Edward Conard

Top Ten New York Times Bestselling Author

  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “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
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Monday, June 23, 2025

AI Summary. Military strikes in the Middle East left Brent global oil prices roughly unchanged, in contrast to Russia's invasion of Ukraine, which severely disrupted global energy markets amid market fears that Russian supply would be taken off the market. Markets are inured to violence in the Middle East, raising the hurdle for severe market fallout.

Robin Brooks Robin Brooks Substack
Date Posted:

In contrast to the March 2022 Russian invasion of Ukraine, the US attack on Iran had “essentially no impact on global oil prices,” with prices settling at the previous week’s level.

Why have oil prices barely moved after Middle East military strikes?

Core argument: Brent crude prices sit roughly where they were last week, showing essentially no impact from this weekend's military strikes, according to a daily time series running from January 2020 to the present.

The chart shows a daily time series for the Brent global oil price from January 2020 through today. This weekend’s military strikes have had essentially no impact on global oil prices, which today are roughly where they were last week. This contrasts with February 2022, when Russia invaded Ukraine. That shock severely disrupted global energy markets, because there was no playbook markets could follow. The risk of Russian oil supply being taken off [the] global market was high, at least in [the] markets’ eyes during those early weeks following the invasion. The sad truth is that the same does not hold true for the Middle East. Markets are inured to endless violence, which means that the hurdle for severe market fallout is higher.

Takeaways by Macro Roundup® AI

  1. Brent crude prices sit roughly where they were last week, showing essentially no impact from this weekend's military strikes, according to a daily time series running from January 2020 to the present.
  2. Russia's February 2022 invasion of Ukraine severely disrupted global energy markets because markets had no playbook to follow and saw a high risk that Russian oil supply would be taken off the global market.
  3. Markets are inured to endless violence in the Middle East, which raises the hurdle for severe market fallout.

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.
  • In 2024, the United States Produced More Energy than Ever Before — U.S. total energy production reached a record of more than 103 quadrillion British thermal units, a 1% increase over the prior record, with natural gas, crude oil, natural gas plant liquids, biofuels, solar, and wind each setting domestic production records. Natural gas accounted for about 38% of total production and crude oil 27%.
  • A Spendthrift Saudi Arabia Can’t Finance the World Anymore — Saudi Arabia has become a net consumer of foreign capital rather than a provider, accumulating $142bn in foreign debt as heavy spending on economic transformation outpaces oil revenue, with its sovereign wealth fund scaling back some projects. Estimates put the oil price needed to balance its budget near $96 a barrel.

AI Summary. The United States produced more energy than it consumed, with primary energy production reaching a record 103.3 quadrillion British thermal units and consumption at 94.2 quadrillion, still below the 2007 peak of 99.0 quadrillion. Energy exports rose 4% to a record 30.9 quadrillion while imports held at 21.7 quadrillion, the largest net exports in records back to 1949.

Brett Marohl Energy Information Administration
Date Posted:

US primary energy production hit a record high in 2024, while consumption remained under the 2007 peak, driving record net exports which rose 4% y/y.

Is the United States producing record energy and net exports?

Core argument: U.S. primary energy production reached a record 103.3 quads in 2024, the third consecutive year production surpassed a previous record, exceeding domestic consumption of 94.2 quads.

The United States continued to produce more energy than it consumed in 2024. This surplus energy production helped energy exports grow to a record high 30.9 quadrillion British thermal units (quads) in 2024, up 4% from 2023. Energy imports stayed flat at 21.7 quads in 2024, meaning the United States exported 9.3 quads more energy than it imported, the highest net exports in our records, which date back to 1949. Energy consumption in the United States totaled 94.2 quads in 2024, remaining below the peak of 99.0 quads set in 2007. Primary energy production in the United States increased to a record 103.3 quads in 2024, the third consecutive year that production has surpassed a previous record.

Takeaways by Macro Roundup® AI

  1. U.S. primary energy production reached a record 103.3 quads in 2024, the third consecutive year production surpassed a previous record, exceeding domestic consumption of 94.2 quads.
  2. U.S. energy exports grew to a record 30.9 quads in 2024, up 4% from 2023, while imports stayed flat at 21.7 quads, yielding net exports of 9.3 quads, the highest in records dating to 1949.
  3. U.S. energy consumption totaled 94.2 quads in 2024, remaining below the peak of 99.0 quads set in 2007.

Related Articles:

  • The New Joule Order — Ample physical capacity keeps inflation low and stable and allows lower interest rates, but when demand catches up to capacity constraints, better returns in the physical economy pull capital back to fund expansion, making a commodity super-cycle a capital-expenditure cycle. In real terms, total energy investment is below its level 15 years ago.
  • 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.
  • 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. New York has directed its public electric utility to add at least 1 gigawatt of new nuclear generation, the first major new U.S. nuclear plant undertaken in more than 15 years. Only five new commercial reactors have come online in the U.S. since 1991, and nuclear capacity is down more than 4% from its 2012 peak.

Ryan Dezember and Jennifer Hiller Wall Street Journal
Date Posted:

In an effort to take advantage of the Trump administration’s new nuclear regulatory regime, New York State is launching an effort to build a new nuclear-power facility. Only 5 new commercial reactors have come online in the U.S. since 1991.

Is the U.S. restarting construction of large nuclear power plants?

Core argument: New York Governor Kathy Hochul has directed the state's public electric utility to add at least 1 gigawatt of new nuclear generation — roughly enough to power about a million homes — to its aging reactor fleet.

New York intends to build a large nuclear-power facility, the first major new U.S. plant undertaken in more than 15 years and a big test of President Trump’s promise to expedite permitting for such projects. Kathy Hochul said in an interview that she has directed the state’s public electric utility to add at least 1 gigawatt of new nuclear-power generation to its aging fleet of reactors. A gigawatt is roughly enough to power about a million homes. Only five new commercial reactors have come online in the U.S. since 1991, which hasn’t been enough to offset plant retirements. Nuclear-generation capacity is down more than 4% from its 2012 peak.

Takeaways by Macro Roundup® AI

  1. New York Governor Kathy Hochul has directed the state's public electric utility to add at least 1 gigawatt of new nuclear generation — roughly enough to power about a million homes — to its aging reactor fleet.
  2. The planned New York facility would be the first major new U.S. nuclear plant undertaken in more than 15 years and a test of President Trump's promise to expedite permitting for such projects.
  3. Only five new commercial reactors have come online in the U.S. since 1991, too few to offset plant retirements, leaving nuclear-generation capacity more than 4% below its 2012 peak.

Related Articles:

  • Plant Vogtle Unit 4 Begins Commercial Operation — The 1,114-megawatt Unit 4 reactor at Georgia's Plant Vogtle entered commercial operation, completing an 11-year expansion that brings the plant's capacity to nearly 5 gigawatts and makes it the largest US nuclear plant. No nuclear reactors are currently under construction in the United States, where nuclear supplies about 19% of electricity.
  • Three Mile Island’s Nuclear Plant to Reopen, Help Power Microsoft’s AI Centers — Constellation Energy will spend about $1.6bn to restart the undamaged reactor at Pennsylvania's Three Mile Island nuclear plant, which closed in 2019, and has signed a 20-year agreement to sell the power to Microsoft. The deal reflects the scale of round-the-clock carbon-free electricity sought for artificial intelligence data centers.
  • Nuclear Power Is Hard. A Climate-Minded Billionaire Wants to Make It Easier — Start-up TerraPower has begun building a sodium-cooled nuclear reactor designed to be smaller and cheaper than conventional water-cooled plants, with completion expected no earlier than 2030 and the design not yet approved by the Nuclear Regulatory Commission. The company says the reactors should ultimately generate electricity at half the cost of traditional nuclear plants.

AI Summary. An analysis of the Current Population Survey finds the foreign-born population fell by 957,000 over a four-month period, with the labor force component down 601,000, one of the largest four-month declines in three decades. The decline was entirely among non-citizens, with non-citizens from Latin America arriving in 1980 or later down 1.07m.

Steven Camarota and Karen Zeigler Center for Immigration Studies
Date Posted:

An analysis of recent CPS data by the Center for Immigration Studies suggests that there were 14.8mm illegal immigrants in the US in May 2025, 1mm fewer than the Center’s January estimate.

How much has the foreign-born population declined in recent months?

Core argument: The total foreign-born population in the Current Population Survey declined by 957,000 from January to May 2025, one of the largest 4-month declines in the foreign-born in the last three decades, though not unprecedented.

An analysis of the Current Population Survey (CPS), shows a large decline in the foreign-born or immigrant population (legal and illegal) between January and May of this year. The decline was caused by a falloff in the number of non-citizens from Latin America who arrived in 1980 or later, a population that overlaps significantly with illegal immigrants. The number of foreign-born individuals in the labor force declined by 601,000 from January to May 2025. Our analysis of the raw data shows the total foreign-born population, both in and out of the labor force, declined 957,000 from January to May 2025. This is one of the largest declines over a 4-month period in the foreign-born in the last three decades, but it is not unprecedented. The decline was entirely among non-citizens. The number of naturalized U.S. citizens in the data did not fall from January to May of this year. In particular, non-citizens from Latin America who indicated they arrived in the United States in 1980 or later show a 1.07 million decrease from January to May of this year and a 1.45 million falloff since December 2024.

Takeaways by Macro Roundup® AI

  1. The total foreign-born population in the Current Population Survey declined by 957,000 from January to May 2025, one of the largest 4-month declines in the foreign-born in the last three decades, though not unprecedented.
  2. The foreign-born labor force fell by 601,000 from January to May 2025, and the overall decline came entirely among non-citizens, as the number of naturalized U.S. citizens in the data did not fall.
  3. Non-citizens from Latin America who reported arriving in 1980 or later, a group overlapping significantly with illegal immigrants, fell by 1.07 million from January to May 2025 and by 1.45 million since December 2024.

Related Articles:

  • America’s Immigration Mess: An Illustrated Guide — Current Population Survey estimates indicate America's foreign-born population surpassed 50m for the first time and exceeded 15% of the national population, above the prior peak of 14.8% recorded in 1890. Mass immigration during that earlier wave was associated in contemporary opinion with widening income and wealth gaps and depressed wages for less-skilled native-born men, and sweeping national restrictions followed.
  • Young Graduates Are Facing an Employment Crisis — Unemployment among 20–24 year-olds with at least a bachelor's degree averaged 6.6% over a 12-month period, up from 6% a year earlier, while the national rate stood around 4%. For 18–19 year-old high-school graduates with no college, unemployment averaged 14.5%, up from 13.3%.
  • Trump Struggles to Press Deportations Without Damaging the Economy — Goldman Sachs estimates, using census data, that immigrants living in the U.S. illegally make up about 4.4% of the U.S. workforce overall but far more in some industries: 19% of landscaping services, 17% of crop production, 16% of animal slaughtering and processing, and 13% of construction.

AI Summary. Using data on multiple ancestors, the authors estimate a small grandparent effect on children's status among white American families and conclude it largely reflects measurement error in the father's status rather than causal transmission. Including Black families raises estimated multigenerational status transmission, as racial economic gaps have converged more slowly than within-race family gaps.

Zachary Ward, Kasey Buckles and Joseph Price National Bureau of Economic Research
Date Posted:
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A 4-generation dataset linking 2.5+ mm adults to their ancestors finds that btw 1850 and 1940, a white American’s socioeconomic status was largely independent of his grandparent’s status after corrections for measurement error and father’s status.

Do grandparents' status influence children's outcomes beyond fathers' status?

Core argument: For white families, the total effect of all three ancestors on a child's status is 9% larger than the father's effect alone, indicating a small but meaningful grandparent effect.

When we predict a child’s status using [all three ancestors], we find a small but meaningful grandparent “effect.” For white families, the total ancestor effect is 9% larger than the father effect. Once we correct for transitory measurement error using repeated observations and IV, these effects shrink substantially, consistent with measurement error driving grandparent effects. With a noisy measure of the father, distant ancestors act as proxies for the father’s true status. If we improve the measurement of the father’s status with repeated observations, the proxies from the [previous generations] no longer provide predictive power. The small grandparent effect that remains for the white population results largely from measurement error that repeated observations do not fully correct, rather than from a causal effect. This “permanent error” occurs because even a complete income or occupational history does not fully capture a person’s productive capability. Including [both] Black [and White families] in our analysis increases the estimated strength of status transmission across multiple generations, as economic gaps between races have converged much more slowly than gaps across families within racial groups over the past 80 years.

Takeaways by Macro Roundup® AI

  1. For white families, the total effect of all three ancestors on a child's status is 9% larger than the father's effect alone, indicating a small but meaningful grandparent effect.
  2. Correcting for transitory measurement error with repeated observations and instrumental variables shrinks the estimated grandparent effects substantially, and once the father's status is measured with repeated observations, earlier generations provide no predictive power.
  3. Including both Black and white families raises the estimated strength of status transmission across multiple generations, as economic gaps between races have converged much more slowly than gaps across families within racial groups over the past 80 years.

Related Articles:

  • Intergenerational Mobility in American History: Accounting for Race and Measurement Error — Accounting for Black families, who historical studies routinely drop, and for measurement error in fathers' economic status can double estimates of intergenerational persistence in linked United States census data from 1850 to 1940. The author argues historical mobility was lower than previously estimated, implying greater equality of opportunity today than in the past.
  • The Gilded Age and Beyond: The Persistence of Elite Wealth in American History — The authors find that most extremely wealthy Americans fall out of the top tail within their lifetimes, and that grandparental wealth is associated with reaching the top 1% in a non-linear way. Still, over 90% of grandchildren of top 1% grandfathers did not reach that level.
  • The Inheritance Of Social Status: England, 1600 to 2022 — Using a genealogical database of 422,374 English people with rarer surnames, the authors find social status persists strongly even among distant relatives, with status correlations declining by a constant factor of 0.79 per step in the lineage across all status measures and eras studied. The authors argue this constancy suggests social interventions have modest effects.

AI Summary. U.S. tax law taxes global profits from intellectual property moved offshore at 10.5%, versus 21% on domestic profits, and American companies report roughly $350bn in annual profits in major corporate tax havens such as Ireland, Luxembourg and Singapore. Pharmaceutical companies shifted patents and manufacturing abroad, reporting nearly all income overseas and largely ceasing to pay domestic corporate tax.

Brad Setser New York Times
Date Posted:

A loophole in the TCJA allows American corporations to book ~$350B in profits in Ireland, Luxembourg and Singapore. Large American pharmaceutical manufacturers effectively pay no corporate taxes to the US government.

Does a lower tax rate on offshore intellectual property shift profits abroad?

Core argument: American companies report roughly $350 billion in annual profits in major centers of corporate tax avoidance including Ireland, Luxembourg and Singapore, an incentive traced to a provision of the U.S. tax code.

American companies now report earning about $350 billion in profits annually in the world’s major centers of corporate tax avoidance, which include Ireland, Luxembourg, Singapore and a handful of others. The incentive comes from this obscure corner of our tax code. It offers a far lower 10.5% tax rate for global profits if a global company moves the profits from its intellectual property offshore. The tax rate for domestic profits, in contrast, is 21%. The tax break was created by Republicans who were searching for a compromise that would stop companies from moving their headquarters overseas without fully ending tax competition and the associated pressure on U.S. corporate tax rates. That provision did stop the trend of companies moving their headquarters overseas. But it also didn’t take long for pharmaceutical companies to realize that they could cut their total tax bill in half by transferring their intellectual property (like, say, a patent for a new drug) to a subsidiary overseas. And to satisfy a different and equally obscure provision of the tax code, they needed to move their manufacturing as well. Soon, Big Pharma began reporting to the I.R.S. that it earned almost all of its income abroad. They have all but stopped paying domestic corporate taxes.

Takeaways by Macro Roundup® AI

  1. American companies report roughly $350 billion in annual profits in major centers of corporate tax avoidance including Ireland, Luxembourg and Singapore, an incentive traced to a provision of the U.S. tax code.
  2. The provision taxes global profits from intellectual property moved offshore at 10.5%, versus 21% on domestic profits, and was created by Republicans seeking to stop companies from relocating their headquarters overseas without fully ending tax competition.
  3. Pharmaceutical companies cut their total tax bills in half by transferring intellectual property such as drug patents to overseas subsidiaries and moving manufacturing abroad to satisfy another tax code provision, and have all but stopped paying domestic corporate taxes.

Related Articles:

  • American Pharmaceutical Companies Still Aren’t Paying Tax in the U.S. — The six largest U.S. pharmaceutical companies by revenue reported a combined U.S. corporate income tax provision of zero or less for their profits, with only Eli Lilly setting aside a significant sum of roughly $1bn. The author attributes this to holding intellectual property offshore, producing patent-protected drugs offshore, and booking profits on U.S. sales offshore.
  • Big Pharma’s Big Tax Dodge — Six major US pharmaceutical firms reported $215bn in US sales versus $170bn abroad, yet attributed $90bn of their combined $100bn in profits to foreign operations and only $10bn to the US. That implies a 5% profit margin in the US and over 50% abroad.

AI Summary. Germany and Italy hold the world's second- and third-largest national gold reserves, at 3,352 and 2,452 tonnes respectively, and each stores more than a third of its bullion with the New York Federal Reserve as custodian. Both face pressure to bring roughly $245bn of that gold home.

Olaf Storbeck and Amy Kazmin Financial Times
Date Posted:

Germany and Italy, which hold the largest gold reserves after the US, are facing domestic pressure to repatriate the 1/3 of their respective reserves currently stored in the US, with a combined value of ~$245B.

Are European countries being pressed to repatriate gold stored in America?

Core argument: Germany and Italy hold the world's second- and third-largest national gold reserves after the US, at 3,352 tonnes and 2,452 tonnes respectively, according to World Gold Council data, and face pressure to repatriate $245bn of bullion from the US.

Germany and Italy hold the world’s second- and third-largest national gold reserves after the US, with reserves of 3,352 tonnes and 2,452 tonnes, respectively, according to World Gold Council data. Both rely heavily on the New York Federal Reserve in Manhattan as a custodian, each storing more than a third of their bullion in the US. Western European countries accumulated huge gold reserves during the economic boom in the two decades after the second World War, when they ran large trade surpluses with the US. Up to 1971, the dollar was converted into gold by the US central bank under the Bretton Woods system of fixed exchange rates. Storing the precious metal across the Atlantic was also seen as a hedge against a potential war with the Soviet Union. France in the mid-1960s nonetheless moved most of its overseas gold reserves to Paris, after President Charles De Gaulle lost faith in the Bretton Woods system.

Takeaways by Macro Roundup® AI

  1. Germany and Italy hold the world's second- and third-largest national gold reserves after the US, at 3,352 tonnes and 2,452 tonnes respectively, according to World Gold Council data, and face pressure to repatriate $245bn of bullion from the US.
  2. Germany and Italy each store more than a third of their gold with the New York Federal Reserve in Manhattan, having accumulated large reserves in the two decades after the second World War when Western European countries ran large trade surpluses with the US.
  3. France moved most of its overseas gold reserves to Paris in the mid-1960s after President Charles De Gaulle lost faith in the Bretton Woods system, under which the US central bank converted dollars into gold up to 1971.

Related Articles:

  • Taking Stock: Dollar Assets, Gold, and Official Foreign Exchange Reserves — Gold accounts for about 10% of aggregate official foreign exchange reserves, roughly its level in the early 2000s. International Monetary Fund country data indicate most added official gold holdings came from a few central banks, with over half of reported accumulation from China and Russia and about a quarter from several emerging markets.
  • How Gold Became the World’s Refuge from Uncertainty — Gold prices reached a record intraday high in real terms, surpassing the prior 1980 peak, with roughly a 30% gain over the year. Central banks have bought more than 1,000 tonnes net annually for three years — record levels — led by emerging markets including China, India and Turkey as they scale back dollar exposure.
  • Gold Overtakes Euro as Global Reserve Asset, ECB Says — Gold has overtaken the euro as a global reserve asset, with central bank gold holdings reaching 36,000 tons, near the mid-1960s peak of 38,000 tons, helped by a 30% rise in the gold price. The European Central Bank finds countries geopolitically close to China and Russia accumulated gold more than others.

Tuesday, June 24, 2025

AI Summary. From 2008 to 2023 the US household and corporate sectors ran average savings surpluses of 3.5% and 1.6% of GDP respectively, leaving the federal government as the dominant net borrower in the US economy. This suggests the benefit of persistent net capital inflows is the ability to run larger fiscal deficits and grow public debt.

Martin Wolf Financial Times
Date Posted:
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Between 2008–2023, the US household and corporate sectors ran a mean surplus of 3.5% and 1.6% of GDP, respectively. “On a net basis, the US private sector does not need foreign savings,” Martin Wolf argues.

Do foreign capital inflows mainly finance larger US budget deficits?

Core argument: US households ran surplus savings averaging 3.5% of GDP and US corporates 1.6% of GDP from 2008 to 2023, and both sectors were close to balance from 1992 to 2007.

On average, the US household and corporate sectors had surplus savings of 3.5% and 1.6% of GDP, respectively, from 2008 to 2023. Even from 1992 to 2007, they were close to balance. So, on a net basis, the US private sector does not need foreign savings. The dominant net borrower in the US economy is the federal government. This analysis suggests that the benefit to the US of its persistent net capital inflows is the ability to have a larger fiscal deficit and so grow its public debt. This does not look like a good bargain.

Takeaways by Macro Roundup® AI

  1. US households ran surplus savings averaging 3.5% of GDP and US corporates 1.6% of GDP from 2008 to 2023, and both sectors were close to balance from 1992 to 2007.
  2. The US private sector on a net basis does not need foreign savings, and the federal government is the dominant net borrower in the US economy.
  3. The analysis suggests the benefit to the US of persistent net capital inflows is the ability to run a larger fiscal deficit and grow public debt, which does not look like a good bargain.

Related Articles:

  • Trade Intervention for Freer Trade — The authors argue the United States should counter surplus countries' trade policies either by restricting their goods exports through tariffs or by restricting their capital inflows through taxes, volume limits, reserve requirements, transaction approvals, or investor eligibility rules. They contend capital controls are a more targeted alternative to uniform tariffs, which impose equal costs on more and less mercantilist countries.
  • The Challenge of Using Excess Global Savings — China, Germany and Japan together ran current account surpluses of $884bn in 2024, with the top 10 surplus countries at $1.568tn, offset by a US current account deficit of $1.134tn and a UK deficit of $123bn. The author argues surplus savings are funding government borrowing in creditworthy-currency countries rather than productive investment elsewhere.
  • The U.S. Trade Deficit: Myths and Realities — Taxing capital inflows would weaken the dollar but could raise domestic interest rates and depress investment, harming long-term growth, while an interest rate cut absent recession would be inflationary and erode any real depreciation needed to durably improve the trade balance. Fiscal restraint could weaken the dollar and reduce the trade deficit.

AI Summary. US gross domestic savings are about 17% of GDP versus a 23% average in high-income countries, while investment of roughly 22% is in line with the rich-world average, leaving $1.3tn of capital imported in a year. Consumption, including government, equals 81% of GDP, and foreign claims on America exceed American assets abroad by 90% of GDP.

Economist Staff The Economist
Date Posted:

American consumption as a share of GDP at 81%, including government, is the highest in the G7, aside from the UK. The other advanced economies’ consumption share of GDP is 5pp lower on average than that of the US.

Does America save too little and consume too much?

Core argument: America's gross domestic savings run about 17% of GDP versus an average of 23% in high-income countries, while US investment of roughly 22% of GDP is in line with the rich-world average.

America’s gross domestic savings are around 17% of GDP, compared with an average of 23% in high-income countries. America invests about 22% of GDP, roughly in line with the rich-world average. The difference between saving and investment is the capital the country must import, which last year amounted to $1.3trn. Meanwhile, America’s consumption as a share of GDP—81% once that by the government is included—is the highest in the G7 apart from Britain. Among the other five big rich economies, the consumption share is on average five percentage points lower. Relying on net capital inflows has left America with deep financial obligations to foreigners. The difference between the assets that Americans own overseas and those foreigners own in America [“net international investment position” (NIIP)] has fallen to -90% of GDP.

Takeaways by Macro Roundup® AI

  1. America's gross domestic savings run about 17% of GDP versus an average of 23% in high-income countries, while US investment of roughly 22% of GDP is in line with the rich-world average.
  2. The gap between American saving and investment is capital the country must import, which last year amounted to $1.3trn.
  3. American consumption, including that by the government, is 81% of GDP, the highest in the G7 apart from Britain and on average five percentage points above the other five big rich economies, while the net international investment position has fallen to -90% of GDP.

Related Articles:

  • The End of Privilege: A Reexamination of the Net Foreign Asset Position of the United States — The authors document that the U.S. net foreign asset position fell by 60 percentage points of U.S. gross domestic product between 2007 and 2021, even as U.S. current account deficits narrowed. They attribute this to a boom in the market valuation of U.S. corporations' non-financial assets, which mechanically raised the value of large foreign equity holdings in U.S. firms.
  • Sucking The World Dry (The US Dependence on Foreign Inflows) — The author argues that negative net national savings means the United States is consuming capital rather than accumulating it, largely by selling capital stock to foreigners and spending the proceeds and by not replacing aging capital. With a negative net international investment position, the author contends U.S. spending depends on continued foreign inflows and that potential growth is declining.
  • United States’ Changing Net IIP — The United States' net international investment position deficit—the gap between foreign-owned US assets and US-owned foreign assets—is the largest on record and has turned negative across all major asset categories. Because much of the liability is equity, the author argues rebalancing could come through a correction in US equity values rather than a weaker dollar.

AI Summary. Foreign investors hold roughly $18.5tn in US equities (about 20% of the market), $7tn in Treasuries and $5tn in credit (about 30% of each), and foreign participation in 30-year Treasury auctions has trended down in recent months. Combined with US fiscal challenges, the authors argue this reliance on foreign demand is a vulnerability.

Torsten Sløk Apollo
Date Posted:

Citing a decline in foreign participation in 30-year Treasury auctions in recent months, Torsten Sløk argues that while the risk of a “firesale” of US assets is unlikely, foreigners may stop buying.

Does heavy foreign ownership of US assets create a vulnerability?

Core argument: Foreign investors own $18.5 trillion in US equities, about 20% of that market, roughly $7 trillion in Treasuries and about $5 trillion in credit, each about 30% of their respective markets.

The rest of the world owns $18.5 trillion in US equities—about 20% of the market. Foreigners also own about $7 trillion in Treasuries—about 30% of that market—and roughly $5 trillion in credit—also 30% of that market. What’s the concern here? If the rest of the world starts losing its appetite for US assets, they may begin to sell. At the very least, they may stop buying. Indirect bidding in Treasury auctions refers to bids submitted on behalf of foreign institutions. These bidders don’t participate directly, but instead have their bids placed by intermediaries—hence “indirect.” Looking at foreign participation in 30-year Treasury auctions shows a downward trend in recent months. Combining these two risks—the enormous fiscal challenges and the fact that the rest of the world holds a lot of our assets—that presents a unique vulnerability to the US economic system. We don’t actually think that foreigners will sell US assets in a fire sale. We continue to think the US is exceptional, despite the Moody’s downgrade, both in terms of our economy and capital markets. But the question of our future role in those global capital markets is an important one.

Takeaways by Macro Roundup® AI

  1. Foreign investors own $18.5 trillion in US equities, about 20% of that market, roughly $7 trillion in Treasuries and about $5 trillion in credit, each about 30% of their respective markets.
  2. Indirect bidding in 30-year Treasury auctions, which reflects bids placed by intermediaries on behalf of foreign institutions, shows a downward trend.
  3. Large fiscal challenges combined with heavy foreign ownership of US assets present a unique vulnerability to the US economic system, though foreigners are not expected to sell in a fire sale and the US remains exceptional despite the Moody's downgrade.

Related Articles:

  • 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.
  • The Great European Disentanglement From US Stocks Has Only Just Started — Federal Reserve data show European investors held about $9tn in US stocks, roughly 17% of the total value of the US market. After inflation, a dollar invested in the US at the start of 2000 was worth $3.28 by the end of 2024, versus $1.63 for the rest of the world.
  • Asia’s $7.5 Trillion Bet on US Assets Is Suddenly Unravelling — Asia's 11 largest economies have accumulated $7.5tn in US stocks and bonds, but their annual capital flows into the US fell to $68bn, equal to just 11% of their trade surpluses with the US. Their major currencies, including the yen and yuan, trade on average 57% below exchange rates adjusted for living-cost differences.

AI Summary. New York City's construction costs exceed international benchmarks: Paris installs metro platform edge doors for about €3.7m per station while the Metropolitan Transportation Authority says it needs $55m per station. The author argues stringent crane operator licensing and sidewalk shed regulations protect a small number of unionized contractors from competition.

Matt Yglesias Slow Boring
Date Posted:

New York City’s elevated infrastructure costs relative to peers such as Paris are due to “stationary bandits” extracting wealth from the “tradable private sector.” Matt Yglesias argues for breaking NYC’s public sector unions.

Do licensing and shed rules inflate a city's construction costs?

Core argument: Paris has installed metro platform edge doors for about €3.7 million per station, and scaling for New York's longer platforms suggests roughly $10 million per station, yet the MTA says it needs $55 million per station.

Paris has been installing platform edge doors in their metro stations for about €3.7 million per station. New York has longer platforms, such that projecting it out would suggest maybe $10 million per station. But the MTA says it needs $55 million per station to do it. NYC famously has the most expensive tunneling in the world. The streets of Manhattan are uniquely covered in sidewalk sheds as a result of unusual regulations that serve the interests of a small cluster of sidewalk shed companies. New York City is also unlike the rest of the United States (which itself is unusual relative to the rest of Europe) in its scant use of tower cranes in construction. This is because of uniquely stringent licensing rules for crane operators, which means that even though New York has the most expensive cranes in the world, you don’t see competitors rushing in. This monopolistic predation is sustained politically by the fact that the parasitic contractors tend to be unionized — the small number of very expensive cranes that are used in NYC are run by members of Operating Engineers Local 14-14B, who are all quite well paid.

Takeaways by Macro Roundup® AI

  1. Paris has installed metro platform edge doors for about €3.7 million per station, and scaling for New York's longer platforms suggests roughly $10 million per station, yet the MTA says it needs $55 million per station.
  2. Manhattan's streets are covered in sidewalk sheds because of unusual regulations that serve the interests of a small cluster of sidewalk shed companies.
  3. New York City makes scant use of tower cranes compared with the rest of the United States and Europe because of uniquely stringent crane operator licensing rules, leaving the world's most expensive cranes run by well-paid members of Operating Engineers Local 14-14B.

Related Articles:

  • Why is New York City Shrinking? — New York City's population is shrinking as domestic out-migration has accelerated, with those leaving tending to be younger, higher-income, and with fewer children than the city's overall population. Census Bureau surveys that ask movers their reasons indicate jobs matter more than any other consideration, including housing affordability.
  • Transit Costs Project — Five of the world's six most expensive subway lines are in New York City, where subway construction averages $1.5bn per km, far above global norms. The costs are attributed to complex regulation, labor expenses, and logistical challenges in a dense urban setting.
  • The Death of NYC Congestion Pricing — New York's Metropolitan Transportation Authority has a $19bn operating budget and roughly $11bn in annual capital spending yet builds relatively little, and 4 of the 5 most expensive projects tracked by the NYU-Marron Institute Transit Costs Project are in New York City. High transit construction costs are an America-wide problem, but the author argues they are worst in the city.

AI Summary. Talks between French labor unions and business groups on revising the law raising the minimum retirement age from 62 to 64 ended in deadlock, with some opposition parties calling for a no-confidence vote. The government says France needs another €40bn ($46bn) of savings in its 2026 budget, mainly from spending cuts.

William Horobin Bloomberg
Date Posted:

Negotiations over changes to Macron’s 2023 retirement reform that raised the minimum retirement age to 64 from 62 have seemingly deadlocked, which could potentially trigger a no-confidence vote.

Can France cut spending enough when pension talks collapse?

Core argument: France's government says it needs another €40 billion ($46 billion) of savings in the 2026 budget to stay on track with plans to rein in the deficit, with ministers saying most of the effort must come from spending cuts rather than tax increases.

Negotiations over France’s contentious retirement reform ended in deadlock late Monday, raising pressure on the government as some opposition parties called for a no-confidence vote. Prime Minister Francois Bayrou had tasked labor unions and business groups with tweaking President Emmanuel Macron’s 2023 law that raises the minimum retirement age to 64 from 62. After four months of talks broke down, the premier said he would meet with negotiators on Tuesday morning to try to find a solution. France will need to make another €40 billion ($46 billion) of savings in the 2026 budget to keep on track with plans to rein in the deficit in the coming years, according to the government. Ministers have said most of the effort must come from cutting spending rather than relying on tax increases.

Takeaways by Macro Roundup® AI

  1. France's government says it needs another €40 billion ($46 billion) of savings in the 2026 budget to stay on track with plans to rein in the deficit, with ministers saying most of the effort must come from spending cuts rather than tax increases.
  2. Four months of talks between labor unions and business groups over amending Macron's 2023 law raising the minimum retirement age from 62 to 64 ended in deadlock, with some opposition parties calling for a no-confidence vote.
  3. Prime Minister Francois Bayrou, who had tasked unions and business groups with revising the pension law, said he would meet negotiators to seek a solution.

Related Articles:

  • Macron’s Pensions Law Clears Constitutional Hurdle After Protests — France's constitutional council validated most of a law raising the minimum retirement age from 62 to 64, ruling it valid under the constitution and legally enacted. Turnout for labour-led marches and strikes against the reform has shrunk.
  • Why Denmark is Raising its Retirement Age to 70, Europe’s Highest — Denmark's state pension age is tied to life expectancy under a parliamentary agreement that sets adjustments every five years with 15 years' notice and caps increases at one year at a time. Under this system the pension age is set to rise from 67 to 70, keeping public finances healthy long term.
  • Global Debt Report 2025 — About 60% of fixed-rate government debt in advanced economies maturing by 2027 — roughly $9tn — was issued before the recent interest-rate tightening, with weighted average yields below 2% versus projected 10-year rates near 3.6%, implying refinancing at nearly double the original cost. France, Spain, the UK, and the US face heightened vulnerability, with maturing debt exceeding 15% of GDP.