Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…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
  • “…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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Friday, June 6, 2025

AI Summary. Four independent budget models produce broadly consistent projections for the House-passed reconciliation bill: roughly $4.0tn in tax cuts over ten years, partially offset by about $1.5tn in spending cuts. The models disagree on growth effects but agree the legislation would substantially widen future deficits even after accounting for growth.

James Capretta American Enterprise Institute
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Concurring with the CBO and JCT, four leading fiscal models “all show a tax cut of around $4.0T over ten years, partially offset by spending cuts of about $1.5T over the same time span.”

Do budget models agree the reconciliation bill would widen deficits?

Core argument: The Penn-Wharton Budget Model, Yale's Budget Lab, the Tax Foundation, and the Tax Policy Center all estimate the House-passed reconciliation bill delivers roughly $4.0tn in tax cuts over ten years, partially offset by about $1.5tn in spending cuts.

The Penn-Wharton Budget Model (PWBM), The Budget Lab (TBL) at Yale,The Tax Foundation (TF) and the Tax Policy Center (TPC) [produce projections that] are largely consistent with each other.They all show a tax cut of around $4.0 trillion over ten years, partially offset by spending cuts of about $1.5 trillion over the same time span. PWBM’s dynamic estimates are more pessimistic in the near term than those produced by the Tax Foundation. PWBM projects that the economic effects of the bill will widen the 10-year deficit effect from $2.8 trillion in its conventional forecast to $3.2 trillion, while the Tax Foundation expects higher growth from the bill’s tax provisions to narrow projected deficits by about $0.9 trillion compared to its conventional forecast. The models are in agreement that the overall effect of the legislation will be to widen future deficits rather substantially, even when growth is taken into account. Moreover, if those tax provisions in the bill which are now scheduled to expire in three to eight years were made permanent, the cost of the tax title would increase further.

Takeaways by Macro Roundup® AI

  1. The Penn-Wharton Budget Model, Yale's Budget Lab, the Tax Foundation, and the Tax Policy Center all estimate the House-passed reconciliation bill delivers roughly $4.0tn in tax cuts over ten years, partially offset by about $1.5tn in spending cuts.
  2. Penn-Wharton projects the bill's economic effects widen the 10-year deficit impact from $2.8tn conventionally to $3.2tn, while the Tax Foundation expects higher growth from the tax provisions to narrow deficits by about $0.9tn versus its conventional estimate.
  3. The models agree the legislation will widen future deficits substantially even when growth is taken into account, and making permanent the tax provisions scheduled to expire in three to eight years would raise the cost of the tax title further.

Related Articles:

AI Summary. Apple's overseas manufacturing model gave it more control over production, not less, and its investment in Chinese manufacturing reached $55bn a year. The author argues Apple's investment and freely shared knowledge were a major factor enabling Chinese technology companies to close the gap with Western rivals, and that this expertise cannot be taken back.

Drake Bennett Bloomberg
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Apple’s investment in PRC mfg reached $55B/yr by 2015, and shared knowledge enabled the rise of Chinese tech companies. Quoting FT’s McGee, “The technology transfer that Apple facilitated made it the biggest corporate supporter of ‘Made in China 2025′.”

Did Apple's investment help Chinese tech firms close the gap?

Core argument: Apple's investment in Chinese manufacturing reached $55 billion per year by 2015, and FT's McGee argues in *Apple in China* that Apple's unique approach to overseas manufacturing evolved into a formidable competitive advantage.

In his new book, Apple in China, FT’s McGee argues Apple’s unique approach to overseas manufacturing…has evolved into a formidable competitive advantage. Apple’s billions in investment and freely shared knowledge have been a major factor enabling the rise of China’s own technology companies, allowing them to close the gap with Western competitors — Apple included —with surprising speed. Outsourcing was - at first in South Korea and Taiwan, then, increasingly, in China - actually gave the company more control, not less, over the production process. As Apple grew, it began making massive investments in manufacturing technology. Apple’s investment in Chinese manufacturing reached $55 billion per year by 2015. But even if Apple were itself interested in decoupling from China, it’s not possible to unbolt and take back the valuable expertise that Apple’s Chinese partners have already gained from their collaboration. “The technology transfer that Apple facilitated,” McGee writes, “made it the biggest corporate supporter of Made in China 2025, Beijing’s ambitious, anti-Western plan to sever its reliance on foreign technology.”

Takeaways by Macro Roundup® AI

  1. Apple's investment in Chinese manufacturing reached $55 billion per year by 2015, and FT's McGee argues in *Apple in China* that Apple's unique approach to overseas manufacturing evolved into a formidable competitive advantage.
  2. McGee writes that the technology transfer Apple facilitated made it the biggest corporate supporter of Made in China 2025, Beijing's plan to sever its reliance on foreign technology.
  3. McGee argues Apple's outsourcing — first in South Korea and Taiwan, then increasingly in China — gave the company more control over production, not less, while its billions in investment and freely shared knowledge helped Chinese technology firms close the gap with Western competitors, Apple included.

Related Articles:

  • What it Would Take for Apple to Disentangle itself from China — Some supply chain experts argue India's phone manufacturing growth is overstated, noting the 200M phones made there last year are mostly models selling for $250 or less, while iPhones average near $1,000 and require more sophisticated automation and labor. One analyst projects Apple shifts just 10% of iPhone production outside China by 2030, or at most 20%.
  • Apple’s iPhone Supply Chain Splinters Under US-China Tensions — Data on more than 370 Apple suppliers and their factory locations show the company's manufacturing network spreading across the developing world, with Vietnam and India the biggest gainers. US and Japanese producers have reduced their China footprint as Chinese firms join the supplier list, though China still houses most Apple device factories.
  • Apple Aims to Source all US iPhones From India in Pivot Away From China — Apple plans to shift assembly of all US-sold iPhones to India, aiming to source the more than 60mn units sold annually in the US from Indian plants, which would require doubling its iPhone output there. The US accounted for about 28% of Apple's 232.1mn global iPhone shipments in 2024.

AI Summary. About three-quarters of manufacturing and service firms facing tariff-driven cost increases reported passing at least some of those costs to customers through higher prices, while roughly a quarter of each said they absorbed the full increase without raising prices. Nearly a third of manufacturers and about 45% of service firms reported full pass-through.

Jaison Abel, Richard Deitz, Sebastian Heise et al Federal Reserve Bank of New York
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About ¾ of firms facing tariff-induced cost increases reported passing on costs to consumers: ~⅓ of mfg and ~45% of service firms fully passed on all cost increases, while 45% of mfrs and ⅓ of service firms passed on a portion of the cost increase.

Are businesses passing tariff costs on to customers or absorbing them?

Core argument: About three-quarters of businesses facing tariff-induced cost increases in both manufacturing and services passed at least some of those higher costs to customers through higher prices.

As shown in the chart, about three-quarters of businesses facing tariff-induced cost increases in both the manufacturing and service sectors passed along at least some of these higher costs to their customers by raising prices. Almost a third of manufacturers and about 45 percent of service firms reported fully passing along all tariff-related cost increases, while 45 percent of manufacturers and a third of service firms said they passed along some but not all of the cost increase. At the other end of the spectrum, roughly a quarter of both types of firms said they absorbed all tariff-related cost increases and were not raising their prices. This pattern is consistent with other research using business surveys showing that in response to a hypothetical 5 percent cost increase, about a quarter of firms would fully pass through this cost increase into higher prices, while another quarter of firms would not change prices at all.

Takeaways by Macro Roundup® AI

  1. About three-quarters of businesses facing tariff-induced cost increases in both manufacturing and services passed at least some of those higher costs to customers through higher prices.
  2. Almost a third of manufacturers and about 45 percent of service firms reported fully passing along all tariff-related cost increases, while 45 percent of manufacturers and a third of service firms passed along some but not all.
  3. Roughly a quarter of both manufacturers and service firms said they absorbed all tariff-related cost increases without raising prices, consistent with survey research in which about a quarter of firms would not change prices after a hypothetical 5 percent cost increase.

Related Articles:

AI Summary. A quarterly U.S. GDP decline driven by a surge in goods imports — with businesses stocking up on gold, electronics, and pharmaceuticals — implied an implausible drop in domestic production, and the author argues consumer spending, business investment, and especially inventory accumulation were undercounted. Even so, the author concludes growth did meaningfully slow.

Matthew Klein The Overshoot
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Though he continues to regard the advance estimate for 2025Q1 GDP as suspiciously low, Klein concedes that U.S. goods imports surged by an apparent $100B to $948B in 2025Q1, which must be subtracted from measured expenditure and exports to infer GDP.

Does an import surge distort measured GDP declines?

Core argument: Under the expenditure approach (consumption + fixed investment + inventory change + exports − imports), the 2025Q1 import surge was large enough relative to domestic demand and exports to imply a negative change in domestic production.

When the advance estimate for 2025Q1 growth was first published at the end of April, I ignored it because the headline number was obviously off. Supposedly, there was a surge in imports that was so large relative to the sum of domestic demand (including inventories) and exports that the implied change in domestic production was negative. My conclusion is that some combination of consumer spending, business investment, and (especially) inventory accumulation must have been undercounted. Even so, however, there really does seem to have been a meaningful slowdown in GDP. The goal is to track production of new goods and services within a given jurisdiction. One way to do this is to measure the value generated by each industry sector and add them all up to get GDP. BEA does so, [but] with a lag. The short cut is the “expenditure approach”: GDP = Consumption + Fixed investment + Changes in inventories + Exports - Imports. As it happens, U.S. goods imports surged in the first three months of 2025 as businesses and investors stocked up on gold, electronics, and pharmaceuticals. The value of goods imports in January-March was $948 billion, compared to $848 billion in October-December 2024.

Takeaways by Macro Roundup® AI

  1. Under the expenditure approach (consumption + fixed investment + inventory change + exports − imports), the 2025Q1 import surge was large enough relative to domestic demand and exports to imply a negative change in domestic production.
  2. Some combination of consumer spending, business investment, and especially inventory accumulation was likely undercounted in the 2025Q1 advance estimate, though a meaningful GDP slowdown still appears to have occurred.

Related Articles:

  • Jason Furman On GDP — Headline GDP growth slowed, but the drag came from volatile inventories, with underlying growth strong. US output sits slightly below the Congressional Budget Office's pre-pandemic forecast, within its rounding error, with most GDP components close to where they were expected to be, though these figures will be revised repeatedly.
  • Jason Furman On US GDP Report — US gross domestic product is roughly in line with the Congressional Budget Office's pre-pandemic forecast, with consumer spending — more than two-thirds of the economy — running well ahead of that forecast, which likely reflects continued effects of large fiscal support. Offsetting this, residential investment has fallen for seven straight quarters, down 19.3% over four quarters.

AI Summary. The author argues dollar bearishness rests on two flawed pillars: US inflation may pick up while tariffs slow inflation in the Euro zone and China, forcing the Federal Reserve to stay more hawkish, and the EU's tolerance of goods transshipped to Russia undermines its claim as a reserve-currency alternative.

Robin Brooks Robin Brooks Substack
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“The EU is styling itself as the big alternative to the US,” Brooks writes, but “the mess EU has made on Russia sanctions [via Kyrgyzstan]” belies its fitness. “You can do that, but you can’t then also pretend to be an alternative to Dollar hegemony.”

Is dollar bearishness built on two flawed pillars?

Core argument: Inflation shows early signs of picking up in the US while slowing in the Euro zone and China under the weight of tariffs, a divergence that is bullish for the Dollar because it forces the Fed to stay more hawkish than other central banks.

The current wave of Dollar bearishness has two pillars. The first is a short-term, cyclical pillar, whereby tariffs damage the US more than the rest of the world. [However],there are early signs that inflation in the US is about to pick up, while - under the weight of tariffs - inflation is slowing in the Euro zone and China. This kind of divergence in inflation is [actually] bullish for the Dollar because it forces the Fed to stay more hawkish than other central banks. The second pillar of Dollar bearishness revolves around a loss of reserve currency status. The EU is styling itself as the big alternative to the US, but - given the mess the EU has made on Russia sanctions - that just isn’t credible. The chart shows exports from various countries to Kyrgyzstan, one of the main transshipment hubs for Western goods to Russia. The US (orange) and the UK (green) kept a tight lid on this stuff, while countries like Germany (black) and Italy (purple) have seen a transshipment boom that is ongoing. In Brussels, this stuff is an open secret and - more than three years after the invasion of Ukraine - key policy makers continue to turn a blind eye. You can do that, but you can’t then also pretend to be an alternative to Dollar hegemony.

Takeaways by Macro Roundup® AI

  1. Inflation shows early signs of picking up in the US while slowing in the Euro zone and China under the weight of tariffs, a divergence that is bullish for the Dollar because it forces the Fed to stay more hawkish than other central banks.
  2. The EU's claim to be the big alternative to the US as a reserve currency is not credible given its handling of Russia sanctions, with key policy makers continuing to turn a blind eye more than three years after the invasion of Ukraine.
  3. Exports to Kyrgyzstan, a main transshipment hub for Western goods to Russia, show an ongoing boom from Germany and Italy, while the US and the UK kept a tight lid on such flows.

Related Articles:

  • Markets Are Discovering the Real Trump Trade Is ‘Sell America’ — Despite shaken confidence in US assets, no alternative matches the depth and liquidity of the nearly $29tn Treasury market, with the dollar involved in about 90% of foreign-exchange trades and almost 60% of central bank reserves. The euro lacks the depth of debt instruments required of a reserve asset, and China's yuan is government-managed.
  • Top Dollar — Foreign holdings of U.S. financial assets exceed American holdings abroad, making the United States a net debtor whose liabilities are denominated in dollars while its foreign assets are largely in other currencies. U.S. foreign liabilities grew from $30tn to over $51tn while U.S. foreign assets grew from $24tn to $33tn, tripling the net debtor position from $6tn.
  • Tariffs, the Dollar, and Equities: High-Frequency Evidence from the Liberation Day Announcement

AI Summary. Saudi Arabia is running a deep budget deficit and has become the largest sovereign bond issuer in emerging markets, with more than $14bn of deals, as it funds an economic transformation plan expected to cost $2tn. The United Arab Emirates and Qatar have pledged larger US investment commitments relative to their economies and have more fiscal headroom.

Matthew Martin, Dinesh Nair, and Adveith Nair Bloomberg
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Qatar agreed to a $1.2T economic commitment with the US and UAE promised $1.4T, compared with $1T from Saudi Arabia whose oil-price driven deficit drove $14B in recent sovereign issuances. Qatar & UAE hope to establish markets for AI, finance, and more.

Are budget deficits limiting Saudi Arabia's investment reach abroad?

Core argument: Saudi Arabia is the biggest sovereign bond issuer in emerging markets with more than $14 billion of deals this year, a figure that would be about $10 billion higher including sales from the PIF and Saudi Aramco.

The kingdom’s budget is in deep deficit, it has raised billions of dollars through bond sales to help fund an economic transformation plan expected to cost $2 trillion, and officials are rationalizing spending. The country is now the biggest issuer of sovereign bonds in emerging markets, with more than $14 billion of deals this year. That number would be about $10 billion higher if sales from the PIF [Private Investment Fund] and state oil company Saudi Aramco are included. The PIF’s strategy calls for it to ramp up investing both globally and domestically in dollar terms, but local commitments will increasingly be a greater portion of the total. Qatar, with less than one-tenth of the Saudi population, agreed to a $1.2 trillion economic commitment with the US, and the UAE has promised $1.4 trillion. While those pledges are larger than Saudi Arabia’s promise [$1T] relative to the sizes of their economies, Riyadh’s neighbors have more fiscal headroom. The UAE and Qatar are earning billions of dollars more than they can spend at home and need to find investments abroad. Along the way, they’re hoping these bets help establish them as leading markets for artificial intelligence, finance and more.

Takeaways by Macro Roundup® AI

  1. Saudi Arabia is the biggest sovereign bond issuer in emerging markets with more than $14 billion of deals this year, a figure that would be about $10 billion higher including sales from the PIF and Saudi Aramco.
  2. Saudi Arabia is running a deep budget deficit and rationalizing spending while funding an economic transformation plan expected to cost $2 trillion, having raised billions of dollars through bond sales.
  3. Qatar, with less than one-tenth of Saudi Arabia's population, agreed to a $1.2 trillion economic commitment with the US and the UAE promised $1.4 trillion, pledges larger than Riyadh's $1 trillion relative to the sizes of their economies.

Related Articles:

  • Megaprojects in the Desert Sap Saudi Arabia’s Cash — Saudi Arabia's spending on megaprojects has risen while oil revenues have leveled off, and the International Monetary Fund estimated oil prices near $80–$86 a barrel would be needed to balance its budget. The kingdom is expected to run a deficit of about $21bn, roughly 2% of gross domestic product.
  • Saudi Arabia’s PIF and the New Petrodollar Recycling — Saudi Arabia's Public Investment Fund appears to have taken over a significant portion of the foreign asset allocation previously handled by the Saudi Central Bank, making its balance sheet a window into a new form of petrodollar recycling. Of roughly $777bn in total assets, $305bn were current and $472bn non-current, with $225bn of the latter held as investment securities.

Monday, June 9, 2025

AI Summary. The case for cutting the Federal Reserve's policy interest rate is weak: the share of workers aged 25-54 with a job has been stable at a multi-decade high, underemployment measures look relatively benign, and inflation is still running faster than target with upside risks more salient than downside risks.

Matthew Klein The Overshoot
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“The latest data available on the job market, inflation, and business sentiment all suggest that the current constellation of interest rates is broadly consistent with underlying economic conditions,” concludes @M_C_Klein.

Does the economy justify cutting interest rates now?

Core argument: The employment rate for U.S. workers aged 25–54 has held at a multi-decade high since the end of 2022, with only minor fluctuations visible on close inspection.

While Federal Reserve officials may eventually feel compelled to lower their policy interest rate band, the case for doing so now is weak. Despite the current administration’s best efforts to discourage business investment and hiring, the U.S. economy is still humming along remarkably well. Moreover, the best and timeliest indicators of business sentiment have improved relative to March and April, implying that we may have (temporarily?) found a cyclical bottom. At the same time, inflation is still trending faster than target, with the upside risks larger and more salient than the downside risks. All of which is to say that there are no obvious reasons to think that interest rates are too high relative to economic and financial conditions. The share of workers aged 25-54 with a job has been stable at a multi-decade high since the end of 2022. While there have been some wiggles in the past 30 months, they are only visible if you zoom in incredibly closely. Measures of underemployment also look relatively benign, even if they are not quite as good as they were in early 2023. Importantly, most of the (mild) worsening in conditions happened over a year ago, with little change in the past 12 months.

Takeaways by Macro Roundup® AI

  1. The employment rate for U.S. workers aged 25–54 has held at a multi-decade high since the end of 2022, with only minor fluctuations visible on close inspection.
  2. The case for cutting the Federal Reserve's policy rate band now is weak, since inflation is still trending faster than target with upside risks larger and more salient than downside risks.
  3. Timely indicators of U.S. business sentiment have improved relative to March and April, implying a possibly temporary cyclical bottom, while underemployment measures remain relatively benign, with most of the mild worsening occurring more than a year ago.

Related Articles:

  • The Fed Should Not Cut Interest Rates Yet — Labor demand continues to outpace labor supply, with job openings 17% above pre-pandemic levels and average wages up 3.9% year on year. The author argues current conditions do not warrant interest rate cuts, as the risk of inflation getting stuck above 2.5% is too great.
  • The U.S. Economy is Roaring. Why Should Rates Come Down? — Traders and Federal Reserve officials expect short-term interest rates to fall sharply on the assumption the economy resembles its pre-pandemic state, but the data suggest a period of structurally faster growth more like the late 1990s, with inflation-adjusted U.S. output up more than 3% in 2023 versus 0.7% the prior year.

AI Summary. Roughly half of all fixed income issuance coming to market over the past year has been US Treasuries, meaning investors must allocate a growing share of dollars to financing the government. The argument is that lower government debt would free up more funds for consumer borrowing and business investment.

Torsten Sløk Apollo
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Sløk notes that the stock of US Treasuries outstanding rose by $1.7T from 2023:Q4 through the end of 2024, exceeding the rise in corporates+mortgages, which finance private expenditure on cars, homes, and business investment.

Is rising Treasury issuance crowding out lending to consumers and businesses?

Core argument: Roughly half of all fixed income product brought to market over the past 12 months has been Treasuries, a share the author argues is unhealthy because half of credit issued in an economy should not go to the government.

Over the past 12 months, roughly half of all fixed income product coming to the market has been Treasuries. This is not healthy. Half of [the] credit issued in the economy should not be going to the government. The consequence is that investors need to allocate more and more dollars to finance the government rather than financing growth in the economy through loans to firms and consumers. The bottom line is that if the level of government debt were significantly lower, more dollars would be available for consumers to buy new cars and new houses, and for companies to build new factories.

Takeaways by Macro Roundup® AI

  1. Roughly half of all fixed income product brought to market over the past 12 months has been Treasuries, a share the author argues is unhealthy because half of credit issued in an economy should not go to the government.
  2. Treasury supply growth requires investors to allocate more dollars to financing the government rather than lending to firms and consumers that finance growth in the economy.
  3. The author contends that significantly lower government debt would leave more dollars available for consumers to buy new cars and houses and for companies to build new factories.

Related Articles:

  • 10 Facts About the US Treasury Market: Monitoring Demand For US Government Debt — US government debt is projected to rise from 100% to 200% of GDP, with deficits above $1tn annually over the next decade and $9tn of debt maturing within 12 months. Debt servicing costs equal 12% of total government outlays, and interest payments have doubled from about $1bn per day before the pandemic to nearly $2bn per day.
  • Rapid Increase in T-Bill Supply Is a Growing Risk — The supply of short-term US Treasury bills has risen by $2tn over 12 months, and bills have grown as a share of total debt outstanding. Absorbing this supply requires continued demand from banks, money market funds, and households, and falling appetite could push short-term rates higher and raise the risk of funding-market strains.

AI Summary. The Congressional Budget Office estimates the House Republican bill would reduce spending by $1.3tn over a decade, predominantly from entitlements, while cutting revenues by $3.7tn through extending tax cuts enacted in 2017 and adding more. The bill adds to deficits because of the revenue reductions rather than spending increases.

Greg Ip Wall Street Journal
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“If Musk is upset about this bill adding to the national debt, it’s the tax cuts, not the spending, he should be attacking,” comments @greg_ip. The bill would reduce spending over the coming decade by $1.3T, while cutting revenues by $3.7T.

Does the House bill add to deficits through spending or tax cuts?

Core argument: The House Republican bill would cut spending by $1.3 trillion over the coming decade relative to current law, predominantly from entitlements, according to the Congressional Budget Office, contrary to Musk's claim of "crazy spending increases.".

Entitlements are infamously difficult to cut. Yet that’s what House Republicans propose. Far from being full of “crazy spending increases,” as Musk claims, the bill would reduce spending over the coming decade by $1.3 trillion, relative to current law, and that would be predominantly from entitlements, according to the Congressional Budget Office. So why does the bill add to deficits? Because it reduces revenues even more, by $3.7 trillion, by extending tax cuts enacted in 2017, then adding a bunch more. If Musk is upset about this bill adding to the national debt, it’s the tax cuts, not the spending, he should be attacking. There’s lots for budget hawks to hate about the Republican bill. It leaves debt on track to hit records. It doesn’t touch the big drivers of spending—Social Security and Medicare. It shifts costs, such as for food stamps, to the states. It lards the tax code with breaks that reward Trump’s base rather than help economic growth, and sunsets them in 2028 to artificially reduce the cost. It front loads the tax cuts and back loads the spending cuts.

Takeaways by Macro Roundup® AI

  1. The House Republican bill would cut spending by $1.3 trillion over the coming decade relative to current law, predominantly from entitlements, according to the Congressional Budget Office, contrary to Musk's claim of "crazy spending increases.".
  2. The bill adds to deficits because it reduces revenues by $3.7 trillion, more than its $1.3 trillion in spending cuts, by extending the tax cuts enacted in 2017 and adding more.
  3. Budget hawks' objections to the Republican bill include leaving debt on track to hit records, not touching Social Security and Medicare, shifting costs such as food stamps to the states, sunsetting tax breaks in 2028 to artificially reduce their cost, and front-loading tax cuts while back-loading spending cuts.

Related Articles:

  • CBO Estimates $3 Trillion of Debt from House-Passed OBBBA — The Congressional Budget Office estimates the House-passed tax and spending bill would add more than $2.4tn to primary deficits over 10 years, or nearly $3tn including interest costs, and about $5tn if temporary provisions are made permanent. It projects debt would rise from 100% of GDP to 124% by 2034, with the deficit reaching 7% of GDP by 2026.
  • Chicken Hawks — The House bill combines spending cuts concentrated in Medicaid, food stamps and student loans with an extension of all expiring tax cut provisions, revenue offsets including a scaled-back energy bill, new tax cuts on tips, overtime, seniors and state and local deductions, manufacturing incentives, and homeland security and defense funding.
  • This is What Normalization Looks Like (Mostly) — Estimates of the legislation's cost rest on a baseline assuming individual and business taxes would have been allowed to rise sharply as prior tax cuts expired. The Committee for a Responsible Federal Budget estimates the bill adds $3.1tn in incremental debt over 2026-2035, below its pre-election projections of $4tn and $7.8tn for the competing campaign agendas.

AI Summary. Automakers and suppliers are considering shifting some auto-parts manufacturing to China to avoid production shutdowns caused by China's export controls on rare-earth magnets, which have slowed license approvals. Shipping unfinished parts to China for magnet installation adds cost, time, and potential tariff exposure, but executives view shutdowns as worse.

Sean McLain and Ryan Felton Wall Street Journal
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Facing strict Chinese export controls on magnets, US & EU auto makers may consider shifting some parts production to China, a “remarkable outcome from a trade war initiated by President Trump with the intention of bringing manufacturing back to the U.S.”

How are automakers responding to export controls on rare-earth magnets?

Core argument: Four major automakers fear China's controls on rare-earth magnet exports could force them to shut down some car production within weeks.

Four major automakers are racing to find workarounds to China’s stranglehold on rare-earth magnets, which they fear could force them to shut down some car production within weeks. Several traditional and electric-vehicle makers—and their suppliers—are considering shifting some auto-parts manufacturing to China to avoid looming factory shutdowns, people familiar with the situation said. Shipping an unfinished part halfway across the world to have a chiclet-sized magnet installed adds to the cost and time it takes to manufacture, but the companies see it as perhaps the only alternative to shutting down some production lines altogether. The move could expose carmakers to additional tariffs, but auto executives believe the alternative would be even worse. China was supposed to have eased export controls on rare-earth magnets as part of a 90-day tariff truce agreement with the White House, but the country has slow-walked license approvals for magnets. China has pushed back at the notion that it was to blame, alleging “discriminatory and restrictive measures” by Washington, including restricting exports of AI chips and revoking visas for Chinese students.

Takeaways by Macro Roundup® AI

  1. Four major automakers fear China's controls on rare-earth magnet exports could force them to shut down some car production within weeks.
  2. Traditional and electric-vehicle makers and their suppliers are considering shifting some auto-parts manufacturing to China so chiclet-sized magnets can be installed there, adding cost and time but averting production-line shutdowns and risking additional tariffs.
  3. China was supposed to ease rare-earth magnet export controls under a 90-day tariff truce with the White House but has slow-walked license approvals, alleging "discriminatory and restrictive measures" by Washington, including AI chip export limits and revoked Chinese student visas.

Related Articles:

  • China Weighs Export Ban For Rare-Earth Magnet Tech — China is weighing rules that would ban or restrict exports of technology used to process and refine rare-earth elements and to make high-performance rare-earth magnet alloys. China accounts for roughly 70% of global rare-earth production, down from about 90% a decade earlier, and retains a tight hold on refining.
  • Can the World Make an Electric Car Battery Without China? — China dominates electric-vehicle battery supply chains, controlling 41% of global cobalt mining and the most lithium mining, and is projected to produce more than twice as many batteries as all other countries combined by 2030. It can build battery factories at nearly half the cost of North America or Europe.

AI Summary. China has agreed to fast-track rare earth export licence approvals for some European companies after its export controls on the critical minerals disrupted global supply chains and slowed deliveries for manufacturers of goods from cars to washing machines. China's commerce minister urged the European Union to facilitate trade in high-tech products to China.

Edward White and Andy Bounds Financial Times
Date Posted:

Beijing agreed to fast-track approvals of rare earth export licenses to the EU, avoiding factory stoppages. “Resolving this issue is of strategic importance for the EU due to the alarming situation for EU industry.”

Is China easing rare earth export controls for European manufacturers?

Core argument: Beijing agreed to fast-track rare earth export licence approvals for some European companies after China's controls on the critical minerals rocked global supply chains and slowed deliveries for manufacturers of goods from cars to washing machines.

Beijing has agreed to fast-track approvals for rare earth export licenses for some European companies after China’s strict controls on shipments of the critical minerals rocked global supply chains. Beijing has become increasingly concerned that Europe has followed US-led restrictions on sales of semiconductors and chipmaking equipment to China. China’s commerce minister urged the EU to “take effective measures to facilitate, safeguard and promote compliant trade of high-tech products to China”. Beijing has sought to improve ties with Brussels since Trump returned to office but EU officials said that, despite warm words, there had been little compromise on issues of concern until now. The EU commissioner for trade and economic security said he had pressed his Chinese counterpart over the rare earth delays, which were slowing deliveries for manufacturers of a wide range of items from cars to washing machines. On Friday the European Chamber warned that progress had “not been sufficient” to prevent severe supply chain disruptions for many companies.

Takeaways by Macro Roundup® AI

  1. Beijing agreed to fast-track rare earth export licence approvals for some European companies after China's controls on the critical minerals rocked global supply chains and slowed deliveries for manufacturers of goods from cars to washing machines.
  2. China's commerce minister urged the EU to "take effective measures to facilitate, safeguard and promote compliant trade of high-tech products to China," amid Beijing's concern that Europe has followed US-led restrictions on semiconductors and chipmaking equipment.
  3. The European Chamber warned that progress had "not been sufficient" to prevent severe supply chain disruptions for many companies, and EU officials said Beijing had offered little compromise on issues of concern despite warm words.

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  • China’s Curb On Metal Exports Reverberates Across Chip Sector — China announced export curbs on gallium and germanium, metals used in chipmaking that the US government classifies among dozens of minerals critical to economic and national security.
  • China Weighs Export Ban For Rare-Earth Magnet Tech — China is weighing rules that would ban or restrict exports of technology used to process and refine rare-earth elements and to make high-performance rare-earth magnet alloys. China accounts for roughly 70% of global rare-earth production, down from about 90% a decade earlier, and retains a tight hold on refining.

AI Summary. The historical preference for sons has almost disappeared globally, with sex ratios at birth falling toward natural levels in South Korea, China, and India, while surveys in Japan and other rich countries show a growing share of couples preferring a daughter. The Economist calculates roughly 50m fewer girls have been born since 1980 than would naturally be expected.

Economist Staff The Economist
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Globally, there are ~105 male births for every 100 female births. The bias in favor of boys is shrinking in developing countries even as a preference for girls is emerging in the rich world.

Are parents worldwide shifting from preferring sons to preferring daughters?

Core argument: The Economist calculates that roughly 50m fewer girls have been born worldwide since 1980 than the natural ratio of about 105 male births per 100 female births would imply, after ultrasound gave parents a way to choose gender.

Parents around the world used to have a pronounced preference for sons. But…that preference for boys has diminished dramatically in developing countries—and signs of a bias in favour of girls are emerging in the rich world. In the natural course of things, there are roughly 105 male births for every 100 female ones. As parents in much of the world began having fewer children…ultrasound gave parents a way to choose [gender]. Roughly 50m fewer girls have been born since 1980 than you would naturally expect, according to The Economist’s calculations. The global preference for sons has almost disappeared. In South Korea almost 116 boys were born for every 100 girls in 1990. Yet today South Korea has a near-even distribution between the sexes. In China it has fallen from a peak of 117 for most of the 2000s to 111 in 2023. In India the rate was 107 that year, down from 109 in 2010. The Japanese National Fertility Survey, a poll conducted every five years, shows that in 1982, 48.5% of married couples wanting only one child said they would prefer a daughter. By 2002, 75% did. Other rich countries follow a similar pattern.

Takeaways by Macro Roundup® AI

  1. The Economist calculates that roughly 50m fewer girls have been born worldwide since 1980 than the natural ratio of about 105 male births per 100 female births would imply, after ultrasound gave parents a way to choose gender.
  2. South Korea's sex ratio at birth has fallen from almost 116 boys per 100 girls in 1990 to a near-even distribution, while China's dropped from a peak of 117 for most of the 2000s to 111 in 2023 and India's from 109 in 2010 to 107.
  3. The Japanese National Fertility Survey shows the share of married couples wanting only one child who would prefer a daughter rose from 48.5% in 1982 to 75% in 2002, with other rich countries following a similar pattern.

Related Articles:

  • China’s Alarming Sex Imbalance — An analysis of UN population projections and China's 2020 census projects the ratio of men to women at prime marriage ages will peak at 119 men per 100 women by 2027, implying 22.5m more men than women in those cohorts, and remain high for decades. The share of unmarried men aged 25-39 rose from 13% to 30%.
  • Suddenly There Aren’t Enough Babies. The Whole World Is Alarmed — The global fertility rate fell to 2.3 by 2021, near the roughly 2.2 rate demographers consider necessary to keep world population stable, and faster than United Nations projections anticipated. National birth registries are reporting births 10% to 20% below United Nations projections, according to an economist's estimate covering about half the world's population.
  • East Asia’s Coming Population Collapse

AI Summary. China's graduate job market faces multiple simultaneous pressures, including a real estate slump, tighter financial-sector regulation with pay cuts and layoffs, and cautious private-sector hiring. Major state banks have cut graduate recruitment sharply, with Agricultural Bank of China planning 4,530 hires, down 68.9%, and Industrial and Commercial Bank of China down 47%.

Luna Sun South China Morning Post
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Tens of millions of highly educated young Chinese men face unprecedented barriers to launching their careers, as both domestic and global economic headwinds lead Chinese employers to slash hiring for entry-level roles.

How severe are the pressures facing China's graduate job market?

Core argument: Agricultural Bank of China plans to hire just 4,530 graduates, down 68.9% from 14,557 last year, while ICBC's intake falls 47% to 4,506 and China Construction Bank's drops 34.8% to 3,567.

China’s job market is being buffeted by several different economic headwinds all at once – with the US trade war just one of the issues affecting employers. The real estate sector – once a pillar of the country’s economy – has plunged into a deep slump. The finance industry has seen its glossy image tarnished following a wave of strict new regulations, sharp pay cuts, and widespread lay-offs. Agricultural Bank of China plans to hire just 4,530 people – a steep 68.9% drop from last year’s 14,557 graduate hires. Industrial and Commercial Bank of China (ICBC) plans to recruit 4,506, down 47% from last year, while China Construction Bank has slashed its intake 34.8% to 3,567. “Most graduates in finance, IT and even engineering are either jobless or preparing for postgraduate exams or the civil service. There’s barely a third option.” The private sector at large, which provides most urban jobs, has also grown cautious: freezing headcounts, scaling back hiring plans, and in some cases cutting staff as old growth drivers like construction and labour-intensive manufacturing become increasingly ineffective.

Takeaways by Macro Roundup® AI

  1. Agricultural Bank of China plans to hire just 4,530 graduates, down 68.9% from 14,557 last year, while ICBC's intake falls 47% to 4,506 and China Construction Bank's drops 34.8% to 3,567.
  2. China's job market faces multiple simultaneous headwinds, including the US trade war, a deep slump in real estate, and a finance industry hit by strict new regulations, sharp pay cuts, and widespread lay-offs.
  3. China's private sector, which provides most urban jobs, is freezing headcounts, scaling back hiring plans, and in some cases cutting staff as old growth drivers like construction and labour-intensive manufacturing become increasingly ineffective.

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