Edward Conard

Top Ten New York Times Bestselling Author

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

Macro Roundup


Tuesday, July 22, 2025

AI Summary. Using longitudinal data with extensive controls for family background, ability, and personality, the authors estimate that college varsity athletes from disadvantaged backgrounds—including women and men from low-income families and Black men—earn more after graduation than comparable non-athletes. The authors conclude that participation in college sports promotes social mobility, with no evidence of adverse outcomes.

James Heckman, Colleen Loughlin and Haihan Tian National Bureau of Economic Research
Date Posted:
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Heckman et al, using two longitudinal data sets with a rich set of controls, find that participation in varsity athletics raises rates of high school and college attendance and graduation, as well as earnings, especially for disadvantaged students.

Does college athletic participation raise earnings for disadvantaged students?

Core argument: Female college varsity athletes from low-income families show an earnings premium relative to non-athlete peers in both longitudinal datasets, with controls for family background, individual abilities, and personality traits.

Using longitudinal data, we study the impact of participation in scholastic athletics on a number of important life outcomes, including graduation from high school and college and wages after schooling is completed. The rich data we have on family backgrounds, individual abilities and personality traits allow us to effectively estimate counterfactual outcomes for student-athletes, controlling for a rich variety of traits and background variables. Table 12 presents and compares the estimated effect of college varsity athletes from disadvantaged backgrounds on post-graduate earnings in the two datasets. Female varsity athletes from low-income families earn premium premiums in both datasets. Black male college varsity athletes and male college varsity athletes from low-income families in the NELS:88 data have higher post-graduate earnings compared to their non-athlete peers. The results suggest that participating in college varsity sports promotes social mobility among the disadvantaged groups, conferring higher earnings. There is no evidence of adverse outcomes.

Takeaways by Macro Roundup® AI

  1. Female college varsity athletes from low-income families show an earnings premium relative to non-athlete peers in both longitudinal datasets, with controls for family background, individual abilities, and personality traits.
  2. Black male college varsity athletes and male college varsity athletes from low-income families in the NELS:88 data have higher post-graduate earnings than their non-athlete peers.
  3. The authors conclude that participation in college varsity sports promotes social mobility among disadvantaged groups by conferring higher earnings, and find no evidence of adverse outcomes.

Related Articles:

  • No Revenge for Nerds? Evaluating the Careers of Ivy League Athletes — Ivy League athletes are far more likely than non-athlete classmates to enter business and finance jobs, and the authors estimate they attain higher terminal wages, greater cumulative career earnings, and more senior positions, controlling for school, graduation year, major, and first job. The authors argue this suggests non-academic human capital developed through athletics is valued in the labor market.
  • High School Sports Build or Reveal Character? — An analysis of high school sports participation finds no consistent evidence of positive effects on wages, labor force participation, or college attendance, attributing strong correlations largely to self-selection, since athletes tend to come from families with higher cognitive test scores and parental education. Male athletes exercise more as adults without lower obesity.

AI Summary. The dollar depreciated by more than interest-rate differentials alone would predict, and regression analysis attributes the gap to the trade war and economic policy uncertainty, including foreign investors' concerns about proposed taxes on foreign holders of US assets and a possible currency accord. The author expects the dollar to appreciate as these uncertainties resolve.

Torsten Sløk and James Thomas Apollo
Date Posted:

Interest rate parity suggests the USD is undervalued by 9.5%, Torsten Sløk finds, but a richer model points to much milder undervaluation. Noting renewed interest in US assets, he expects the dollar to appreciate as the trade war fades.

Did trade war and policy uncertainty drive the dollar's depreciation?

Core argument: The US dollar depreciated more in the first half of 2025 than yield differentials alone would have predicted.

The dollar has depreciated more in the first half of 2025 than yield differentials would have predicted. Regression models indicate that this was due to the trade war and economic policy uncertainty, including concerns among foreign investors about Section 899 and the Mar-a-Lago Accord. Looking ahead, with Section 899 behind us and the trade war likely to be resolved within the next couple of weeks, the US dollar is expected to appreciate again. Renewed strong appetite for US assets after Liberation Day is also visible in the TIC data for May.

Takeaways by Macro Roundup® AI

  1. The US dollar depreciated more in the first half of 2025 than yield differentials alone would have predicted.
  2. Regression models attribute the dollar's excess depreciation to the trade war and economic policy uncertainty, including foreign investors' concerns about Section 899 and the Mar-a-Lago Accord.
  3. With Section 899 behind and the trade war expected to be resolved within weeks, the dollar is expected to appreciate, and May TIC data show renewed strong appetite for US assets after Liberation Day.

Related Articles:

  • Dollar Positioning — The dollar is having its worst year since 1973, and the author argues that persistent large fiscal deficits and challenges to Federal Reserve independence imply significant further downside for a currency still trading above historical averages. Foreign investors hold very large dollar asset exposure, so a shift from currency hedging to outright selling could spur a self-reinforcing cycle of declines.
  • A Trump Risk Premium in the Dollar — Movements in the trade-weighted US dollar against other major currencies map almost entirely onto changes in forward interest-rate differentials, with the same positive relationship holding across periods despite noisier data. The author argues this leaves no discernible evidence of a separate political risk premium in the dollar.
  • 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. Net foreign capital inflows into advanced economies are more likely to fund higher household or government debt than rising investment, and the US, UK, and Canada — which absorb large inflows — are distinguished from peers by faster credit growth rather than lower interest rates. The author argues taxing capital inflows would shrink trade deficits without raising domestic interest rates.

Michael Pettis Financial Times
Date Posted:

Pettis asserts that in countries running chronic trade deficits, investment isn’t constrained by a lack of domestic saving, and that restricting capital inflows would not raise interest rates, while protecting domestic demand from currency appreciation.

Do foreign capital inflows fund debt rather than investment?

Core argument: Since the 1970s, net capital inflows have not accommodated rising investment but are more likely to set off an increase in household or fiscal debt.

Since the 1970s net capital inflows do not accommodate rising investment — they are more likely to set off an increase in household or fiscal debt. This is also why the advanced economies that consistently absorb large net foreign capital inflows — the US, UK, and Canada — are distinguished among their peers not by lower interest rates, but by faster credit growth. Because capital inflows into these economies are not financing productive new investments that generate the returns needed to service the debt, they instead fund higher household or fiscal debt designed to prevent recessions caused by the leakage of demand abroad. In the long run, this dynamic is unsustainable. It leaves recipient countries with a legacy of rising debt and the distorted economic structures needed to accommodate persistent deficits. More importantly, it also means that while taxing capital inflows will indeed reduce trade deficits for countries like the US, it will not do so while raising domestic interest rates.

Takeaways by Macro Roundup® AI

  1. Since the 1970s, net capital inflows have not accommodated rising investment but are more likely to set off an increase in household or fiscal debt.
  2. The advanced economies that consistently absorb large net foreign capital inflows — the US, UK, and Canada — are distinguished among their peers by faster credit growth rather than lower interest rates.
  3. Taxing capital inflows would reduce trade deficits for countries like the US without raising domestic interest rates, because those inflows fund household or fiscal debt rather than productive investment.

Related Articles:

  • Why Global Imbalances Do Matter — 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.
  • 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.
  • Foreign Capital Inflows Don’t Lower U.S. Interest Rates — The author argues that if U.S. business investment is not constrained by a shortage of savings, net foreign capital inflows must be absorbed through lower domestic saving via higher unemployment or higher debt rather than higher investment. On this view, inflows expand the supply of U.S. debt alongside demand and so do not lower American interest rates.

AI Summary. China's exports to the US have fallen sharply while its exports to the rest of the world have risen by an almost offsetting amount. The author argues both adjustments are deflationary for China: routing goods through third countries raises transport costs and squeezes exporter margins, while redirecting goods to new markets requires cutting prices to generate demand.

Robin Brooks Robin Brooks Substack
Date Posted:

US tariffs may amplify deflation in China. As it seeks to replace falling US demand, China is ramping up exports to new markets at lower prices.

Do US tariffs create deflationary pressure on China's exports?

Core argument: China's exports to the US have fallen sharply while its exports to the rest of the world have risen in an almost one-for-one offset, which the author argues is a deflationary shock for China either way.

China’s exports to the US have fallen sharply this year, while its exports to the rest of the world have soared in an almost one-for-one offset. Either option is a deflationary shock for China. The first option - transshipment - should be obvious. Having to export via third countries adds to transportation costs, which cuts into margins and profitability of China’s exporters. The second option - exporting goods to new markets - is also a deflationary shock for China, because the price of exported goods needs to be lowered to generate demand. If China is redirecting goods that would have gone to the US to the rest of the world, this equates to a shift down and to the right of the supply curve. The rest of the world didn’t ask for this rise in supply, so China has to cut the price of its exports to generate demand. This is a move down the demand curve, which means falling prices, and could explain why exports to the rest of the world have risen.

Takeaways by Macro Roundup® AI

  1. China's exports to the US have fallen sharply while its exports to the rest of the world have risen in an almost one-for-one offset, which the author argues is a deflationary shock for China either way.
  2. Transshipment of Chinese goods through third countries adds transportation costs that cut into the margins and profitability of China's exporters.
  3. Redirecting goods intended for the US to other markets shifts China's supply curve down and to the right, so exporters must cut prices to generate demand the rest of the world did not ask for.

Related Articles:

  • China Emerges From Trade Chaos With Record Exports, Surplus — China posted a record half-year trade surplus of about $586bn, with exports up 5.8% year-over-year to $325bn and imports up 1.1%. Shipments to the US fell 16.1% from a year earlier, while exports to the 10 Southeast Asian nations in the Asean group rose 17%.
  • 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.
  • Our Revamped China Wage Tracker Shows Gradual Softening in Wage Growth — A revamped wage tracker estimates China's wage growth slowed to 4.2% year-over-year in the first quarter and 3.9% in the second, down from 4.5% in the prior fourth quarter and about 1 percentage point below official figures. The authors argue sluggish wage growth may weigh on consumption growth.

AI Summary. Nearly half of passenger vehicles sold in China last year were all-electric or plug-in hybrids, up from 6% in 2020, while domestic oil output rose 13% from 2018 to 2024 to about 4.3m barrels a day. China still imports roughly 11m barrels a day, about 70% of what it consumes.

Brian Spegele Wall Street Journal
Date Posted:
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Enormous government subsidies for EVs are reducing Chinese oil demand, which is expected to peak in 2027.

Is China reducing its reliance on imported oil?

Core argument: Nearly half of passenger vehicles sold in China last year were all-electrics or plug-in hybrids, up from 6% in 2020, as locally designed and produced electric models replace Volkswagen and Hyundai taxicabs.

Across China, fleets of gas-guzzling Volkswagen and Hyundai taxicabs are being replaced by electric models designed and produced locally. Last year, nearly half of passenger vehicles sold in the country were either all-electrics or plug-in hybrids, compared with 6% in 2020. In a remote corner of China called the “sea of death” for its harsh conditions, oil workers are trying to coax more crude out of the ground by drilling holes as deep as Mt. Everest is high. State-owned PetroChina reported $38 billion of capital expenditures last year, nearly as much as Exxon Mobil’s and Chevron’s combined. China boosted oil output by 13% from 2018 to 2024, to around 4.3 million barrels a day. Crude imports fell nearly 2% last year, though they have rebounded slightly this year as some Chinese companies built stockpiles. China won’t stop importing oil. It still brings in roughly 11 million barrels a day, about 70% of what it consumes, up from less than three million a day 20 years ago. And overall oil consumption is likely to decline only gradually as China’s demand for oil to make petrochemicals continues to grow.

Takeaways by Macro Roundup® AI

  1. Nearly half of passenger vehicles sold in China last year were all-electrics or plug-in hybrids, up from 6% in 2020, as locally designed and produced electric models replace Volkswagen and Hyundai taxicabs.
  2. China raised domestic oil output 13% from 2018 to 2024 to around 4.3 million barrels a day, and state-owned PetroChina reported $38 billion of capital expenditures last year, nearly as much as Exxon Mobil's and Chevron's combined.
  3. China still imports roughly 11 million barrels of oil a day, about 70% of what it consumes and up from less than three million a day 20 years ago, with crude imports down nearly 2% last year.

Related Articles:

  • How Xi Sparked China’s Electricity Revolution — Electricity has risen to 30% of China's final energy use while plateauing near 22% in Europe and the US, supported by a decades-long grid expansion and upgrade program projected to cost as much as $800bn by 2030. Chinese grid investment is forecast to grow about 5% annually through 2030, faster than projected economic growth.
  • 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.
  • A Spendthrift Saudi Arabia Can’t Finance the World Anymore — Saudi Arabia has become a net consumer of foreign capital rather than a provider, accumulating $142bn in foreign debt as heavy spending on economic transformation outpaces oil revenue, with its sovereign wealth fund scaling back some projects. Estimates put the oil price needed to balance its budget near $96 a barrel.

Wednesday, July 23, 2025

AI Summary. Current accounts of major economies diverged, with the US deficit widening by $228bn to $1.13tn (1% of world GDP) while China's surplus rose by $161bn to $424bn and the euro area's by $198bn to $461bn. Changes in investment rates drove the widening saving-investment gaps, with private saving offsetting only 10–50% of the investment change.

Pierre-Olivier Gourinchas, Rudolfs Bems, and Jiaqian Chen International Monetary Fund
Date Posted:

Global current account imbalances rose in 2024. China’s surplus was up $161B. The US current account deficit widened by $228B, and the euro area surplus rose $198B, fueled by higher public saving in the euro area and dissaving in the United States.

Are diverging investment rates driving wider global current account imbalances?

Core argument: The U.S. current account deficit widened by $228 billion to $1.13 trillion, equal to 1% of world GDP, while China's surplus rose $161 billion to $424 billion and the euro area's rose $198 billion to $461 billion.

Current accounts of major economies diverged significantly in 2024. The deficit in the United States widened by $228 billion to $1.13 trillion (1% of world GDP). Meanwhile, surpluses in China and the euro area increased by $161 billion to $424 billion and by $198 billion to $461 billion, respectively. Changes in investment rates uniformly contributed to widening saving-investment gaps, with an increased investment rate in the United States widening the current account deficit, and a decrease in key surplus regions (China, the euro area, and Japan) expanding the surpluses. The divergence in investment rates was accommodated partly by changes in private saving, which are estimated to have increased in the United States and decreased in the surplus countries—China, euro area, and Japan. However, in all cases, private saving compensated for only 10% to 50% of the investment change. Meanwhile, change in public saving magnified domestic imbalances through, while contributing to narrowing domestic imbalances in China.

Takeaways by Macro Roundup® AI

  1. The U.S. current account deficit widened by $228 billion to $1.13 trillion, equal to 1% of world GDP, while China's surplus rose $161 billion to $424 billion and the euro area's rose $198 billion to $461 billion.
  2. Changes in investment rates widened saving-investment gaps across major economies, with a higher U.S. investment rate enlarging the U.S. deficit and lower investment rates in China, the euro area, and Japan expanding their surpluses.
  3. Private saving is estimated to have risen in the United States and fallen in China, the euro area, and Japan, offsetting only 10% to 50% of the investment change, while changes in public saving magnified domestic imbalances except in China.

Related Articles:

  • 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.
  • 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.
  • 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.

AI Summary. The US dollar accounted for 58% of disclosed global official foreign reserves, versus 20% for the euro and 2% for China's renminbi, and roughly 50% of international payments made through the SWIFT messaging system. About 55% of international claims and 60% of liabilities are denominated in dollars, a share relatively stable since 2000.

Carol Bertaut, Bastian von Beschwitz, and Stephanie Curcuru Federal Reserve Board
Date Posted:
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The dollar’s share in official currency reserves, FX transaction volume, and foreign currency debt instruments and related measures suggest little threat to its international dominance as store of value, unit of account, and means of payment.

Does the dollar remain the world's dominant international currency?

Core argument: The U.S. dollar comprised 58% of disclosed global official foreign reserves in 2024, far surpassing the euro at 20% and the renminbi at 2%.

We construct an aggregate index of international currency usage, computed as the weighted average of five measures of currency usage: official currency reserves, FX transaction volume, foreign currency debt instruments outstanding, cross-border deposits, and cross-border loans. The U.S. dollar comprised 58% of disclosed global official foreign reserves in 2024 and far surpassed all currencies [the euro comprised 20% and the renminbi a mere 2%]. The share of Treasuries held by foreign investors has declined to 30% from ~50% in 2014, [but] is ~unchanged since 2022 [and at the same level as in 2000]. The dollar is overwhelmingly the world's most frequently used currency in global trade. There is no comprehensive time-series data for trade invoicing, [but] we have time-series data on international payments on SWIFT. The U.S. dollar share of international payments is about 50% and has slightly increased in recent years; if intra-euro area payments are included, it is 60% percent. 55% of international and foreign currency claims (primarily loans) and 60% of liabilities (primarily deposits) are denominated in dollars, relatively stable since 2000 and is well above that of the euro (~ 20%).

Takeaways by Macro Roundup® AI

  1. The U.S. dollar comprised 58% of disclosed global official foreign reserves in 2024, far surpassing the euro at 20% and the renminbi at 2%.
  2. The dollar accounts for about 50% of international payments on SWIFT, a share that has slightly increased in recent years, and 60% when intra-euro area payments are included.
  3. Dollars denominate 55% of international and foreign currency claims, primarily loans, and 60% of liabilities, primarily deposits, shares relatively stable since 2000 and well above the euro's roughly 20%.

Related Articles:

  • Top Dollar — Foreign holdings of U.S. financial assets exceed American holdings abroad, making the United States a net debtor whose liabilities are denominated in dollars while its foreign assets are largely in other currencies. U.S. foreign liabilities grew from $30tn to over $51tn while U.S. foreign assets grew from $24tn to $33tn, tripling the net debtor position from $6tn.
  • 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.
  • Trump Is Driving Off Investors and Threatening the Dollar’s Reign — The dollar has lost more than 10% of its value against the euro, pound and Swiss franc and is down against every major currency, a decline comparable in speed to 2010. It nonetheless remains stronger against most major currencies than it was in 2021.

AI Summary. Foreign net purchases of US Treasuries and equities rebounded and stand near their all-time high, following only modest outflows earlier. This suggests the dollar's decline was driven by a relatively small segment of the market, making price action a noisy proxy for investor sentiment toward the US.

Robin Brooks Robin Brooks Substack
Date Posted:
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Net foreign inflows into US assets were near a record high in May. Robin Brooks argues that U.S. exceptionalism is “alive and well,” with the fall in the Dollar likely driven by temporary liquidity issues “at a time of heightened risk aversion.”

Are foreign investors still buying US assets despite the dollar's decline?

Core argument: Foreign net buying of US Treasuries and equities rebounded in May after only tepid outflows in April, with net foreign inflows near their all-time high of July 2023.

The left chart shows that foreign net buying of Treasuries and US equities came roaring back in May, after only tepid outflows in April. The right chart shows that net foreign inflows are near their all-time high of July 2023, which was the peak of the US “exceptionalism” narrative in markets. These flows suggest that the fall in the Dollar may have been driven by a relatively small segment of the market, which is another way of saying that small outflows led to disproportionate moves in global foreign exchange markets. This could reflect thinner liquidity at a time of heightened risk aversion, which is fairly common when markets are turbulent. That makes price action - and the fall in the Dollar - a noisy proxy for what investors really think. They seem to still be very positive on the US.

Takeaways by Macro Roundup® AI

  1. Foreign net buying of US Treasuries and equities rebounded in May after only tepid outflows in April, with net foreign inflows near their all-time high of July 2023.
  2. The July 2023 peak in net foreign inflows marked the height of the US "exceptionalism" narrative in markets, a level May's flows approach.
  3. The flows suggest the Dollar's fall was driven by a relatively small segment of the market, with small outflows producing disproportionate moves in global foreign exchange markets, possibly reflecting thinner liquidity amid heightened risk aversion.

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 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.
  • With a Weakening Dollar, It’s America Second — The S&P 500's record level holds in dollars but not in other major currencies, reflecting dollar depreciation, with non-US stocks outperforming US stocks by about 10 percentage points. The rebound is not driven by the largest tech platforms, whose performance now matches the index's other 493 stocks.

AI Summary. PJM, the largest US power market, procured capacity at a record $329.17 per megawatt-day, up 22% from the prior year, and will pay producers $16.1bn to meet demand over a one-year delivery period, a 10% increase. The grid operator expects customer energy bills to rise 1–5%, depending on how utilities and states pass on costs.

Martha Muir Financial Times
Date Posted:

PJM, the largest grid operator whose coverage includes “data center alley” in VA, announced a 22% y/y increase in the cost of procuring energy supplies and projects a 1–5% rise in customers’ energy bills.

How much are AI-driven electricity capacity costs rising for consumers?

Core argument: PJM procured energy supplies at $329.17 per MW-day, a 22% increase from the prior year, and will pay power producers $16.1bn to meet demand from June 2026 to May 2027, up 10% year over year.

Grid operator PJM said it procured energy supplies for $329.17 per megawatt day, a 22% increase compared with the previous year. The organisation will pay power producers $16.1bn to meet its energy needs from June 2026 to May 2027, a 10% increase compared with the previous year. The operator said it expected a 1-5% rise for customers in their energy bills, depending on how utilities and states passed on costs. PJM sets prices at an annual capacity auction where power suppliers bid to provide the region’s projected demand. Earlier this year, PJM and some state governments took steps to try to keep power prices lower after last year’s capacity auction delivered a $269.92 per MW-day price — a more than 800% increase from 2023. In January, under pressure from a complaint that Pennsylvania governor Josh Shapiro filed with the Federal Energy Regulatory Commission, PJM agreed to a “price collar” — a floor and ceiling on prices set at $175 per MW-day and $325 per MW-day for the next two years. Although FERC increased the cap on Tuesday.

Takeaways by Macro Roundup® AI

  1. PJM procured energy supplies at $329.17 per MW-day, a 22% increase from the prior year, and will pay power producers $16.1bn to meet demand from June 2026 to May 2027, up 10% year over year.
  2. PJM expects customer energy bills to rise 1–5%, depending on how utilities and states pass on costs.
  3. PJM agreed in January to a price collar of $175 to $325 per MW-day for two years after Pennsylvania governor Josh Shapiro filed a complaint with the Federal Energy Regulatory Commission; the prior auction cleared at $269.92 per MW-day, more than 800% above 2023.

Related Articles:

  • 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.
  • Electricity 2025 — US electricity demand is projected to grow about 2% annually over 2025-2027, an upward revision from an earlier 1% forecast. A study commissioned by the US Department of Energy found data centre electricity use rose from about 60 TWh in 2014 to 176 TWh in 2023, and could reach 325-580 TWh by 2028.
  • Economic Growth Now Depends on Electricity, Not Oil — Average annual electricity load growth reached 3% and is projected to continue at that rate for five years, with utilities raising expected peak demand for 2029 by 12%, or 101 gigawatts, driven by data centers, new factories, electric vehicles, heat pumps, and hydrogen production.

AI Summary. The US and Japan agreed to a trade deal setting 15% tariffs on Japanese imports including automobiles, alongside a $550bn Japanese investment fund for the US partly in loan guarantees. Japan also agreed to buy 100 Boeing aircraft, raise rice purchases 75%, and lift defense spending with American firms to $17bn annually.

Jennifer Dlouhy, Josh Wingrove, and Yoshiaki Nohara Bloomberg
Date Posted:

The US and Japan have reached a trade deal that will impose a 15% tariff on Japanese imports. The deal includes a pledge of $550B for Japanese investment in the US.

What did the US and Japan agree to in their trade deal?

Core argument: President Trump's trade deal with Japan sets a 15% tariff on Japanese imports including automobiles, alongside a $550 billion fund to make investments in the US, with the source of the Japanese funding not immediately available.

President Donald Trump reached a trade deal with Japan that will impose 15% tariffs on imports including automobiles from the key American ally, while creating a $550 billion fund to make investments in the US. The source of the Japanese funding was also not immediately available. Prime Minister Ishiba said the investment sum would reach as much as $550 billion and would partly come in the form of loan guarantees. Japan has also agreed to buy 100 Boeing aircraft, boost rice purchases by 75% and buy $8 billion in agricultural and other products while hiking defense spending with American firms to $17 billion annually, from $14 billion, the senior official said. Japan will also participate in an LNG pipeline project in Alaska, the official said, an apparent reference to a long-stalled $44 billion venture designed to export the state’s gas around the globe.

Takeaways by Macro Roundup® AI

  1. President Trump's trade deal with Japan sets a 15% tariff on Japanese imports including automobiles, alongside a $550 billion fund to make investments in the US, with the source of the Japanese funding not immediately available.
  2. Prime Minister Ishiba said the Japanese investment sum would reach as much as $550 billion and would partly come in the form of loan guarantees.
  3. Japan agreed to buy 100 Boeing aircraft, raise rice purchases by 75%, buy $8 billion in agricultural and other products, lift defense spending with American firms to $17 billion annually from $14 billion, and join an Alaska LNG pipeline project, according to a senior official.

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