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
  • “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
  • “…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
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…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
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, July 15, 2025

AI Summary. The authors estimate that a 1 percentage point rise in the federal debt-to-GDP ratio raises long-term nominal interest rates by about 3 basis points, roughly three-quarters of which reflects higher term premia. Applying this to a projected 56 percentage point increase in debt-to-GDP over 30 years implies long-term rates about 170 basis points higher.

Michael Plante, Alexander Richter and Sarah Zubairy National Bureau of Economic Research
Date Posted:
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Researchers from the @DallasFed forecast that the 56pp projected increase in the US debt-to-GDP ratio over the next 30 years will boost long-term interest rates by about 170bps, implying yields of about 6% in 2055. Higher term premia would account for 120 of the 170 bps.

How much does rising federal debt raise long-term interest rates?

Core argument: The authors estimate that a 1 percentage point increase in the U.S. debt-to-GDP ratio raises long-term nominal interest rates by about 3 basis points, with term structure models indicating roughly three-quarters of that increase comes from higher term premia.

This paper revisits the relationship between federal debt and interest rates, which is a key input for assessments of fiscal sustainability. A common approach is to regress long-term forward interest rates on long-term projections of federal debt, [but the apparent disappearance of cointegration] over the last 20 years [leads us to estimate] the model in 1st differences. Our estimates indicate that a 1 percentage point increase in the debt-to-GDP ratio raises long-term nominal interest rates by about 3bps, with [the application of term structure models indicating] that about three-quarters of that increase is attributable to higher term premia. The CBO projects that the U.S. debt-to-GDP ratio will rise by 56 percentage points over the next 30 years. Holding other factors constant, our estimates suggest that the projected increase in debt would boost long-term interest rates by about 170 basis points. Given that the 5-year-ahead, 5-year Treasury rate averaged 4.35% in 2024, this would imply a rate of about 6% in 2055. Of this increase, approximately 120 basis points would stem from higher term premia, with the other 50 basis points reflecting an increase in expected short-term real rates.

Takeaways by Macro Roundup® AI

  1. The authors estimate that a 1 percentage point increase in the U.S. debt-to-GDP ratio raises long-term nominal interest rates by about 3 basis points, with term structure models indicating roughly three-quarters of that increase comes from higher term premia.
  2. Applying those estimates to CBO's projected 56 percentage point rise in the U.S. debt-to-GDP ratio over 30 years implies long-term interest rates about 170 basis points higher, holding other factors constant.
  3. With the 5-year-ahead, 5-year Treasury rate averaging 4.35% in 2024, the authors' estimates imply a rate of about 6% in 2055, of which roughly 120 basis points would stem from higher term premia and 50 basis points from higher expected short-term real rates.

Related Articles:

  • Can Treasury Markets Add and Subtract? — The authors estimate that Treasury yields rise on days when official cost estimates reveal deficit-increasing legislation, with a one-time 1 percentage point increase in the deficit-to-GDP ratio raising the 10-year yield by 0.75 basis points, or 6.75 basis points for a persistent deficit shock. The response reflects higher expected inflation and term premia alongside lower convenience yields.
  • Treasury Issuance Growing — US Treasury auction metrics show no current weakness in demand, with stable bid-to-cover ratios and no systematic tailing, even as debt-to-GDP rises, the term premium increases, and the government must refinance $9tn over the next year. The author argues Treasury issuance will keep outgrowing the economy, likely pushing long-term interest rates higher.
  • Brazil’s Slow-Burning Economic Crisis Might Be the U.S. Future — Brazil illustrates a feedback loop in which higher interest rates raise debt-servicing costs—now over 7% of GDP—which in turn lift risk premia and inflation expectations, making fiscal policy less sustainable still. U.S. long-term rates have not fallen despite Federal Reserve cuts, partly reflecting an $11tn debt increase and markets pricing the risk that debt is managed through higher inflation.

AI Summary. Japan's 30-year government bond yield remains below Germany's even after rising, despite Japanese government debt of 240% of GDP versus Germany's 65%. The author argues years of Bank of Japan quantitative easing and yield curve control, along with its continued gross purchases of government debt, keep Japanese yields artificially low.

Robin Brooks Robin Brooks Substack
Date Posted:

The Japanese 30-year yield is still below Germany’s, despite Japan’s debt/GDP of 240% relative to Germany’s 65%. The Bank of Japan is currently engaged in a yield control effort to manage rates.

Why are Japan's bond yields lower than Germany's despite far higher debt?

Core argument: Japan's 30-year government bond yield has hit new highs yet remains below Germany's, even though Japanese government debt stands at 240% of GDP versus Germany's 65%.

In recent days, Japan’s 30-year government bond yield has made new highs. The easiest way to see this is in the chart above, which shows Japan’s 30-year yield (white line) together with that for Germany (orange line). Even with the recent sharp rise, Japan’s yield is below Germany, which is nuts given Japan’s debt of 240% of GDP (versus Germany’s 65%). Many years of quantitative easing by the BoJ, as well as yield curve control, mean that Japan’s yields are still artificially low. And of course the BoJ remains a buyer of government debt in gross terms.

Takeaways by Macro Roundup® AI

  1. Japan's 30-year government bond yield has hit new highs yet remains below Germany's, even though Japanese government debt stands at 240% of GDP versus Germany's 65%.
  2. Years of Bank of Japan quantitative easing and yield curve control have left Japanese government bond yields artificially low, according to the author.
  3. The Bank of Japan remains a buyer of Japanese government debt in gross terms.

Related Articles:

  • Japan Leads Global Long-Bond Drop as Spending Takes Center-Stage — Long-term government bond yields rose in Japan, Germany, the UK and France as concern over widening fiscal deficits dented demand, with 30-year German yields near their highest levels in 14 years. Fiscal worries — including heavy government debt, spending, bond supply and sticky inflation — are displacing central-bank interest-rate policy as the main driver for these markets.
  • 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.
  • Japan’s Debt Trap — Japan's 30-year government bond yield has risen from 2.3% to just under 3.0%, matching Germany's despite Japanese government debt of 240% of GDP versus Germany's 64%. The author argues the Bank of Japan's continued bond purchases hold yields artificially low, and that market-set yields could reach 6–7%.

AI Summary. Insurers are issuing catastrophe bonds, which transfer risk from events such as wildfires, hurricanes and earthquakes to bondholders, at a record pace, with issuance reaching $18.1bn against a prior full-year record of $17.7bn. A Swiss Re index of total returns on these bonds has risen 14% over the past year.

Lee Harris and Ian Smith Financial Times
Date Posted:

Total returns for catastrophe bonds have risen 14% y/y and 50% over the past five years, according to a Swiss Re’s index. Bondholders haven’t experienced significant losses despite insurer payouts running >$100B/year since 2020.

Are insurers transferring disaster risk to bondholders at a record pace?

Core argument: Catastrophe bond issuance has reached $18.1bn so far this year, surpassing the previous full-year record of $17.7bn set in 2024, according to specialist data provider Artemis.bm.

Insurers are selling so-called catastrophe bonds at a record rate as they seek to offload the growing risk from climate change onto investors eager for high returns. Issuance of the instruments, which transfer part of the risk for events such as wildfires, hurricanes and earthquakes to bondholders, has surged to $18.1bn so far this year. That compares with the previous record of $17.7bn for the whole of 2024, according to specialist data provider Artemis.bm. An industry-wide Swiss Re index of total returns from catastrophe bonds has risen 14% over the past year and by more than 50% over the past five years.

Takeaways by Macro Roundup® AI

  1. Catastrophe bond issuance has reached $18.1bn so far this year, surpassing the previous full-year record of $17.7bn set in 2024, according to specialist data provider Artemis.bm.
  2. Insurers are selling catastrophe bonds at a record rate to offload growing risk from climate change onto investors seeking high returns, transferring part of the exposure to events such as wildfires, hurricanes and earthquakes to bondholders.
  3. An industry-wide Swiss Re index of total returns from catastrophe bonds has risen 14% over the past year and by more than 50% over the past five years.

Related Articles:

  • The World Is Getting Riskier. Americans Don’t Want to Pay for It — Americans' resistance to paying to insure against risks from illness, old age, and natural and financial disasters is growing alongside those risks; JPMorgan estimated wildfires around Los Angeles caused $50bn in losses, of which only $20bn were insured. Socializing risk removes the price signal that encourages the insured to mitigate their own exposure.
  • Catastrophe Bonds Look Set to Dodge Losses as LA Fires Rage — Catastrophe bonds, which insurers use to transfer risk to capital markets and which pay out only when cumulative losses over a year exceed a preset threshold, are unlikely to incur significant losses from wildfires in Los Angeles. The Swiss Re Global Cat Bond Index gained more than 17% in 2024, following a record near-20% return in 2023.
  • Reinsurers Little Exposed to LA Fires After Retreat From Disaster Risks — Citi analysts estimate reinsurers could absorb less than 3% of insured losses from the Los Angeles wildfires. Reinsurers' share of modelled catastrophe risk has fallen from about 46% over the past 25 years to 33%, following years of wildfire losses that led major reinsurers to reduce their appetite for such risks.

AI Summary. Analysis of US Current Population Survey data shows the retired share of the population rose at a roughly linear rate in the decade before the COVID-19 pandemic, reflecting the baby boomer generation reaching retirement age. Over that period the actual retired share tracked the demographic trend line within narrow bounds.

Miguel Faria-e-Castro, Serdar Birinci, Kurt See and Gus Gerlach Federal Reserve Bank of St. Louis
Date Posted:
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During the pandemic era “Great Retirement Boom,” >2.4mm people retired in excess of trend, @mfariacastro finds. As of 2024, retirements had reverted to their prepandemic trend.

Does the retired share of the population follow its demographic trend?

Core argument: The U.S. retirement share rose at a roughly linear rate from 2008 to February 2020 in Current Population Survey data, reflecting the baby boomer generation reaching retirement age.

Using CPS data, the figure shows the share of the population that is retired. The linear trend line fitted to the data from June 2008 to February 2020—is designed to represent the retirement share based on demographic trends, in the absence of economic fluctuations and other factors that could affect people’s decisions to retire or not (such as a public health emergency like COVID-19). The trend is estimated starting in 2008—the first year in which the oldest baby boomers turned 62 and thus became eligible to collect Social Security benefits—and ending in February 2020, which is the final full month before the outbreak of the COVID-19 pandemic in the U.S. The retirement share increased at a roughly linear rate between 2008 and 2020, reflecting the baby boomer generation reaching retirement age. Pre-2020, the retirement share closely follows the trend line, orbiting above or below the linear trend within narrow bounds.

Takeaways by Macro Roundup® AI

  1. The U.S. retirement share rose at a roughly linear rate from 2008 to February 2020 in Current Population Survey data, reflecting the baby boomer generation reaching retirement age.
  2. The linear trend line is fitted from June 2008, the first year the oldest baby boomers turned 62 and became eligible for Social Security benefits, through February 2020, the last full month before the COVID-19 outbreak in the U.S.
  3. Before 2020, the retirement share closely followed the fitted linear trend, moving above or below it within narrow bounds, with the trend intended to represent demographic developments absent economic fluctuations and other factors affecting retirement decisions.

Related Articles:

  • Pandemic Labor Force Participation and Net Worth Fluctuations — Applying the pre-pandemic peak labor force participation rate to the adult population implies about 3.73m "missing workers" and 3.27m "excess retirees" in the US economy. The authors estimate that wealth effects on retirement decisions among those aged 55 and over account for over 50% of the aggregate participation decline and more than 80% of excess retirements.
  • Another ‘Great Retirement’ Wave Hits the US After Stocks Rally — The US has roughly 2.7m more retirees than predicted by a Federal Reserve Bank of St. Louis model, with the number of retirees reaching a post-pandemic record. Financial market performance appears to have played a role, as stocks rebounded 24% and home prices rose across most US metro areas, bolstering older Americans' wealth.
  • Analysis of the 2024 Social Security Trustees’ Report — The Social Security Trustees project the retirement trust fund will deplete its reserves by 2033, triggering a 21% across-the-board benefit cut, with the combined retirement and disability funds insolvent by 2035 and a 17% cut. Restoring 75-year solvency would require the equivalent of a 27% payroll tax increase or a 21% benefit reduction.

AI Summary. Chinese electric-vehicle maker BYD has unveiled an advanced driver-assistance system and a battery charging system it says adds about 470km of driving range in five minutes, a fraction of the time Tesla would require. Legacy carmakers have responded by partnering with Chinese rivals to learn to build vehicles faster, cheaper, and with better software.

Kana Inagaki, Edward White and Stephen Morris Financial Times
Date Posted:

In 2024, BYD sold 4.27mm cars, a 10-fold increase in four years; 1.76mm were pure EVs, almost on par with Tesla’s 1.79mm. Over those four years, Tesla’s production rose only 3.6x. Both firms are focusing on autonomous driving.

Have Chinese EV makers moved ahead on technology, not just price?

Core argument: BYD announced a battery charging system that adds roughly 470km of driving range in five minutes, a fraction of the time a Tesla would take to charge to that level.

Until recently, the main advantage Chinese EV manufacturers had over Tesla was that their products were significantly cheaper. But in February, BYD’s founder Wang Chuanfu stood on stage in Shenzhen and unveiled “God’s Eye”, an advanced driver-assistance system that is a precursor to fully autonomous vehicles. A month later, Lian, who now heads BYD’s automotive engineering research institute, was on stage with Wang to announce a new battery charging system capable of adding a driving range of about 470km in five minutes — a fraction of the time it would take a Tesla to charge to that level. The startling technological advances made by BYD and others have sparked panic among legacy carmakers, who have responded by partnering with Chinese rivals to learn how to build vehicles faster and cheaper, and with better software.

Takeaways by Macro Roundup® AI

  1. BYD announced a battery charging system that adds roughly 470km of driving range in five minutes, a fraction of the time a Tesla would take to charge to that level.
  2. BYD founder Wang Chuanfu unveiled "God's Eye" in Shenzhen in February, an advanced driver-assistance system that is a precursor to fully autonomous vehicles.
  3. Chinese EV makers' main advantage over Tesla had been significantly cheaper products, and technological advances by BYD and others have prompted legacy carmakers to partner with Chinese rivals to build vehicles faster, cheaper and with better software.

Related Articles:

  • Will China Take Over the Global Auto Industry? — The global auto market has historically been regional, with most cars sold in a region also built there. Overcapacity in China's internal combustion sector, expanding electric-vehicle capacity, ample state bank credit, and a weaker yuan could concentrate global auto production in China absent restrictions such as the US 100% tariff on Chinese electric vehicles.
  • China Delays Approval of BYD’s Mexico Plant Amid Fears Tech Could Leak to US — China's commerce ministry has withheld the approval that domestic automakers need to manufacture abroad, holding up BYD's planned Mexican car plant, which the company said would create 10,000 jobs and build 150,000 vehicles a year. Officials are concerned that Mexico's proximity to the US could give Mexico, and possibly the US, access to BYD's advanced technology and knowhow.
  • Cheap Chinese Cars Are Taking Over Roads From Brazil to South Africa — Inexpensive cars from Chinese makers such as BYD, Chery, Great Wall and SAIC are gaining share in emerging markets, reaching nearly 10% of sales in South Africa, 8% in Turkey and close to a third in Chile. Chinese automakers' market share outside China is projected to rise to 13% by 2030 from 3%.

AI Summary. Apple has agreed to a $500m deal to buy rare-earth minerals from US producer MP Materials, which has secured Pentagon backing, and the two firms will build a Texas factory with neodymium magnet lines tailored for Apple products. Western producers including MP Materials and Australia's Lynas have struggled to profit amid weak prices and oversupply.

Carlos Caminada Bloomberg
Date Posted:

Apple will start purchasing rare-earth minerals from MP Materials, and along with MP Materials, will build a factory in Texas with neodymium magnet manufacturing lines tailored for Apple products.

Can corporate deals make US rare-earth production profitable?

Core argument: Apple struck a $500 million deal to buy rare-earth minerals from MP Materials, the US producer that secured Pentagon backing the prior week.

Apple has struck a $500 million deal to buy rare-earth minerals from MP Materials Corp., the US producer that just last week secured backing from the Pentagon. The two companies will build a factory in Texas, with neodymium magnet manufacturing lines tailored for Apple products, the iPhone maker said Tuesday in a statement. Apple said the spending on rare-earth minerals is part of its earlier pledge to invest more than $500 billion in the US over the next four years. While the [Chinese] export halt boosted prices and sparked fears of shortages, over the longer run western producers like MP Materials and Australia’s Lynas Rare Earths have struggled to turn a profit due to weak prices and oversupply.

Takeaways by Macro Roundup® AI

  1. Apple struck a $500 million deal to buy rare-earth minerals from MP Materials, the US producer that secured Pentagon backing the prior week.
  2. Apple and MP Materials will build a Texas factory with neodymium magnet manufacturing lines tailored for Apple products, spending Apple counts toward its pledge to invest more than $500 billion in the US over four years.
  3. The Chinese export halt boosted rare-earth prices and sparked shortage fears, while western producers including MP Materials and Australia's Lynas Rare Earths have struggled over the longer run to turn a profit due to weak prices and oversupply.

Related Articles:

  • Pentagon to Take Stake in Rare-Earth Company, Challenging China’s Control — Under a deal with the largest U.S. rare earths miner, the Defense Department will take a 15% stake, commit billions of dollars to investment and output purchases, and guarantee a price floor for rare earth minerals and magnets. The agreement calls for a new magnet factory, expected online in 2028, at a scale far exceeding current U.S. magnet production.
  • China’s Weaponisation of Rare Earths is a New Kind of Trade War — China's export controls on rare earth materials and magnets threatened to halt production across the auto industry, the largest manufacturing sector in most advanced economies, and forced Washington to negotiate on tariffs. Despite China's well-known dominance of rare earth production, Western governments and companies have not developed alternative suppliers.
  • China Found World’s Pain Point on Trade – and Will Use It Again — China's export permitting system for rare earths and other critical minerals is detailed enough that Beijing is developing a granular understanding of where every kilogram it produces ends up and why. Bottlenecks emerged as China slowed approvals for magnets containing even minuscule amounts of seven rare earths, alongside limits on sales of the raw elements.

Wednesday, July 16, 2025

AI Summary. Nvidia's data center revenue growth is used as a simple extrapolation to project the broader capital-expenditure impact of AI-specific investment on GDP. The aim is not precision but a timely sense of whether the growth contribution from AI capital spending is accelerating or potentially peaking.

Jens Nordvig Money: Inside and Out
Date Posted:

Using Nvidia’s datacenter revenue as a reference for US AI capex, @JensNordvig estimates that AI will make up ~2% of US GDP in 2025 given a standard multiplier, implying an AI contribution to GDP growth of 0.7% in 2025.

Is AI capital spending's contribution to GDP growth still accelerating?

Core argument: The author extrapolates from Nvidia's data center revenue to project the GDP impact of AI-specific capital expenditure, a method used for more than two years.

At the macro level, we have been using Nvidia’s growth trajectory to project the broader CAPEX impact of AI specific investment for more than two years now. We have been using a simple extrapolation from Nvidia’s data center revenue to build a trajectory of the GDP impact. The goal here is not to be particularly precise, but rather to have a timely sense of the trajectory of the impact on AI via CAPEX, and when the growth impact is accelerating (and in the future, potentially peaking).

Takeaways by Macro Roundup® AI

  1. The author extrapolates from Nvidia's data center revenue to project the GDP impact of AI-specific capital expenditure, a method used for more than two years.
  2. The stated aim of the Nvidia-based extrapolation is not precision but a timely read on whether the CAPEX-driven AI growth impact is accelerating or eventually peaking.

Related Articles:

  • SPVs, Credit, and AI Datacenters — Companies funding AI data centers through jointly owned special purpose vehicles keep the borrowing off their own balance sheets while retaining shared control and use of the facilities. AI data center spending already exceeds telecom spending during the dot-com bubble, and weak returns would quickly wipe out the thin equity cushion above the vehicles' debtholders.
  • Microsoft’s Datacenter Freeze – 1.5GW Self-Build Slowdown & Lease Cancellation Misconceptions — Reported cancellations of about 2GW of Microsoft datacenter capacity cover only non-binding letters of intent, while the company holds roughly 5GW of pre-leased capacity under binding contracts slated to begin operating between 2025 and 2028. The authors estimate Microsoft accounted for more than 60% of all newly leased turnkey datacenter capacity over a recent six-quarter stretch.
  • The Alchemists — NVIDIA's share of all US capital spending is projected to approach two 20th-century peaks by 2026, and large cloud providers would need $400–500bn in new revenue to earn their traditional 50% gross margin on roughly $250bn of annual data center spending. After the dot-com collapse, Corning's fiber optic revenues did not surpass 2000 levels until 2018 in nominal terms.

AI Summary. The authors estimate that California's $20 fast food minimum wage, up from $16, raised fast food sector wages roughly 8% relative to the rest of the country while employment fell about 2.7% relative to fast food employment elsewhere in the US. Their median estimate implies 18,000 fewer California fast food jobs than otherwise.

Jeffrey Clemens, Olivia Edwards and Jonathan Meer National Bureau of Economic Research
Date Posted:
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The 2024 rise in CA’s minimum wage in fast food restaurants from $16 to $20 raised the sector’s wages ~8% and lowered its employment by 2 to 4% relative to the US sector overall, with an estimated loss of 18,000 CA fast food jobs. @jeffreypclemens

Did a higher fast food minimum wage reduce fast food employment?

Core argument: Employment in California's fast food sector fell 2.7% relative to the fast food sector elsewhere in the United States from September 2023 through September 2024, in unadjusted Quarterly Census of Employment and Wages data.

We analyze the effect of California's $20 fast food minimum wage [up from $16], which was enacted in September 2023 and went into effect in April 2024, on employment in the fast food sector. We document that AB 1228 increased wages substantially, with a roughly 8% increase in California’s fast food sector relative to the fast food sector elsewhere in the country. In unadjusted data from the Quarterly Census of Employment and Wages, we find that employment in California's fast food sector declined by 2.7% relative to employment in the fast food sector elsewhere in the United States from September 2023 through September 2024. In Figures 1b, 1c, and 1d, for which each series has been indexed relative to September 2023, the magnitude of the relative decline through late 2024 is readily observed from the graphs as being on the order of 2 to 4%. Indexing, detrending, and seasonally adjusting the data make the series more visually comparable but do not substantively alter the relative movements that underlie our regression estimates. Our median estimate translates into a loss of 18,000 jobs in California's fast food sector relative to the counterfactual.

Takeaways by Macro Roundup® AI

  1. Employment in California's fast food sector fell 2.7% relative to the fast food sector elsewhere in the United States from September 2023 through September 2024, in unadjusted Quarterly Census of Employment and Wages data.
  2. California's AB 1228, which raised the fast food minimum wage to $20 from $16 effective April 2024, increased wages in the state's fast food sector by roughly 8% relative to the sector elsewhere in the country.
  3. The median estimate implies a loss of 18,000 jobs in California's fast food sector relative to the counterfactual, with indexed series showing relative declines through late 2024 on the order of 2 to 4%.

Related Articles:

  • The U.S. Low-Wage Structure: A McWage Comparison — Using wage data from most U.S. McDonald's restaurants, the authors find that before the Covid-19 pandemic, differences in entry-level wages across states were strongly related to state minimum wages, with real wages rising only in the roughly half of states raising their minimums. The 2021 wage spike nearly eliminated those geographic differences and left the federal minimum wage near-irrelevant.
  • Do Minimum Wages Reduce Job Opportunities for Blacks? — The authors find evidence that higher minimum wages reduce employment among low-skill Black workers across every group examined — teens, high school dropouts, and young workers with at most a high school education — with larger effects for Black males, while such effects are not very detectable for whites.
  • Why Do Labor Unions Advocate for Minimum Wage Increases? — Using variation in U.S. state minimum wages, the authors estimate that each $1 increase predicts a 5% (0.3 percentage point) rise in the likelihood of union membership among people ages 16–40. Membership declines among the minimum wage's most direct beneficiaries, consistent with free-riding, while gains occur among broader groups not directly affected.

AI Summary. Most US trading partners have not retaliated against sweeping US tariffs, with only China and Canada hitting back at a minimum 10% global tariff, 50% levies on steel and aluminium, and 25% on autos. US customs duty revenues reached a record $64bn in the second quarter, $47bn more than a year earlier.

Peter Foster, Amy Borrett, Andy Bounds and Ilya Gridneff Financial Times
Date Posted:
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Other than China and Canada, America’s trading partners have largely avoided retaliation against US tariffs, allowing Trump to raise almost $50B in excess customs revenues without a significant impact on US exports.

Have trading partners retaliated against sweeping US tariffs?

Core argument: US customs duty revenues hit a record $64bn in the second quarter, $47bn more than the same period a year earlier, according to data published by the US Treasury.

America’s trading partners have largely failed to retaliate against Donald Trump’s sweeping tariffs, allowing a president taunted for “always chickening out” to raise nearly $50bn in extra customs revenues at little cost. Four months since Trump fired the opening salvo of his trade war, only China and Canada have dared to hit back at Washington imposing a minimum 10% global tariff, 50% levies on steel and aluminium, and 25% on autos. At the same time US revenues from customs duties hit a record high of $64bn in the second quarter — $47bn more than over the same period last year, according to data published by the US Treasury on Friday. China’s retaliatory tariffs on American imports, the most sustained and significant of any country, have not had the same effect, with overall income from custom duties only 1.9% higher in May 2025 than the year before. Combined with limited retaliation from Canada, which has yet to release second-quarter customs data, the duties imposed on American exports worldwide represent a tiny fraction of the US revenue during the same period.

Takeaways by Macro Roundup® AI

  1. US customs duty revenues hit a record $64bn in the second quarter, $47bn more than the same period a year earlier, according to data published by the US Treasury.
  2. Only China and Canada have retaliated four months into Trump's trade war, which imposed a minimum 10% global tariff, 50% levies on steel and aluminium, and 25% on autos.
  3. China's overall customs duty income was only 1.9% higher in May 2025 than a year earlier, and duties imposed on American exports worldwide represent a tiny fraction of US revenue over the same period.

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.
  • US Tariff Receipts Surge in Donald Trump’s Trade War — 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.
  • The US Trade Deficit and Foreign Borrowing — The authors argue US trade deficits persist because foreign investors find US financial assets attractive, but the current deficit level is not sustainable. They estimate that stabilizing the US net foreign liability position requires improving the trade balance by about 2% of GDP, or over 3% if low-cost borrowing privileges are lost.

AI Summary. Core goods inflation, which excludes food and energy and is where tariffs would show up most clearly, is running at its highest rate in more than a decade outside the post-pandemic spike, after having been negative for many years before that spike. Its contribution to overall inflation remains small but is trending upward.

John Authers Bloomberg
Date Posted:

A recent rise in core goods prices, which historically have fallen over time, could be driven by the pricing-in of tariffs. The current uptick in prices is the highest in more than a decade, outside of the 2021–2023 spike.

Is core goods inflation trending upward again?

Core argument: Core goods inflation, excluding food and energy, is running at its highest rate in more than a decade outside of the post-pandemic spike, after having been negative for many years before that spike.

Tariffs would raise their ugly head most obviously in core goods, excluding food and energy. Reviewing how much this sector contributed to overall inflation, we can say that the problem is still nothing serious, but also that the trend is plainly going in the wrong direction. Core goods inflation had been negative for many years before the post-pandemic spike. Its current rate is the highest in more than a decade, outside of that spike.

Takeaways by Macro Roundup® AI

  1. Core goods inflation, excluding food and energy, is running at its highest rate in more than a decade outside of the post-pandemic spike, after having been negative for many years before that spike.
  2. Tariffs would show up most obviously in core goods, a sector whose contribution to overall inflation remains nothing serious for now but is trending in the wrong direction.

Related Articles:

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  • 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: July 7, 2025 — The authors estimate US tariffs leave consumers facing an average effective tariff rate of 17.6%, the highest since 1934, or 16.5% after consumption shifts to cheaper goods. They project the tariffs reduce US real GDP growth by 0.7pp, leave the economy persistently 0.4% smaller (about $110bn annually), and raise $2.2tn over a decade after dynamic effects.

AI Summary. A stronger renminbi would erode Chinese manufacturers' competitiveness at a time when Beijing depends on them for employment and output, because that competitiveness and China's weak household consumption stem from the same transfers. In the short term a rising currency could cut export demand faster than domestic demand rises, risking job losses, falling industrial profits, and financial stress.

Michael Pettis China Financial Markets
Date Posted:

Pettis argues China is unlikely to revalue the renminbi in the short term as a stronger renminbi would risk reducing export demand more rapidly than household wealth gains would increase domestic demand.

Pettis argues China is unlikely to revalue the renminbi in the short term as a stronger renminbi would risk reducing export...

Why is it hard for China to let its currency strengthen?

Core argument: China's manufacturing competitiveness and its very weak domestic consumption are flip sides of the same transfers, so raising the household share of GDP is equivalent to undermining that manufacturing competitiveness.

A stronger renminbi becomes a problem—it would erode the competitiveness of Chinese manufacturers just as Beijing has become more dependent on them for employment and economic activity. The critical point that analysts often miss is that China’s global manufacturing competitiveness and its very weak domestic consumption are not separate characteristics of the Chinese economy. Each is the flip side of the other—Chinese manufacturing competitiveness is the result of the same transfers that result in China’s very low household share of GDP, so that raising the latter is the same as undermining the former. And while it would boost the role of domestic consumption in absorbing Chinese production, the risk is that at first a rising currency would reduce export demand more quickly than it increases domestic demand, mainly because the shift from export demand to domestic demand would require that factories retooled and redirected the goods they produced, something that could take years to complete. The result in the short term could be job losses, falling industrial profits, and renewed financial stress—particularly in heavily indebted manufacturing provinces.

Takeaways by Macro Roundup® AI

  1. China's manufacturing competitiveness and its very weak domestic consumption are flip sides of the same transfers, so raising the household share of GDP is equivalent to undermining that manufacturing competitiveness.
  2. A stronger renminbi would erode the competitiveness of Chinese manufacturers just as Beijing has grown more dependent on them for employment and economic activity.
  3. A rising renminbi risks reducing export demand faster than it raises domestic demand, since retooling and redirecting factory output could take years, with possible short-term job losses, falling industrial profits, and renewed financial stress in heavily indebted manufacturing provinces.

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  • Why China’s White-and Blue-Collar Workers Are Worried About Losing Their Shirts — Chinese workers across industries, age groups, and income brackets report fear of layoffs, shrinking wages, and few alternative job options. China's urban unemployment rate was 5%, below the government's 5.5% official target, while joblessness among those aged 16 to 24 excluding students was 14.9%, up from 14.2% a year earlier.
  • China Chooses Deflation — China's headline consumer price inflation has fallen below zero and core inflation is little better, and the author argues US tariffs will hasten this deflationary dynamic. Because easing monetary policy would weaken the Yuan against the Dollar, China is accepting deflation instead, which the author argues means rising real interest rates.