains unknown.

Eve Sampson New York Times
Date Posted:

World Health Organization is worried about an unidentified illness, linked to three children who ate a bat, that killed 53 people out of 431 cases in the Democratic Republic of Congo.

Is an unidentified deadly illness spreading rapidly in central Africa?

Core argument: An unidentified illness in northwestern Democratic Republic of Congo had killed 53 people out of 431 reported cases as of Feb. 15, according to a bulletin from the World Health Organization's Africa office.

An unidentified illness has killed scores of people and infected hundreds in the Democratic Republic of Congo, the World Health Organization has reported, with preliminary investigations tracing the outbreak to three children who in January ate a bat and died. Fifty-three people in the country’s northwest had died from the disease, out of 431 reported cases as of Feb. 15, and “with nearly half of the deaths occurring within 48 hours of symptom onset” in one of two identified clusters, according to a weekly bulletin published by the W.H.O.’s Africa office. “The outbreak, which has seen cases rise rapidly within days, poses a significant public health threat,” the report said, and “the exact cause remains unknown.” Investigators sent 18 samples to Congo’s capital, Kinshasa, for testing, ruling out Ebola and Marburg viruses.

Takeaways by Macro Roundup® AI

  1. An unidentified illness in northwestern Democratic Republic of Congo had killed 53 people out of 431 reported cases as of Feb. 15, according to a bulletin from the World Health Organization's Africa office.
  2. Preliminary investigations trace the Congo outbreak to three children who ate a bat in January and died, with nearly half of the deaths in one of two identified clusters occurring within 48 hours of symptom onset.
  3. Investigators sent 18 samples to Congo's capital, Kinshasa, for testing and ruled out Ebola and Marburg viruses, with the World Health Organization saying the exact cause remains unknown and the outbreak poses a significant public health threat.

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