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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…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
  • “…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 represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “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 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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Monday, May 12, 2025

AI Summary. An analysis of 8,300 large firms accounting for two-thirds of gross value added in Germany, the UK, and the US finds that fewer than 100 firms generated about two-thirds of positive labor productivity gains in each country. A still smaller group of 55 firms accounted for 50–65% of the firm-level productivity drag.

Jan Mischke, Chris Bradley, Olivia White, Guillaume Dagorret, et al. McKinsey
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A McKinsey analysis finds btw 2011–2019, 5% of American firms drove ~80% of real gross value added per worker gains. The US sample had 3x the number of leading firms relative to “stragglers” than did Germany and the UK who were almost at par.

How concentrated are national productivity gains among a few firms?

Core argument: Fewer than 100 firms out of a sample of 8,300 large companies — dubbed Standouts — accounted for roughly two-thirds of positive productivity gains in each of Germany, the UK, and the US.

We apply the economic definition of labor productivity as real gross value added (GVA) per worker, which is very different from profitability or efficiency and includes the impact of employees moving across firms. We look at 8,300 large firms covering 2/3rds of GVA in Germany, the UK, and the US. Fewer than 100 firms in our sample of 8,300, a group that we have dubbed Standouts, accounted for about 2/3rds of the positive productivity gains in each of the countries. Standouts are defined as firms that added at least one basis point to their national sample’s productivity growth. The number of firms that were responsible for the largest drags (negative contributions of at least one basis point) on productivity growth—we call them Stragglers—was even smaller. Only 55 Stragglers accounted for 50 to 65% of the firm-level productivity drag in the three-country samples. In the US, 44 Standouts—5% of sample firms, accounting for 23% of employment share—generated 78% of positive productivity growth. And 14 Stragglers—2% of sample firms, accounting for 10% of employment—were responsible for 57% of negative growth.

Takeaways by Macro Roundup® AI

  1. Fewer than 100 firms out of a sample of 8,300 large companies — dubbed Standouts — accounted for roughly two-thirds of positive productivity gains in each of Germany, the UK, and the US.
  2. In the US, 44 Standouts, 5% of sample firms and 23% of employment, generated 78% of positive productivity growth, while 14 Stragglers, 2% of firms and 10% of employment, were responsible for 57% of negative growth.
  3. Measuring labor productivity as real gross value added per worker across 8,300 large firms covering two-thirds of GVA in Germany, the UK, and the US, just 55 Stragglers accounted for 50–65% of the firm-level productivity drag.

Related Articles:

  • 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.
  • Increasing Returns: Identifying Forms of Increasing Returns and What Drives Them — Within U.S. manufacturing, output at the 90th-percentile plant is nearly double that at the 10th percentile, a gap economists commonly attribute to differences in management talent. Superstar firms outspend rivals on intangible assets, and U.S. firms spend over $200bn a year on proprietary software that the authors argue enables economies of scale and product differentiation.
  • Long-Term Shareholder Returns: Evidence From 64,000 Global Stocks — A study of about 64,000 global stocks estimates net global stock market wealth creation of $75.7tn, with returns highly concentrated: the top 159 firms (0.25%) account for half of net wealth creation and the top 1,526 (2.39%) account for all of it. Fewer than half of stocks beat one-month US Treasury bills, 42.6% of non-US and 44.8% of US stocks.

AI Summary. The dollar has risen on tariff reductions and fallen on tariff increases, a pattern the author calls unusual because tariffs on the rest of the world would be expected to strengthen the dollar. The author argues markets punished US policy volatility and that the dollar remains below the level implied by forward interest-rate differentials against other advanced economies.

Robin Brooks Robin Brooks Substack
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The de-escalation of the Trade War saw the $ gain 1.5% relative to its G10 peers. @robin_j_brooks cautions, “US tariffs are a negative shock on other countries, in response to which the Dollar should rise as a market offset. The opposite has happened.”

Why does the dollar fall when tariffs rise?

Core argument: The trade-weighted Dollar has rallied on tariff reductions and fell on prior tariff hikes, a pattern the author calls highly unusual since imposing tariffs on the rest of the world should have pushed the Dollar up.

The fact that the Dollar is rallying on tariff reductions - and that it fell on previous tariff hikes - is very unusual and worrying. The chart shows the trade-weighted Dollar (black line) against its G10 peers, i.e. against the currencies of other advanced economies like the Euro and the British Pound. It also shows the corresponding trade-weighted interest rate differential (blue line), where I am using the same trade weights in the Dollar index to calculate the rate differential. I am looking at the 2y2y forward interest differential, which you get by splitting out the second half of 4-year interest rates. Markets like this tenor because it gives a more forward-looking perspective on where interest rates are headed. Even with today’s rally, the Dollar has yet to close the gap with the 2y2y forward rate differential. The sharp fall in the Dollar after April 9 is significant. One week after announcing reciprocal tariffs, the US suspended them. In effect, the US looked like it was negotiating against itself and the sharp fall in the Dollar around that time looks like markets punished this policy volatility. All this is highly unusual. As I note above, the imposition of tariffs on the rest of the world should have seen the Dollar rise.

Takeaways by Macro Roundup® AI

  1. The trade-weighted Dollar has rallied on tariff reductions and fell on prior tariff hikes, a pattern the author calls highly unusual since imposing tariffs on the rest of the world should have pushed the Dollar up.
  2. Even after the rally, the Dollar has yet to close the gap with the 2y2y forward trade-weighted interest rate differential against G10 peers, which the author calculates using the same trade weights as the Dollar index.
  3. The Dollar fell sharply after April 9, when the US suspended the reciprocal tariffs it had announced a week earlier, which the author reads as markets punishing US policy volatility.

Related Articles:

  • Why Didn’t Tariffs Push up the U.S. Dollar? — The US dollar was exceptionally strong at a level implying an ever-shrinking export base and an ever-growing trade deficit, requiring continually larger foreign inflows at ever more inflated dollar and US equity valuations to sustain. Even after its recent slide, the dollar remains strong by almost all measures.
  • 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.
  • Are Foreigners Selling US Assets? — European and Japanese investors hold roughly 30% and 20% of their fixed income in foreign debt, versus under 10% for US investors, with US bonds making up about 15% of Eurozone and Japanese portfolios. Because foreign investors are less sticky than domestic ones, turmoil in US bond markets has greater potential to unsettle them.

AI Summary. The US Treasury says it is "implausible" that reciprocal tariffs on China fall below 10%, with a 34% rate serving as a ceiling. It also says some of the 20% surtax imposed on China over fentanyl could come off given strong engagement from Beijing on addressing that crisis.

Jenny Leonard Bloomberg
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The US and China are lowering tariffs to 30% and 10%, from 145% and 125%, respectively, for the next three months while Washington and Beijing work toward a broader agreement. Scott Bessent said the range of US tariffs on the PRC will fall btw 10–34%.

Will US tariffs on China stay between 10% and 34%?

Core argument: The US and China agreed to cut tariffs during a 90-day reprieve for talks, with Treasury Secretary Scott Bessent saying the April 2 reciprocal tariff level of 34%, set by the President, "would be a ceiling.".

Treasury Secretary Scott Bessent said it’s “implausible” that reciprocal tariffs on China go below 10%, but the April 2 level — set by the President at 34% — “would be a ceiling.” He also said that “we could see some amount of the fentanyl tariffs perhaps come off,” if there were “excellent engagement” from Beijing on solutions toward solving that crisis. Trump put a 20% surtax on China earlier this year over fentanyl concerns.

Takeaways by Macro Roundup® AI

  1. The US and China agreed to cut tariffs during a 90-day reprieve for talks, with Treasury Secretary Scott Bessent saying the April 2 reciprocal tariff level of 34%, set by the President, "would be a ceiling.".
  2. Bessent called it "implausible" that reciprocal tariffs on China fall below 10%.

Related Articles:

  • 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.
  • Did Tariffs Make American Manufacturing Great? New Evidence from the Gilded Age — Using digitized industry-level US tariff data from 1870–1900 matched to state-level manufacturing census data for over 80 industries, the authors estimate that tariffs reduced labor productivity. They argue the results are consistent with weaker international competition allowing less efficient firms to survive, reduced incentives to innovate, and lobbying for protection misallocating resources.
  • 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.

AI Summary. New U.S. tariffs act like a sudden corporate tax increase worth hundreds of billions, and with the dollar weakening and a global minimum tariff limiting substitution toward other suppliers, importing companies likely absorb much of the cost through higher input prices and lower sales volumes. Forward earnings estimates remain elevated, suggesting this hit is not priced in.

Joseph Wang Fed Guy Blog
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Noting elevated forward earnings, @FedGuy12 argues markets have not priced a hit to corporate profits due to tariffs. He argues the weakening dollar and the downtick in consumer sentiment mean firms have limited ability to pass on tariff related costs.

Do tariffs act as a corporate tax hike markets haven't priced?

Core argument: The U.S. aggregate effective tariff rate stood at 3% before April, making Trump's tariffs a sizable increase equivalent to a sudden corporate tax hike that in aggregate would run into the hundreds of billions of dollars.

Trump’s tariffs are equivalent to a sudden corporate tax hike that in aggregate would be in the hundreds of billions. In theory, the impact on tariffs can be blunted by a strengthening currency and substitution towards non-tariffed countries. However, the dollar has been weakening and a global minimum tariff makes substitution less likely as it impacts all imports regardless of origin. This suggests that the importing company will bear the brunt of the tariffs through higher import costs and lower sales volumes. The U.S. aggregate effective tariff rate was just 3% before April, so the new tariffs are a sizable increase. The negative impact of tariffs on companies is potentially a sizable hit on profits, but more importantly an unknowably negative impact on profits. Many companies will not know how their costs will be impacted by tariffs until after an extended negotiation period. They will also not know how much of the increase they will be able to pass on to their consumers. This impact does not appear to be factored into forward earnings, which remain elevated. Earnings are just one input into stock prices and are sometimes not even very important, but the clear negative profit impact of tariffs does not seem to be in the price.

Takeaways by Macro Roundup® AI

  1. The U.S. aggregate effective tariff rate stood at 3% before April, making Trump's tariffs a sizable increase equivalent to a sudden corporate tax hike that in aggregate would run into the hundreds of billions of dollars.
  2. A weakening dollar and a global minimum tariff applying to all imports regardless of origin suggest importing companies will bear the brunt of the tariffs through higher import costs and lower sales volumes.
  3. Forward earnings remain elevated and do not appear to reflect the negative profit impact of tariffs, which many companies cannot size until after extended negotiations and until they learn how much cost they can pass to consumers.

Related Articles:

  • What’s Driving the Surge in U.S. Corporate Profits? — U.S. corporate profits reached $4tn, 2.3 percentage points higher as a share of national income than before the COVID-19 pandemic, an increase driven by domestic nonfinancial industries and offset mainly by declines in net interest and miscellaneous asset payments and in income of unincorporated businesses. Employee compensation's share edged down, and higher profits mostly went to shareholders through dividends.
  • End of an Era: The Coming Long-Run Slowdown in Corporate Profit Growth and Stock Returns — The authors estimate that declining interest and corporate tax rates accounted for over 40% of real corporate profit growth from 1989 to 2019, while falling risk-free rates explain the entire expansion in price-to-earnings multiples. Real earnings before interest and taxes grew slightly more slowly than in 1962–1989, at 2.2% versus 2.4% per year.
  • 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.

AI Summary. Electricity has risen to 30% of China's final energy use while plateauing near 22% in Europe and the US, supported by a decades-long grid expansion and upgrade program projected to cost as much as $800bn by 2030. Chinese grid investment is forecast to grow about 5% annually through 2030, faster than projected economic growth.

Nassos Stylianou, Jana Tauschinski and Edward White Financial Times
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China is outpacing both the US and Europe in electrification. The US and Europe’s electrical consumption as a final share of energy seemingly plateaued at ~ 22% in 2015; since then China’s has surged to 30%.

How is China pulling ahead of the West in electrification?

Core argument: China's electricity share of final energy use has risen to 30%, while the US and Europe have plateaued at around 22%, after China already led both a decade ago.

Even a decade ago, China’s rate of electrification was ahead of Europe and the US. Since then, those rival economies have seen electricity as a final share of energy plateau at around 22%, while electrification in China has surged to 30%. The central pillar of China’s electrification plans is its decades-long plan to upgrade and expand China’s electricity grid. The country is forecast to spend as much as $800bn by 2030 upgrading the system’s hardware and software. Electricity infrastructure spending in many countries tracks economic growth. However, Ken Liu, head of China renewables, utilities and energy research at UBS, forecasts overall grid capex in China as high as 10% this year. Grid spending will continue at a compound annual growth rate of about 5% through to 2030, significantly faster than forecast economic growth “due to the trend of electrification”, he says.

Takeaways by Macro Roundup® AI

  1. China's electricity share of final energy use has risen to 30%, while the US and Europe have plateaued at around 22%, after China already led both a decade ago.
  2. China is forecast to spend as much as $800bn by 2030 upgrading its electricity grid's hardware and software, the central pillar of its decades-long electrification plans.
  3. Ken Liu, head of China renewables, utilities and energy research at UBS, forecasts China's overall grid capex growth as high as 10% this year and a compound annual growth rate of about 5% through 2030, faster than forecast economic growth.

Related Articles:

  • Economic Growth Now Depends on Electricity, Not Oil — Average annual electricity load growth reached 3% and is projected to continue at that rate for five years, with utilities raising expected peak demand for 2029 by 12%, or 101 gigawatts, driven by data centers, new factories, electric vehicles, heat pumps, and hydrogen production.
  • Heliocentrism — An energy use must be electrified before green grid electricity can decarbonize it, and while US grid decarbonization continues at a steady pace, the electricity share of final US energy consumption has grown little. Transmission line growth runs well below Department of Energy targets for 2030 and 2035, and transformer delivery times have stretched from 4–6 weeks to 2–3 years.
  • Electricity 2025 — US electricity demand is projected to grow about 2% annually over 2025-2027, an upward revision from an earlier 1% forecast. A study commissioned by the US Department of Energy found data centre electricity use rose from about 60 TWh in 2014 to 176 TWh in 2023, and could reach 325-580 TWh by 2028.

AI Summary. China registered about 6.1m marriages in its most recent year, the lowest since public records began in 1986 and less than half the 2013 peak, with roughly 30% of 30-year-olds unmarried versus 15% a decade earlier. Births of 9.54m were the second-lowest since the People's Republic of China was founded in 1949.

Lucille Liu Bloomberg
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Marriages in China fell almost 21% y/y in 2024 to 6.1mm, the lowest tally since 1986, and less than half the 2013 peak. ~9.54mm babies were born last year, the second-lowest number of births since the founding of the PRC.

Are marriages and births in China falling to record lows?

Core argument: China registered 6.1 million marriages in 2024, according to the Ministry of Civil Affairs, the lowest since public records began in 1986 and less than half the 2013 peak, with the decline continuing into the following first quarter.

Some 6.1 million marriages were registered in 2024, according to the Ministry of Civil Affairs. That’s the lowest tally since public records began in 1986 and is less than half the peak reached in 2013. The decline continued in the first quarter of this year. About 30% of 30-year-olds were unmarried in 2023, compared with 15% a decade earlier, according to demographer He Yafu. Some 9.54 million babies were born in China last year, up slightly from 2023 — in part because the Year of the Dragon in the Chinese zodiac is considered lucky for having children. But it was still the second-lowest number of births since the founding of the People’s Republic of China in 1949.

Takeaways by Macro Roundup® AI

  1. China registered 6.1 million marriages in 2024, according to the Ministry of Civil Affairs, the lowest since public records began in 1986 and less than half the 2013 peak, with the decline continuing into the following first quarter.
  2. About 30% of Chinese 30-year-olds were unmarried in 2023, up from 15% a decade earlier, according to demographer He Yafu.
  3. China recorded 9.54 million births in 2024, up slightly from 2023 in part because the Year of the Dragon is considered lucky for having children, yet still the second-lowest total since the People's Republic was founded in 1949.

Related Articles:

  • The Power of Demography and the Fate of East Asia — East Asia's total population has peaked and is projected to decline for at least a generation, with the pace of decline likely accelerating each decade, while US population is projected to keep growing for decades. The author argues such sustained divergence can shift the global balance of power.
  • China Steps Up Campaign For Single People to Date, Marry and Give Birth — Local officials in China are calling married women in their 20s and early 30s to ask about family plans, urge prenatal check-ups, and offer subsidies for additional children, with one resident reporting an Rmb100,000 ($14,000) offer for a second child. State-run outlets have promoted claims that childbirth benefits maternal health.
  • East Asia’s Coming Population Collapse — United Nations projections show China's population falling 8%, Japan's 18%, South Korea's 12%, and Taiwan's 8% between 2020 and 2050, while the US population rises 12%. Working-age people per person over 65 are projected to drop to about 1.8 in China and 1.2 in Japan and South Korea.

Tuesday, May 13, 2025

AI Summary. The four largest US hyperscalers spent $440bn on capital expenditure and research in 2024, with $596bn projected for 2025, a 35% increase, leaving large gaps between AI spending and AI revenues. These firms account for more than half of all capital expenditure growth in the US equity market.

Michael Cembalest J.P. Morgan
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The four major “hyperscalers” continue to have a large gap btw AI spending ($440B in 2024 and $596B in 2025) and AI revenues. The four firms now account for more than half of all capex growth of the entire US equity market. Michael Cembalest notes an uptick in revenue from cloud services, which “likely includes most AI activity.”

How large is the gap between AI spending and AI revenues?

Core argument: The four big hyperscalers spent $440 billion on capex and R&D in 2024 and are projected to spend $596 billion in 2025, a 35% increase, leaving large gaps between AI spending and AI revenues.

Last September we expressed concern that hyperscalers were spending an increasing amount on AI, and that investors would need to see evidence of corporate AI adoption fairly soon. No matter how you do the analysis, you still end up with large gaps between AI spending and revenues given $440 billion of capex/R&D for the four big hyperscalers in 2024 and $596 billion projected for 2025, a 35% increase. These four companies now account for more than half of all capex growth of the entire US equity market. We don’t have a trove of answers at this point since only Microsoft explicitly discloses AI related revenues, which rose by 150% over the past year. But we do see healthy increases in cloud-based revenues for Microsoft, Google and Amazon, which is a category that likely includes most AI activity. Another observation from Microsoft: they processed 100 trillion tokens in Q1 2025, up 5x from Q1 2024 levels; 50 trillion of these tokens were processed in March 2025 alone. This implies that there’s a lot of inference activity going on which is often a sign of corporate AI models being used in actual workflows.    

Takeaways by Macro Roundup® AI

  1. The four big hyperscalers spent $440 billion on capex and R&D in 2024 and are projected to spend $596 billion in 2025, a 35% increase, leaving large gaps between AI spending and AI revenues.
  2. The four big hyperscalers account for more than half of all capex growth across the entire US equity market.
  3. Microsoft, the only one of the four to explicitly disclose AI-related revenues, reported them up 150% over the past year and processed 100 trillion tokens in Q1 2025, 5x Q1 2024 levels, with 50 trillion in March 2025 alone.

Related Articles:

  • AI’s $600B Question — Comparing spending on AI chips to historical railroad construction overlooks that high-fixed-cost, low-marginal-cost businesses without monopoly or oligopoly power tend to see prices competed down to marginal cost, and that semiconductors continually improve in cost versus performance, unlike physical infrastructure. Speculative frenzies accompany technology, but the payoff will take a long time.
  • Microsoft’s Datacenter Freeze – 1.5GW Self-Build Slowdown & Lease Cancellation Misconceptions — Reported cancellations of about 2GW of Microsoft datacenter capacity cover only non-binding letters of intent, while the company holds roughly 5GW of pre-leased capacity under binding contracts slated to begin operating between 2025 and 2028. The authors estimate Microsoft accounted for more than 60% of all newly leased turnkey datacenter capacity over a recent six-quarter stretch.
  • The Alchemists — NVIDIA's share of all US capital spending is projected to approach two 20th-century peaks by 2026, and large cloud providers would need $400–500bn in new revenue to earn their traditional 50% gross margin on roughly $250bn of annual data center spending. After the dot-com collapse, Corning's fiber optic revenues did not surpass 2000 levels until 2018 in nominal terms.

AI Summary. U.S. aggregate productivity growth since 2019 came from within-industry gains rather than the shift of employment toward highly productive industries. Information, management of companies, and mining led productivity growth—output per worker in information rose 30% over five years—while construction productivity fell 12%, and industries with more college-educated workers showed higher productivity growth.

Oksana Leukhina and Mickenzie Bass Federal Reserve Bank of St. Louis
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Over 2019–2024, US productivity growth, which exceeded that of other advanced countries by 4–6%, was driven by within-industry growth, not reallocation across industries. Industry productivity growth was strongly related to higher education and AI use.

What is driving U.S. productivity growth since the pandemic?

Core argument: Output per worker in the U.S. information industry grew 30% from the third quarter of 2019 to the third quarter of 2024, about 5% annually, among the highest alongside management of other companies and mining.

Aggregate productivity growth since 2019 was not driven by employment reallocation toward the highly productive industries; rather, it was fueled by within-industry growth.Which industries led the way in terms of productivity growth, and what is special about them? In the figure below each point refers to one industry. Industry-specific productivity growth is shown on the x-axis, while the share of an industry’s workers who are college-educated appears on the y-axis. The highest productivity growth from the third quarter of 2019 to the third quarter of 2024 was in information, management of other companies, and mining. Output per worker in the information industry, for example, grew 30% over the course of five years (about 5% annual growth). By contrast, the construction industry grew the least; its productivity actually declined by 12% (that is, a negative 2.5% annual growth). It is clear there’s a positive relationship (as indicated by the slope of the fitted line) between sectoral education level and productivity growth in this period.

Takeaways by Macro Roundup® AI

  1. Output per worker in the U.S. information industry grew 30% from the third quarter of 2019 to the third quarter of 2024, about 5% annually, among the highest alongside management of other companies and mining.
  2. Construction productivity declined 12% from the third quarter of 2019 to the third quarter of 2024, about -2.5% annually, the smallest growth among U.S. industries.
  3. Aggregate U.S. productivity growth since 2019 came from within-industry growth rather than employment reallocation toward highly productive industries, and industries with higher shares of college-educated workers showed higher productivity growth.

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.
  • AI Beneficiaries: Investing in Second-Order Effects — 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.
  • The Power of One: How Standout Firms Grow National Productivity — An analysis of 8,300 large firms accounting for two-thirds of gross value added in Germany, the UK, and the US finds that fewer than 100 firms generated about two-thirds of positive labor productivity gains in each country. A still smaller group of 55 firms accounted for 50–65% of the firm-level productivity drag.

AI Summary. U.S. electricity consumption is projected to rise to new record highs, growing an average 1.7% per year, in contrast with the relatively flat demand from the mid-2000s to the early 2020s. The commercial sector, which includes data centers, and the industrial sector are projected to grow faster, at 2.6% and 2.1% per year, versus 0.7% for households.

Mark Schipper and Tyler Hodge Energy Information Administration
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US electrical consumption was flat btw 2005–2020 but is projected to rise 1.7% annually btw 2020 and 2026, driven by commercial and industrial consumption which are growing at an average of 2.6% and 2.1% per year, respectively.

Is U.S. electricity consumption rising again after years of flat demand?

Core argument: U.S. annual electricity consumption is forecast to grow an average of 1.7% per year from 2020 through 2026, with 2025 and 2026 consumption surpassing the all-time high reached in 2024.

We forecast U.S. annual electricity consumption will increase in 2025 and 2026, surpassing the all-time high reached in 2024. This growth contrasts with the trend of relatively flat electricity demand between the mid-2000s and early 2020s. From 2020 through the end of our short-term forecast in 2026, we expect electricity consumption to grow at an average rate of 1.7% per year. The commercial [which includes data centers] and industrial sectors grow faster in the forecast, at an average of 2.6% and 2.1% per year, respectively. Forecast electricity sales to the residential sector, which largely depend on year-to-year temperature fluctuations, grow on average 0.7% between 2020 and 2026.

Takeaways by Macro Roundup® AI

  1. U.S. annual electricity consumption is forecast to grow an average of 1.7% per year from 2020 through 2026, with 2025 and 2026 consumption surpassing the all-time high reached in 2024.
  2. The commercial sector, which includes data centers, and the industrial sector are forecast to grow faster than overall demand, at averages of 2.6% and 2.1% per year, respectively, through 2026.
  3. Residential electricity sales, which largely depend on year-to-year temperature fluctuations, are forecast to grow an average of 0.7% between 2020 and 2026.

Related Articles:

  • Heliocentrism — An energy use must be electrified before green grid electricity can decarbonize it, and while US grid decarbonization continues at a steady pace, the electricity share of final US energy consumption has grown little. Transmission line growth runs well below Department of Energy targets for 2030 and 2035, and transformer delivery times have stretched from 4–6 weeks to 2–3 years.
  • Economic Growth Now Depends on Electricity, Not Oil — Average annual electricity load growth reached 3% and is projected to continue at that rate for five years, with utilities raising expected peak demand for 2029 by 12%, or 101 gigawatts, driven by data centers, new factories, electric vehicles, heat pumps, and hydrogen production.
  • How Xi Sparked China’s Electricity Revolution — Electricity has risen to 30% of China's final energy use while plateauing near 22% in Europe and the US, supported by a decades-long grid expansion and upgrade program projected to cost as much as $800bn by 2030. Chinese grid investment is forecast to grow about 5% annually through 2030, faster than projected economic growth.

AI Summary. China has told its airlines they can again take delivery of previously ordered Boeing jets, reversing a restriction that had required additional approval and in effect halted deliveries to one of Boeing's biggest markets. Chinese carriers had returned several jets to the U.S. rather than pay tariffs exceeding 100%.

Raffaele Huang and Sharon Terlep Wall Street Journal
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Boeing shares rose 2% on news that Beijing has lifted restrictions on airlines accepting pre-existing aircraft orders.

Has China resumed allowing its airlines to accept Boeing deliveries?

Core argument: Beijing has told Chinese airlines they can take delivery of pre-existing Boeing jet orders, reversing a restriction imposed the prior month, after the U.S. and China reached a temporary trade-war truce, according to people familiar with the situation.

China has reopened itself to Boeing, the biggest U.S. exporter, after the two nations reached a temporary truce in their trade war. Reversing an earlier restriction, Beijing has told the country’s airlines that they can take delivery on pre-existing Boeing jet orders, according to people familiar with the situation. The government last month told Chinese carriers they had to seek additional approval before taking delivery of Boeing aircraft they had already ordered, in effect halting deliveries to one of Boeing’s biggest markets. Chinese airlines, which also balked at paying tariffs of more than 100%, shipped several Boeing jets back to the U.S. that had been in China awaiting final delivery. The returns tied up hundreds of millions of dollars in revenue for Boeing.

Takeaways by Macro Roundup® AI

  1. Beijing has told Chinese airlines they can take delivery of pre-existing Boeing jet orders, reversing a restriction imposed the prior month, after the U.S. and China reached a temporary trade-war truce, according to people familiar with the situation.
  2. China's earlier requirement that carriers seek additional approval before accepting already-ordered Boeing aircraft in effect halted deliveries to one of Boeing's biggest markets.
  3. Chinese airlines balked at paying tariffs of more than 100% and shipped several Boeing jets awaiting final delivery back to the U.S., tying up hundreds of millions of dollars in revenue for Boeing.

Related Articles:

  • China Orders Boeing Jet Delivery Halt as Trade War Expands — 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.
  • 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.

AI Summary. A US-China trade deal removes the tail risk of a complete collapse in trade between the two countries, with the probability of a US recession estimated at 30%. Tourism into the US accounts for 10% of GDP, and a 30%-40% decline in visitor arrivals from Canada and Europe is weighing on US airlines, hotels, and restaurants.

Torsten Sløk Apollo
Date Posted:

With the tail risk of a “complete collapse in trade between China and the US” removed, Sløk now puts the odds of a recession this year at 30%. He notes that restoration of confidence may take some time, and points to the travel industry as a bellwether.

How quickly will confidence rebound after the trade deal?

Core argument: The probability of a US recession in 2025 stands at 30% following the China trade deal, which removed the tail risk of a complete collapse in US-China trade.

After the China trade deal, the probability of a US recession in 2025 is now at 30%, and the tail risk coming from a complete collapse in trade between China and the US has been removed. Looking ahead, the key issue for markets is to monitor the speed with which confidence is restored among consumers, corporates, and foreigners. Is trust and confidence going to rebound quickly, or is it going to take several quarters or several years? One particular area to watch is tourism. Tourism into the US makes up 10% of the country’s GDP, and the observed 30% to 40% decline in visitor arrivals from Canada and Europe is having a negative impact on US airlines, hotels, and restaurants. The bottom line is that markets may recover quickly from this episode. But it will likely take some time before confidence is restored among consumers, corporates, and foreigners.

Takeaways by Macro Roundup® AI

  1. The probability of a US recession in 2025 stands at 30% following the China trade deal, which removed the tail risk of a complete collapse in US-China trade.
  2. Visitor arrivals from Canada and Europe have declined 30% to 40%, weighing on US airlines, hotels, and restaurants, with tourism into the US accounting for 10% of GDP.
  3. Markets may recover quickly from this episode, but restoring confidence among consumers, corporates, and foreigners will likely take several quarters or several years.

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  • 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.

AI Summary. China's state-owned agricultural conglomerate Cofco is building its largest export terminal outside China in Brazil, raising its annual export capacity to 14m tons from 4.5m tons. Between 2017 and 2024 China increased imports of Brazilian soybeans 35% to 73m tons while cutting U.S. soybean imports 14% to 27m tons.

Samantha Pearson Wall Street Journal
Date Posted:

China is investing in South American infrastructure to secure agricultural imports, making a significant investment in Latin America’s largest port in Santos, Brazil. Brazil now supplies about 70% of soybean shipments to China.

Is China building South American port capacity to replace U.S. crop imports?

Core argument: China's state-owned agricultural conglomerate Cofco is building its largest export terminal outside China in Brazil to handle corn, sugar and soybeans, raising its annual export capacity to 14 million tons from 4.5 million, with full capacity not expected until next year.

China’s state-owned agricultural conglomerate, Cofco, is building its biggest export terminal outside China at the port to manage shipments of corn, sugar and soybeans. It would increase the company’s annual export capacity to 14 million tons from 4.5 million, but isn’t expected to reach full capacity until next year. Brazil benefited from global trade tensions during President Trump’s first term, displacing U.S. exports to China. Between 2017 and 2024, China increased imports of Brazilian soybeans 35% to 73 million tons, while cutting imports of U.S. soybeans 14% to 27 million tons. By 2023, Brazil accounted for about a quarter of Chinese agricultural imports, while the U.S. share had dropped to about 14%, government data show. Brazil now supplies about 70% of soybean shipments to China.

Takeaways by Macro Roundup® AI

  1. China's state-owned agricultural conglomerate Cofco is building its largest export terminal outside China in Brazil to handle corn, sugar and soybeans, raising its annual export capacity to 14 million tons from 4.5 million, with full capacity not expected until next year.
  2. Between 2017 and 2024, China increased imports of Brazilian soybeans 35% to 73 million tons while cutting U.S. soybean imports 14% to 27 million tons, and Brazil now supplies about 70% of soybean shipments to China.
  3. Brazil accounted for about a quarter of Chinese agricultural imports by 2023 while the U.S. share fell to about 14%, according to government data, after Brazil benefited from global trade tensions during President Trump's first term and displaced U.S. exports to China.

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  • South America’s ‘Made in China’ Megaport Prepares To Transform Trade — The Chinese-built Port of Chancay on Peru's Pacific coast, developed by Cosco with local miner Volcan, uses Chinese-made automated cranes, vehicles and 5G towers, and its deep waters can accommodate larger vessels. Peruvian officials argue it will reshape maritime trade along South America's Pacific coast.
  • China’s Ports Dominance Undermines Western Aims To Loosen Trade Ties — China has 76 port terminals able to handle large ships carrying more than 14,000 20ft containers, while south and south-east Asian countries have 31 between them, according to research group Drewry. This shortage of deep-water capacity elsewhere in Asia could make it harder for Western businesses to shift trade away from China.