Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


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.

Wednesday, June 25, 2025

AI Summary. Researchers surveyed 1,500 workers and AI experts across 844 tasks in 104 occupations, building a database that pairs worker preferences for automation with expert assessments of AI capability. The framework introduces a five-point Human Agency Scale and sorts tasks into zones where automation is both wanted and feasible, unwanted, or technically lacking.

Erik Brynjolfsson, Yijia Shao, Humishka Zope, Yucheng Jiang, et al. arXiv
Date Posted:
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A large dataset on preferences of workers and capability assessments from AI experts suggests a mismatch between actual AI usage by task and a Human Agency Scale that rates its suitability to the task, taking into account both tastes and capabilities.

Where do worker preferences for automation align with AI capability?

Core argument: The WORKBank database, built on the U.S. Department of Labor's O*NET database, records preferences from 1,500 domain workers and AI-expert capability assessments across over 844 tasks spanning 104 occupations.

Our framework features an audio-enhanced mini-interview to capture nuanced worker desires and introduces the Human Agency Scale (HAS) to quantify the preferred level of human involvement. [Our] WORKBank database, building on the U.S. Department of Labor’s O*NET database, captures preferences from 1,500 domain workers and capability assessments from AI experts across over 844 tasks spanning 104 occupations. We construct the Human Agency Scale (HAS), a 5-point scale that captures a spectrum from full automation to full human control, moving beyond a simple automate-or-not dichotomy. Jointly considering the desire and technological capability, it divides tasks in WORKBank into four zones: Automation “GreenLight” Zone, Automation “RedLight” Zone, R&D Opportunity Zone, LowPriorityZone. This highlights critical mismatches and opportunities for AI agent development. Our results reveal diverse HAS profiles across occupations, reflecting heterogeneous expectations for human involvement. We emphasize the need to align AI development with worker preferences and to support collaborative human-AI work arrangements.

Takeaways by Macro Roundup® AI

  1. The WORKBank database, built on the U.S. Department of Labor's O*NET database, records preferences from 1,500 domain workers and AI-expert capability assessments across over 844 tasks spanning 104 occupations.
  2. The Human Agency Scale is a 5-point measure spanning full automation to full human control, moving beyond a binary automate-or-not framing.
  3. Combining worker desire with technological capability sorts WORKBank tasks into four zones — Automation "GreenLight," Automation "RedLight," R&D Opportunity, and Low Priority — highlighting mismatches and opportunities for AI agent development.

Related Articles:

  • Navigating the Future of Work — Demographic groups whose work has been more displaced by automation have seen slower real wage growth, and automation is estimated to account for about 70% of between-group wage inequality in the US since 1980. Establishments adopting artificial intelligence have slowed hiring of non-AI workers by more than they have added AI specialists.
  • Generative AI at Work — A study of 5,179 customer support agents finds that access to a generative AI conversational assistant raised issues resolved per hour by 14% on average, with the largest gains for novice and low-skilled workers and minimal effect on experienced, highly skilled ones. The authors also find AI assistance improved customer sentiment, reduced requests for managerial intervention, and improved employee retention.
  • The Rapid Adoption of Generative AI — A nationally representative U.S. survey found 39% of people aged 18-64 used generative AI, with more than 24% of workers using it in the prior week and nearly one in nine using it every workday. The authors estimate 0.5-3.5% of U.S. work hours are currently assisted by generative AI.

AI Summary. Data compiled by Oxford University researchers shows the United States, China and the European Union host more than half of the world's most powerful data centers, with American and Chinese companies operating more than 90% of those rented out for artificial intelligence work. U.S. firms run almost two-thirds of global AI computing hubs, most using Nvidia chips.

Adam Satariano and Paul Mozur New York Times
Date Posted:

American companies operate almost two-thirds of A.I. data centers globally. Only 16% of nations have AI data centers.

Are the world's AI data centers concentrated in a few countries?

Core argument: U.S. companies operated 87 AI computing hubs, almost two-thirds of the global total, compared with 39 operated by Chinese firms and six by European firms, according to data compiled by Oxford University researchers.

According to data compiled by Oxford University, researchers the United States, China and the European Union host more than half of the world’s most powerful data centers, which are used for developing the most complex A.I. systems. American and Chinese companies operate more than 90% of the data centers that other companies and institutions use for A.I. work, according to the Oxford data. U.S. companies operated 87 A.I. computing hubs, which can sometimes include multiple data centers, or almost two-thirds of the global total, compared with 39 operated by Chinese firms and six by Europeans, according to the research. Inside the data centers, most of the chips — the foundational components for making calculations — were from the U.S. chipmaker Nvidia. Globally, the United States has the lead, with American companies building 63 A.I computing hubs outside the country’s borders, compared with 19 by China, according to the Oxford data. All but three of the data centers operated by Chinese firms outside their home country use chips from Nvidia, despite efforts by China to produce competing chips. Chinese firms were able to buy Nvidia chips before U.S. government restrictions.

Takeaways by Macro Roundup® AI

  1. U.S. companies operated 87 AI computing hubs, almost two-thirds of the global total, compared with 39 operated by Chinese firms and six by European firms, according to data compiled by Oxford University researchers.
  2. American companies built 63 AI computing hubs outside U.S. borders, compared with 19 by China, and all but three of the data centers Chinese firms operate abroad use Nvidia chips, which those firms could buy before U.S. government restrictions.

Related Articles:

  • AI Arrives In The Middle East: US Strikes A Deal with UAE and KSA — U.S. artificial intelligence agreements with the United Arab Emirates and Saudi Arabia bypass prior export-control rules, unlocking large-scale Gulf capital for AI infrastructure both in the region and in the United States. The author argues the deals tie both states more closely to American technology and position the energy-rich Gulf as a major AI hub.
  • Back to our Regularly Scheduled Programming — The four largest US hyperscalers spent $440bn on capital expenditure and research in 2024, with $596bn projected for 2025, a 35% increase, leaving large gaps between AI spending and AI revenues. These firms account for more than half of all capital expenditure growth in the US equity market.
  • Microsoft’s Datacenter Freeze – 1.5GW Self-Build Slowdown & Lease Cancellation Misconceptions — Reported cancellations of about 2GW of Microsoft datacenter capacity cover only non-binding letters of intent, while the company holds roughly 5GW of pre-leased capacity under binding contracts slated to begin operating between 2025 and 2028. The authors estimate Microsoft accounted for more than 60% of all newly leased turnkey datacenter capacity over a recent six-quarter stretch.

AI Summary. Computing is estimated to have accounted for 8% of US commercial sector electricity consumption and is projected to reach 20% by 2050, potentially exceeding every other commercial end use including lighting, space cooling, and ventilation. The projections assume computing growth outpaces efficiency gains, contributing to a reversal in declining commercial electricity use per square foot.

Courtney Sourmehi Energy Information Administration
Date Posted:

Computing accounted for 8% of commercial sector electricity consumption in 2024 and is projected to more than double to 20% by 2050. More electricity could be consumed by computing than for any other end use in the commercial sector.

Will computing become the largest user of commercial electricity?

Core argument: Computing accounted for an estimated 8% of commercial sector electricity consumption in 2024 and is projected to reach 20% by 2050, potentially exceeding every other commercial end use, including lighting, space cooling, and ventilation.

Computing accounted for an estimated 8% of commercial sector electricity consumption in 2024 and grows to 20% by 2050. Ultimately, more electricity could be consumed by computing than for any other end use in the commercial sector, including lighting, space cooling, and ventilation. We expect commercial computing growth will outpace computing efficiency improvements which, in the past, have moderated the growth in electricity consumption associated with computers. Commercial computing electricity demand growth is significant enough in our projections to contribute to a reversal in the trend in declining commercial electricity intensity, as measured in kilowatt hours consumed per square foot.

Takeaways by Macro Roundup® AI

  1. Computing accounted for an estimated 8% of commercial sector electricity consumption in 2024 and is projected to reach 20% by 2050, potentially exceeding every other commercial end use, including lighting, space cooling, and ventilation.
  2. Commercial computing growth is projected to outpace computing efficiency improvements, which in the past moderated growth in electricity consumption associated with computers.
  3. Projected commercial computing electricity demand growth is large enough to contribute to a reversal in the declining trend in commercial electricity intensity, measured in kilowatt hours consumed per square foot.

Related Articles:

  • The Future of Cooling — Over half of the world's 1.6bn air conditioners are in just two countries, China with 570m units and the United States with 375m, and nearly 70% of all units globally are in residential buildings. Household ownership ranges from about 4% in India and under 10% in Europe to over 90% in the United States and Japan.
  • After More Than a Decade of Little Change, U.S. Electricity Consumption is Rising Again — U.S. electricity consumption is projected to rise to new record highs, growing an average 1.7% per year, in contrast with the relatively flat demand from the mid-2000s to the early 2020s. The commercial sector, which includes data centers, and the industrial sector are projected to grow faster, at 2.6% and 2.1% per year, versus 0.7% for households.
  • 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.

AI Summary. A possible US trade strategy would hold tariffs at 30% on China and 10% on all other countries while giving trading partners 12 months to lower non-tariff barriers. The author argues this would immediately reduce uncertainty, aiding business planning, employment, and markets, while generating $400bn in annual revenue.

Torsten Sløk Apollo
Date Posted:

Approaching the Trump administration’s self-imposed 90-day deadline for trade deals, Torsten Sløk posits that extending the deadline by one year would leave trade partners “happy” with 10% and Trump with $400B of annual revenue.

Would fixed tariff rates plus a year to negotiate reduce uncertainty?

Core argument: Maintaining 30% tariffs on China and 10% on all other countries could produce $400 billion of annual revenue for US taxpayers while leaving trade partners satisfied with the 10% rate, the author speculates.

As we approach the Trump administration’s self-imposed 90-day deadline for trade deals, markets are starting to speculate about what comes next. The longer uncertainty remains elevated, the more negative its impact on the economy. Maybe the strategy is to maintain 30% tariffs on China and 10% tariffs on all other countries and then give all countries 12 months to lower non-tariff barriers and open up their economies to trade. Extending the deadline one year would give countries and US domestic businesses time to adjust to the new world with permanently higher tariffs, and it would also result in an immediate decline in uncertainty, which would be positive for business planning, employment, and financial markets. This would seem like a victory for the world and yet would produce $400 billion of annual revenue for US taxpayers. Trade partners will be happy with only 10% tariffs and US tax revenue will go up. Maybe the administration has outsmarted all of us.

Takeaways by Macro Roundup® AI

  1. Maintaining 30% tariffs on China and 10% on all other countries could produce $400 billion of annual revenue for US taxpayers while leaving trade partners satisfied with the 10% rate, the author speculates.
  2. Extending the Trump administration's 90-day trade-deal deadline by 12 months would give countries and US domestic businesses time to adjust to permanently higher tariffs and to lower non-tariff barriers, according to the author.
  3. The author argues that trade uncertainty weighs more heavily on the economy the longer it stays elevated, and that an immediate decline in uncertainty would benefit business planning, employment, and financial markets.

Related Articles:

  • Are Businesses Absorbing the Tariffs or Passing them on to Their Customers? — 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.
  • State of U.S. Tariffs: May 29, 2025 — The authors estimate that if tariffs issued under emergency economic powers are invalidated, leaving only steel, aluminum, auto, and auto parts tariffs, consumers would face an average effective tariff rate of 6.9%, the highest since 1969. They project a 0.6% short-run price increase, equal to an average household loss of $950, and US real GDP growth 0.2pp lower.
  • Help for the Heartland? The Employment and Electoral Effects of the Trump Tariffs in the United States — The authors find that the combined effect of U.S.-China trade war import tariffs, retaliatory tariffs, and farm subsidies on employment in exposed U.S. locations was at best a wash and possibly mildly negative, while residents of tariff-protected areas became less likely to identify as Democrats and more likely to vote Republican.

AI Summary. Bond traders have paid at least $38m in premiums for options positions that pay off if the 10-year US Treasury yield falls to 4% from roughly 4.3%. Interest-rate swaps price about 60 basis points of Federal Reserve easing across the year's remaining meetings, up from 45 basis points a week earlier.

Edward Bolingbroke Bloomberg
Date Posted:

Traders are betting on 10-year yields falling from 4.3% to 4% in the coming weeks in light of Jerome Powell’s recent statement that cuts would come “sooner rather than later” if inflation remains contained.

Are bond traders betting on lower long-term yields and more rate cuts?

Core argument: Traders paid at least $38 million in premiums across Friday and Monday on August calls on US 10-year Treasury options, positions that hedge against a drop in the 10-year yield to 4% from roughly 4.3%.

Traders are ramping up options wagers that 10-year Treasury yields are poised to sink to the lowest since April. The focus of the bets, which have drawn at least $38 million in premiums across Friday and Monday, has been around August calls on US 10-year options. The positions hedge against a drop in 10-year Treasury yields to 4% in the coming weeks, from roughly 4.3% now. Traders have been building bets on additional rate cuts into the front end of the curve. Swaps are now pricing around four basis points of easing into the July Fed meeting, compared with near zero before Governor Christopher Waller and Vice Chair for Supervision Michelle Bowman spoke, appearing to support an interest-rate cut as early as July, and a combined 60 basis points over the remaining four gatherings this year, up from 45 basis points a week ago.

Takeaways by Macro Roundup® AI

  1. Traders paid at least $38 million in premiums across Friday and Monday on August calls on US 10-year Treasury options, positions that hedge against a drop in the 10-year yield to 4% from roughly 4.3%.
  2. Swaps price about four basis points of easing into the July Fed meeting, up from near zero before Governor Christopher Waller and Vice Chair for Supervision Michelle Bowman appeared to support a rate cut as early as July.
  3. Swaps price a combined 60 basis points of Fed easing over the remaining four meetings this year, up from 45 basis points a week earlier.

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  • Foreign Treasuries Holdings Held Near a Record in April Turmoil — Foreign holdings of US Treasuries totaled $9.01tn, the second-highest on record and down $36bn from the prior month, with the decline mainly reflecting net sales of US notes and bonds by foreign private investors while official entities were net buyers of longer-term Treasuries. Japan remained the largest foreign holder at $1.13tn.
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