Edward Conard

Top Ten New York Times Bestselling Author

  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…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 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
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “Unintended Consequences 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
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, July 3, 2025

AI Summary. The authors project net migration for the year to range from about −525,000 to 115,000, with zero or negative net migration more likely, reducing GDP growth by 0.3–0.4 percentage points. They project immigration policy will become more restrictive the following year before net migration rebounds in subsequent years.

Wendy Edelberg, Stan Veuger, and Tara Watson American Enterprise Institute
Date Posted:

Revised projections of net migration for 2025 span a range from −525,000 to 115,000, “reflecting [an] expectation of severely curtailed inflows” and only “somewhat” higher outflows, strongly weighted towards large negative net flows. @stanveuger @AEIecon

How much does restrictive immigration policy reduce GDP growth?

Core argument: The authors project net migration to the U.S. in 2025 in a range from about −525,000 to 115,000, reflecting severely curtailed inflows and somewhat higher outflows than in recent years.

Our projections of net migration for 2025 span a range from about −525,000 to 115,000, reflecting our expectation of severely curtailed inflows and somewhat higher outflows than in recent years. Though small positive net flows are within our projected range and certainly possible, we believe zero or net negative migration for the year is more likely. These changes will reduce GDP growth by 0.3-0.4 percentage points in 2025. We project that immigration policy will be even more restrictive in 2026 before net migration starts to rebound in 2027 and 2028.

Takeaways by Macro Roundup® AI

  1. The authors project net migration to the U.S. in 2025 in a range from about −525,000 to 115,000, reflecting severely curtailed inflows and somewhat higher outflows than in recent years.
  2. The authors estimate these migration changes will reduce U.S. GDP growth by 0.3–0.4 percentage points in 2025, and judge zero or net negative migration for the year more likely than small positive net flows.
  3. The authors project immigration policy will be even more restrictive in 2026, with net migration beginning to rebound in 2027 and 2028.

Related Articles:

  • Illegal Population Down Since January — 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.
  • 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.
  • 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. The number of Republican-held seats among the one-third of U.S. House districts most reliant on Medicaid has more than doubled since 2009. Five of the 18 Republican-held districts rated competitive and 13 of the 22 competitive Democratic-held districts fall within that most Medicaid-dependent third.

Aaron Zitner, Anthony DeBarros and Danny Dougherty Wall Street Journal
Date Posted:

Medicaid cuts are a potential liability for the GOP. The GOP represented 26 of the 100 lowest-income House districts in 2009 and 56 in 2023. Of the 145 districts most dependent on Medicaid, the % represented by Republicans has more than doubled to ~37%.

Do Republicans now hold more of the most Medicaid-dependent districts?

Core argument: The number of Republicans elected in the 145 House districts most reliant on Medicaid — one-third of all House districts — has more than doubled since 2009.

The party of middle- and lower-income America is a party that is more reliant on safety-net programs. Consider the 145 House districts—the one-third of all House districts—that are most reliant on Medicaid. The number electing Republicans has more than doubled since 2009. Of the 18 Republican-held House districts that the nonpartisan Cook Political Report says are tossups or merely lean in the GOP’s direction, five are among the most dependent on Medicaid—that is, they are among the top one-third of House districts ranked by Medicaid reliance. Cutting Medicaid could also damage the GOP’s prospects in its best pickup opportunities, in districts where the Democratic hold is tenuous. Of the 22 Democratic-held districts rated as tossups or as merely leaning Democratic, 13 are among the most-dependent on Medicaid.

Takeaways by Macro Roundup® AI

  1. The number of Republicans elected in the 145 House districts most reliant on Medicaid — one-third of all House districts — has more than doubled since 2009.
  2. Five of the 18 Republican-held House districts that the nonpartisan Cook Political Report rates as tossups or leaning Republican rank among the top one-third of districts by Medicaid reliance.
  3. Of the 22 Democratic-held districts rated tossups or leaning Democratic, 13 are among the most Medicaid-dependent, and cutting Medicaid could damage Republican prospects in those pickup opportunities.

Related Articles:

  • The Economic Geography Of The 2024 Elections — Counties where government transfer programs such as Social Security, Medicare, Medicaid, and unemployment insurance make up at least a quarter of personal income gave Trump 63% of the vote, while counties where transfers account for less than 15% gave Harris 56%. Transfers supplied 18% of total US personal income.
  • The Great “Transfer”-mation — Government transfers rose from 8.2% of Americans' total personal income in 1970 to 17.6% in 2022, making them the third largest income source after work and investments. The share of U.S. counties drawing a quarter or more of personal income from transfers rose from under 1% in 1970 to 53% in 2022.
  • Saved by Medicaid: New Evidence on Health Insurance and Mortality from the Universe of Low-Income Adults — Using linked Census and tax records for 37m low-income adults, the authors estimate that state Medicaid expansions raised enrollment by 12 percentage points and cut mortality among low-income adults by 2.5%, implying a 21% reduction in the mortality hazard of new enrollees. They estimate direct budgetary costs of $5.4m per life saved and $179,000 per life-year saved.

AI Summary. Polling has long asked Americans whether the United States is the greatest country in the world, with two-thirds once choosing that view over saying other countries are also great. In recent polling, 53% say America's best days are ahead versus 40% who say they are behind.

Karlyn Bowman American Enterprise Institute
Date Posted:

Polling data show that the share of Americans who believe in American exceptionalism has consistently declined over the past 70 years. Just from 2011 to 2024, the number of respondents claiming there are other countries greater than the US tripled.

How do Americans view their country's greatness and future prospects?

Core argument: In Gallup's 1955 poll, two-thirds of Americans said the United States was the "greatest country in the world, better than all other countries in every possible way," 31% said it was a great country but so were certain others, and 1% said other countries were better in many respects.

In 1955, the Gallup Organization asked Americans to suppose they were talking in a general way about the United States and other countries. The organization then asked which of three statements came closer to the respondent’s point of view. Two-thirds chose the response that the United States was the “greatest country in the world, better than all other countries in every possible way.” 31% believed the US was “a great country but so are certain other countries.” And finally, 1% said that in many other respects, certain other countries were better than the US. A version of this question has been asked occasionally by pollsters ever since. Even in these deeply polarized times, most Americans still believe America’s best days are ahead. Like the exceptionalism question, pollsters ask about optimism in different ways, and in most of them, including a new poll from Quinnipiac released last week, optimism beats pessimism. In the new poll, 53% said America’s best days were ahead, and 40% behind.

Takeaways by Macro Roundup® AI

  1. In Gallup's 1955 poll, two-thirds of Americans said the United States was the "greatest country in the world, better than all other countries in every possible way," 31% said it was a great country but so were certain others, and 1% said other countries were better in many respects.
  2. A Quinnipiac poll found 53% of Americans said America's best days were ahead and 40% said they were behind.
  3. Pollsters have asked versions of the American exceptionalism question occasionally since 1955, and in most formulations of the optimism question, optimism outweighs pessimism.

Related Articles:

  • America Pulls Back From Values That Once Defined It, WSJ-NORC Poll Finds — A Wall Street Journal-NORC poll found 38% of Americans call patriotism very important and 39% say the same of religion, down from 70% and 62% in 1998. Money was the only tested priority to grow in importance, cited as very important by 43% versus 31% in 1998.
  • Why This Extremely Viral Poll Result Might Not Be Real — A widely cited survey showing dramatically different results on patriotism and community values across waves changed collection methods, from telephone interviews to a high-quality online panel. Respondents speaking to a human interviewer by phone are more likely to answer values questions in ways that make them look like upstanding citizens.
  • Zero-Sum Thinking and the Roots of U.S. Political Divides — Zero-sum thinking — viewing gains for one group as losses for another — is associated with greater support for liberal economic policies, stronger alignment with the Democratic Party, and weaker alignment with the Republican Party. The authors also find it linked to believing the QAnon conspiracy theory holds some truth and to sympathy for the attack on the U.S. Capitol.

AI Summary. A US trade deal with Vietnam applies a 40% tariff to goods transshipped through Vietnam, twice the 20% rate on regular Vietnamese imports. The US goods trade deficit with Vietnam has grown to more than $120bn, behind only China and Mexico, while Vietnam's imports from China rose 28% and its exports to the US rose 26% year over year.

Jason Douglas and Jon Emont Wall Street Journal
Date Posted:

The US is imposing a 20% tariff on imports from Vietnam and a 40% rate on those “transshipped” through the country in an effort to reduce American trade with China.

Can tariffs on transshipped goods close the back door for Chinese exports?

Core argument: Goods transshipped to the U.S. through Vietnam would face a 40% tariff under the deal announced by President Trump, twice the 20% rate Trump said he is applying to regular Vietnamese imports.

A key provision of the Vietnam deal announced by President Trump Wednesday is that goods “transshipped” to the U.S. through Vietnam would be subject to a punitive 40% tariff, twice the 20% rate Trump said he is applying to regular imports from Vietnam. As recently as 2018, the U.S. deficit in goods trade with Vietnam was smaller than its deficit with Japan or Germany and a 10th the size of its deficit with China. By the end of last year, the U.S. deficit with Vietnam had ballooned to more than $120 billion, putting Vietnam behind only China and Mexico in its share of the U.S.’s $1.2 trillion goods trade deficit. Vietnam’s rise up the rankings in U.S. trade has also drawn scrutiny from the U.S. as a hub for simply rerouting China-made goods bound for the U.S. for firms wanting to dodge tariffs. Chinese exports to the U.S. were about 10% lower in the first five months of the year than the same period a year earlier as tariffs bit into direct trade between the two economic superpowers, Chinese customs data show. Over the same period, however, Vietnamese imports from China were up 28% year over year, Vietnamese data show, while Vietnamese exports to the U.S. rose 26%.

Takeaways by Macro Roundup® AI

  1. Goods transshipped to the U.S. through Vietnam would face a 40% tariff under the deal announced by President Trump, twice the 20% rate Trump said he is applying to regular Vietnamese imports.
  2. The U.S. goods trade deficit with Vietnam exceeded $120 billion by the end of last year, trailing only China and Mexico within the $1.2 trillion total, after being a 10th the size of the China deficit as recently as 2018.
  3. Chinese exports to the U.S. were about 10% lower in the first five months of the year than a year earlier, Chinese customs data show, while Vietnamese data show imports from China up 28% and exports to the U.S. up 26%.

Related Articles:

  • How China Gets Around US Tariffs — China's exports to Indonesia, Malaysia, Thailand and Vietnam hit record highs while its imports from them stayed subdued, which the author reads as evidence of transshipment to circumvent US tariffs. The author argues that as long as US demand stays strong, Chinese goods will reach the US, and decoupling would require curbing domestic demand.

Monday, July 7, 2025

AI Summary. The National Association of Realtors reports 1.1m first-time home buyers last year, 380,000 fewer than the prior year and about half the two-decade average of 2.1m a year, with the sharpest sales slowdown in homes under $500,000. Unaffordable prices and high mortgage rates have slowed the flow from renting to owning.

Carol Ryan Wall Street Journal
Date Posted:
Is Database:
Database

Between 2004–2024, an average of 2.1mm people annually became first-time home buyers. Last year there were only 1.1mm first-time buyers, relative to 1.9mm in 2008; 46mm American households are renting, a record high.

Are unaffordable prices and high mortgage rates keeping renters from buying?

Core argument: First-time home buyers numbered 1.1 million last year, 380,000 fewer than in 2023 and nearly half the two-decade average of 2.1 million a year, according to National Association of Realtors data.

On average, 2.1 million people a year became first-time buyers over the last two decades. Many moved to homeownership straight from the rental market. Unaffordable house prices and high mortgage rates have slowed this flow since 2022. There were 1.1 million first-time buyers last year—380,000 fewer than in 2023 and almost half the historical norm, data from the National Association of Realtors shows. This year could be even worse judging by the weak spring home-selling season. Based on sales through May, the U.S. is on track to sell 4.03 million homes in 2025, fewer than last year’s tally, which was the lowest since 1995. The sharpest slowdown is happening among properties that cost less than $500,000, NAR data shows. That is the price range that usually attracts first-time buyers.

Takeaways by Macro Roundup® AI

  1. First-time home buyers numbered 1.1 million last year, 380,000 fewer than in 2023 and nearly half the two-decade average of 2.1 million a year, according to National Association of Realtors data.
  2. Based on sales through May, the U.S. is on track to sell 4.03 million homes in 2025, fewer than last year's tally, which was the lowest since 1995.
  3. The sharpest sales slowdown is occurring among homes priced below $500,000, the range that usually attracts first-time buyers, according to National Association of Realtors data.

Related Articles:

  • Inflation Adjusted House Prices 1.0% Below 2022 Peak — Inflation-adjusted US house prices are 1.0% below their 2022 peak. An affordability index built from median income, a 15% down payment, and 30-year fixed mortgage rates shows the monthly payment on the same house up 102% over four years, with prices up 34% and mortgage rates at 6.65%.
  • Rapidly Growing Treasury Supply Crowding Out Other Types of Credit Growth — 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.
  • The Long-Term Budget Outlook Under Alternative Scenarios for the Economy and the Budget — The Congressional Budget Office projects that if private investment were more sensitive to federal deficits, debt held by the public would exceed 250% of GDP and real national income per person would be 18% ($21,300) lower than its baseline, with the average interest rate on federal debt 2pp higher.

AI Summary. Survey data indicate US adults do not rank having children as a top life priority: among adults aged 18–34, 22% say having children is extremely or very important, versus 68% for an enjoyable job or career and 62% for close friends. Among women aged 20–44, the share reporting that work is very important rose from 31.9% to 47.4%.

Melissa Kearney and Phillip Levine National Bureau of Economic Research
Date Posted:
Is Database:
Database

“Shifting priorities.” In a 2023 Pew study, only 22% of those 18–34 say having children is extremely or very important. For comparison, 68% say the same about having a job or career they enjoy, and 62% say this about having close friends.

Are shifting personal priorities driving low fertility in rich countries?

Core argument: In World Values Survey data for U.S. women ages 20–44, the share reporting that work is very important to them rose from 31.9% to 47.4% between the 2005 and 2009 survey periods.

Data from the World Values Survey gives some insight into the expressed priorities of women between the ages of 20 and 44 in the United States between 2005 and 2009. Between those two survey periods, the % of women who report that work is very important to them rose from 31.9% to 47.4%. Among respondents of a 2018 survey conducted for the New York Times, the desire to “have more leisure time” is offered as the leading reason for not having children among adults who said they did not want to have children or were not sure whether they did. Survey evidence from the Pew Research Center finds that adults today do not list having children as a top priority for their adult lives. Another survey conducted by the Pew Research Center survey conducted in April 2023 reveals that while a sizable majority of American adults of all ages view job satisfaction and having close friends as being very important to a fulfilling life, many fewer say the same about being married or having children. Among all adults ages 18 to 34, only 22% say having children is extremely or very important. For comparison, 68% say the same about having a job or career they enjoy, and 62% say this about having close friends.

Takeaways by Macro Roundup® AI

  1. In World Values Survey data for U.S. women ages 20–44, the share reporting that work is very important to them rose from 31.9% to 47.4% between the 2005 and 2009 survey periods.
  2. An April 2023 Pew Research Center survey found that 22% of U.S. adults ages 18–34 say having children is extremely or very important, versus 68% for a job or career they enjoy and 62% for close friends.
  3. In a 2018 survey conducted for the New York Times, the desire to have more leisure time was the leading reason for not having children among adults who did not want children or were unsure.

Related Articles:

  • The Demographic Future of Humanity: Facts and Consequences — The authors estimate the world total fertility rate is around 2.17, below the global replacement rate of roughly 2.21, meaning humanity is already below replacement, with fertility and births falling faster than anticipated. They project middle-income countries' fertility may fall below that of rich countries outside East Asia, with emigration compounding population decline.
  • World Depopulation: Prospects and Implications — The US is projected to account for a growing share of the rich world's labor force, youth, and highly educated talent, with continuing population and labor force growth and only moderate aging through 2050. Its fertility, though below replacement, exceeds that of East Asian and nearly all European countries, and sustained legal immigration is essential to this demographic advantage.
  • The Age of Depopulation: Surviving a World Gone Gray — The United States remains the main outlier among developed countries resisting depopulation, with fertility of just over 1.6 births per woman — high for a rich country but below the 2.1 replacement threshold — plus steady immigration. The Census Bureau projects the U.S. population will peak around 2080 and decline continuously thereafter.

AI Summary. New data show the population of children under five in large U.S. urban counties fell 0.2%, matching the national rate of decline and ending a stretch in which big cities lost young children faster than the country as a whole. Every large urban county with under-five growth since 2020 is in Texas, North Carolina, or Florida.

Connor O'Brien Agglomerations
Date Posted:
Is Database:
Database

The pandemic-era flight of families with young children from non-sunbelt cities ended in 2024. Sunbelt cities have seen growth over the entire period. Rural counties are now losing their aged 0–4 populations at a faster rate (-.5%) than cities (-.2%).

Have big cities stopped losing young children faster than the nation?

Core argument: The under-five population in America's large urban counties fell 0.2% between July 2023 and July 2024, matching the national rate of decline and marking the first post-pandemic year in which big cities did not lose young children faster than the country overall.

The steep and startling decline in the number of young children living in America’s major cities was a defining demographic story of the Covid-19 pandemic and its aftermath. New data suggests that this “urban family exodus” has stopped, at least for the moment. The population of children under five years old declined a modest 0.2% in the country’s large urban counties between July 2023 and July 2024, the same rate of decline as for the country as a whole. Last year was the first since the pandemic in which the under-five population did not decline faster in the county’s largest cities than it did nationwide. None of the large urban counties whose under-five populations declined the most between 2020 and 2023 are anywhere close to recovering to pre-pandemic levels. In 2024, small towns and rural counties experienced larger declines in their populations of young children than small, mid-sized, and large urban counties. Meanwhile, suburbs’ under-five population grew very slightly, as it also did in 2022 and 2023. Every large urban county that has grown its under-five population since 2020 is in Texas, North Carolina, or Florida.

Takeaways by Macro Roundup® AI

  1. The under-five population in America's large urban counties fell 0.2% between July 2023 and July 2024, matching the national rate of decline and marking the first post-pandemic year in which big cities did not lose young children faster than the country overall.
  2. None of the large urban counties with the steepest under-five declines from 2020 to 2023 are close to recovering to pre-pandemic levels, and every large urban county that has grown its under-five population since 2020 is in Texas, North Carolina, or Florida.
  3. Small towns and rural counties saw larger declines in young-child populations than small, mid-sized, and large urban counties in 2024, while suburbs' under-five population grew very slightly, as it also did in 2022 and 2023.

Related Articles:

  • Young Families Have Continued Leaving Big Cities Post-Pandemic — Large urban counties have continued to lose population of young children even as their overall population growth resumed, driven by immigration. Birth rates in large urban counties have declined twice as fast as in rural counties over the past decade, and the number of children under five fell in 58% of all US counties.
  • Cities Aren’t Back — The share of college-educated 25-34 year-olds without school-age children living in urban neighborhoods fell from 39.2% to 37.0%, a steeper decline than for the population overall, according to the American Community Survey. The urban share of top-10% income households held roughly flat at about 30%, a change from earlier steady increases.
  • Where is Standard of Living the Highest? Local Prices and the Geography of Consumption — The authors estimate that geographical differences in cost of living are especially large for low-income US households, and that expensive cities offer college graduates a standard of living similar to affordable cities while offering less-educated households a lower one. A high school dropout household moving from the most affordable to the most expensive commuting zone would see consumption fall 18.5%.

AI Summary. Federal spending has averaged 21.1% of gross domestic product over the past 50 years but has remained above that average since rising during the Covid-19 pandemic, and with tax increases politically off the table the result is larger deficits. Medicare and Medicaid now cost just over 5% of gross domestic product, up from 1.2% in 1975.

Steven Rattner New York Times
Date Posted:
Is Database:
Database

Over the past 50 years, federal spending has averaged 21.1% of GDP, rising to 24.4% post-pandemic. Revenues, at 18.3% of GDP, remain above the 17.3% 50-year average, but not enough to cover interest costs and “relentlessly” rising Medicare and Medicaid.

Is elevated federal spending driving larger deficits?

Core argument: Federal spending averaged 21.1% of GDP over the past 50 years but has remained above that average since ballooning during the Covid-19 pandemic, which, with tax increases politically off the table, means larger deficits.

Over the past 50 years, federal spending as a percentage of gross domestic product averaged 21.1%. But since ballooning during the Covid-19 pandemic, spending has remained stubbornly above this average. With tax increases politically off the table, this means larger deficits. The [reconciliation bill] is just the latest, and worst, example of a policy followed by both Republicans and Democrats in recent years: take the easy way out and let deficits climb. The costs of Medicare and Medicaid are rising relentlessly and are now just over 5% of G.D.P., compared with 1.2% in 1975. Social Security’s outlays have also grown. And now, because of increasing debt and higher interest rates, the cost of servicing the national debt has begun to soar. Allowing the 2017 tax cuts to expire, which effectively would have raised taxes on 62% of Americans, could have been highly unpopular. But it was also necessary.

Takeaways by Macro Roundup® AI

  1. Federal spending averaged 21.1% of GDP over the past 50 years but has remained above that average since ballooning during the Covid-19 pandemic, which, with tax increases politically off the table, means larger deficits.
  2. Medicare and Medicaid costs now stand just over 5% of GDP, compared with 1.2% in 1975, while Social Security outlays have also grown and debt-servicing costs have begun to soar amid rising debt and higher interest rates.
  3. Letting the 2017 tax cuts expire would effectively have raised taxes on 62% of Americans, a step the author argues was necessary though potentially highly unpopular.

Related Articles:

  • The Budget and Economic Outlook: 2025 to 2035 — The Congressional Budget Office projects the federal deficit will grow from $1.9tn (6.2% of GDP) to $2.7tn by 2035, well above the 3.8% of GDP average of the past 50 years. Outlays are projected to rise to 24.4% of GDP, driven by growth in Social Security and Medicare spending and rising net interest costs, while revenues reach 18.3%.
  • Larry Summers and Bob Rubin Join Our CIOs to Discuss the Surprising Economic Cycle — Adopting the Simpson-Bowles fiscal consolidation when interest rates were at zero would have risked excessive disinflation, since long rates had no room to fall to provide an offsetting expansionary impulse. After the large run-up in debt and rise in real interest rates, the developing fiscal situation risks inflationary pressure, Treasury market disruption, or crowding out of private investment.
  • US Fiscal Sustainability Once More — US federal interest payments were projected to rise from 18% of tax revenues to about 22% by 2034 under the Congressional Budget Office's prior baseline. The author estimates that if the yield curve stays at current levels and policy is unchanged, that ratio would exceed 25% by 2032 and approach 30% by 2035.

AI Summary. US tariff revenues rose almost fourfold from a year earlier to a record $24.2bn in a month, equal to about 14.5% of the typical $166bn monthly federal budget shortfall. The Yale Budget Lab projects current tariff policy would raise $2.2tn over 2025–2034, or $1.8tn net of lost revenue elsewhere.

Alan Smith and Jonathan Vincent Financial Times
Date Posted:

In May, the first full month of the 10% universal tariff, revenue hit a record $24.2B, 14.5% of the mean monthly deficit over the last year. Tariff revenue is projected at $1.8T over the next decade, offsetting ~½ of the $3.4T deficit hike in the OBBBA.

How much of the federal deficit do rising tariff revenues cover?

Core argument: US tariff revenues rose almost fourfold from a year earlier to a record $24.2bn in May, the first full month of President Donald Trump's 10% global tariff, up more than 25% from April while total goods imports were broadly unchanged.

US tariff revenues surged almost fourfold from a year earlier to a record $24.2bn in May, the first full month in which President Donald Trump’s 10% global tariff was in effect. The figure represented a rise of more than 25% from the month earlier, while the total value of US goods imports remained broadly unchanged from April. Despite the rise in sums collected, the receipts represented only about 7.7% of May’s federal deficit of $316bn. The deficit figure oscillates from month to month, however. The sum raised in May was equivalent to about 14.5% of the typical $166bn shortfall between federal spending and revenues over the past year. Analysis by Yale Budget Lab suggests that if the rates in place as of June 16 were to remain, with no further increase on July 9, the effective tariff rate would settle at about 15 per cent. The think-tank projected that the current tariff policy would raise $2.2tn between 2025 and 2034, but thanks to reductions in tax revenue streams elsewhere, would result in net revenues of $1.8tn during those years - large, but significantly less than the $3.4tn forecast to be added to US federal debt over the same period by implementing Trump’s tax bill, according to estimates from the Congressional Budget Office

Takeaways by Macro Roundup® AI

  1. US tariff revenues rose almost fourfold from a year earlier to a record $24.2bn in May, the first full month of President Donald Trump's 10% global tariff, up more than 25% from April while total goods imports were broadly unchanged.
  2. May's $24.2bn in tariff receipts covered about 7.7% of that month's $316bn federal deficit and equalled roughly 14.5% of the typical $166bn monthly shortfall between federal spending and revenues over the past year.
  3. Yale Budget Lab projects that if tariff rates in place as of June 16 remain, the effective rate would settle at about 15% and raise $2.2tn between 2025 and 2034, or $1.8tn net, against the $3.4tn the Congressional Budget Office estimates Trump's tax bill would add to federal debt.

Related Articles:

  • Has Trump Outsmarted Everyone on Tariffs? — 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.
  • 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.
  • 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.