Edward Conard

Top Ten New York Times Bestselling Author

  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “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 comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…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
  • “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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, May 8, 2025

AI Summary. An analysis of US company market values finds that roughly 62% of net market-cap growth across all US companies since 2000 came from a narrow cluster of young West Coast technology firms, including Uber, Meta, Amazon, Netflix, NVIDIA, Apple and Microsoft. The author argues this concentration shows how fast, broad, and deep the shifts in US value creation have been.

Andrew McAfee The Geek Way
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The center of gravity of the American economy has shifted west; 70% of the top 50 public companies’ market cap growth occurred on the west coast btw 2000 and 2024 as well as 62% of the net market cap growth of all US companies. @amcafee

How concentrated has US market-cap growth been since 2000?

Core argument: Fully 70% of the graph's total market cap growth sits within a single "15 x 75" box, which also contains about 62% of net market cap growth across all US companies between 2000 and 2024.

There are still some smallish flakes of confetti floating around the rest of the economy, but the main party is clearly happening with the 15 x 75 box. That box is so densely populated it's hard to see all of its contents, even after making the bubbles partially see-through. Uber, Meta, Amazon, Netflix, NVIDIA, Apple and Microsoft are all there, and they have plenty of company. It looks like the Mountain Time Zone finally incubated a green bubble during this time, but no: Palantir’s headquarters is now in Denver, but the company was born in Palo Alto and spent more than fifteen years there before moving east shortly before its 2020 IPO. Fully 70% of the graph’s total market cap growth is contained within the 15 x 75 box, as is about 62% of the net market cap growth in all US companies between 2000 and 2024. It's hard for me to escape the conclusion that we went from having a diversified economy to having a diversified economy with a concentrated tech sector to, in the first quarter of the 21st century, having a young, West Coast tech sector with a national economy attached to it. That’s an exaggeration, of course, but it does capture how fast, broad, and deep the shifts in value creation have been in the second machine age.

Takeaways by Macro Roundup® AI

  1. Fully 70% of the graph's total market cap growth sits within a single "15 x 75" box, which also contains about 62% of net market cap growth across all US companies between 2000 and 2024.
  2. Uber, Meta, Amazon, Netflix, NVIDIA, Apple, and Microsoft all fall inside the densely populated 15 x 75 box, alongside many other companies.
  3. Palantir's Denver headquarters does not mark a Mountain Time Zone origin: the company was born in Palo Alto and spent more than fifteen years there before moving shortly before its 2020 IPO.

Related Articles:

  • A Visualization of Europe’s Non-Bubbly Economy — The Draghi report notes that no European Union company with a market capitalization above €100bn was founded from scratch in the past fifty years, while all six US companies valued above €1tn were. The 13 EU companies founded in that period and worth at least $10bn total about $400bn, versus nearly $30tn for their US counterparts.
  • The Long Goodbye? Incumbent Competitiveness in the 21st Century — Value creation among large American companies has become concentrated in a newer cohort of firms: businesses founded after World War II accounted for 8% of the top 50 companies' total market value in 1990 but 77% by 2024. The leading 20th-century incumbents are fading as this newer group takes over.
  • The Economics of Inequality in High-Wage Economies — Information technology created investment opportunities exceeding the supply of properly trained talent, while trade with low-wage economies, low-skilled immigration, trade deficits, and aging demographics eased constraints on low-skilled labor and risk-averse savings. The author argues this framework, rather than rising cronyism, explains high returns to success, slowing productivity growth, and low interest rates.

AI Summary. If the 1,000 largest public companies automated half of the roles with a high probability of automation, the authors estimate 1.7 million fewer jobs and $207bn in annual labor-cost savings. They project customers capture $72bn, suppliers $48bn, and companies retain $87bn as added profit, a 5% rise in the group's operating profit pool.

Michael Mauboussin and Dan Callahan Morgan Stanley
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Morgan Stanley estimates that the largest public firms will see their EBIT profit pool rise 5% as AI diffuses through the economy. Their model implies that the profit pool of the top quartile of firms by adaptation will rise by 16%.

How are automation labor-cost savings split among customers, suppliers, and companies?

Core argument: If the 1,000 largest public companies automated half of the roles with a high probability of automation, employment would fall by an estimated 1.7 million and annual labor costs by $207 billion, excluding implementation costs, time frame, and growth expectations.

We estimate that if the 1,000 largest public companies automated away half of their roles with a “high probability of automation,” it would result in 1.7 million fewer jobs—enabling companies to reduce labor costs by $207 billion annually. These estimates do not account for the cost of implementing technologies, specify a time frame, or factor in the growth expectations of these companies, but provide a sense of scale regarding how these technologies might reshape the corporate landscape. Using our surplus allocation framework across the index of the 1,000 largest public companies, we estimate that customers will capture $72 billion in savings through lower labor and supply costs, suppliers will capture $48 billion, and companies will retain the remaining $87 billion in surplus as incremental profit, [and] would represent a 5% increase in the operating EBIT profit pool for the combined group. Efficiency gains [won’t] be evenly distributed. For the top 25% of companies in terms of estimated efficiency gain capture, the profit pool is projected to expand by 16%, increasing from $311 billion to $361 billion.

Takeaways by Macro Roundup® AI

  1. If the 1,000 largest public companies automated half of the roles with a high probability of automation, employment would fall by an estimated 1.7 million and annual labor costs by $207 billion, excluding implementation costs, time frame, and growth expectations.
  2. Under the authors' surplus allocation framework, customers capture $72 billion of the savings through lower labor and supply costs, suppliers $48 billion, and companies retain $87 billion as incremental profit, a 5% increase in the combined operating EBIT profit pool.
  3. Efficiency gains are projected to be unevenly distributed, with the top 25% of companies by estimated efficiency-gain capture seeing their profit pool expand 16%, from $311 billion to $361 billion.

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.
  • A Critical Juncture Amid Policy Shifts — US artificial-intelligence-producing sectors' value added quadrupled from $278bn to $1.13tn in constant 2017 dollars between 2010 and 2023, raising their share of GDP from 2.4% to 3.5% while manufacturing's share fell 1.5 percentage points. The authors attribute the data-processing sector's productivity gains largely to elevated physical capital investment and complementary intermediate inputs, including energy.

AI Summary. Inflation-adjusted median weekly earnings for full-time workers with a high school diploma and no college degree reached their highest level on record in the latest data, rising 11% since 2000. Every US state recorded positive real median wage growth over that period.

Jeremy Horpedahl Economist Writing Every Day
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Real median earnings for a full-time worker with a high school degree are at an all-time high and have risen 11% since 2000, prior to the “China Shock.” @jmhorp notes “Every single state had positive real median wage growth from 2001 to 2024.”

Have real wages for workers without college degrees risen since 2000?

Core argument: Real median weekly earnings for full-time workers with a high school diploma and no college degree reached their highest level in the series in 2024, adjusted for inflation with the PCE Price Index.

Here’s what that data on median weekly earnings for full-time workers with a high school diploma, but no college degree look like, adjusted for inflation with the PCE Price Index. Notice that the latest data point is for 2024, which is the highest they have ever been in this data series, and likely higher than any point in the past. While many point to about the year 2000 as when troubles for the working class started (this is when manufacturing employment really fell off a cliff, and China joined the WTO in 2001), inflation-adjusted earnings have risen 11% for this group of workers since then. You might say that’s not a lot of growth — and you would be correct! But this group is better off economically than in the year 2000. Every single state had positive real median wage growth from 2001 to 2024. Every single one!

Takeaways by Macro Roundup® AI

  1. Real median weekly earnings for full-time workers with a high school diploma and no college degree reached their highest level in the series in 2024, adjusted for inflation with the PCE Price Index.
  2. Inflation-adjusted median earnings for full-time workers with a high school diploma and no college degree rose 11% since 2000, the year many cite as the start of working-class troubles, when manufacturing employment fell sharply and before China joined the WTO in 2001.
  3. Every U.S. state recorded positive real median wage growth from 2001 to 2024.

Related Articles:

  • The American Dream Is Not a Coin Flip, and Wages Have Not Stagnated — Using an alternative cost-of-living adjustment, the typical 40-year-old's pre-tax family income rose 52% between 1979 and 2019, or 73% adjusting for family size, versus 15% under the methods behind widely cited mobility estimates. Absolute mobility is down 20 percentage points since 1979 but stood at 72% in 2023.
  • Understanding Trends in Worker Pay over the Past 50 Years — Productivity growth has been unequal across industries, across firms within industries, and across workers within firms, slowing growth in both the productivity and the pay of the median worker. The authors argue that working- and middle-class men earlier received "breadwinner rents"—pay above their marginal value to employers—and then endured slow wage growth as women's workforce participation rose.
  • They Used to Be Ahead in the American Economy. Now They’ve Fallen Behind — An analysis of census and American Community Survey microdata compares the average income of full-time workers in specific demographic groups and occupations with the national average for full-time workers, showing how each group's relative economic standing has shifted over the decades.

AI Summary. Generation X households earned 16% more in inflation-adjusted terms between ages 36 and 40 than the preceding generation at the same ages, the smallest generational improvement of any cohort. Earnings typically rise quickly in people's 30s and 40s as they move into managerial roles, but labour markets were weak when Generation X reached those ages.

The Economist Economist Staff
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Americans ages 44–59 (Gen X) saw income gains at a slower pace than both Millennials and Gen Zers. They also lag in home ownership. By age 31, Millennials/Gen Z had 2x the wealth that Gen X experienced at the same age.

Did one generation see the smallest income gain over its predecessor?

Core argument: Gen Xers' real household incomes at ages 36–40 were only 16% higher than the previous generation at the same age, the smallest improvement of any cohort.

Gen Xers do earn more after inflation than earlier generations—the continuation of a long historical trend, and one from which both millennials and Gen Zers also benefit. But their progress has been slow. From the ages of 36 to 40 Gen Xers’ real household incomes were only 16% higher than the previous generation at the same age, the smallest improvement of any cohort. People’s earnings typically rise fast in their 30s and 40s, as they move into managerial roles. Unfortunately for Gen Xers, when they were in that age range labour markets were weak, following the global financial crisis of 2007-09.

Takeaways by Macro Roundup® AI

  1. Gen Xers' real household incomes at ages 36–40 were only 16% higher than the previous generation at the same age, the smallest improvement of any cohort.
  2. Gen Xers earn more after inflation than earlier generations, continuing a long historical trend that millennials and Gen Zers also benefit from, but their progress has been slow.
  3. Earnings typically rise fast in people's 30s and 40s as they move into managerial roles, but Gen Xers reached that age range when labour markets were weak following the global financial crisis of 2007-09.

Related Articles:

  • Has Intergenerational Progress Stalled? Income Growth Over Five Generations of Americans — Using post-tax, post-transfer income data, the authors find each of the past four US generations was better off than the prior one, with Millennials' real median household income at ages 36–40 18% above the previous generation's, versus 34% for the Silent Generation, 27% for Baby Boomers, and 16% for Generation X.
  • Young Americans Continue to Build Wealth, Across the Distribution — Younger Americans now hold about double the average wealth Generation X had at the same age, roughly matching what Generation X and Baby Boomers had 5-6 years later in life. Generation X and Baby Boomers currently have roughly equal average wealth at the same age, after Generation X had been about $100,000 ahead.
  • Assets and Debt Across Generations — Comparing households by birth cohort in inflation-adjusted dollars, both Generation X (born 1965-1980) and millennials (born 1981-1996) held more debt than baby boomers (born 1946-1964). Generation X held the most mortgage debt, alongside the highest home values, while millennials held nearly 2x as much educational debt as Generation X.

AI Summary. Chinese goods exporters have accumulated substantial foreign currency onshore, with onshore foreign-currency deposits rising $14bn/month since December versus -$1bn/month in the prior twelve months. The authors speculate state banks are using these deposits to inject dollar liquidity onshore, which would imply currency intervention of up to $135bn in one quarter rather than $31bn.

Martin Lynge Rasmussen Money: Inside and Out
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Dollar repatriations by Chinese exporters through state banks are propping up the RMB, @martin_lynge infers. “Goods traders are being asked/required to repatriate FX earnings to help increase onshore FX liquidity and thereby ease depreciation pressure.”

Are exporter dollar deposits funding undisclosed currency intervention?

Core argument: Onshore FX deposits in China have risen $14bn/month since December, versus -$1bn/month over the prior twelve months, as Chinese goods traders accumulate foreign exchange onshore.

We examine whether dollar repatriation by Chinese exporters is funding banks’ FX reverse repos, something that might have helped the renminbi shrug off tariffs. In recent months, Chinese goods traders have begun to accumulate a substantial amount of FX onshore. As a result, onshore FX deposits have increased $14bn/month since December vs. -$1bn/month in the prior twelve months. We wonder whether goods traders are being asked/required to repatriate FX earnings to help increase onshore FX liquidity and thereby ease depreciation pressure. We find that banks' FX reverse repo activity, which injects FX into markets, began to correlate with onshore FX accumulation by goods traders in 2022. Given the large role of state banks in stabilizing FX markets, we speculate that goods traders' FX deposits are being used by state banks to inject dollar liquidity into onshore markets. If true, it would imply that FX intervention added up to $135bn in Q1 instead of the $31bn implied by our intervention estimates; this is a dramatic difference, and we are still in the process of evaluating whether to include bank FX reverse repos in our intervention tracking.

Takeaways by Macro Roundup® AI

  1. Onshore FX deposits in China have risen $14bn/month since December, versus -$1bn/month over the prior twelve months, as Chinese goods traders accumulate foreign exchange onshore.
  2. State banks may be using goods traders' FX deposits to inject dollar liquidity into onshore markets, as banks' FX reverse repo activity began to correlate with goods traders' onshore FX accumulation in 2022.
  3. Counting bank FX reverse repos as intervention would imply Chinese FX intervention of up to $135bn in the first quarter, rather than the $31bn implied by existing estimates.

Related Articles:

  • Taiwan’s Markets Jolted as Currency Surges Most Since 1980s — Taiwan's dollar surged as much as 5% in a day, its largest move since 1988, as traders speculated authorities might permit appreciation to help secure a trade deal with the US. Taiwan's central bank attributed the two-day appreciation partly to market chatter and urged against irresponsible speculation.
  • The Coming Asian FX ‘Avalanche’ — Investment firm Eurizon SLJ argues that Asian exporters have hoarded much of their trade surpluses in dollar deposits rather than repatriating them, creating an overhang the firm roughly estimates at $2.5tn in China plus more from Taiwan, Malaysia, and Korea, growing about $500bn a year. It predicts this raises the risk of a non-linear dollar sell-off.
  • The Dollar has Further to Fall — The author argues the dollar has considerably further to fall, noting Federal Reserve data show its real value nearly two standard deviations above its average since 1973, a level matched only twice before, each followed by depreciations of 25-30%. Financing the $1.1tn US current account deficit requires matching net capital inflows.

AI Summary. Strategists argue risk asset markets have already priced in a modest economic upside surprise and warn against chasing the rally ahead of what they expect to be significant price increases, supply chain disruptions, and job losses. Their strongest market views are a weaker dollar and a higher gold price.

Jan Hatzius Goldman Sachs
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Jan Hatzius expects the US tariff rate on China to “drop from ~160% to ~60% relatively soon,” and expects China to reduce tariffs by a similar amount. He continues to estimate a 12-month recession risk of 45%.

Have risk assets already priced in the modest economic upside surprise?

Core argument: Equity, credit, and cross-market strategists are wary of chasing the rally, since risk assets have already taken credit for a modest economic surprise ahead of what looks likely to be significant price hikes, supply chain disruptions, and job losses.

This is a tricky time for investors. While the economy has held up a touch better than expected so far, it’s very early and risk asset markets have already taken a lot of credit for the modest surprise. Further relaxation is certainly possible, especially if we do see trade deals over the next few weeks, but our equity, credit, and cross-market strategists are wary of chasing the rally on the eve of what looks likely to be significant price hikes, supply chain disruptions, and job losses. Our strongest views across markets remain a weaker dollar and a higher gold price. Beyond these two, we are bullish on UK rates, copper, and US natural gas, but bearish on oil.

Takeaways by Macro Roundup® AI

  1. Equity, credit, and cross-market strategists are wary of chasing the rally, since risk assets have already taken credit for a modest economic surprise ahead of what looks likely to be significant price hikes, supply chain disruptions, and job losses.
  2. The strongest cross-market views are a weaker dollar and a higher gold price, alongside bullish positions on UK rates, copper, and US natural gas and a bearish view on oil.
  3. Further market relaxation is possible, especially if trade deals are reached over the next few weeks.

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.
  • How Are US Consumers and Firms Responding to Tariffs? — The author projects that new US tariffs will trigger a cascade: container departures from China slow, ship arrivals at US ports stop, trucking demand halts as shelves empty, and layoffs follow in trucking and retail. The projected end point is a recession.

Friday, May 9, 2025

AI Summary. According to Zeki Data, the top 15 US artificial intelligence companies recruited 500,000 software engineers at a rate of up to 3,000 a month, but their net monthly hiring rate has fallen to zero. The article argues these firms expect AI agents to perform many of the same tasks.

John Thornhill Financial Times
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The top AI firms had been hiring software engineers at the rate of ~ 3k a month but their “net monthly hiring rate has dropped to zero.” @johnthornhillft speculates that firms believe they are close to AI that “could write software as well as any human.”

Have top AI companies stopped net hiring of software engineers?

Core argument: According to Zeki Data, the top 15 US AI companies hired software engineers at a rate of up to 3,000 a month, recruiting 500,000 in total between 2011 and 2024.

The big AI companies seem to think they are close to AGI [defined as "an autonomous coding agent that could write software as well as any human"]. One giveaway is reflected in their own hiring practices. According to Zeki Data, the top 15 US AI companies had been frantically hiring software engineers at a rate of up to 3,000 a month, recruiting a total of 500,000 between 2011 and 2024. But lately their net monthly hiring rate has dropped to zero as these companies anticipate that AI agents can perform many of the same tasks.

Takeaways by Macro Roundup® AI

  1. According to Zeki Data, the top 15 US AI companies hired software engineers at a rate of up to 3,000 a month, recruiting 500,000 in total between 2011 and 2024.
  2. Net monthly hiring at the top 15 US AI companies has dropped to zero as these companies anticipate that AI agents can perform many of the same tasks.
  3. Big AI companies appear to believe they are close to artificial general intelligence, defined as an autonomous coding agent that could write software as well as any human, with their own hiring practices as one giveaway.

Related Articles:

  • SWE-Lancer: Can Frontier LLMs Earn $1 Million from Real-World Freelance Software Engineering? — SWE-Lancer is a benchmark of over 1,400 real freelance software engineering tasks worth $1m in actual payouts, spanning $50 bug fixes to $32,000 feature builds plus managerial choices between technical proposals. Evaluations find leading AI models still cannot solve the majority of the tasks.
  • Why Hasn’t AI Taken Your Job Yet? — 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.
  • 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.

AI Summary. Labor force participation for Americans 55 and older remains almost two percentage points below pre-pandemic levels, while participation for youth, prime-age women, and prime-age men has recovered or exceeded earlier levels. Participation among 55–64 year-olds in the US has been overtaken by the OECD average and Europe.

Nicholas Eberstadt American Enterprise Institute
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After rising 10pp from 1993–2019, the Labor Force Participation Rate of the US 55+ population has fallen 2pp since 2019. The LFPR of the US 55–64 cohort is now below that of the EU, down from a 20pp lead in 2000.

Have older Americans failed to rejoin the workforce while other groups recovered?

Core argument: Labor force participation rates for Americans aged 55 and over remain almost two percentage points below pre-pandemic levels in early 2025, after rising more than 10 percentage points between 1993 and 2019.

LFPRs for the 55+ group rose by over 10 percentage points between 1993 and 2019. [Yet] in early 2025 LFPRs for the 55+ population remain stubbornly stuck almost two percentage points below the pre-pandemic level. The faltering trends for older workers stand in contrast to those for the rest of the US labor force. LFPRs for US youth (the 15–24s) are higher today than before the pandemic. LFPRs for prime age women (the 25–54 group) are higher today than ever before. Even for the notoriously troubled prime age male contingent, LFPRs for early 2025 look to be back up to pre-pandemic levels. Older workers remain the troubling exception to the general post-pandemic recovery of the US labor force. The drop-off in older workers appears to account for the entirety of the current workforce shortfall [close to 2 ml]—and then some. In the critical 55–64 cohort—a group that may or may not be in the workforce—US LFPRs have just been overtaken by the OECD. At the turn of the century, America enjoyed a 10-point edge here. Even more stunning, the US has now fallen behind Europe in workforce participation for its 55–64, sacrificing the over 20-point lead it enjoyed in the year 2000.

Takeaways by Macro Roundup® AI

  1. Labor force participation rates for Americans aged 55 and over remain almost two percentage points below pre-pandemic levels in early 2025, after rising more than 10 percentage points between 1993 and 2019.
  2. The drop-off in older workers appears to account for the entirety of the US workforce shortfall of close to 2 million—and then some—while participation for youth aged 15–24, prime-age women, and prime-age men has returned to or exceeded pre-pandemic levels.
  3. US labor force participation for the 55–64 cohort has been overtaken by the OECD, erasing a 10-point edge held at the turn of the century, and now trails Europe, sacrificing a lead of over 20 points in 2000.

Related Articles:

  • To Retire or Keep Working after a Pandemic? — Workers age 55 and older have not reversed the decline in labor force participation that began with the COVID-19 pandemic, unlike other age groups, amounting to roughly 2m workers by some estimates. The shortfall is concentrated among those without a college degree, while college-educated older workers' participation returned to its pre-pandemic trend.
  • Pandemic Labor Force Participation and Net Worth Fluctuations — Applying the pre-pandemic peak labor force participation rate to the adult population implies about 3.73m "missing workers" and 3.27m "excess retirees" in the US economy. The authors estimate that wealth effects on retirement decisions among those aged 55 and over account for over 50% of the aggregate participation decline and more than 80% of excess retirements.
  • Thoughts and Comments on Demographic Aging and Shrinking — As an arithmetic matter, the greying of societies is driven much more by smaller families than by longer lives, which the author attributes to a withering away of the family. Demographic simulations project that by 2040 couples in their 60s in China will likely have at least one living parent to care for, and many will have two or three.

AI Summary. Banks provide a smaller share of corporate credit than before the financial crisis, with bank lending falling from about 27% of total non-financial corporate debt to about 20%.

Torsten Sløk Apollo
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Torsten Sløk shows that banks are playing a smaller role as a provider of credit. Bank lending declined from ~27% of total non-financial corporate debt prior to the crisis to ~20% today.

Are banks providing a smaller share of corporate credit?

Core argument: Bank lending has fallen from roughly 27% of total non-financial corporate debt before the financial crisis to about 20% today, according to Torsten Sløk.

[Torsten Slok] will be giving a presentation on “The Growing Role of Private Credit” today at the Hoover Institution during a conference celebrating John Taylor and the Taylor role.

Takeaways by Macro Roundup® AI

  1. Bank lending has fallen from roughly 27% of total non-financial corporate debt before the financial crisis to about 20% today, according to Torsten Sløk.
  2. Torsten Sløk argues that banks are playing a smaller role as providers of credit.
  3. Torsten Sløk is presenting "The Growing Role of Private Credit" at the Hoover Institution during a conference celebrating John Taylor and the Taylor rule.

Related Articles:

  • Has Private Credit Broken the High-Yield Spread Signal? — The high-yield bond market has stayed at about $1.4tn while private credit assets have grown to as much as $2tn, and the highest-rated BB portion of the high-yield index has risen from 41% to 51%. Private markets have shifted riskier borrowers out of high yield, making that index safer.
  • The Secular Decline of Bank Balance Sheet Lending — Traditional bank balance sheet lending has declined as a share of credit intermediation, with credit increasingly channeled through arms-length transactions such as securitization. A structural model attributes falling lending shares to lower securitization costs, savers' behavior driving bank balance sheet size, and implicit bank costs and subsidies shaping balance sheet composition.
  • Private Credit: Characteristics and Risks — Private credit loans are negotiated bilaterally outside traditional regulatory requirements and are illiquid because no secondary market exists, leaving investors expected to hold them to maturity or face steep losses if they need to exit. Scarce data on this growing form of nonbank lending makes assessing its risks difficult.

AI Summary. A proposal under consideration would let the top US income tax rate revert from 37% to the pre-2017 level of 39.6% for individuals earning $2.5mn or more, with the revenue used to fund middle- and working-class tax cuts and protect Medicaid, the health program for low-income households.

James Politi Financial Times
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Trump again signaled openness to raising the tax rate on earnings over $2.5mm to the pre-TCJA rate of 39.6%. “Republicans should probably not do it, but I’m OK if they do!!!”

Should the top income tax rate rise to fund middle-class cuts?

Core argument: Trump is considering letting the top income tax rate revert from 37% to the pre-2017 level of 39.6% for individuals earning $2.5mn or more, according to a person familiar with his thinking.

Trump’s proposal would mark a major break from the traditional Republican low-tax approach to high earners — and drew criticism from some rightwing groups who said it was more akin to a Democratic policy. “The president is considering allowing the rate on individuals making $2.5mn or more to revert from 37% to the pre-2017 39.6%. This will help pay for massive middle- and working-class tax cuts, and protect Medicaid,” the person familiar with Trump’s thinking said, referring to the government healthcare plan for low-income households.

Takeaways by Macro Roundup® AI

  1. Trump is considering letting the top income tax rate revert from 37% to the pre-2017 level of 39.6% for individuals earning $2.5mn or more, according to a person familiar with his thinking.
  2. The person familiar with Trump's thinking said the higher top rate would help pay for middle- and working-class tax cuts and protect Medicaid, the government healthcare plan for low-income households.
  3. Trump's proposal marks a break from the traditional Republican low-tax approach to high earners and drew criticism from some rightwing groups who said it was more akin to a Democratic policy.

Related Articles:

  • Trump Says Millionaire Tax Would Push Wealthy to Leave the US — The US president argued that a higher tax rate on millionaires would be disruptive because wealthy people would leave the country, citing other countries that have lost high earners after similar moves. The remarks push back on discussions among some Republican lawmakers about a new 40% bracket for those earning $1m or more to help fund an economic package.
  • 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.