Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…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
  • “…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 comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, April 15, 2025

AI Summary. After broad-based US tariffs were announced, stock prices fell, volatility jumped and Treasury yields rose — conditions that normally lift the dollar as a haven — yet the dollar fell instead. Relative to a simple econometric model, the dollar's decline was the largest prediction error in four years.

Steven Kamin Financial Times
Date Posted:

Recent moves in the dollar are at odds with historical patterns, in which spikes in the VIX drove a flight to dollar assets. “At least during this episode, the dollar has stopped acting like a ‘flight-to-safety’ currency.” @steven_kamin @AEIecon

Did the dollar stop behaving like a safe haven after tariffs?

Core argument: Following President Trump's 2 April broad-based tariff announcement, the dollar fell by the largest margin relative to a simple econometric model's predictions of any episode in the past four years.

In the wake of President Trump’s initial salvo of broad-based tariffs, on 2 April, stock prices plunged, volatility as measured by the VIX index soared, and Treasury yields shot up substantially. Ordinarily, these developments would be expected to buoy the value of the dollar, a “flight-to-safety” currency sought out by investors during times of crisis and acute uncertainty. Instead, the value of the dollar, too, plunged. In fact — relative to the predictions of a simple econometric model — the dollar fell by the greatest margin in the past four years. There are, of course, many misses between predicted and actual levels of the dollar, but the Trump tariff episode at the end of the sample appears to represent the largest such error. The model expects the spike in the VIX to substantially boost the dollar, but instead the dollar fell. The miss on the dollar is extraordinarily large. Does this mean the end of dollar dominance? Probably not. But it is clear that, at least during this episode, the dollar has stopped acting like a “flight-to-safety” currency.

Takeaways by Macro Roundup® AI

  1. Following President Trump's 2 April broad-based tariff announcement, the dollar fell by the largest margin relative to a simple econometric model's predictions of any episode in the past four years.
  2. Stock prices plunged, the VIX soared, and Treasury yields rose substantially after the 2 April tariffs, conditions that would ordinarily lift the dollar as a flight-to-safety currency, yet the dollar declined instead.
  3. The episode probably does not mean the end of dollar dominance, but the dollar stopped acting as a flight-to-safety currency during it.

Related Articles:

  • Dollar Downgrade — The author argues that rising 10- and 30-year US Treasury yields do not show up in long-term inflation expectations, judging by the spread between inflation-indexed and non-indexed Treasury bonds. The author attributes the increase instead to a shift in demand away from long-dated US debt, reinforcing higher long-term real interest rates.
  • Victory Over Inflation Now Seems So Yesterday — The dollar fell more than 3% against the Swiss franc, widely regarded as the safest haven currency, reaching a level last seen during the 2011 US debt ceiling standoff. The moves in bond and currency markets point to a significant loss of confidence in the US.
  • The Dollar and the Bond Market’s Ominous Message for Trump — JPMorgan Chase estimates Treasury yields rise a third of a percentage point for each $300bn decline in foreign official holdings of US Treasuries. Carlyle Group notes gold has strongly outperformed inflation-protected Treasuries, suggesting gold is now the world's preferred safe-haven asset as reserve managers grow more hesitant to add Treasury exposure.

AI Summary. Bid-ask spreads on investment-grade corporate bonds have widened, with transaction costs rising materially more for older, smaller "off-the-run" issues — which make up about 50% of the investment-grade market by count — than for large, recently issued bonds. This points to a liquidity divide in which off-the-run paper is effectively a buy-and-hold investment.

Torsten Sløk Apollo
Date Posted:

In a further sign of the run on liquidity following April 2, the bid-ask spread on off-the-run investment-grade bonds (those >2 years old with deal sizes <$900mm) has risen to 20 bps from 10 bps, leaving off-the-run paper “virtually untradeable.”

Is a liquidity divide emerging within investment-grade corporate bond markets?

Core argument: Off-the-run investment grade bonds — those issued more than two years ago with deal sizes under $900 million — make up 50% of the IG market by count, and their transaction costs have risen materially since the April 2 tariff announcement.

My colleague Shobhit Gupta has calculated bid-ask spreads for investment grade (IG) bonds based on trader quotes. Liquid securities are defined as $1 billion-plus deals issued in the past year. Off-the-run bonds are those issued more than two years ago with deal sizes less than $900 million, and these bonds make up 50% of the IG market by count. Bid-ask spreads have spiked post the April 2 tariff announcement. The gap between liquid and illiquid bonds is particularly noteworthy. In 2020, the bid-ask spread widened across the whole market. But this time around, transaction costs have increased materially more for off-the-run paper. This highlights the growing liquidity divide in the public IG market. Liquidity in on-the-run bonds has improved, but off-the-run paper has become virtually untradeable and effectively a buy-and-hold investment.

Takeaways by Macro Roundup® AI

  1. Off-the-run investment grade bonds — those issued more than two years ago with deal sizes under $900 million — make up 50% of the IG market by count, and their transaction costs have risen materially since the April 2 tariff announcement.
  2. Shobhit Gupta's bid-ask spread calculations from trader quotes show liquidity in on-the-run IG bonds, defined as $1 billion-plus deals issued within the past year, has improved while off-the-run paper has become virtually untradeable and effectively buy-and-hold.
  3. Unlike 2020, when bid-ask spreads widened across the entire investment grade market, the post-tariff spike has raised transaction costs materially more for off-the-run bonds, highlighting a growing liquidity divide in the public IG market.

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. China has ordered its airlines to stop taking deliveries of Boeing jets and to halt purchases of aircraft equipment and parts from US companies. China is forecast to account for 20% of global aircraft demand over the next two decades, though Boeing has redirected some 737 Max jets built for Chinese carriers to Indian airlines.

Bloomberg Staff Bloomberg
Date Posted:

China has ordered its airlines to stop accepting delivery of Boeing aircraft. China is forecast to make up 20% of global aircraft demand over the next two decades. Indian demand for aircraft should soften the loss of the China market.

Is China halting Boeing deliveries as trade tensions escalate?

Core argument: China has ordered its airlines to stop taking deliveries of Boeing jets and to halt purchases of aircraft-related equipment and parts from US companies, according to people familiar with the matter.

China has ordered its airlines not to take any further deliveries of Boeing jets according to people familiar with the matter. Beijing has asked that Chinese carriers halt any purchases of aircraft-related equipment and parts from US companies, the people said, asking not to be identified discussing matters that are private. About 10 Boeing 737 Max aircraft are preparing to enter Chinese airline fleets, including two each for China Southern Airlines, Air China and Xiamen Airlines, based on data from Aviation Flights Group. China is forecast to make up 20% of global aircraft demand over the next two decades and in 2018, nearly a quarter of Boeing’s output ended up there. But the US planemaker hasn’t announced a major order in China in recent years due to trade tensions and self-inflicted issues. The impact from Boeing’s loss of market share in China has been softened somewhat by surging demand for new aircraft in other global markets. India’s fast-growing airlines have taken some of the 737 Max aircraft originally built for Chinese carriers.

Takeaways by Macro Roundup® AI

  1. China has ordered its airlines to stop taking deliveries of Boeing jets and to halt purchases of aircraft-related equipment and parts from US companies, according to people familiar with the matter.
  2. About 10 Boeing 737 Max aircraft are preparing to enter Chinese airline fleets, including two each for China Southern Airlines, Air China and Xiamen Airlines, based on Aviation Flights Group data.
  3. China is forecast to account for 20% of global aircraft demand over the next two decades, and in 2018 nearly a quarter of Boeing's output went there, though Boeing has announced no major Chinese order in recent years.

Related Articles:

  • China Steps Up Drive To Break Boeing and Airbus Grip on Plane Market — China's state-backed planemaker Comac has its subsidised C919 single-aisle jet flying domestic routes with Air China, China Eastern and China Southern, and is expanding to a route between Shanghai and Hong Kong. Aviation consultancy IBA projects Comac can lift output from one to 11 aircraft a month, delivering almost 2,000 C919s by 2040.
  • Boeing Battles Brain Drain As Engineers Chase the Allure of Space — The average tenure of a Boeing engineer has fallen from 16.4 years to 12.6 years, according to data from the union representing 12,000 Boeing engineers, with tenure shortening in almost every age bracket. Analysts, recruiters and union officials describe this "brain drain" as a drag on operations that could make launching a new plane harder.
  • China Increases Retaliatory Tariffs On US Imports to 125% — China raised its retaliatory tariffs on US goods from 84% to 125%, and said it would not respond to further US tariff increases because there is no market acceptance for US goods in China at current tariff levels. US duties on Chinese imports have reached as high as 145%.

AI Summary. Apple assembled $22bn of iPhones in India over a 12-month period, up nearly 60% from the prior year, and now makes about one in five of its iPhones there. Most India-made iPhones are assembled at a Foxconn factory in southern India, with Tata Group's electronics arm another key supplier.

Sankalp Phartiyal Bloomberg
Date Posted:

Apple currently manufactures 20% of its iPhones in India, up 60% year-over-year, “a sign of continued diversification away from China.” In 2021, only 1% of iPhones were manufactured in India.

Is iPhone production shifting from China to India?

Core argument: Apple assembled $22 billion of iPhones in India in the 12 months ended March, up nearly 60% from the prior year, in a sign of continued diversification away from China.

Apple assembled $22 billion worth of iPhones in India in the 12 months ended March, increasing production by nearly 60% over the previous year in a sign of continued diversification away from China. The Cupertino, California-headquartered company now makes 20%, or one in five, of its prized iPhones in the South Asian country, according to people familiar with the matter who asked not to be identified as the information isn’t public. The dollar figure represents the devices’ estimated factory gate value, rather than the marked-up retail price. The bulk of India-made iPhones are assembled at Foxconn Technology Group’s factory in southern India. Tata Group’s electronics manufacturing arm, which bought Wistron Corp. and controls Pegatron Corp.’s operations, is also a key supplier.

Takeaways by Macro Roundup® AI

  1. Apple assembled $22 billion of iPhones in India in the 12 months ended March, up nearly 60% from the prior year, in a sign of continued diversification away from China.
  2. India now accounts for 20%, or one in five, of Apple's iPhone output, with the $22 billion figure representing the devices' estimated factory gate value rather than marked-up retail prices.
  3. The bulk of India-made iPhones are assembled at Foxconn Technology Group's factory in southern India, with Tata Group's electronics manufacturing arm — which bought Wistron and controls Pegatron's operations — also a key supplier.

Related Articles:

  • China Slows Supply Chain Shifts by Apple, Others as Trump 2.0 Looms — China has stepped up customs scrutiny of production equipment and materials exported by Apple and other American technology companies, citing dual-use export controls on goods with both military and commercial applications. The stricter reviews have delayed shipments to Vietnam and India by days or weeks, hampering supply chain diversification.
  • Apple’s India iPhone Output Hits $14 Billion in China Shift — Apple assembled $14bn of iPhones in India in its last fiscal year, doubling output there to roughly 14%, or about 1 in 7, of its iPhones. China remains Apple's largest iPhone-making hub and biggest overseas market, though its revenue there is falling amid competition from rivals such as Huawei.
  • China and India Decoupling — After decades of moving together, the business cycles of China and India have decoupled.

AI Summary. Overnight visitors from western Europe to the US fell 17% year-on-year, with declines of more than 20% from countries including Ireland, Norway and Germany, according to the International Trade Administration. Total overseas visitors dropped 12% year-on-year, the steepest decline since pandemic travel restrictions.

Eva Xiao, Philip Georgiadis, John Burn-Murdoch and Claire Bushey Financial Times
Date Posted:

The number of visitors from Western Europe who stayed at least one night in the US is down 17% year-over-year, and overall overseas visitors are down 12% – the sharpest decline since the pandemic period. Tourism drives 2.5% of US GDP.

Are European visits to the US declining sharply?

Core argument: Visitors from western Europe staying at least one night in the US fell 17% in March from a year earlier, according to International Trade Administration data.

Visitors from western Europe who stayed at least one night in the US fell by 17% in March from a year ago, according to the International Trade Administration. Travel from some countries — including Ireland, Norway and Germany — fell by more than 20%, an FT analysis of ITA data showed. The total number of overseas visitors travelling to the US dropped by 12% year-on-year in March, the steepest decline since March 2021 when the travel sector was reeling from pandemic restrictions, according to the ITA data.

Takeaways by Macro Roundup® AI

  1. Visitors from western Europe staying at least one night in the US fell 17% in March from a year earlier, according to International Trade Administration data.
  2. Total overseas visitors to the US dropped 12% year-on-year in March, the steepest decline since March 2021, when the travel sector was reeling from pandemic restrictions, according to ITA data.
  3. Travel to the US from Ireland, Norway and Germany fell by more than 20%, according to an FT analysis of ITA data.

Related Articles:

  • Consumer Confidence Is Weaker than During the 2008 Financial Crisis — The University of Michigan survey of consumers shows sentiment declining among households earning both above and below $100,000, job-loss worries at levels normally seen in recessions, a record-high share saying business conditions are worsening, falling income expectations, and rapidly rising inflation expectations. The concern is that weak sentiment spills over into weaker actual spending.
  • Bear Market Anatomy – The Path and Shape of the Bear Market — Cyclical and event-driven bear markets have both averaged declines of roughly 30%, but cyclical ones last about two years and take five to recover, versus about eight months and one year for event-driven; structural bear markets average 60% declines over three-plus years and take a decade to recover.

Wednesday, April 16, 2025

AI Summary. Following a sweeping US tariff announcement, the dollar's effective exchange rate depreciated rather than appreciating as standard international macroeconomic models predict: all G10 currencies gained against the dollar while the most freely floating emerging market currencies gained less or fell. The authors read this as advanced economies rebalancing away from dollar assets.

Jonathan Hartley and Alessandro Rebucci Center for Economic and Policy Research
Date Posted:

Post “Liberation Day,” the dollar has fallen against advanced economy currencies, whereas emerging market currencies depreciated against the dollar, suggesting “foreign advanced economies reduced exposure to US dollar-denominated assets.”

Why did the dollar weaken after new tariffs instead of strengthening?

Core argument: The dollar's effective exchange rate sharply depreciated following the Liberation Day tariff announcement, contrary to the prediction of standard international macroeconomic models and the evidence from the first Trump tariffs.

Contrary to the prediction of standard international macroeconomic models and the evidence from the first Trump tariffs, on Liberation Day the dollar effective exchange rate sharply depreciated rather than appreciating. Unpacking the impact on broad dollar indexes by looking at the reaction of the main bilateral pairs reveals a striking divergence in currency responses Figure 2 plots the daily change in the bilateral exchange rate against the tariff rates announced on Liberation Day. The figure shows that all G10 currencies appreciated against the US dollar in the 24 hours following the announcement, meaning the dollar weakened against those currencies. In contrast, the most floating emerging market currencies either appreciated less or depreciated against the dollar. The strong appreciation of the G10 currencies implies that that foreign advanced economies reduced exposure to US dollar-denominated assets, selling dollars in favour of other major currencies to rebalance their portfolios, as trade flows cannot adjust instantaneously.

Takeaways by Macro Roundup® AI

  1. The dollar's effective exchange rate sharply depreciated following the Liberation Day tariff announcement, contrary to the prediction of standard international macroeconomic models and the evidence from the first Trump tariffs.
  2. All G10 currencies appreciated against the US dollar in the 24 hours after the Liberation Day announcement, while the most floating emerging market currencies either appreciated less or depreciated against the dollar.
  3. The strong G10 appreciation implies that foreign advanced economies reduced exposure to US dollar-denominated assets, selling dollars for other major currencies to rebalance portfolios, as trade flows cannot adjust instantaneously.

Related Articles:

  • The World’s Reserve Currency Gets a Sharp Shock — After broad-based US tariffs were announced, stock prices fell, volatility jumped and Treasury yields rose — conditions that normally lift the dollar as a haven — yet the dollar fell instead. Relative to a simple econometric model, the dollar's decline was the largest prediction error in four years.
  • Dollar Downgrade — The author argues that rising 10- and 30-year US Treasury yields do not show up in long-term inflation expectations, judging by the spread between inflation-indexed and non-indexed Treasury bonds. The author attributes the increase instead to a shift in demand away from long-dated US debt, reinforcing higher long-term real interest rates.
  • The Great European Disentanglement From US Stocks Has Only Just Started — 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.

AI Summary. The S&P 500 has returned -7.9% including dividends while Europe's Stoxx Europe 600 returned 10% in dollar terms. On price-earnings ratios, European stocks trade almost 30% below US stocks, a wider gap than the roughly 17% average discount of the past two decades.

Alice Gledhill, Abhinav Ramnarayan, and Julien Ponthus Bloomberg
Date Posted:

European stocks still trade at a discount to American equities; Stoxx Europe 600 trades at a ~30% P/E discount to the S&P 500, “much wider than the average 17% discount going back a couple decades.”

Are European stocks outperforming US stocks while still trading at wider discounts?

Core argument: The S&P 500 is down 7.9% this year including dividends, while the Stoxx Europe 600 Index has returned 10% in dollar terms.

The S&P 500 is down 7.9% this year including dividends, versus a 10% return in dollar terms for the Stoxx Europe 600 Index. Yet, judging by price-earnings ratios, European stocks still look like a bargain: They’re almost 30% cheaper than the US, much wider than the average 17% discount going back a couple decades.

Takeaways by Macro Roundup® AI

  1. The S&P 500 is down 7.9% this year including dividends, while the Stoxx Europe 600 Index has returned 10% in dollar terms.
  2. European stocks trade almost 30% cheaper than US stocks on price-earnings ratios, a discount wider than the 17% average going back a couple of decades.

Related Articles:

AI Summary. A recession would lower long-term interest rates and cut US government interest costs by roughly $500bn annually if rates fell two percentage points, but the historical recession-driven widening of the deficit of about 4% of GDP would erode government finances by an additional $1.3tn in 2025 dollars. Deliberately inducing a recession therefore cannot improve the budget deficit.

Torsten Sløk Apollo
Date Posted:

Torsten Sløk estimates that in the event of a recession that generates a 200 bps decline in interest rates, the cost of debt service would decline by $568 billion, while lower tax receipts and higher UI payments would cost the government $1.3 trillion.

Can inducing a recession reduce the budget deficit through lower interest rates?

Core argument: A two-percentage-point decline in interest rates would save the US government around $500 billion in annual interest payments, but a recession would deteriorate government finances by about double that amount.

If the US enters a recession, long-term interest rates are likely to go down, and it would be cheaper for the US government to refinance existing government debt. However the interest payments saved if interest rates decline by two percentage points would be more than offset by the deterioration in government finances associated with a recession. Specifically, if interest rates decline by two percentage points, the US government would save around $500 billion in annual interest payments. But if the US enters a recession, the government will have lower tax collections and pay more in unemployment benefits, and the historical deepening of the budget deficit during recessions of around 4% of GDP would correspond to an additional $1.3 trillion erosion of US government finances measured in 2025 dollars. The bottom line is that it is not possible to improve the budget deficit by creating a recession because during a recession government finances would deteriorate by double the amount saved in interest payments.

Takeaways by Macro Roundup® AI

  1. A two-percentage-point decline in interest rates would save the US government around $500 billion in annual interest payments, but a recession would deteriorate government finances by about double that amount.
  2. Recessions have historically deepened the US budget deficit by around 4% of GDP, corresponding to an additional $1.3 trillion erosion of government finances in 2025 dollars through lower tax collections and higher unemployment benefits.
  3. Creating a recession cannot improve the US budget deficit, because the fiscal deterioration during a downturn exceeds the interest savings from lower long-term rates.

Related Articles:

  • Bear Market Anatomy – The Path and Shape of the Bear Market — Cyclical and event-driven bear markets have both averaged declines of roughly 30%, but cyclical ones last about two years and take five to recover, versus about eight months and one year for event-driven; structural bear markets average 60% declines over three-plus years and take a decade to recover.
  • Consumer Confidence Is Weaker than During the 2008 Financial Crisis — The University of Michigan survey of consumers shows sentiment declining among households earning both above and below $100,000, job-loss worries at levels normally seen in recessions, a record-high share saying business conditions are worsening, falling income expectations, and rapidly rising inflation expectations. The concern is that weak sentiment spills over into weaker actual spending.
  • Microsoft Pulls Back on Data Centers From Chicago to Jakarta — Microsoft has halted talks for or delayed data center projects in Indonesia, the UK, Australia, Illinois, North Dakota and Wisconsin. It is unclear how much of the pullback reflects expectations of weaker demand for artificial intelligence and cloud services versus construction constraints such as shortages of power and building materials.

AI Summary. Republicans in the White House, Senate and House are drafting analyses on creating a new top income tax bracket for the wealthiest Americans, with a House proposal setting the rate at 40% for taxpayers earning $1m or more a year.

Nancy Cook, Saleha Mohsin, and Erik Wasson Bloomberg
Date Posted:

Both the White House and Republicans in the Senate and House are drafting an analysis of a new tax bracket for high-earning Americans; a House proposal would set the rate at 40% for income over $1mm annually, close to the pre-TCJA top rate of 39.6%.

Are Republicans considering a new top tax bracket for millionaires?

Core argument: A House Republican proposal would set a new top tax bracket at a 40% rate for taxpayers earning $1 million or more a year, according to people familiar with the proposal.

Republicans in the White House, Senate and House are drafting analyses on how best to craft a new tax bracket for the wealthiest Americans, work that signals the GOP under President Donald Trump is seriously considering ideas to raise taxes on the rich. The House proposal would set the new rate at 40% for taxpayers earning $1 million or more a year, according to people familiar with the proposal. Economic policy aides in the Senate and the Trump administration have been studying the idea as well, according to people briefed on the work. A White House official, speaking on the condition of anonymity to discuss private conversations, said Trump is open to the idea of a new top tax bracket. However, the person emphasized that the higher rate should kick in at a threshold far greater than $1 million.

Takeaways by Macro Roundup® AI

  1. A House Republican proposal would set a new top tax bracket at a 40% rate for taxpayers earning $1 million or more a year, according to people familiar with the proposal.
  2. Republicans in the White House, Senate and House are drafting analyses on how best to craft a new tax bracket for the wealthiest Americans.
  3. A White House official, speaking anonymously, said President Donald Trump is open to a new top tax bracket but emphasized that the higher rate should kick in at a threshold far greater than $1 million.

Related Articles:

  • Capitalists in the Twenty-First Century — Most income at the top of the US distribution is non-wage income, primarily profits from closely-held, mid-market firms in skill-intensive industries owned by working-age individuals. The authors find private business profit falls by three-quarters after an owner retires or dies prematurely, indicating most top earners are "working rich" deriving income from human capital.
  • Taxing Top Wealth: Migration Responses and Their Aggregate Economic Implications — Swedish data show that when a wealth-taxed entrepreneur emigrates, employment at their businesses falls 33%, value-added 34%, tax payments 50%, and investment 21%, but 60% of closed firms are absorbed by other domestic companies. The authors estimate aggregate effects on employment and investment are small.
  • Behavioral Responses to State Income Taxation of High Earners: Evidence from California — A California ballot measure raising top marginal income tax rates by up to 3 percentage points prompted an additional 0.8% of the affected tax base to leave the state, with an estimated income elasticity of 2.5–3.2 for high earners who stayed. The authors estimate these responses eroded 45.2% of windfall revenues within one year and 60.9% within two.

AI Summary. Intelligence test scores rose roughly 2–3 IQ points per decade, about one standard deviation between 1942 and 2008, before reversing. Analysis of Norwegian Armed Forces intelligence scores finds that neither the rise nor the reversal reflects changes in general mental ability, attributing them instead to shifts in test properties and education.

Morten Nordmo, Tore Nøttestad Norrøne and Ole Christian Lang-Ree Intelligence
Date Posted:
Is Database:
Database

Analysis of a General Mental Ability (GMA) test given to Norwegian soldiers since 1954 suggest that the upward trend in global IQ scores btw 1942-2008 and its subsequent reversal is a testing artifact, not a reflection of real changes in GMA.

Do rising and falling IQ scores reflect real changes in intelligence?

Core argument: Global intelligence test scores rose 2–3 IQ points per decade, an increase of roughly 1 standard deviation between 1942 and 2008, a pattern known as the Flynn Effect that has reversed since 2008.

Global intelligence test scores over time show a consistent rise of 2–3 IQ points per decade, resulting in an approximate increase of 1 standard deviation from 1942 to 2008. The increase in test scores is now known as the Flynn Effect. [This trend has shown a reversal since 2008]. Research has shown that the Flynn Effect isn’t and hasn’t been strongly identified with latent cognitive ability for quite some time, this study builds on that foundation by providing a more nuanced understanding of the observed increases in observed GMA scores. In addition, the results add to the growing body of research indicating that the Flynn reversal also does not reflect changes in general ability. Specifically, our findings are more in line with the conclusion that the reversal is influenced by shifts in test properties, and educational changes rather than broad changes in general mental ability. These results emphasize the need for careful interpretation of temporal intelligence trends and reinforce the importance of measurement invariance in cross-generational comparisons.

Takeaways by Macro Roundup® AI

  1. Global intelligence test scores rose 2–3 IQ points per decade, an increase of roughly 1 standard deviation between 1942 and 2008, a pattern known as the Flynn Effect that has reversed since 2008.
  2. The study of Norwegian Armed Forces intelligence scores builds on prior research finding that the Flynn Effect is not strongly identified with latent cognitive ability, offering a more nuanced account of rises in observed general mental ability scores.
  3. The authors conclude that the reversal in test scores is influenced by shifts in test properties and educational changes rather than broad changes in general mental ability, underscoring the importance of measurement invariance in cross-generational comparisons.

Related Articles: