Edward Conard

Top Ten New York Times Bestselling Author

  • “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 comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…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 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
  • “…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 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 must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


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.

Related Articles:

  • Nippon Steel Considers ‘Golden Share’ Idea For US Steel Deal — Nippon Steel is considering granting the U.S. government a "golden share" in U.S. Steel to advance its acquisition, a special class of stock whose holder can control board composition and wield influence over major management decisions. U.S.-listed companies generally cannot issue golden shares, but Nippon Steel plans to delist U.S. Steel.
  • Donald Trump Reaps $50bn Tariff Haul As World ‘Chickens Out’ — 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.
  • Australia, Japan and US Sign ‘Historic’ Agreement on Naval Logistics — Australia, Japan, and the United States signed an agreement to boost logistical interoperability among their forces, letting their navies refuel, reload missile systems, repair ships, and share maintenance data, including flexible refueling at sea. Indo-Pacific militaries depend on sea and air transport for supplies, while fixed seaports and airports can be difficult to defend from attack.

Thursday, July 24, 2025

AI Summary. The International Monetary Fund's latest report recognizes that global current account imbalances began widening, but its forecast that the surpluses of China, Japan, and Korea will fall is questioned. China's customs goods surplus rose $150bn in the first half of the year, pointing to a current account surplus above $600bn versus the Fund's $365bn projection.

Brad Setser Council on Foreign Relations
Date Posted:
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Setser argues the IMF is likely to underestimate China’s 2025 BOP surplus. “The customs goods surplus increased by $150B in the first half of 2025, and a conservative forecast of the current account surplus through Q2 2025 puts it at just over $600B.”

Do trade data contradict forecasts of falling Asian surpluses?

Core argument: China's customs goods surplus rose $150 billion in the first half of 2025, and a conservative forecast puts its current account surplus through Q2 2025 at just over $600 billion, against the IMF's projection of $365 billion.

The IMF [latest report] didn’t repeat the mistake it made in August 2024, when it looked at the fall in the global imbalance between the end of 2022 and the end of 2023 and ignored higher frequency data indicating that imbalances were in fact widening. It also cleverly constructed a chart showing that the pandemic-adjusted imbalance only really started to widen in 2024 (but for China’s whacky data adjustments it would have started much earlier). [However], the IMF’s forward-looking forecasting of imbalances needs some work; it has the surpluses of China, Japan, and Korea all falling in 2025. China’s surplus falls back to $365 billion even as the high frequency trade data points to a big increase in the trade surplus and even after the CNY [renminbi] depreciated another 10%. The customs goods surplus increased by $150 billion in the first half of 2025, and a conservative forecast of the current account surplus through Q2 2025 puts it at just over $600 billion, so the IMF’s forecast is going to be WAY off.

Takeaways by Macro Roundup® AI

  1. China's customs goods surplus rose $150 billion in the first half of 2025, and a conservative forecast puts its current account surplus through Q2 2025 at just over $600 billion, against the IMF's projection of $365 billion.
  2. The IMF forecasts the surpluses of China, Japan, and Korea all falling in 2025, a projection the author argues will be far off given high-frequency trade data pointing to a large increase in China's trade surplus even after the renminbi depreciated another 10%.
  3. The IMF's latest report avoided its August 2024 error of reading the 2022–2023 decline in global imbalances while ignoring higher-frequency data showing imbalances widening, and its pandemic-adjusted chart shows imbalances widening from 2024, which the author attributes to China's data adjustments.

Related Articles:

  • Global Imbalances In A Shifting World — 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.
  • The IMF’s Latest External Sector Report Misses the Mark — The global goods imbalance, measured with customs data from major economies, is larger in dollar terms than before the pandemic, and China's share has grown, with Chinese export volumes up about 12% over twelve months versus 4% for imports. The author argues China's prioritization of goods supply over household demand should widen imbalances.
  • 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.

AI Summary. Bank of America Global Research estimates US electricity demand will grow at a 2.5% compound annual rate through 2035, up from 0.5% annually over the prior decade, driven by building electrification, data centers, industrial demand, and electric vehicles. Meeting it requires greater utility investment in grid capacity.

Vanessa Cook Bank of America
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Bank of America forecasts US electrical demand will increase at a 2.5% CAGR btw 2024 and 2035 relative to its 0.5% CAGR btw 2014 and 2024. Only ⅓ of the utilities’ ~$100B capex spend in 2024 was for expanding grid capacity.

How fast will US electricity demand grow, and what's driving it?

Core argument: BofA Global Research estimates US electrical demand will grow at a 2.5% CAGR through 2035, up from a 0.5% CAGR over 2014–2024, driven by building electrification, data centers, industrial demand, and EV adoption.

Energy demand is surging – and will continue to do so for an extended period, which will require significant additions to power generation capacity and higher capex in order to grow the grid. While the drivers of this growth have changed over time, demand is largely due to 1) building electrification; 2) data centers; 3) industrial demand; and 4) electric vehicle (EV) adoption. BofA Global Research estimates that US electrical demand will increase at a 2.5% compound annual growth rate (CAGR) through 2035E. That compares to just a 0.5% CAGR from 2014-2024. As electricity demand ramps, utility companies will need to invest more in capacity expansion for the grid. In 2024, US utilities invested $35 billion on transmission capex and $60 billion on distribution capex. However, expansion capex represented only 33% of total transmission and distribution capex, with replacements and upgrades the remaining 67%. While US electrical demand grew at a 0.5% CAGR over 2014-24, transmission and distribution spending has grown at an 8.9% CAGR, largely due to the aging nature of the US grid.

Takeaways by Macro Roundup® AI

  1. BofA Global Research estimates US electrical demand will grow at a 2.5% CAGR through 2035, up from a 0.5% CAGR over 2014–2024, driven by building electrification, data centers, industrial demand, and EV adoption.
  2. US utilities invested $35 billion in transmission capex and $60 billion in distribution capex in 2024, with expansion accounting for only 33% of the total and replacements and upgrades the remaining 67%.
  3. US transmission and distribution spending grew at an 8.9% CAGR over 2014–2024 while electrical demand grew at a 0.5% CAGR, largely due to the aging nature of the US grid.

Related Articles:

  • AI Demand Drives Record Electricity Supply Costs In Largest US Market — 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.
  • 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.

AI Summary. China's reportedly high average IQ is best treated as a stylized fact: few serious studies have measured it across the population, measured IQ levels shift over time, and testing has been concentrated in urban rather than rural areas. Research from Stanford's REAP group reports rural Chinese children average at least one standard deviation below the international norm.

Nicholas Eberstadt American Enterprise Institute
Date Posted:
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China’s PISA test-takers reportedly outscored the mean Western test taker in math and science by over 100 points. However, 85% of the population, and a higher share of students, reside in regions for which Beijing does not disclose PISA scores.

How reliable is the claim that China has high average IQ?

Core argument: Stanford's REAP group reports mean measured IQs for rural Chinese children one standard deviation or more below the international norm, a result reportedly holding for toddlers, 8th graders, and rural migrant children in urban schools.

We refer to China’s purportedly high IQ levels as a “stylized fact” for three reasons. First: there have been perhaps surprisingly few serious studies attempting to measure this quantity in China’s huge population. Second: given the “Flynn effect” of secular increases in measured IQs for national populations all around the world over the postwar era, IQ in China may well be a moving target. Third: IQ testing in China appears to have been generally conducted in urban rather than rural settings—and it is possible there is an urban-rural divergence in measured cognitive abilities due to developmental differences. This third possibility is strongly suggested by some of the recent research of the REAP group at Stanford University. Their studies consistently report finding a low average for measured IQs for rural Chinese children—a mean one standard deviation or more below the international “norm”. The result also reportedly holds for a range of rural children, from toddlers to 8th graders to migrant children from rural areas currently in urban schools. Using these REAP-PIRLS data, the World Bank modeled an estimated nationwide level of student achievement with its “Harmonized Learning Outcome” (HLO) database for its Human Capital Index (HCI). By this initial reckoning, China’s HLO level would have been comparable to those of countries like Mexico or Turkey. [See his slides here.]

Takeaways by Macro Roundup® AI

  1. Stanford's REAP group reports mean measured IQs for rural Chinese children one standard deviation or more below the international norm, a result reportedly holding for toddlers, 8th graders, and rural migrant children in urban schools.
  2. Using REAP-PIRLS data, the World Bank's Harmonized Learning Outcome estimate for China's nationwide student achievement was comparable to levels in countries such as Mexico or Turkey.
  3. China's reputed high IQ level is treated as a stylized fact because few serious studies have measured it in China's population, the Flynn effect may make national IQ a moving target, and testing appears concentrated in urban settings.

Related Articles:

  • Do Adults Own the Skills They Need to Thrive in a Changing World? — An international assessment of adult skills describes numeracy proficiency levels ranging from counting objects and adding small whole numbers at the lowest level, to extracting information from tables and graphs and performing basic arithmetic with money and percentages at Level 1, up to analysing complex mathematical information and critically evaluating whether data support a claim at Level 5.
  • Knowledge, Skills, and the Global Balance of Power — China's top global ranking on the international PISA exams for 15-year-olds covers only four regions, Beijing, Shanghai, Jiangsu, and Zhejiang, while over 85% of China's population lives in regions whose scores Beijing does not disclose. The authors' statistical estimate places China's overall student achievement on par with other upper-middle-income economies such as Turkey and Mauritius.
  • The Power of Demography and the Fate of East Asia — East Asia's total population has peaked and is projected to decline for at least a generation, with the pace of decline likely accelerating each decade, while US population is projected to keep growing for decades. The author argues such sustained divergence can shift the global balance of power.

AI Summary. U.S. weapons makers are reporting rising missile sales, with Lockheed Martin's missiles and fire control division up 11% and RTX's Raytheon unit up 8%, and Raytheon's order backlog reaching $63.5bn. The U.S. Army asked Lockheed to quadruple PAC-3 missile output, while Northrop Grumman expects to produce 25,000 solid rocket motors annually by 2029, up from 13,000.

Drew FitzGerald Wall Street Journal
Date Posted:

Rearmament in the West is boosting order books and backlogs at defense companies. Lockheed Martin reported an 11% increase in Q2 missile sales and revenue rose 8% in Raytheon’s missile unit.

Is rising Western missile demand lifting U.S. weapons makers' sales?

Core argument: Lockheed Martin's missiles and fire control division, which makes Patriot air-defense missiles and Thaad interceptors, posted an 11% rise in second-quarter sales, and the company expects backlogged orders for its weaponry to hit a record later this year.

Lockheed Martin reported an 11% increase in second-quarter sales within its missiles and firing control division, which makes Patriot air-defense missiles and high-end Thaad interceptors. Revenue rose 8% at RTX’s Raytheon unit, powered by higher sales of its Patriot equipment and of Nasams, another surface-to-air missile system. The U.S. Army asked Lockheed to quadruple production of its PAC-3 missiles for Patriot batteries. The company said it expects backlogged orders for its weaponry to hit a record later this year. The backlog at Raytheon swelled to $63.5 billion at the end of June, nudged higher by Navy contracts for new ship-fired SM-3 projectiles and AIM-9X Sidewinder missiles. Defense contractor Northrop Grumman said it expects to pump out 25,000 solid rocket motors a year by 2029, up from 13,000 units today.

Takeaways by Macro Roundup® AI

  1. Lockheed Martin's missiles and fire control division, which makes Patriot air-defense missiles and Thaad interceptors, posted an 11% rise in second-quarter sales, and the company expects backlogged orders for its weaponry to hit a record later this year.
  2. Revenue rose 8% at RTX's Raytheon unit on higher sales of Patriot equipment and Nasams surface-to-air systems, with Raytheon's backlog swelling to $63.5 billion at the end of June, nudged higher by Navy contracts for SM-3 and AIM-9X Sidewinder missiles.
  3. The U.S. Army asked Lockheed Martin to quadruple production of PAC-3 missiles for Patriot batteries, while Northrop Grumman expects to produce 25,000 solid rocket motors a year by 2029, up from 13,000 currently.

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