Edward Conard

Top Ten New York Times Bestselling Author

  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…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
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “…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
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Friday, March 28, 2025

AI Summary. The Congressional Budget Office projects the 10-year Treasury note interest rate will average 3.8% over 2025–2055, close to its 3.7% average over the prior three decades, with the inflation-adjusted rate averaging 1.5%. It assesses that long-run rates are largely set by structural factors including demographics, saving and investment behavior, and federal debt.

Molly Dahl, Robert Arnold, Devrim Demirel, et al. Congressional Budget Office
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Debt as a % of GDP will hit an all-time high of 107% in 2029 up from 98% of GDP in 2024, @USCBO forecasts. The forecast assumes 10-year Treasuries will yield 4.1% this year and fall to 3.8% by 2035, close to their 1995-2024 mean of 3.7%.

How high will long-term interest rates average over the next thirty years?

Core argument: CBO projects the interest rate on 10-year Treasury notes will average 3.8% over 2025–2055, similar to the 3.7% average of the past three decades, and stay roughly flat at 3.9% in the first decade and 3.8% in the third.

In CBO’s projections for the 2025–2055 period, the interest rate on 10-year Treasury notes averages 3.8%—similar to the 3.7% average recorded over the past three decades. The interest rate on 10-year Treasury notes remains roughly flat over the 30-year projection period, averaging 3.9% in the first decade and 3.8% in the third decade. The real interest rate on 10-year Treasury notes (calculated by subtracting the percentage increase in the consumer price index from the nominal yield on those notes) is projected to average 1.5% over the 2025–2055 period, 0.3 ppts higher than the average from 1995 to 2024. (Since 2008, the real interest rate on 10-year Treasury notes has averaged 0.1%.) In CBO’s assessment, interest rates are largely determined over the long run by structural factors, including demographic trends, people’s saving and investment behavior, and the amount of federal debt. CBO expects continued downward pressure on interest rates through 2055 because of changes such as slower growth of the labor force, more private domestic and foreign savings available for investment, and slower total factor productivity growth, relative to their averages over the past 3 decades.

Takeaways by Macro Roundup® AI

  1. CBO projects the interest rate on 10-year Treasury notes will average 3.8% over 2025–2055, similar to the 3.7% average of the past three decades, and stay roughly flat at 3.9% in the first decade and 3.8% in the third.
  2. CBO projects the real interest rate on 10-year Treasury notes will average 1.5% over 2025–2055, 0.3 percentage points above the 1995–2024 average, compared with an average of 0.1% since 2008.
  3. In CBO's assessment, interest rates are largely determined over the long run by structural factors including demographic trends, saving and investment behavior, and federal debt, with continued downward pressure expected through 2055 from slower labor force growth, more available private savings, and slower total factor productivity growth.

Related Articles:

  • 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.
  • Larry Summers and Bob Rubin Join Our CIOs to Discuss the Surprising Economic Cycle — Adopting the Simpson-Bowles fiscal consolidation when interest rates were at zero would have risked excessive disinflation, since long rates had no room to fall to provide an offsetting expansionary impulse. After the large run-up in debt and rise in real interest rates, the developing fiscal situation risks inflationary pressure, Treasury market disruption, or crowding out of private investment.
  • The Long-Term Budget Outlook Under Alternative Scenarios for the Economy and the Budget — The Congressional Budget Office projects that if private investment were more sensitive to federal deficits, debt held by the public would exceed 250% of GDP and real national income per person would be 18% ($21,300) lower than its baseline, with the average interest rate on federal debt 2pp higher.

AI Summary. The authors argue the Federal Reserve could relieve Treasury market strain by buying cash Treasuries while fully hedging with offsetting short positions in Treasury derivatives, taking the other side of hedge funds' unwinding of hedged positions. Because this removes no net duration from the market, it distinguishes market-functioning purchases from quantitative easing.

Anil Kashyap, Jeremy Stein, Jonathan Wallen, and Joshua Younger Brookings Paper on Economic Activity
Date Posted:

Stein et al argue that in a repeat of the March 2020 crisis in which hedge funds rapidly unwound leveraged Treasury basis trades (long cash bonds, short futures), the Fed should undertake hedged interventions rather than outright purchases of Treasuries.

Can the Fed calm Treasury markets without removing duration?

Core argument: The hedge-fund fire sale that strained dealer balance sheets was an unwinding of hedged long-cash-Treasuries/short-derivatives positions rather than an outright liquidation of cash Treasuries.

In response to the Treasury-market turmoil positions of March 2020, the Federal Reserve initiated an extraordinarily aggressive program of buying cash Treasuries: between the beginning of March and the end of May, the Fed bought approximately $1.6 trillion of Treasury bonds. A more surgical approach may have advantages over cash purchases of cash securities by the Fed. The fire sale by hedge funds, which in turn creates the severe strain on dealer balance sheets, is not an outright liquidation of cash Treasuries [but] an unwinding of a hedged long-cash Treasuries/short-derivatives position. To relieve stress on dealers, the Fed [could simply] take the other side of this hedge-fund unwind, purchasing cash Treasuries, and fully hedging this purchase with an offsetting short position in Treasury derivatives. [In this case the Fed] is not removing net duration from the market, and hence to a first approximation not attempting to exert downward pressure on long-term interest rates. This draws a key distinction between market functioning purchases, which are designed to stabilize market conditions by providing a buyer of last resort over the short term, and quantitative easing.

Takeaways by Macro Roundup® AI

  1. The hedge-fund fire sale that strained dealer balance sheets was an unwinding of hedged long-cash-Treasuries/short-derivatives positions rather than an outright liquidation of cash Treasuries.
  2. The Federal Reserve could take the other side of that unwind by buying cash Treasuries fully hedged with an offsetting short position in Treasury derivatives, removing no net duration and distinguishing market-functioning purchases from quantitative easing.

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.
  • Summers Says Slowing Balance-Sheet Runoff Pace Is ‘Alarming’ Signal on Debt Fragility — 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.

AI Summary. An analysis of US employment data finds that occupations flagged as highly exposed to automation — including accounting clerks, insurance underwriters, travel agents and legal secretaries — have stayed within their usual employment ranges, while writers and software developers show employment falling away from trend. Both occupations involve linear, self-contained tasks and high freelancing rates.

John Burn-Murdoch Financial Times
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US employment in two fields—software programmers/developers and writers—has broken from trends. @jburnmurdoch attributes this to LLM disruption, noting both roles involve “structured, self-contained tasks” that map closely to AI strengths.

Which jobs are actually losing employment to AI so far?

Core argument: Employment among accounting clerks, insurance underwriters, travel agents and legal secretaries has remained within its usual range despite generative AI's proliferation, even though their daily tasks overlap almost entirely with the capabilities of large language models.

I carried out a fine-grained analysis of US employment data, comparing recent trends in job numbers against a list of occupations identified as at especially high risk of automation. The daily tasks undertaken by accounting clerks, insurance underwriters, travel agents and legal secretaries all overlap almost entirely with LLMs’ capabilities. But the numbers of workers in these roles have all remained within their usual range even as generative AI has proliferated. There are two notable exceptions, however. Writers — of words, not code — and software developers both show tell-tale signs of LLM-related disruption, with employment falling sharply away from trend in the past two years. What sets programmers and writers apart is that these are occupations where the entire job from start to finish — not just discrete constituent parts — is about as close as possible to what AI excels at: nice, clean, linear and sequential tasks, exam-style questions and essay assignments. Notably, both jobs also have high rates of contracting or freelancing. So an AI assistant such as Anthropic’s Claude can be swapped in for a non-staff copywriter without HR getting involved.

Takeaways by Macro Roundup® AI

  1. Employment among accounting clerks, insurance underwriters, travel agents and legal secretaries has remained within its usual range despite generative AI's proliferation, even though their daily tasks overlap almost entirely with the capabilities of large language models.
  2. Writers and software developers are the two occupations showing signs of disruption from large language models, with employment in both falling sharply away from trend over the past two years.
  3. Writers and programmers stand out, the analysis argues, because their entire jobs — not just discrete parts — consist of clean, linear, sequential tasks resembling exam questions and essay assignments, and because both have high rates of freelancing or contracting.

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.
  • Technological Disruption in the Labor Market — The authors measure US labor market structure since 1880 and find 1990–2017 less disruptive than any earlier period, because past changes from general-purpose technologies like steam and electricity were so profound. They identify four recent signs of accelerating change, including a 50%+ rise in science and technology employment share since 2010.

AI Summary. Tariffs can raise the size of the US manufacturing sector but carry two short-term costs: elevated uncertainty weighs on household and corporate spending, and higher production costs weigh on corporate earnings. The author argues weakness in survey-based measures should spill over into hard economic data, a negative for the S&P 500.

Torsten Sløk Apollo
Date Posted:

Torsten Sløk finds that within 24 months of the start of a 10% correction in the S&P 500, the S&P is up ~ 10% if there is no recession. If a recession occurs, the S&P remains down ~ 10%.

Do tariffs expand manufacturing while imposing short-term costs on spending and earnings?

Core argument: Tariffs can boost the size of the US manufacturing sector but carry two short-term negative effects: elevated uncertainty depressing household and corporate spending decisions, and higher production costs weighing on corporate earnings.

Tariffs can be used to boost the size of the US manufacturing sector. But tariffs, unfortunately, have two short-term negative effects on the economy: 1. Elevated uncertainty has a negative impact on household and corporate spending decisions. 2. Tariffs have a negative impact on corporate earnings as companies experience higher production costs. Uncertainty may have declined modestly in recent weeks, but the next step is for tariffs to begin to have a negative impact on corporate earnings over the coming quarters. Combined with the risk of retaliation, this is negative for the S&P 500. The bottom line is that the incoming data remains solid, but the soft data is deteriorating. With tariffs not going away, the observed weakness in the soft data should be expected to spill over to weakness in the hard data over the coming months. The performance of the S&P 500 will depend on the size of the adjustment costs as companies adjust to a new situation with permanently higher tariffs,

Takeaways by Macro Roundup® AI

  1. Tariffs can boost the size of the US manufacturing sector but carry two short-term negative effects: elevated uncertainty depressing household and corporate spending decisions, and higher production costs weighing on corporate earnings.
  2. Tariffs are expected to begin hurting corporate earnings over the coming quarters, which, combined with the risk of retaliation, is negative for the S&P 500.
  3. Incoming hard data remains solid while soft data is deteriorating, and with tariffs not going away, the soft-data weakness should be expected to spill over into the hard data over the coming months.

Related Articles:

  • Lowering our S&P 500 EPS and Valuation Forecasts As the “Maleficent 7” Pushes the Index to the Brink of Correction — The S&P 500 fell 9% from its record high, with more than half of the decline coming from a 14% drop in the seven largest technology stocks, whose price-to-earnings ratio fell from 30x to 26x. The equal-weighted index declined 6%, leaving it 8% below its own record high.
  • 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.
  • The Trade War Will Pound Stocks — Efforts to cut U.S. trade deficits and escalate tensions with allies risk deterring foreign capital, and foreigners need only stop buying U.S. assets to hit prices, as China and Russia already have. Bridgewater estimates nonfinancial U.S. firms capture 39% of global profits though the U.S. is 15% of world output.

AI Summary. The White House warned chief executives of major U.S. automakers that it would look unfavorably on raising car prices in response to tariffs, leaving some executives concerned about retaliation. Automakers depend on federal regulators for critical approvals, though it is unclear what action the administration could take.

Josh Dawsey and Ryan Felton Wall Street Journal
Date Posted:

The WSJ reports that President Trump is jawboning American automakers in an effort to deter them from passing along tariff-related costs; the “White House would look unfavorably on such a move,” leaving some automakers rattled.

Can the White House pressure automakers not to raise prices?

Core argument: President Trump warned CEOs of top U.S. automakers on a call that the White House would look unfavorably on any decision to raise car prices in response to tariffs, according to people with knowledge of the call.

When President Trump convened CEOs of some of the country’s top automakers for a call earlier this month, he issued a warning: They better not raise car prices because of tariffs. Trump told the executives that the White House would look unfavorably on such a move, leaving some of them rattled and worried they would face punishment if they increased prices, people with knowledge of the call said. It is unclear what the Trump administration could do if automakers raise their prices. Trump has targeted disfavored law firms with executive orders, and automakers rely on federal regulators for critical approvals.

Takeaways by Macro Roundup® AI

  1. President Trump warned CEOs of top U.S. automakers on a call that the White House would look unfavorably on any decision to raise car prices in response to tariffs, according to people with knowledge of the call.
  2. Some automaker executives were left rattled by Trump's warning and worried they would face punishment if they raised prices, though it is unclear what the administration could do in response.
  3. Automakers rely on federal regulators for critical approvals, and Trump has targeted disfavored law firms with executive orders.

Related Articles:

  • Steel Productivity has Plummeted Since Trump’s 2018 Tariffs — 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.
  • The Mysterious Slowdown in U.S. Manufacturing Productivity — US manufacturing labor productivity growth slowed broadly after the Great Recession, with the four largest firms in each industry averaging –0.5% growth from 2010 to 2022 versus 3.7% from 1987 to 2007, and smaller follower firms showing an identical 4.2 percentage-point decline. The authors find the slowdown spans all industries and firm sizes.
  • Help for the Heartland? The Employment and Electoral Effects of the Trump Tariffs in the United States — The authors find that the combined effect of U.S.-China trade war import tariffs, retaliatory tariffs, and farm subsidies on employment in exposed U.S. locations was at best a wash and possibly mildly negative, while residents of tariff-protected areas became less likely to identify as Democrats and more likely to vote Republican.

AI Summary. The European Union is identifying concessions it is willing to offer the US administration to secure partial removal of US tariffs on the bloc's exports. EU officials argue that its value-added tax applies equally to domestic and imported goods, and that the bloc imports large volumes of American services despite running a goods trade surplus with the US.

Alberto Nardelli and Shawn Donnan Bloomberg
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The EU is preparing concessions to minimize Trump’s reciprocal tariffs. In 2023 the EU ran a €155.8B goods surplus with the US, partially offset by a €104B services deficit for a net €51.8B goods and service surplus with the US.

Will the EU offer concessions to win partial tariff relief?

Core argument: The European Union is identifying concessions to the Trump administration to win partial removal of US tariffs already hitting EU exports and set to increase after April 2.

The European Union is identifying concessions it’s willing to make to Donald Trump’s administration to secure the partial removal of the US tariffs that have already started hitting the bloc’s exports and that are set to increase after April 2. The reciprocal tariffs are meant to strike out against what Trump considers to be unfair levies on US goods as well as non-tariff barriers, such as domestic regulations and how countries collect taxes, including the bloc’s value-added tax, digital taxes and regulations. The EU says its VAT is a fair, non-discriminatory tax that applies equally to domestic and imported goods. European officials have tried stressing that even though the EU has a goods trade surplus with the US, the 27-nation bloc imports a lot of American services ranging from ecommerce and social media sites to Internet search engines — all part of the US’s Big Tech industry that has recently cozied up to Trump and his circle of advisers. EU and US firms have more than €5 trillion ($5.4 trillion) worth of investment in each other’s markets, according to the commission.

Takeaways by Macro Roundup® AI

  1. The European Union is identifying concessions to the Trump administration to win partial removal of US tariffs already hitting EU exports and set to increase after April 2.
  2. Trump's reciprocal tariffs target what he considers unfair levies on US goods plus non-tariff barriers including the EU's value-added tax, digital taxes and regulations, which the EU defends as a fair, non-discriminatory tax applied equally to domestic and imported goods.
  3. EU and US firms hold more than €5 trillion ($5.4 trillion) of investment in each other's markets, according to the European Commission, and EU officials stress the bloc imports many American services despite its goods trade surplus with the US.

Related Articles:

  • Message to President Trump: We (Europe) Take As Much From You (The US) As You Take From Us — The US trade deficit with the euro area in goods and services combined is about €57bn, under 0.2% of US GDP, and the euro area pays roughly €49bn more in investment income and wages to the US than it receives. Counting these flows, the euro area's current account with the US is effectively balanced.
  • The U.S. Income Balance Puzzle — The U.S. net international investment position tends to converge with cumulative current account deficits as valuation gains and losses even out, and the interest rate on that external debt tends to track Treasury yields. The author argues the end of ultra-low rates should eliminate the U.S. income surplus and push the current account deficit above 4% of GDP.
  • The End of Privilege: A Reexamination of the Net Foreign Asset Position of the United States — The authors document that the U.S. net foreign asset position fell by 60 percentage points of U.S. gross domestic product between 2007 and 2021, even as U.S. current account deficits narrowed. They attribute this to a boom in the market valuation of U.S. corporations' non-financial assets, which mechanically raised the value of large foreign equity holdings in U.S. firms.

AI Summary. Canada's prime minister said the country's old relationship with the US is over, pledged a broad renegotiation of the two countries' trade agreement, and promised retaliatory trade actions designed for maximum impact in the US and minimum impact at home. The Bank of Canada's governor has said US tariffs would probably push Canada into recession.

Ilya Gridneff Financial Times
Date Posted:

Canada’s Prime Minister Mark Carney said there will be a “broad renegotiation of our security and trade relationship” with the US. “Canada will fight American tariffs with retaliatory trade actions”.

Is Canada's old trade relationship with the US over?

Core argument: Canadian Prime Minister Mark Carney said Canada's old relationship with the US is "over" and pledged a "broad renegotiation" of the trade agreement between the two countries.

Prime Minister Mark Carney said on Thursday that Canada’s old relationship with the US was “over” and vowed that there would be a “broad renegotiation” of the trade agreement between the countries. Carney said Canada would fight American tariffs with retaliatory trade actions of its own “that will have maximum impact in the US and minimum impacts in Canada”. The prime minister said the Canadian economy and its supply chains in critical sectors such as the auto industry would have to fundamentally change to insulate themselves from further tariffs and US hostility. “We are gonna have to do some things very differently,” he said. Tiff Macklem, governor of the Bank of Canada, has said US tariffs would probably put Canada in a recession.

Takeaways by Macro Roundup® AI

  1. Canadian Prime Minister Mark Carney said Canada's old relationship with the US is "over" and pledged a "broad renegotiation" of the trade agreement between the two countries.
  2. Carney said Canada would answer American tariffs with retaliatory trade actions designed for "maximum impact in the US and minimum impacts in Canada".
  3. Bank of Canada governor Tiff Macklem has said US tariffs would probably push Canada into a recession, and Carney said the Canadian economy and supply chains in sectors such as autos would have to fundamentally change.

Related Articles:

  • A Wonkish Note on Trade with Canada and Mexico — Canadian oil is shipped to the midwestern United States because pipelines make it a nearby market, while North American manufacturing, especially autos, relies on an integrated just-in-time production system in which lower-wage Mexico specializes in labor-intensive stages. These exports, which account for the bilateral trade deficits, make America richer by lowering energy costs and making U.S. manufacturing more competitive.
  • Canada’s Growth Challenge: Why The Economy Is Stuck In Neutral — Canada's labor productivity is about 30% below the United States and roughly 10% below Australia's, and Canada has fallen from the 6th to the 18th most productive economy in the OECD. The authors attribute this to a shortfall in investment outside real estate, construction, and public services, plus negative multifactor productivity growth.
  • A “Heat Dome” of Immigration — Canada has adopted some of the most aggressive immigration policies in the OECD, adding 1.273m residents in a year to reach a population of 41m — proportionally equivalent to the US admitting more than 10m immigrants annually. Canadians are increasingly angry as housing prices soar, sprawl expands, and traffic worsens.

Monday, March 31, 2025

AI Summary. Housing production intensity has fallen substantially, especially in fast-growing Sunbelt markets once known for building, converging toward the low rates long seen on the coasts and in declining industrial centers. The authors argue incumbent-controlled regulation explains the weakening link between high prices, high demand areas, and new construction.

Edward Glaeser and Joseph Gyourko Brookings Papers on Economic Activity
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Why are constant-quality house prices 15% above their pre-2007 peak? Ed Glaeser notes that US housing grew just 0.6% annually in the 2010s, down from 4% in the 1950s. Sun Belt metros now mirror coastal markets: supply-constrained and high-priced.

Why has homebuilding slowed even in high-demand, high-price markets?

Core argument: The intensity of U.S. housing production has dropped substantially over time, especially in expanding Sunbelt markets that were once housing market superstars, with Miami now resembling Los Angeles in its pace of unit production.

The key driver appears to be that the intensity of housing production has dropped substantially over time, especially in many expanding Sunbelt markets that were once housing market superstars. There is a marked convergence in the pace of housing unit production across markets throughout the country: Miami has become far more like Los Angeles. Our analysis suggests that there has been an economically important flattening of the empirical housing supply curve in these places. [As in] other markets on the coasts and in declining industrial centers in earlier decades. Within metropolitan areas across the country, we now build less often in the highest demand areas. We also found relatively weak relationships between density and the construction of single family detached housing. To us, this suggests that insiders increasingly control regulations to protect their own rents. If so we should expect to see a decreasing link between high prices and new construction, which is exactly what the data shows.

Takeaways by Macro Roundup® AI

  1. The intensity of U.S. housing production has dropped substantially over time, especially in expanding Sunbelt markets that were once housing market superstars, with Miami now resembling Los Angeles in its pace of unit production.
  2. The authors' analysis suggests an economically important flattening of the empirical housing supply curve in Sunbelt markets, as occurred in coastal markets and declining industrial centers in earlier decades.
  3. Within metropolitan areas across the country, less building now occurs in the highest demand areas, and the authors interpret the weakening link between high prices and new construction as a sign that insiders increasingly control regulations to protect their own rents.

Related Articles:

  • 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.
  • Why Has Construction Productivity Stagnated? The Role of Land-Use Regulation — Homes built per construction worker boomed after World War II and fell after 1970, a decline the authors link to local land-use regulation that limits project size and keeps construction firms small and less productive. They estimate US residential builders would be roughly 60% more productive if their size distribution matched manufacturing.
  • The Price of Housing in the United States — Real housing price appreciation in the United States has varied widely across regions, with West Coast cities rising earlier while prices in other regions remained comparable in real terms to decades earlier. The authors find essentially no relationship between real price growth and zoning restrictiveness in the earliest period studied, and progressively steeper gradients in later periods.

AI Summary. Research from Peking University finds China was the target of 198 trade investigations alleging dumping or illegal subsidies, double the prior year's tally and nearly half of all such measures reported to the global trade body. More than half of these cases were initiated by developing countries, including 37 from India, 19 from Brazil and nine from Turkey.

Ryan McMorrow and Wenjie Ding Financial Times
Date Posted:
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As WTO members reeled from China’s ~ $1T surplus, China became the subject of 198 trade investigations in 2024, 2x that of 2023.

Are developing countries driving the surge in trade cases against China?

Core argument: China faced 198 trade investigations alleging dumping or illegal subsidies in 2024, double the prior year's tally and nearly half of all measures reported to the global trade body, according to Peking University economist Lu Feng.

Beijing was the subject of 198 trade investigations alleging dumping or illegal subsidies by partners in 2024, double the tally the previous year and accounting for nearly half of all measures reported to the global trade body, according to research by Peking University economics professor Lu Feng. The European Commission launched 21 trade defence investigations into Chinese products in 2024 — including steel cylinders, plywood, candles and decorative paper, among others — up from nine the previous year, according to Chinese data. More than half of the trade cases against China last year were initiated by developing countries, indicating that western countries’ objections to Chinese overproduction were widely shared. The data showed 117 cases were initiated by emerging economies, including 37 from India, 19 by Brazil and nine from Turkey.

Takeaways by Macro Roundup® AI

  1. China faced 198 trade investigations alleging dumping or illegal subsidies in 2024, double the prior year's tally and nearly half of all measures reported to the global trade body, according to Peking University economist Lu Feng.
  2. More than half of the 2024 trade cases against China — 117 — were initiated by emerging economies, including 37 from India, 19 from Brazil and nine from Turkey, indicating objections to Chinese overproduction were widely shared.
  3. The European Commission launched 21 trade defence investigations into Chinese products in 2024, up from nine the previous year, covering goods including steel cylinders, plywood, candles and decorative paper, according to Chinese data.

Related Articles:

  • The Evolution of Global Trade in 2024 — Global trade imbalances consist of one very large surplus and one very large deficit: China's goods surplus exceeds $1tn a year, while the U.S. non-petroleum deficit drives the Asian surplus. The author argues a Chinese surplus this large can be sustained only alongside a large U.S. deficit.
  • A New ‘China Shock’ Is Destroying Jobs Around the World — 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.
  • 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. Foreign purchases of U.S. debt are mostly long-term securities rather than the short-term assets typically held as reserves, and large capital flows also move both into and out of the U.S. outside bond markets. The author argues reduced demand for dollar reserves would have little effect on net capital inflows, which mainly reflect perceived U.S. investment opportunities.

Paul Krugman Krugman Wonks Out
Date Posted:
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Krugman challenges the notion that US trade deficits result from the dollar’s reserve currency role. “Most annual purchases of U.S. securities are of long-term bonds, not the short-term securities usually used as reserve assets.”

Would falling demand for dollar reserves shrink net capital inflows?

Core argument: Foreign purchases of U.S. debt securities partly reflect the dollar's reserve-currency role, though most of those purchases are of long-term securities rather than the short-term securities typically held as reserve assets.

It’s true that foreigners buy a lot of U.S. debt securities every year, which to some extent reflects the role of the dollar as a reserve currency — although most of those purchases are of long-term securities, not the short-term securities usually used as reserve assets. But there’s also a lot of capital inflow to the U.S. that doesn’t involve buying bonds, while at the same time there’s a lot of capital flowing out of the country as American individuals and companies invest abroad. Here’s the picture for 2024. Suppose that we were able somehow to force foreign governments to stop buying U.S. bonds. The balance of payments always balances, so something else would have to change in response. But why should all or even most of the adjustment involve a reduction in the trade deficit? Why couldn’t it involve an increase in other kinds of capital inflow, or a reduction in capital outflows? In fact, I’d argue that the best bet is that a reduced demand for dollar reserves would have little effect on net capital flows to the United States, which mostly reflect the perception that the U.S. economy offers good investment opportunities.

Takeaways by Macro Roundup® AI

  1. Foreign purchases of U.S. debt securities partly reflect the dollar's reserve-currency role, though most of those purchases are of long-term securities rather than the short-term securities typically held as reserve assets.
  2. Capital flows to the U.S. include large inflows that do not involve buying bonds, alongside substantial outflows as American individuals and companies invest abroad.
  3. Krugman argues that if foreign governments stopped buying U.S. bonds, the adjustment need not fall mainly on the trade deficit, and reduced demand for dollar reserves would likely leave net capital flows to the U.S. little changed.

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AI Summary. Federal Reserve data show European investors held about $9tn in US stocks, roughly 17% of the total value of the US market. After inflation, a dollar invested in the US at the start of 2000 was worth $3.28 by the end of 2024, versus $1.63 for the rest of the world.

Katie Martin Financial Times
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European investors held ~$9T in US equities at the end of 2024, ~17% of US market cap, on par with the market cap of all European equities. “Trillions of dollars can leave the US if the rest of the world chooses to get back towards a neutral position.”

Are European investors heavily overweight US stocks?

Core argument: European investors held about $9tn in US stocks at the end of last year, roughly 17% of the total value of the US market and not far off the combined market capitalisation of all European equities, according to Federal Reserve data.

Data from the US Federal Reserve shows that European investors held about $9tn in US stocks at the end of last year — around 17% of the overall value of the US market and not far off the market capitalisation of all the equities in Europe. A dollar invested in the US at the start of 2000 was worth $3.28 by the end of 2024, again, after inflation. For the rest of the world, you end up at a rather humdrum $1.63. As a rule, non-US investors who have failed to make a significant allocation to the US have not been doing their jobs properly. Trillions of investment dollars can leave the US if the rest of the world chooses to get back towards a neutral position.

Takeaways by Macro Roundup® AI

  1. European investors held about $9tn in US stocks at the end of last year, roughly 17% of the total value of the US market and not far off the combined market capitalisation of all European equities, according to Federal Reserve data.
  2. A dollar invested in US stocks at the start of 2000 was worth $3.28 after inflation by the end of 2024, versus $1.63 for the rest of the world.
  3. Trillions of investment dollars can leave the US if the rest of the world moves back towards a neutral allocation, after a period in which non-US investors lacking a significant US allocation were not doing their jobs properly.

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AI Summary. Household and banking sector leverage in the US have declined significantly since 2008, while corporate leverage has moved sideways and federal government leverage has risen significantly. On this measure, the US private sector is in strong financial shape.

Torsten Sløk Apollo
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​​Torsten Sløk notes that US household and banking sector debt has fallen to its lowest level in decades as a % of GDP, while corporate leverage has moved sideways. “The bottom line is that the private sector in the US is in incredibly good shape.”

Is the US private sector in strong financial shape?

Core argument: US household sector leverage and banking sector leverage have both declined significantly since 2008, leaving the US private sector in what the author characterizes as incredibly good shape.

Household sector leverage and banking sector leverage have declined significantly since 2008. Over the same period, federal government leverage has increased significantly, and corporate leverage has moved sideways. The bottom line is that the private sector in the US is in incredibly good shape.

Takeaways by Macro Roundup® AI

  1. US household sector leverage and banking sector leverage have both declined significantly since 2008, leaving the US private sector in what the author characterizes as incredibly good shape.
  2. US federal government leverage has increased significantly since 2008, moving in the opposite direction from the deleveraging in the household and banking sectors.
  3. US corporate leverage has moved sideways since 2008, neither declining like household and banking leverage nor rising like federal government leverage.

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