Edward Conard

Top Ten New York Times Bestselling Author

  • “…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 must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…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 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
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “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
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Friday, March 7, 2025

AI Summary. The authors estimate that expanded access to oral contraception and abortion shifted childcare workforce composition toward less-educated women, raising lower-skilled childcare employment 69% and cutting higher-skilled employment 20% relative to each group's average. They attribute 57% of the lower-skilled increase to abortion access and estimate the higher-skilled share would have been 1.43x higher without the pill.

Chris Herbst and Erdal Tekin National Bureau of Economic Research
Date Posted:

Herbst and @Erdal_Tekin_ find that “the share of higher-skilled women in child care would have been 1.43 times higher had the pill not been made accessible,” while access to abortion facilitated the movement of low-skilled women into child care.

How did expanded contraception and abortion access reshape the childcare workforce?

Core argument: The authors estimate that full abortion access between ages 14 and 21 raised the likelihood of child care employment by 1.1 percentage points among less-skilled women, a 69% increase from that skill group's mean.

Leveraging state-by-birth cohort variation in access to oral contraceptives and abortion, we find that expanded access throughout the 1960's and 1970's significantly increas[ed] the proportion of less-educated women in the [Childcare] sector while reducing the share of highly-educated workers, [resulting in] a decline in average education levels and wages within the child care workforce. The estimates in Table 1 imply that exposure to abortion access every year between ages 14 and 21 (hereafter called “full access”) increased the likelihood of child care employment by 1.1 percentage points among less-skilled women while full access to the pill reduced the likelihood of child care employment by 0.3 percentage points among higher-skilled women. These effects imply a 69% increase in lower-skilled child care employment and a 20% reduction in higher-skilled employment from the means of each skill group. Our results imply that 57% of the increase in lower-skilled employment can be attributed to an increase in abortion access, and that the share of higher-skilled women in child care would have been 1.43 times higher had the pill not been made accessible.

Takeaways by Macro Roundup® AI

  1. The authors estimate that full abortion access between ages 14 and 21 raised the likelihood of child care employment by 1.1 percentage points among less-skilled women, a 69% increase from that skill group's mean.
  2. The authors estimate that full access to the pill reduced the likelihood of child care employment by 0.3 percentage points among higher-skilled women, a 20% reduction from their mean, and that the higher-skilled share in child care would have been 1.43 times higher absent pill access.
  3. The authors find that expanded access to oral contraceptives and abortion in the 1960s and 1970s raised the share of less-educated women in the child care sector and reduced the share of highly educated workers, lowering average education levels and wages in that workforce.

Related Articles:

AI Summary. An analytics firm estimates that 50% of Mexican exports and 38% of Canadian exports entered the U.S. duty-free under the North American trade pact, while about 40% of U.S. imports from the two countries entered duty-free outside it, leaving roughly 10% of Mexican and 22% of Canadian exports facing any tariffs.

Chao Deng Wall Street Journal
Date Posted:

In 2024, the US imported $1B of duty-free goods per day from Canada and Mexico under USMCA. Firms may be liable for $250mm per day in new tariffs.

How much of Canadian and Mexican exports actually face tariffs?

Core argument: Trade Partnership Worldwide estimated that in 2024 about 10% of Mexican exports to the U.S. faced any tariffs, with 50% entering duty-free under USMCA, while roughly 40% of U.S. imports from Canada and Mexico fell outside USMCA yet still entered duty-free.

The analytics firm Trade Partnership Worldwide (TPW) estimated that in 2024, 50% of Mexican exports and 38% of Canadian exports entered the U.S. duty-free under USMCA. About 40% of U.S. imports from Canada and Mexico fell outside USMCA but still passed through duty-free. The U.S. imposes no tariffs on a host of products, regardless of the supplier country. Only about 10% of total Mexican exports to the U.S. in 2024 faced any tariffs at all. In 2024, only about 22% of Canadian exports to the U.S. faced any tariffs. This included nearly all oil with low tariff rates, rather than products that couldn’t comply with USMCA rules. Generally speaking, under the USMCA, which took effect during Trump’s first term, products enter the U.S. duty-free if businesses can show they comply with certain rules regarding the origins of those products’ components. Because USMCA rules are so complicated, businesses have sometimes chosen to pay a tariff on a given product instead of expending time and money to figure out whether it is USMCA-compliant, according to trade experts.

Takeaways by Macro Roundup® AI

  1. Trade Partnership Worldwide estimated that in 2024 about 10% of Mexican exports to the U.S. faced any tariffs, with 50% entering duty-free under USMCA, while roughly 40% of U.S. imports from Canada and Mexico fell outside USMCA yet still entered duty-free.
  2. Trade experts say USMCA's rules are complicated enough that businesses have sometimes paid a tariff on a product instead of spending time and money determining whether it qualifies as USMCA-compliant.
  3. Trade Partnership Worldwide estimated that in 2024, 38% of Canadian exports entered the U.S. duty-free under USMCA and about 22% faced any tariffs, including nearly all oil at low tariff rates.

Related Articles:

  • The Fiscal, Economic, and Distributional Effects of 20% Tariffs on China and 25% Tariffs on Canada and Mexico — The authors estimate that 25% tariffs on Canada and Mexico plus 20% tariffs on China raise the US effective tariff rate by 7 percentage points to its highest since 1943, lifting the price level 1.0–1.2% and costing households an average $1,600–2,000. They project the economy is persistently 0.3–0.4% smaller.
  • 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.

AI Summary. Output per hour in the U.S. steel industry has fallen 32% since 2017, following the imposition of 25% tariffs on steel imports, while output per hour for the economy as a whole rose 15%. U.S. steel-using firms, which employ roughly 45x as many Americans as steel producers, pay about 75% more for steel than global competitors.

Benn Steil and Elisabeth Harding Council on Foreign Relations
Date Posted:

Output per hour in the U.S. steel industry has fallen by 32% since 2017, before tariffs went into effect in March 2018, compared to a 15% increase for the economy overall. US steel-using firms pay 75% more for steel than their global competitors.

Have steel tariffs reduced productivity in the protected industry?

Core argument: Output per hour in the U.S. steel industry has fallen 32% since 2017, the year before President Trump imposed 25% steel import tariffs in March 2018, while economy-wide output per hour rose 15%.

Import tariffs tend to depress labor productivity in protected industries. By shielding domestic industries from foreign competition, protectionism allows less productive firms to populate the market. By reducing import competition, protectionism removes incentives for domestic firms to invest in efficiency improvements, and by hindering companies from collaboration and knowledge-sharing with foreign ones, protectionism lessens opportunities for technological advance. We looked at labor productivity in the U.S. steel industry since President Trump imposed 25% tariffs on steel imports in March 2018. The results are striking. Output per hour in the U.S. steel industry has fallen by 32% since 2017. For the economy as a whole, output per hour has increased by 15%. The result is that U.S. steel-using firms, which employ roughly 45 times the number of Americans as steel-producing ones, pay about 75% more for steel than do their competitors globally. The conclusion is clear. Steel tariffs are a bad deal for U.S. manufacturers, a bad deal for U.S. workers, and a bad deal for U.S. consumers.

Takeaways by Macro Roundup® AI

  1. Output per hour in the U.S. steel industry has fallen 32% since 2017, the year before President Trump imposed 25% steel import tariffs in March 2018, while economy-wide output per hour rose 15%.
  2. U.S. steel-using firms, which employ roughly 45 times the number of Americans as steel-producing firms, pay about 75% more for steel than their global competitors.
  3. Protectionism tends to depress labor productivity in protected industries by allowing less productive firms to populate the market, removing incentives to invest in efficiency, and limiting collaboration and knowledge-sharing with foreign companies.

Related Articles:

AI Summary. Russia's population decline has accelerated, with births falling 3.4% to 1.22m — the lowest level in roughly 25 years — while deaths rose 3.3% to 1.82m, according to Russia's Federal Statistics Service. The decline is attributed in part to Russia's war on Ukraine, though detailed mortality data has been classified and war deaths enter the statistics with long delays.

Bloomberg Staff Bloomberg
Date Posted:

Russia’s population shrank by ~ 600,000 last year, the fastest pace since the pandemic. Births were down 3.4% to the lowest level since 1999. “Its economy is already starved of labor, threatening the country’s future development and prosperity.”

Is Russia's population decline accelerating despite government pronatalist appeals?

Core argument: Russia recorded 1.22 million births in 2024, down 3.4% from 2023 and the lowest level since 1999, while deaths rose 3.3% to 1.82 million, according to the Federal Statistics Service, known as Rosstat.

Russia’s population is declining at its quickest pace since the Covid-19 pandemic, even after President Vladimir Putin declared that a demographic turnaround is the country’s most important priority. Russia recorded the lowest number of births last year in a quarter of a century, while the number of deaths increased for the first time since the height of the pandemic in 2021. In 2024, 1.22 million people, or 3.4% fewer than in 2023, were born — the lowest level since 1999 — while deaths increased by 3.3% to 1.82 million, according to the Federal Statistics Service, known as Rosstat. The pace of the population decline accelerated by roughly 20% compared to 2023, due in part to the Kremlin’s three-year-old war on Ukraine. The actual impact of the February 2022 full-scale invasion could be greater than what is currently reflected in demographic data. Those killed in the war are included in statistics with great delay, said Alexey Raksha, an independent demographer from Moscow. Detailed statistics on mortality have been classified since 2023.

Takeaways by Macro Roundup® AI

  1. Russia recorded 1.22 million births in 2024, down 3.4% from 2023 and the lowest level since 1999, while deaths rose 3.3% to 1.82 million, according to the Federal Statistics Service, known as Rosstat.
  2. Russia's population decline accelerated by roughly 20% compared with 2023, the quickest pace since the Covid-19 pandemic, due in part to the Kremlin's three-year-old war on Ukraine.
  3. Independent Moscow demographer Alexey Raksha says those killed in the war are included in statistics with great delay, and detailed mortality statistics have been classified since 2023, so the February 2022 invasion's impact could exceed what demographic data show.

Related Articles:

  • Russia’s Birth Rate Slides To Lowest In Quarter Century In 2024 — Russia's state statistics service reported 599,600 births in the first half of the year, 16,000 fewer than the same period a year earlier and the lowest count since 1999. Natural population decline accelerated, with 325,100 deaths recorded over those six months, 49,000 more than a year earlier.
  • Putin’s Existential Problem: Not Enough Russians — Russia's population has been declining for years, with Western estimates of at least 150,000 Russian battlefield deaths in Ukraine, nearly a million people leaving the country after the war began, and births at their lowest level in more than two decades. Russia has pledged to spend up to $157bn over six years on measures supporting families and children.
  • The Wealth of Working Nations — Because of population aging, growth in GDP per capita and GDP per working-age adult have diverged across advanced economies; from 1998 to 2019 Japan's accumulated growth per working-age adult was 31.9% versus 29.5% in the US. The authors find a standard neoclassical growth model calibrated to each country's working-age population tracks output per working-age adult in most economies.

AI Summary. SpaceX lost the upper-stage spacecraft of its Starship rocket shortly after liftoff during a test flight, repeating an earlier failure in which a Starship spacecraft exploded after launch. The company did recover the rocket's booster, guiding it to rest between the launchpad's "chopstick" arms.

Micah Maidenberg Wall Street Journal
Date Posted:

The 8th Starship rocket exploded; like the prior test. The booster was successfully recaptured for the third time.

Did another Starship test flight lose its upper-stage spacecraft after liftoff?

Core argument: SpaceX lost the Starship spacecraft shortly after Thursday's liftoff, repeating a January setback in which a Starship spacecraft blew up not long after launch.

SpaceX launched another Starship rocket Thursday but lost the vehicle’s spacecraft not long after liftoff. Starship has two stages: a booster and a spacecraft that is stacked on top of the booster for liftoff. The spacecraft separates from the booster shortly after launch. In January, SpaceX suffered a similar setback when a Starship spacecraft blew up not long after liftoff. Thursday’s launch marked the eighth time SpaceX launched the Starship rocket since the company started testing the vehicle in flight in April 2023. Before the explosion, SpaceX successfully recaptured the rocket’s booster, which navigated to rest between what the company calls “chopstick” arms on the launchpad. It was the third time SpaceX was able to guide down the booster, critical to the company’s longer-range ambitions to launch the rockets regularly.

Takeaways by Macro Roundup® AI

  1. SpaceX lost the Starship spacecraft shortly after Thursday's liftoff, repeating a January setback in which a Starship spacecraft blew up not long after launch.
  2. Thursday's flight was the eighth Starship launch since SpaceX began flight testing the vehicle in April 2023.
  3. SpaceX recaptured the Starship booster between the launchpad's "chopstick" arms for the third time, a capability critical to the company's longer-range ambitions to launch the rockets regularly.

Related Articles:

  • SpaceX Ship Explodes During Test Flight — SpaceX's experimental Starship spacecraft separated from its booster as designed after liftoff but then exploded, with initial data pointing to a leak that built more pressure inside the vehicle than it could vent. SpaceX said a fire in the rear of the vehicle led it to break apart and fall into predefined hazard areas in the Atlantic Ocean.
  • It’s Not a Space Race, It’s the Space Olympics — The US operates 81% of commercial satellites in orbit and 86% of global effective launch capacity, with NATO allies second in satellites at 11% and China second in launch capacity at 9%. China is pursuing mega satellite constellations and reusable rockets, in many cases copying approaches already proven by US companies.
  • Building an Enduring Advantage in the Third Space Age — The United States and China each logged their highest-ever annual launch rates, at 103 and 66 launches, while Russia fell to 19 and Europe recorded three. The US accounted for roughly half of global launches but 81% of effective launch capacity, since Falcon 9 and Falcon Heavy comprised 93% of US launches.

Monday, March 10, 2025

AI Summary. Large US venture rounds are concentrated in a few high-growth, well-known companies such as OpenAI and Anduril, while most start-ups cannot access similar capital. Industry researchers describe this as an untested departure from traditional venture investing, which backs very early companies on the expectation that one outsized winner covers portfolio losses.

George Hammond Financial Times
Date Posted:
Is Database:
Database

US VCs invested $80B in Q4 ‘24, the highest since 2021, with 40% of total funding going to six large firms including OpenAI, xAI, and Databricks. Q1 ‘25 follows a similar pattern, with $30B raised so far and OpenAI in talks to raise $40B.

Is venture capital abandoning early-stage bets for a few giant companies?

Core argument: US venture funding may reach $80bn this quarter, with $40bn of that from a single round, a concentration PitchBook's Kyle Stanford says dwarfs even the outliers of 2021.

The huge funding rounds being carried out mark a significant departure from traditional venture capitalism, which targets nascent companies and is governed by the “power law” that states the best start-up in a portfolio will more than pay off the losses from the remainder that fail. “We’ve always thought [a venture fund’s] 50x return will come from a seed investment which they exit at IPO,” said Kyle Stanford, director of research at PitchBook. In a largely untested experiment, that logic is now being applied to companies that are orders of magnitude larger. “If you’re OpenAI or Anduril — a high-growth, named brand — you are very well positioned. The money is there for you . . . If you’re on the other side, as most companies are, the money is not there,” said Stanford. “Maybe it ends up at $80bn [raised this quarter], but $40bn of that is just one round…even the outliers in 2021 were minuscule compared to that.”

Takeaways by Macro Roundup® AI

  1. US venture funding may reach $80bn this quarter, with $40bn of that from a single round, a concentration PitchBook's Kyle Stanford says dwarfs even the outliers of 2021.
  2. The scale of these rounds departs from traditional venture capital's "power law," under which, as Stanford describes, a fund's 50x return comes from a seed investment exited at IPO, covering losses from portfolio companies that fail.
  3. Stanford says high-growth, named brands such as OpenAI and Anduril can access abundant capital while most other companies cannot, an application of venture logic to far larger companies that remains largely untested.

Related Articles:

  • Probabilities and Payoffs — Across more than 31,000 global venture capital deals, 62% lost money and over half lost 50–100% of invested capital, offset by tails far fatter than those of public equities or buyouts. The U.S. venture industry held $1.3tn in assets under management and owned more than 58,000 companies in aggregate.
  • The Alchemists — NVIDIA's share of all US capital spending is projected to approach two 20th-century peaks by 2026, and large cloud providers would need $400–500bn in new revenue to earn their traditional 50% gross margin on roughly $250bn of annual data center spending. After the dot-com collapse, Corning's fiber optic revenues did not surpass 2000 levels until 2018 in nominal terms.
  • The Unicorn Boom Is Over, and Startups Are Getting Desperate — More than 354 companies reached $1bn valuations in a single year, but only six have since held initial public offerings, four went public via blank-check mergers, and 10 were acquired, several for less than $1bn. Fewer than 30% of that cohort has raised financing in the past three years, and nearly half of those did so at lower valuations.

AI Summary. 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.

Greg Obenshain Verdad
Date Posted:
Is Database:
Database

As the riskiest borrowers have been absorbed by the $2T private credit market, high-yield spreads have fallen to a historically low level since 2022. @GregObenshain

Has the growth of private credit made high-yield bond indexes safer?

Core argument: Private credit lenders hold as much as $2tn of assets, according to McKinsey, exceeding both the $1.4tn Bloomberg High-Yield Index and the $1.3tn leveraged loan market measured by Fitch.

The numbers are staggering. While the Bloomberg High-Yield Index has about $1.4 trillion of bonds, it is matched by the leveraged loan market with $1.3 trillion of loans, according to Fitch, and is now exceeded by private credit lenders with as much as $2 trillion of private credit assets, according to McKinsey. While the private credit market has experienced rapid growth in the past ten years, the high-yield market is the same size as it was in 2014. Furthermore, over the same period, the share of BBs, the highest-rated portion of the index, has climbed from 41% to 51% of the high-yield index. The high-yield market has gotten safer as private markets have removed risky borrowers from high yield and expanded the pool of risky borrowers in the private credit market.

Takeaways by Macro Roundup® AI

  1. Private credit lenders hold as much as $2tn of assets, according to McKinsey, exceeding both the $1.4tn Bloomberg High-Yield Index and the $1.3tn leveraged loan market measured by Fitch.
  2. The high-yield market is the same size as it was in 2014, while private credit has grown rapidly over the same ten years.
  3. BBs, the highest-rated portion of the high-yield index, climbed from 41% to 51% of the index as private markets drew risky borrowers out of high yield and expanded the pool of risky borrowers in private credit.

Related Articles:

  • Downside Risks Intensifying — Federal workforce layoffs and contract cuts are projected by consensus to eliminate 300,000 jobs, but with studies showing two contractors for every federal employee, total job losses could approach 1mm. Economic policy uncertainty is spiking while credit spreads have not widened and incoming data remain strong.
  • The Calm Before the Storm — Private credit and direct lending have not rewritten the rules of credit risk, and much financial innovation amounts to repackaging risk in higher-fee wrappers. High-yield bonds followed a comparable path: after the 1980s boom, below-investment-grade default rates reached roughly 10.4% and 9.1% before the market matured.
  • Corporate Debt, Boom-Bust Cycles, and Financial Crises — Using a dataset on sectoral credit exposure for 115 economies, the authors find corporate debt accounts for two-thirds of credit expansion before financial crises and three-quarters of nonperforming loans during busts, and that corporate debt expansions predict crises similarly to household debt. Recoveries are slower after corporate debt booms.

AI Summary. The author argues the United States holds the upper hand in a trade conflict because it runs large trade deficits, giving it more imports to tariff than exports and more to gain if companies shift investment and supply chains home. Surplus countries in Europe are argued to suffer most, since their key industries overlap with China's strongest.

Karen Karniol-Tambour New York Times
Date Posted:

Karen Karniol-Tambour argues that if the US reduces its trade deficit, “Europe will suffer most, because their most important industries are exactly those where China has built the biggest advantages.”

Do trade deficits give a country the upper hand in trade wars?

Core argument: The United States holds the upper hand in the trade conflict because its large trade deficits leave it with more imports to tariff than exports, and more to gain if American companies increase domestic investment and bring supply chains home.

If the United States is unwilling to continue to run big trade deficits, it means that the “pie” available to everyone else to produce more than they consume is shrinking. The United States has the upper hand in this trade conflict precisely because it currently runs large trade deficits. It has more imports to tariff than exports, and it has more to gain should American companies respond by increasing domestic investment and bringing supply chains back home. This is the opposite of its positioning during the Great Depression-era trade war, which began with the Smoot-Hawley Tariff Act of 1930. The United States was the one running a trade surplus at the time, so it was more vulnerable to tariffs and protectionist measures. As tariffs ramp up, every country running a surplus with America will find it harder to sell its products in the United States, but those in Europe will suffer most, because their most important industries are exactly those where China has built the biggest advantages.

Takeaways by Macro Roundup® AI

  1. The United States holds the upper hand in the trade conflict because its large trade deficits leave it with more imports to tariff than exports, and more to gain if American companies increase domestic investment and bring supply chains home.
  2. If the United States stops running big trade deficits, the "pie" available to other countries to produce more than they consume shrinks.
  3. European surplus countries stand to suffer most from rising U.S. tariffs because their most important industries are those where China has built the biggest advantages, unlike the Smoot-Hawley era of 1930, when a surplus-running United States was the vulnerable party.

Related Articles:

  • Will China Take Over the Global Auto Industry? — The global auto market has historically been regional, with most cars sold in a region also built there. Overcapacity in China's internal combustion sector, expanding electric-vehicle capacity, ample state bank credit, and a weaker yuan could concentrate global auto production in China absent restrictions such as the US 100% tariff on Chinese electric vehicles.
  • Global Economies, Converging on Equilibrium, Confront a Geopolitical Regime Shift — Global economies are converging on a reasonable equilibrium, with developed-world central banks gradually cutting rates toward what they view as neutral, China prioritizing domestic demand after a deflationary stretch, and artificial intelligence showing potential to enhance productivity. Markets are discounting that stability, with US equity indexes pricing an even more exceptional decade than the last.
  • We Are All Mercantilists Now — The postwar free-trade system depended on American soft power and broad respect for its rules, and as countries defected to mercantilist policies each defection pushed others to respond in kind. China's economic size and its use of currency management, public procurement, state subsidies and protectionism to build leading industries in electric vehicles, solar power and batteries broke the existing order.

AI Summary. The US went from an irrelevant supplier of liquefied natural gas to the world's largest in about seven years, and BloombergNEF estimates its export capacity will expand 60%, with nearly 1 in 3 tankers of the fuel originating in the US by the end of the decade.

Kevin Crowley and Ruth Liao Bloomberg
Date Posted:

Bloomberg estimates that US LNG production capacity will grow 60% over the next two years, and forecasts that by 2030, ~ 1/3 of global exports will be American.

How did the US become the world's largest LNG exporter?

Core argument: BloombergNEF estimates US LNG production capacity will expand 60% during the first half of Donald Trump's second presidency, after the US went from an irrelevant LNG supplier to the world's largest in about seven years.

The US, which in the span of about seven years transformed itself from an irrelevant supplier of LNG into the world’s largest, is set to expand its production capacity by 60% in the first half of Donald Trump’s second presidency, according to an estimate from BloombergNEF. By the end of the decade, almost 1 in every 3 tankers carrying the super chilled fuel will originate in the US, giving Trump his best chance to attain the energy dominance his campaign promised. US natural gas prices have averaged $3.55 per million British thermal units over the past five years, about 70% lower than the European average, providing the economy with a major competitive advantage and helping to underpin both Biden and Trump’s policies to bring US manufacturing back from overseas

Takeaways by Macro Roundup® AI

  1. BloombergNEF estimates US LNG production capacity will expand 60% during the first half of Donald Trump's second presidency, after the US went from an irrelevant LNG supplier to the world's largest in about seven years.
  2. By the end of the decade, almost 1 in every 3 tankers carrying liquefied natural gas will originate in the US, giving Trump his best chance to attain the energy dominance promised in his campaign.
  3. US natural gas prices averaged $3.55 per million British thermal units over the past five years, about 70% below the European average, a competitive advantage that helps underpin Biden and Trump policies to bring manufacturing back from overseas.

Related Articles:

  • Heliocentrism — An energy use must be electrified before green grid electricity can decarbonize it, and while US grid decarbonization continues at a steady pace, the electricity share of final US energy consumption has grown little. Transmission line growth runs well below Department of Energy targets for 2030 and 2035, and transformer delivery times have stretched from 4–6 weeks to 2–3 years.
  • Electricity 2025 — US electricity demand is projected to grow about 2% annually over 2025-2027, an upward revision from an earlier 1% forecast. A study commissioned by the US Department of Energy found data centre electricity use rose from about 60 TWh in 2014 to 176 TWh in 2023, and could reach 325-580 TWh by 2028.
  • Europe Grapples With Energy Crisis, Three Years After Ukraine Invasion — High European natural gas prices have contributed to inflation and prompted factory closures and relocations, with chemical giant BASF closing some production in Germany while making its largest-ever foreign investment in China, where energy costs up to two-thirds less, and fertilizer maker Yara halting ammonia output in Belgium.

AI Summary. A poll of 28 eurozone economists estimated that Germany could raise its debt from 63% to 86% of GDP over a decade without repercussions for growth, implying about €1.9tn of fiscal space. The calculation assumes German nominal output grows 2% a year, from €4.3tn to €5.4tn.

Olaf Storbeck Financial Times
Date Posted:

According to an FT poll of Eurozone economists, Germany could increase debt from 63% of GDP in 2024 to 86% in 2035 “without repercussions on growth.” That translates to €1.9T of fiscal spending for infrastructure and defense in the next decade.

How much more debt can Germany take on without hurting growth?

Core argument: Germany could take on just under €2tn in debt over the next decade without risking damage to growth, according to a Financial Times analysis of a poll of Eurozone economists that supports likely-chancellor Friedrich Merz's fiscal plans.

The German government could take on just under €2tn in debt over the next decade without running the risk of damaging growth, according to a Financial Times analysis of a Eurozone economists poll that supports likely-chancellor Friedrich Merz’s fiscal bazooka. An economists’ poll conducted last week estimated that Europe’s largest economy could raise its fiscal burden from its current level of 63% of GDP to 86% of GDP over the next decade without negative repercussions. The 28 economists’ responses imply fiscal space of €1.9tn. The FT calculations of the €1.9tn in fiscal space assume that German nominal GDP will increase by 2% per year from €4.3tn to €5.4tn by 2035. This estimate is likely to be conservative, as it does not account for any real GDP growth, should inflation match the European Central Bank’s 2% target. The findings were based on 28 quantitative responses given to a question on whether, leaving aside any legal borrowing limits, Germany could raise its federal debt without repercussions on growth.

Takeaways by Macro Roundup® AI

  1. Germany could take on just under €2tn in debt over the next decade without risking damage to growth, according to a Financial Times analysis of a poll of Eurozone economists that supports likely-chancellor Friedrich Merz's fiscal plans.
  2. The 28 economists polled estimated Germany could raise its fiscal burden from 63% of GDP to 86% of GDP over the next decade without negative repercussions, implying €1.9tn of fiscal space.
  3. The Financial Times' €1.9tn estimate assumes German nominal GDP rises 2% a year from €4.3tn to €5.4tn by 2035, and is described as likely conservative because it excludes real GDP growth if inflation matches the European Central Bank's 2% target.

Related Articles:

  • German Borrowing Costs Soar By Most Since 1997 on ‘Historic’ Debt Deal — Germany's incoming governing partners agreed to exempt defense spending above 1% of GDP from the constitutional borrowing limit, create a €500bn off-budget vehicle for debt-funded infrastructure, and loosen borrowing rules for states. Goldman Sachs estimated the package could lift German growth to as much as 2%, versus its 0.8% forecast, if approved and implemented quickly.
  • The Future of European Competitiveness – A Competitiveness Strategy for Europe — A European Union competitiveness report attributes the EU's labour productivity growth gap with the US largely to weaker activity in information and communications technology and large-scale digital services; excluding main ICT sectors, EU productivity was broadly at par with the US from 2000-2019. It estimates Europe's investment share must rise about 5 percentage points of GDP.
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AI Summary. The proposed Mar-a-Lago Accord would have the US offer allies security guarantees and market access in exchange for their intervening to weaken the dollar, expanding US manufacturing, and swapping existing US government debt for new 100-year Treasury bonds. Questions remain about the transition costs, inflation from higher US wage costs, and allies' incentives to participate.

Torsten Sløk Apollo
Date Posted:

Torsten Sløk argues that “the rest of the world may over time begin to decrease its reliance on US markets and also increase their own defense spending,” reducing prospects for “Mar-a-Lago Accord” to weaken the dollar and boost US manufacturing.

Can the US trade security and market access for a weaker dollar?

Core argument: The proposed Mar-a-Lago Accord would trade US security guarantees and market access for the G7, Middle East, and Latin America in return for their agreement to depreciate the dollar, expand US manufacturing, and swap existing US government debt into new Treasury century bonds.

The Mar-a-Largo Accord is the idea that the US will give the G7, the Middle East, and Latin America security and access to US markets, and in return, these countries agree to intervene to depreciate the US dollar, grow the size of the US manufacturing sector, and solve the US fiscal debt problems by swapping existing US government debt with new US Treasury century bonds. For markets, this raises three questions: 1) The changes that are required to existing US manufacturing production, including eliminating Canada and Mexico from all auto supply chains, will take many years. Can the US achieve the long-term gain without too much short-term pain? 2) Will a more segmented global economy with a much bigger manufacturing sector in the US put too much upward pressure on US inflation, given the higher wage costs in the US than in many other countries? 3) With tariffs, the rest of the world may over time begin to decrease its reliance on US markets and also increase their own defense spending. [If so,] what are the incentives for the rest of the world to sign a Mar-a-Lago Accord?

Takeaways by Macro Roundup® AI

  1. The proposed Mar-a-Lago Accord would trade US security guarantees and market access for the G7, Middle East, and Latin America in return for their agreement to depreciate the dollar, expand US manufacturing, and swap existing US government debt into new Treasury century bonds.
  2. Restructuring US manufacturing production under the Accord, including eliminating Canada and Mexico from all auto supply chains, would take many years, raising the question of whether the US can secure long-term gains without excessive short-term pain.
  3. A more segmented global economy with a much larger US manufacturing sector may put upward pressure on US inflation given higher US wage costs, while tariffs may lead other countries to reduce reliance on US markets and increase their own defense spending, weakening their incentive to sign such an accord.

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AI Summary. The Stockholm International Peace Research Institute reports that the US supplied 64% of arms imported by European members of NATO over a five-year period, up from 52% in the prior five years, while those imports more than doubled.

Sylvia Pfeifer, Jana Tauschinski and Charles Clover Financial Times
Date Posted:

Almost two-thirds of arms imports by European NATO members over the past five years were produced by the US; import substitution may reduce this share if Europe follows through on remilitarization.

Is Europe's reliance on US-made weapons growing?

Core argument: The US supplied 64% of arms imported by European NATO members in 2020–2024, up from 52% in 2015–2019, according to data from the Stockholm International Peace Research Institute.

Almost two-thirds of the arms imported by European members of Nato over the past five years were produced by the US, according to new research that underlined the continent’s deep reliance on American-made weapons. Arms imports by the European nations more than doubled between 2020 and 2024 compared with the previous five years, as the region responded to Russia’s full-scale invasion of Ukraine in 2022, according to data from the Stockholm International Peace Research Institute. The US supplied 64% of these arms, up from 52% between 2015-2019. Industry executives have echoed calls that the region needed to reduce dependency on non-European suppliers in order to boost its resilience. There are growing concerns that the US could even decide to withhold critical support for key weapon systems, such as the advanced F-35 fighter jet.

Takeaways by Macro Roundup® AI

  1. The US supplied 64% of arms imported by European NATO members in 2020–2024, up from 52% in 2015–2019, according to data from the Stockholm International Peace Research Institute.
  2. Arms imports by European NATO members more than doubled in 2020–2024 versus the prior five years, as the region responded to Russia's full-scale invasion of Ukraine in 2022.
  3. Industry executives have echoed calls for Europe to reduce dependency on non-European arms suppliers, amid growing concerns that the US could withhold critical support for key weapon systems such as the F-35 fighter jet.

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  • European Defence Shares Jump As Blistering Rally Gathers Pace — European defence stocks and the euro rose as investors bet governments will increase military spending and take on more responsibility for the continent's security, with shares in major contractors including Rheinmetall, Leonardo, Thales, BAE Systems and Saab gaining. European government bonds sold off on expectations of higher spending.
  • The Intellectual Spoils of War? Defense RD, Productivity and International Spillovers — The authors estimate that a 10% increase in government-financed R&D, largely defense, is associated with a 4.3% rise in privately funded R&D across OECD countries, indicating "crowding in" rather than "crowding out." They also find international spillovers raise private R&D abroad, though the overall effect on US productivity growth is modest.