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


Thursday, March 20, 2025

AI Summary. About 60% of fixed-rate government debt in advanced economies maturing by 2027 — roughly $9tn — was issued before the recent interest-rate tightening, with weighted average yields below 2% versus projected 10-year rates near 3.6%, implying refinancing at nearly double the original cost. France, Spain, the UK, and the US face heightened vulnerability, with maturing debt exceeding 15% of GDP.

OECD Staff Organisation for Economic Co-operation and Development
Date Posted:

Over the next two years, the US must refinance debt exceeding 25% of GDP at sharply higher rates. Treasuries issued in 2024 carried an average yield approximately 2 percentage points higher than debt maturing in 2025-27.

How much will maturing advanced-economy government debt cost to refinance?

Core argument: About 60% of OECD fixed-rate debt maturing by 2027 — roughly $9tn — was issued in 2021 or earlier, and with weighted average yield-to-maturity below 2% in 2025–27 against projected 10-year rates near 3.6%, it will likely be refinanced at nearly twice original rates.

Around 60% of the fixed-rate debt in the OECD that will mature by 2027 (approximately $9T) was issued in 2021 or earlier, before the recent tightening cycle, most likely at yields below current market rates. The weighted average YTM of the maturing debt in 2025-27, remains below 2% in all three years, [while] the average of the projected 10-year interest rate in OECD countries is expected to remain around 3.6% in 2025. The debt maturing in 2025-27 will, therefore, likely be refinanced at nearly twice the original rates. Increased borrowing needs and high borrowing costs have driven interest payments to a higher share of GDP in 2024, [contributing to] the first increase in the central government marketable debt-to-GDP ratio since 2020. The supply of bonds needing to be absorbed by the market accelerated as central banks continued to scale back their holdings. Four countries — France, Spain, the United Kingdom, and the United States — face heightened vulnerability, with the debt maturing by 2027 exceeding 15% of their current GDP and the average yield-to-maturity on debt issued in 2024 surpassing that of this maturing debt by over 1.5 percentage points.

Takeaways by Macro Roundup® AI

  1. About 60% of OECD fixed-rate debt maturing by 2027 — roughly $9tn — was issued in 2021 or earlier, and with weighted average yield-to-maturity below 2% in 2025–27 against projected 10-year rates near 3.6%, it will likely be refinanced at nearly twice original rates.
  2. France, Spain, the United Kingdom, and the United States face heightened vulnerability, with debt maturing by 2027 exceeding 15% of current GDP and average yield-to-maturity on 2024 issuance exceeding that of the maturing debt by over 1.5 percentage points.
  3. Increased borrowing needs and high borrowing costs pushed interest payments to a higher share of GDP in 2024, contributing to the first rise in the central government marketable debt-to-GDP ratio since 2020, as central banks continued scaling back bond holdings.

Related Articles:

  • Global Government Borrowing Set to Hit Record $12.3tn — S&P Global Ratings estimates global government borrowing will reach a record $12.3tn, a 3% rise in sovereign bond issuance across 138 countries that would lift the total debt stock to a record $76.9tn, or 70.2% of global GDP. S&P attributes the increase to higher defence and other spending by major economies alongside higher interest rates.
  • 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.
  • Brazil’s Slow-Burning Economic Crisis Might Be the U.S. Future — Brazil illustrates a feedback loop in which higher interest rates raise debt-servicing costs—now over 7% of GDP—which in turn lift risk premia and inflation expectations, making fiscal policy less sustainable still. U.S. long-term rates have not fallen despite Federal Reserve cuts, partly reflecting an $11tn debt increase and markets pricing the risk that debt is managed through higher inflation.

AI Summary. Florida's total property-tax levy has roughly doubled over the past decade to more than $55bn as home values surged, with property taxes supplying 18% of county revenue, 17% of municipal revenue and 50%–60% of school-district revenue. Eliminating them would require at least doubling the sales tax to 12%.

Arian Campo-Flores and Deborah Acosta Wall Street Journal
Date Posted:

Florida lawmakers are weighing a first-in-the-nation repeal of property taxes as home affordability erodes. Property taxes have doubled over the last decade to $55B; eliminating them would require doubling the sales tax to 12%.

How much would sales taxes rise to replace property taxes?

Core argument: Florida's total property-tax levy roughly doubled over the past decade to more than $55 billion in fiscal 2024–25 as real-estate values surged, though the state's effective property-tax rate ranked 28th nationally in 2023, according to the Tax Foundation.

Property values in the U.S. increased 27%, adjusted for inflation, between January 2020 and July 2024, according to the Tax Foundation. Median home prices in Florida have skyrocketed, quadrupling in the Miami metro area since 2012 and more than tripling in the Orlando and Tampa metro areas, according to real-estate brokerage Redfin. Average home-insurance premiums in Florida have climbed, rising to $3,731 in 2024 from $1,973 in 2018, according to the Insurance Information Institute and state data. Florida’s effective property-tax rate ranked 28th nationally in 2023, according to an analysis by the Tax Foundation. But as real-estate values have surged, the total amount levied has roughly doubled over the past decade, reaching more than $55 billion in the 2024-25 fiscal year. Florida has no personal income tax, [so] property taxes play a significant role in paying for schools, police, parks and other services. They account for 18% of county revenue, 17% of municipal revenue and 50% to 60% of school-district revenue. If property taxes were eliminated, the sales tax would have to be at least doubled, to 12%, to make up for the lost revenue.

Takeaways by Macro Roundup® AI

  1. Florida's total property-tax levy roughly doubled over the past decade to more than $55 billion in fiscal 2024–25 as real-estate values surged, though the state's effective property-tax rate ranked 28th nationally in 2023, according to the Tax Foundation.
  2. Property taxes account for 18% of Florida county revenue, 17% of municipal revenue and 50% to 60% of school-district revenue, and eliminating them would require at least doubling the sales tax to 12% to replace the lost revenue.
  3. Median home prices have quadrupled in the Miami metro area since 2012 and more than tripled in the Orlando and Tampa metro areas, according to Redfin, while average Florida home-insurance premiums rose to $3,731 in 2024 from $1,973 in 2018.

Related Articles:

  • The Great Florida Migration Is Coming Undone — Florida's housing market is cooling amid excess inventory and weaker buyer demand, with analysts warning some cities could see a price correction. Home insurance premiums in parts of the state are up as much as 400% over five years, pricing out some homeowners and prompting institutional investors to sell properties.
  • Florida’s Home Insurance Industry May Be Worse Than Anyone Realizes — A working paper by researchers at Harvard, Columbia, and the Federal Reserve finds that nearly 20% of Florida insurers rated financially stable by the rating agency Demotech became insolvent, with 99.7% of that agency's ratings in the sample at A or above. The researchers argue this signals Florida's insurance market is more precarious than already known.
  • The Economic Geography Of The 2024 Elections — Counties where government transfer programs such as Social Security, Medicare, Medicaid, and unemployment insurance make up at least a quarter of personal income gave Trump 63% of the vote, while counties where transfers account for less than 15% gave Harris 56%. Transfers supplied 18% of total US personal income.

AI Summary. Research finds children raised outside an intact two-parent family are markedly more likely to struggle in school, with the law, and in the workforce; boys raised outside such families are more likely to be incarcerated than to graduate college. Marriage is also associated with men working harder and fewer deaths of despair.

Brad Wilcox and Maria Baer Deseret News
Date Posted:
Is Database:
Database

American boys raised outside of an intact family with two biological parents are “more likely to go to prison or jail than they are to graduate from college.” @BradWilcoxIFS

Does growing up outside a two-parent family hurt children's outcomes?

Core argument: Boys raised outside an intact family with two biological parents are more likely to go to prison or jail than to graduate from college, while boys raised by two married biological parents are about twice as likely to graduate as to be imprisoned.

Our research has demonstrated the catastrophic social consequences of absentee fatherhood and family breakdown. When children are raised outside of an intact family, those children are markedly more likely to struggle in school, to tangle with the law and to struggle in the workforce. The data show a clear “two-parent advantage” for kids, especially boys. Our most striking finding is that boys raised outside of an intact family with two biological parents are more likely to go to prison or jail than they are to graduate from college. By contrast, boys raised by their two married, biological parents are about twice as likely to graduate from college as they are to land in prison. There’s another surprising discovery in the data. Stable marriages don’t just benefit kids. The obligations of family life motivate men to work harder and smarter. [Further], the data suggest being a married family man also protects men from self-destruction. Deaths of despair, for instance, are markedly lower in places where more men (and women) are married.

Takeaways by Macro Roundup® AI

  1. Boys raised outside an intact family with two biological parents are more likely to go to prison or jail than to graduate from college, while boys raised by two married biological parents are about twice as likely to graduate as to be imprisoned.
  2. Children raised outside an intact family are markedly more likely to struggle in school, tangle with the law and struggle in the workforce, a pattern the authors call a "two-parent advantage" that is especially clear for boys.
  3. The obligations of family life motivate men to work harder and smarter, and the data suggest deaths of despair are markedly lower in places where more men and women are married.

Related Articles:

  • Post-Pandemic Recovery for America’s Prime Age Labor Force: A Tale of Two Sexes — Prime-age women's labor force participation climbed about 5 points above its pre-pandemic level over a decade, while prime-age men's rose barely a point, only just regaining pre-pandemic levels. Despite economic expansion and labor shortages, work rates for prime-age American men are barely as high as at the trough of the severe Reagan-era recession.
  • Men’s Falling Labor Force Participation Across Generations — Each successive generation of prime-age men has shown higher rates of not participating in the labor force, with millennials starting at a higher level and declining more steeply into their mid-30s, a pattern driven by school enrollment. Given rising educational attainment, the authors suggest the sustained rise in male nonparticipation may slow, which could benefit economic growth.
  • Bachelors Without Bachelor’s: Gender Gaps in Education and Declining Marriage Rates — Marriage rates for college-educated women have remained stable over the past fifty years even as the relative supply of college-educated men declined, with the overall decline in marriage driven almost entirely by fewer marriages between non-college women and non-college men. The education gap in women's marriage rates is larger in areas where non-college men face the highest joblessness and incarceration.

AI Summary. Preliminary estimates from the Centers for Disease Control and Prevention show US overdose deaths fell 25% over a 12-month period to about 82,000, led by a falling number of fatalities involving synthetic opioids such as bootleg fentanyl.

Julie Wernau, Brianna Abbott, and Josh Ulick Wall Street Journal
Date Posted:

US drug overdose deaths fell 25% YoY as of Oct 2024, with 82,000 fatalities—driven by a decline in deaths from synthetic opioid deaths like fentanyl. Researchers suggest the drop reflects a grim reality: “the most vulnerable people have died.” @WSJ

Are US drug overdose deaths falling?

Core argument: U.S. overdose deaths fell 25% in the 12 months ending October 2024 versus the prior-year period, to about 82,000 deaths, according to preliminary CDC estimates.

Over the 12 months ending in October 2024, the country saw a 25% decline in overdose deaths compared with the same period the year prior, according to the latest preliminary estimates from the Centers for Disease Control and Prevention. About 82,000 overdose deaths were reported. The leading factor? A falling number of fatalities involving synthetic opioids, a drug class in which bootleg fentanyl is the big killer. That shift occurs in part because the most vulnerable people have died and others have adapted. Many fentanyl users are now smoking the drug instead of injecting it, and some research shows that smoking fentanyl could come with lower risk of overdose, infections and other complications.

Takeaways by Macro Roundup® AI

  1. U.S. overdose deaths fell 25% in the 12 months ending October 2024 versus the prior-year period, to about 82,000 deaths, according to preliminary CDC estimates.
  2. The decline is led by fewer fatalities involving synthetic opioids, the drug class in which bootleg fentanyl is the big killer.
  3. The shift occurs in part because the most vulnerable people have died and others have adapted, with many fentanyl users smoking rather than injecting, which some research links to lower risk of overdose, infections and other complications.

Related Articles:

  • Fentanyl Deaths Are Falling. What’s Behind the Decline? — Gangs mixing fentanyl with the horse tranquilliser xylazine is believed to postpone withdrawal symptoms so users take fewer hits, and to be one factor behind a shift from injecting to smoking fentanyl, which tends to reduce lethality. Analysis of state-level data finds the states furthest into declines in fentanyl mortality are those where xylazine has circulated longest.
  • Importing the Opioid Crisis? International Trade and Fentanyl Overdoses — A study using U.S. mortality and import data finds a positive state-level association between imports per resident and drug overdose death rates, driven by fentanyl and accounting for an estimated 15,000–20,000 deaths per year. The authors estimate that 10% higher imports per resident is associated with an 8.1% higher fentanyl death rate.
  • The Rise in American Pain: The Importance of the Great Recession — The authors find that the rise in reported pain among Americans was almost entirely concentrated in the 2007–2010 recession period rather than following a smooth upward trend, with the disproportionate increase among the less educated also occurring primarily then. The authors state they find this jump difficult to explain.

AI Summary. Nvidia says it will procure roughly $500bn of electronics over the next four years and expects several hundred billion dollars of that to be manufactured in the US, shifting its supply chain back from Asia amid US tariff threats.

Tim Bradshaw and Michael Acton Financial Times
Date Posted:

Nvidia’s CEO and co-founder said the firm will spend $500B on chips and electronics globally over the next four years and “we can easily see ourselves manufacturing several hundred billion of it here in the US,” tilting its supply chain away from Asia.

Are tariff threats pushing chipmakers to shift supply chains to the US?

Core argument: Nvidia chief executive Jensen Huang told the Financial Times the company will procure probably half a trillion dollars worth of electronics over the next four years, and that he can "easily see" several hundred billion of it manufactured in the US.

Nvidia will spend hundreds of billions of dollars on chips and other electronics manufactured in the US over the next four years, its chief executive has said, as the company tilts its supply chain back from Asia in the face of Donald Trump’s tariff threats. “Overall, we will procure, over the course of the next four years, probably half a trillion dollars worth of electronics in total,” Jensen Huang, Nvidia’s chief executive and co-founder, told the Financial Times. “And I think we can easily see ourselves manufacturing several hundred billion of it here in the US.”

Takeaways by Macro Roundup® AI

  1. Nvidia chief executive Jensen Huang told the Financial Times the company will procure probably half a trillion dollars worth of electronics over the next four years, and that he can "easily see" several hundred billion of it manufactured in the US.
  2. Nvidia is tilting its supply chain back from Asia to the US in the face of Donald Trump's tariff threats.

Related Articles:

  • DeepSeek Debates: Chinese Leadership On Cost, True Training Cost, Closed Model Margin Impacts — Estimates put algorithmic progress in artificial intelligence at roughly 4x per year, meaning the compute needed for a given capability level falls 4x annually, with some industry leaders arguing improvements run closer to 10x. The Bank of China announced a $140bn (1tn yuan) five-year subsidy for the AI industry chain aimed at making China self-reliant in science and technology.
  • 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.
  • DeepSeek and the Sincerest Form of Flattery — DeepSeek appears to have trained its models about 45x more efficiently than other leading-edge models, combining existing techniques—activating only 37bn of 671bn parameters at a time, a smaller memory cache, lower-precision training, and multi-token prediction—alongside self-reinforcement learning. Training cost $5.6m, and its interface charges $0.14 per million tokens versus OpenAI's $7.50.

AI Summary. Indonesia's textiles and apparel industry lost roughly 250,000 jobs over two years, with an industry association estimating another 500,000 at risk, amounting to one in four jobs in the sector. Researchers describe this as a new "China Shock," faster than the earlier wave that eliminated as many as 2.4m US jobs.

Katia Dmitrieva, Philip Heijmans, and Prima Wirayani Bloomberg
Date Posted:
Is Database:
Database

China’s efforts to maintain its share of global exports despite a drop in its share of American imports is creating an emerging markets backlash as they lose manufacturing employment.

Is a new China shock destroying manufacturing jobs faster than the first?

Core argument: Indonesia's textiles and apparel industry lost roughly 250,000 jobs over the last two years, according to the Indonesia Fiber and Filament Yarn Producer Association, which estimates another 500,000 are at risk in 2025, effectively wiping out one of four jobs in the sector.

Indonesia lost roughly a quarter-million jobs in the textiles and apparel industry over the last two years, according to the Indonesia Fiber and Filament Yarn Producer Association, which has estimated another half-million are at risk in 2025—effectively wiping out one of four jobs in the sector in a matter of years. That pace is considerably faster than the “China Shock” that claimed as many as 2.4 million US jobs from 1999 to 2011. “This is China Shock 2.0 or China Shock 3.0,” says Gordon Hanson, a professor of urban policy at the Harvard Kennedy School and one of the authors of the research paper that coined the name of the phenomenon. “China has this immense manufacturing capacity, and the goods have to go somewhere.”

Takeaways by Macro Roundup® AI

  1. Indonesia's textiles and apparel industry lost roughly 250,000 jobs over the last two years, according to the Indonesia Fiber and Filament Yarn Producer Association, which estimates another 500,000 are at risk in 2025, effectively wiping out one of four jobs in the sector.
  2. Indonesia's textile job losses are running considerably faster than the original "China Shock," which claimed as many as 2.4 million US jobs from 1999 to 2011.
  3. Gordon Hanson, a Harvard Kennedy School urban policy professor and co-author of the paper that coined the term, calls the episode "China Shock 2.0 or China Shock 3.0," citing China's immense manufacturing capacity and goods that "have to go somewhere.".

Related Articles:

  • Mexico Targets Chinese Steel Imports With Increased Tariff Of Nearly 80% — Mexico imposed a tariff of nearly 80% on some steel imports, including certain Vietnamese exports of cold-rolled steel sheets, after local producers said Chinese steelmakers had strangled their production. Exporters that prove the steel originates outside China are exempt.
  • Cheap Chinese Cars Are Taking Over Roads From Brazil to South Africa — Inexpensive cars from Chinese makers such as BYD, Chery, Great Wall and SAIC are gaining share in emerging markets, reaching nearly 10% of sales in South Africa, 8% in Turkey and close to a third in Chile. Chinese automakers' market share outside China is projected to rise to 13% by 2030 from 3%.
  • 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.

AI Summary. Researchers used a low-cost, lightweight microsatellite to distribute a quantum encryption key nearly 13,000 km between rooftops in Beijing and at Stellenbosch University near Cape Town, encrypting two images. The demonstration is a step toward ultra-secure quantum messaging between any two locations, however distant.

Elizabeth Gibney Nature
Date Posted:

A Chinese team set a distance record in quantum communication by sending an encryption key nearly 13,000 km from China to South Africa via a microsatellite. Quantum key distribution (QKD) establishes ultra-secure messaging between two locations.

Can small satellites enable quantum-encrypted messaging across intercontinental distances?

Core argument: Researchers transmitted a quantum encryption key nearly 13,000 km from a Beijing rooftop to Stellenbosch University near Cape Town, breaking the distance record for quantum communication, in a study published in Nature on 19 March.

Researchers have broken a distance record in quantum communication by sending a secret encryption key nearly 13,000 km from China to South Africa, using a cheap, lightweight ‘microsatellite’. The satellite was able to send pulses of laser light, put into special quantum states, from a rooftop in Beijing to another at Stellenbosch University near Cape Town. The pulses formed a quantum key that was used to encrypt two images — one of China’s Great Wall and one showing part of Stellenbosch’s campus. The feat, a kind of encryption known as quantum key distribution (QKD), is a step towards being able to send ultra-secure messages between any two locations, however distant. It was described in Nature on 19 March.

Takeaways by Macro Roundup® AI

  1. Researchers transmitted a quantum encryption key nearly 13,000 km from a Beijing rooftop to Stellenbosch University near Cape Town, breaking the distance record for quantum communication, in a study published in Nature on 19 March.
  2. The transmission used a cheap, lightweight "microsatellite" that sent pulses of laser light in special quantum states, forming a quantum key that encrypted two images — one of China's Great Wall and one of part of Stellenbosch's campus.
  3. The demonstration of quantum key distribution is a step towards sending ultra-secure messages between any two locations, however distant.

Related Articles:

  • Quantum Error Correction Below the Surface Code Threshold — Researchers report superconducting quantum processors running surface code memories below the error-correction threshold, with the logical error rate suppressed 2.14x per two-step increase in code distance and a 101-qubit code reaching 0.143% error per cycle. The logical memory outlived its best physical qubit by 2.4x.
  • Physicists Question Microsoft’s Quantum Claim — Physicists outside the work have responded cautiously to Microsoft's topological quantum computing claim, noting that the search for topological qubits and the "Majorana" particles underpinning them has a history of bold announcements later withdrawn. Researchers describe the technology as excruciatingly difficult to actually build.
  • Microsoft’s Majorana 1 Chip Carves New Path for Quantum Computing — Microsoft unveiled Majorana 1, a quantum chip built on a Topological Core architecture using a new materials stack of indium arsenide and aluminum, which the company expects will enable quantum computers capable of solving industrial-scale problems within years rather than decades. The topological superconductor produces a qubit that is fast, small, stable, and digitally controlled.

Friday, March 21, 2025

AI Summary. The Federal Reserve cut the monthly cap on Treasury securities allowed to roll off its balance sheet to $5bn from $25bn; because its purchases create interest-bearing bank reserves, slowing the runoff shortens the effective maturity of US public-sector debt. One argument holds this signals fragility in placing government debt amid worsening fiscal policy.

Chris Anstey Bloomberg
Date Posted:

.@LHSummers warns the Federal Reserve’s move to slow the shrinkage of its Treasury holdings indicates “limited absorption capacity in the markets for long-term bonds,” and may reflect preemptive efforts to avoid a debt crisis like the UK in 2022.

Does slowing the balance-sheet runoff signal fragility in placing government debt?

Core argument: The Federal Reserve cut its monthly cap on Treasury runoff to $5 billion from $25 billion, slowing quantitative tightening and shortening the maturity of collective US public-sector debt relative to what it would otherwise be.

The Fed on Wednesday slashed its cap for how much in Treasuries it lets roll off its balance sheet every month to $5 billion from $25 billion. Because the Fed creates bank reserves when it buys Treasuries — and those reserves pay interest at an overnight rate — slowing QT also has the effect of shortening the maturity of the collective debt owed by the US public sector compared with what it would otherwise be. “We’re finding it necessary, in order to place debt, to shorten up” the maturity structure of government obligations, Larry Summers said. “This is Fed policy to contain possible emerging Liz Truss risks — the kind of accident that took place in Britain,” Summers said. “And it’s a reflection of the fact that almost everything we’re hearing on fiscal policy is pointing towards things getting worse, not better.”

Takeaways by Macro Roundup® AI

  1. The Federal Reserve cut its monthly cap on Treasury runoff to $5 billion from $25 billion, slowing quantitative tightening and shortening the maturity of collective US public-sector debt relative to what it would otherwise be.
  2. Larry Summers called the slower runoff pace an alarming signal on debt fragility, saying that placing debt is making it necessary to shorten the maturity structure of government obligations.
  3. Summers described the move as Fed policy to contain possible emerging Liz Truss risks of the kind that occurred in Britain, adding that almost everything heard on fiscal policy points toward things getting worse, not better.

Related Articles:

  • Global Debt Report 2025 — About 60% of fixed-rate government debt in advanced economies maturing by 2027 — roughly $9tn — was issued before the recent interest-rate tightening, with weighted average yields below 2% versus projected 10-year rates near 3.6%, implying refinancing at nearly double the original cost. France, Spain, the UK, and the US face heightened vulnerability, with maturing debt exceeding 15% of GDP.
  • 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.
  • Brazil’s Slow-Burning Economic Crisis Might Be the U.S. Future — Brazil illustrates a feedback loop in which higher interest rates raise debt-servicing costs—now over 7% of GDP—which in turn lift risk premia and inflation expectations, making fiscal policy less sustainable still. U.S. long-term rates have not fallen despite Federal Reserve cuts, partly reflecting an $11tn debt increase and markets pricing the risk that debt is managed through higher inflation.

AI Summary. The US personal saving rate has fallen from levels usually above 10% in 1960–80 to below 5% on average post-pandemic, and with persistent federal budget deficits, total US saving is exceptionally low internationally while investment has not trended down — yielding a sizable, stubborn current account deficit.

Maurice Obstfeld Peterson Institute For International Economics
Date Posted:

Noting the US gross saving rate of 22% is one of the lowest among advanced countries, Maurice Obstfeld rejects @michaelxpettis’ argument that foreign savings “force” chronic US deficits. Foreign assets in the US are ~ equal to the US % of global GDP.

Does low US saving explain the persistent trade deficit?

Core argument: The US personal saving rate has fallen from levels usually above 10% during 1960–80 to an average below 5% in post-pandemic data, with persistent federal budget deficits another cause of the low national saving rate.

The US personal saving rate has fallen from levels usually above 10% during 1960–80 to an average below 5% in post-pandemic data. Persistent federal budget deficits are another cause of the low national saving rate. Total saving in the United States is exceptionally low by international standards. Because US investment has not trended downward, a sizable and stubborn current account deficit has emerged [reflecting the incontrovertible identity NX=S-I]. If it is accurate that countries have a strong preference for claims on America, then we would expect other countries to invest most of their external assets in the United States. This is nowhere close to true. Figure 3 shows the share of the rest of the world’s foreign assets invested in the United States. That share hovered around 19% for the first part of this century before rising to nearly 25% starting around 2014, as the dollar appreciated (raising the relative value of claims on the United States) and the US stock market outperformed. Broadly speaking, these shares track the US share in global GDP, which in 2023 was 25.8%.

Takeaways by Macro Roundup® AI

  1. The US personal saving rate has fallen from levels usually above 10% during 1960–80 to an average below 5% in post-pandemic data, with persistent federal budget deficits another cause of the low national saving rate.
  2. Because US investment has not trended downward while total US saving is exceptionally low by international standards, a sizable and stubborn current account deficit has emerged, reflecting the identity that net exports equal saving minus investment.
  3. The share of the rest of the world's foreign assets invested in the United States hovered around 19% early this century before rising to nearly 25% around 2014 as the dollar appreciated and US stocks outperformed, broadly tracking the 25.8% US share of global GDP in 2023.

Related Articles:

  • Pettis on Obstfeld — Pettis argues that saving rates in China, Japan, South Korea, Germany, Russia and Saudi Arabia are driven by their own domestic policies and conditions, and in turn drive the US saving rate. He notes the US has an open capital account, deep financial markets, and limited intervention in credit allocation.
  • Trade Intervention for Freer Trade — The authors argue the United States should counter surplus countries' trade policies either by restricting their goods exports through tariffs or by restricting their capital inflows through taxes, volume limits, reserve requirements, transaction approvals, or investor eligibility rules. They contend capital controls are a more targeted alternative to uniform tariffs, which impose equal costs on more and less mercantilist countries.
  • 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.

AI Summary. China's commerce ministry has withheld the approval that domestic automakers need to manufacture abroad, holding up BYD's planned Mexican car plant, which the company said would create 10,000 jobs and build 150,000 vehicles a year. Officials are concerned that Mexico's proximity to the US could give Mexico, and possibly the US, access to BYD's advanced technology and knowhow.

Gloria Li, Cheng Leng, Thomas Graham and Kana Inagaki Financial Times
Date Posted:

Beijing is delaying approval for BYD’s announced Mexico facility due to worries about potential technology transfer to the US. BYD sold 40,000 cars in Mexico in 2024 and aims to “double sales volume and open 30 new dealerships in the country in 2025.”

Is China blocking overseas auto plants to keep technology from the US?

Core argument: BYD's planned Mexico plant, announced in 2023 with projections of 10,000 jobs and 150,000 vehicles a year, has not received the approval from China's commerce ministry that domestic automakers need to manufacture overseas, according to two people familiar with the matter.

BYD first announced plans for a car plant in Mexico in 2023, along with intentions to make cars in Brazil, Hungary and Indonesia. It said the Mexican plant would create 10,000 jobs and produce 150,000 vehicles a year. But domestic automakers require approval from China’s commerce ministry to manufacture overseas and it has yet to give approval, according to two people familiar with the matter. Authorities feared Mexico would gain unrestricted access to BYD’s advanced technology and knowhow, they said, even possibly allowing US access to it. “The commerce ministry’s biggest concern is Mexico’s proximity to the US,” said one of the people.

Takeaways by Macro Roundup® AI

  1. BYD's planned Mexico plant, announced in 2023 with projections of 10,000 jobs and 150,000 vehicles a year, has not received the approval from China's commerce ministry that domestic automakers need to manufacture overseas, according to two people familiar with the matter.
  2. Chinese authorities feared Mexico would gain unrestricted access to BYD's advanced technology and knowhow, possibly allowing US access to it, with one person familiar with the matter saying the commerce ministry's biggest concern is Mexico's proximity to the US.
  3. BYD announced plans in 2023 to build cars in Mexico, Brazil, Hungary and Indonesia.

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AI Summary. Boom Belt" states combine high birth rates with low death rates, led by Utah at 13.2 births and 6.3 deaths per 1,000 residents for a natural increase of 6.9 per 1,000. Texas records about 12.7 births versus 9.1 deaths per 1,000, with roughly half its population growth from natural increase.

Aziz Sunderji HomeEconomics
Date Posted:

Looking at natural population growth @AzizSunderji finds that all five metros with the highest natural population growth, births net deaths, in the entire country are in Texas and Utah.

Which states combine high birth rates with low death rates?

Core argument: Utah leads the nation with both the highest birth rate (13.2 per 1,000) and the lowest death rate (6.3 per 1,000), yielding a natural population increase of 6.9 per 1,000 residents.

“Boom Belts”—our name for the states that dominate the top right quadrant of the schematic shown above—are where birth rates are high and death rates are low. Propelled by a culture that encourages early marriage and big families, Utah leads the nation with both the highest birth rate (13.2 per 1,000) and lowest death rate (6.3 per 1,000), creating an impressive natural population increase of 6.9 per 1,000 residents. Meanwhile, Texas tallies about 12.7 births per 1,000 people versus only 9.1 deaths, thanks to an influx of young families and a relatively small senior share. The Houston metropolitan area, for example, maintains a birth rate (12.7 per 1,000) that's more than double its death rate (6.2 per 1,000). Even as a strong economy and affordable housing attract migrants from across the country and abroad, fueling population growth, about half of Texas’s growth still comes from natural increase.

Takeaways by Macro Roundup® AI

  1. Utah leads the nation with both the highest birth rate (13.2 per 1,000) and the lowest death rate (6.3 per 1,000), yielding a natural population increase of 6.9 per 1,000 residents.
  2. Texas records about 12.7 births per 1,000 people against 9.1 deaths, attributed to an influx of young families and a relatively small senior share.
  3. About half of Texas's population growth comes from natural increase, while a strong economy and affordable housing attract migrants from across the country and abroad.

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  • Homes For Young Families: A Pro-Family Housing Agenda — The authors' Young Family Median Multiple, comparing median incomes of 20-34 year-olds to local median home values, finds that virtually every US metro area met a basic affordability standard in 1969 versus just 21% in 2018-2022. New housing completions trailed new household formations by 3.8m units.
  • Young Families Have Continued Leaving Big Cities Post-Pandemic — Large urban counties have continued to lose population of young children even as their overall population growth resumed, driven by immigration. Birth rates in large urban counties have declined twice as fast as in rural counties over the past decade, and the number of children under five fell in 58% of all US counties.

AI Summary. The six largest U.S. pharmaceutical companies by revenue reported a combined U.S. corporate income tax provision of zero or less for their profits, with only Eli Lilly setting aside a significant sum of roughly $1bn. The author attributes this to holding intellectual property offshore, producing patent-protected drugs offshore, and booking profits on U.S. sales offshore.

Brad Setser Council on Foreign Relations
Date Posted:

6 of the top 7 US pharma firms expect negative US federal tax bills in 2024, as several report tax losses. @Brad_Setser asserts this is “a direct function of keeping intellectual property offshore and booking the profit on U.S. sales offshore.”

Why do the largest U.S. drugmakers owe no U.S. corporate income tax?

Core argument: The top six U.S. pharmaceutical companies by revenue set aside zero — less than zero, as several report tax losses — out of their 2024 profit for U.S. corporate income tax, with only Eli Lilly provisioning roughly $1 billion.

Most of the major U.S. pharmaceutical companies (AbbVie, Amgen, Bristol Myers Squibb, Eli Lilly, Johnson and Johnson, Merck, and Pfizer) have reported the amount they have set aside out of their 2024 profit to pay their U.S. corporate income tax bill. That number—when the provisions of the top six U.S. companies by revenue is summed—is zero. Less than zero, actually—as several companies report tax losses. Only Eli Lilly actually set aside a significant sum (roughly $1 billion) for its tax payments to the U.S. Treasury. It is a direct function of keeping intellectual property offshore, investing to produce valuable patent protected drugs offshore, and booking the profit on U.S. sales offshore. In other words, it’s the predictable result of the tax and production structures that most large U.S. pharmaceutical companies have adopted following the 2017 Tax Cut and Jobs Act. The lack of tax payments in the U.S. should not be a surprise. The typical large U.S. pharmaceutical company reports losing money on their U.S. operations. Lots of money apparently.

Takeaways by Macro Roundup® AI

  1. The top six U.S. pharmaceutical companies by revenue set aside zero — less than zero, as several report tax losses — out of their 2024 profit for U.S. corporate income tax, with only Eli Lilly provisioning roughly $1 billion.
  2. The absence of U.S. tax payments follows from keeping intellectual property offshore, investing to produce patent-protected drugs offshore, and booking the profit on U.S. sales offshore.
  3. The typical large U.S. pharmaceutical company reports losing money on its U.S. operations, a predictable result of the tax and production structures adopted after the 2017 Tax Cuts and Jobs Act.

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  • Big Pharma’s Big Tax Dodge — Six major US pharmaceutical firms reported $215bn in US sales versus $170bn abroad, yet attributed $90bn of their combined $100bn in profits to foreign operations and only $10bn to the US. That implies a 5% profit margin in the US and over 50% abroad.

AI Summary. US drone maker Skydio has produced 45,000 drones in total, while Chinese rival DJI likely makes that many every few weeks — a scale gap that matters because production costs fall predictably with cumulative output. The Pentagon's Defense Innovation Unit says that at attrition rates observed in Ukraine, the US military would exhaust its entire drone supply in five days.

Drake Bennett and Ashlee Vance Bloomberg
Date Posted:

The leading US drone manufacturer Skydio has built a cumulative 45,000 drones, a quantity that Chinese drone leader DJI builds every few weeks. The production gap gives DJI a major edge under Wright’s Law: cost declines with cumulative production.

Can US drone makers close the production scale gap with China?

Core argument: Skydio has produced 45,000 drones in total, while DJI, which does not release numbers, in all likelihood makes that many every few weeks, leaving Skydio further behind on Wright's law cost curve.

In the 1920s and ’30s, an aeronautical engineer named Theodore Wright noticed that, as factories made more planes, their production costs steadily declined by a calculable percentage. The dynamic is now referred to as Wright’s law. A challenge for Skydio is that its biggest competitor is a lot further along Wright’s curve. Skydio has produced a total of 45,000 drones; DJI doesn’t release numbers, but in all likelihood it makes that many every few weeks. The American company is doing whatever it can to close the gap: Engineers in its San Mateo offices use a CT scanner to X-ray DJI drones to see how they’re made. According to Trent Emeneker, a program manager for the Pentagon’s Defense Innovation Unit, at the attrition rate currently observed in Ukraine, the US military would exhaust its entire drone supply in five days. Military strategists who focus on drones talk about “attritable mass”: In the future, they argue, war will be waged not by nine-figure next-generation aircraft but by ones that are cheap enough to be disposable.

Takeaways by Macro Roundup® AI

  1. Skydio has produced 45,000 drones in total, while DJI, which does not release numbers, in all likelihood makes that many every few weeks, leaving Skydio further behind on Wright's law cost curve.
  2. At the drone attrition rate observed in Ukraine, the US military would exhaust its entire drone supply in five days, according to Trent Emeneker, a program manager for the Pentagon's Defense Innovation Unit.
  3. Engineers at Skydio's San Mateo offices use a CT scanner to X-ray DJI drones to see how they are made, part of the company's effort to close the gap.

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  • China Is Cutting Off Drone Supplies Critical to Ukraine War Effort — Manufacturers in China have begun limiting sales to the US and Europe of key components used to build drones, a prelude to broader export restrictions on drone parts that Western officials expect Beijing to enforce. China controls nearly 80% of the commercial drone market, according to the Center for Strategic and International Studies.
  • US Efforts to Contain Xi’s Push for Tech Supremacy Are Faltering — Research by Bloomberg Economics and Bloomberg Intelligence finds that of 13 key technologies tracked, China has reached global leadership in five and is catching up in seven others, with clear leads in electric vehicles, automotive software and lithium battery technology. China still struggles to develop manufacturing processes for advanced semiconductors, the main focus of US export controls.