Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…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
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Friday, July 25, 2025

AI Summary. The share of young adults regularly experiencing stress and anger has risen sharply in the US, Canada, UK, Ireland, Australia and New Zealand while remaining largely stable elsewhere in the West. Real house prices since 1995 are up 85% in the US and over 200% in the other five countries.

John Burn-Murdoch Financial Times
Date Posted:

As housing affordability has deteriorated in the Anglosphere, the share of young people (18-29) “who believe hard work brings success” has declined relative to their peers in Western Europe.

Does declining housing affordability explain rising unhappiness among English-speaking young adults?

Core argument: The share of young adults regularly experiencing stress and anger has risen sharply over the past 15 years in the US, Canada, UK, Ireland, Australia and New Zealand, while remaining largely stable elsewhere in the west, according to Gallup World Poll data.

The share of young adults regularly experiencing stress and anger has risen sharply over the past 15 years in the US, Canada, UK, Ireland, Australia and New Zealand. But it has been largely stable elsewhere in the west, according to detailed data from the Gallup World Poll used in the report. While dozens of countries are dealing with deteriorating housing affordability, the issue is especially acute in the Anglosphere. In Germany and Spain real house prices have climbed 32 and 44% respectively since 1995. In the US the equivalent figure is 85%, while the UK, Ireland, Australia, New Zealand and Canada all come in north of 200%. The result has been a brutal snatching away of the particularly Anglophone dream of home ownership. Rates of ownership among people aged 25-34 in English-speaking countries have slumped by between 20 and 50 percentage points over the same 30-year period.

Takeaways by Macro Roundup® AI

  1. The share of young adults regularly experiencing stress and anger has risen sharply over the past 15 years in the US, Canada, UK, Ireland, Australia and New Zealand, while remaining largely stable elsewhere in the west, according to Gallup World Poll data.
  2. Real house prices since 1995 have risen 85% in the US and more than 200% in the UK, Ireland, Australia, New Zealand and Canada, against 32% in Germany and 44% in Spain.
  3. Home ownership rates among people aged 25-34 in English-speaking countries have fallen by between 20 and 50 percentage points since 1995.

Related Articles:

  • Life Under Two: Debt, Deficits, and the AI Discontinuity — The United States averaged annual GDP growth above 3% for decades, but 2% or less is now more likely. Over ten years, the author estimates that gap amounts to a $3.36tn larger economy, $3.7tn more tax revenue, and 6m more jobs, shifting public psychology from abundance toward scarcity.
  • The Price of Housing in the United States — Real housing price appreciation in the United States has varied widely across regions, with West Coast cities rising earlier while prices in other regions remained comparable in real terms to decades earlier. The authors find essentially no relationship between real price growth and zoning restrictiveness in the earliest period studied, and progressively steeper gradients in later periods.
  • Zero-Sum Thinking and the Roots of U.S. Political Divides — Zero-sum thinking — viewing gains for one group as losses for another — is associated with greater support for liberal economic policies, stronger alignment with the Democratic Party, and weaker alignment with the Republican Party. The authors also find it linked to believing the QAnon conspiracy theory holds some truth and to sympathy for the attack on the U.S. Capitol.

AI Summary. UK job postings for entry-level roles requiring a degree have fallen by almost two-thirds since 2022, twice the drop for all entry-level roles, with US listings down 43%. Analysis of US data shows no clear correlation between an occupation's exposure to generative AI and whether it lost young workers.

Clara Murray, Delphine Strauss, John Burn-Murdoch and Sarah Lim Financial Times
Date Posted:

Since ChatGPT launched, Adzuna data shows a 43% decline in US entry-level job postings requiring a degree. An FT analysis finds “no clear correlation” btw an occupation’s potential exposure to generative AI and a loss of young workers btw 2022–2024.

Is AI behind the steep decline in entry-level graduate job postings?

Core argument: UK job postings for entry-level roles requiring a degree have fallen by almost two-thirds since 2022, twice the decline for all entry-level roles, while US listings of the same type are down 43%, according to Adzuna.

Job postings for entry-level roles requiring a degree have dropped by almost two-thirds in the UK since 2022 — the year ChatGPT launched — twice as much as for all entry level roles, according to job search engine Adzuna. In the US, such listings are down 43% over the same period. FT analysis of US official data showed there was no clear correlation between an occupation’s potential exposure to generative AI (on an International Labour Organization (ILO) measure of the tasks susceptible to automation), and whether it lost young workers between 2022 and 2024. Looking specifically at occupations considered to be at high or moderate risk from generative AI, some graduate roles such as graphic designers and management analysts have thousands fewer workers aged between 20 and 24 than in the year ChatGPT launched. The drop is also noticeable in some highly exposed non-graduate occupations, such as insurance claim assessors, credit counselors or loan interviewers. But in other graduate sectors, such as accountants and auditors, youth employment was booming as of last year, according to US government statistics — and this holds for many tech sector roles, despite a 2% decline in young people employed in software development.

Takeaways by Macro Roundup® AI

  1. UK job postings for entry-level roles requiring a degree have fallen by almost two-thirds since 2022, twice the decline for all entry-level roles, while US listings of the same type are down 43%, according to Adzuna.
  2. FT analysis of US official data found no clear correlation between an occupation's potential exposure to generative AI, on the ILO measure of tasks susceptible to automation, and whether it lost young workers between 2022 and 2024.
  3. Among US occupations at high or moderate risk from generative AI, graphic designers, management analysts, insurance claim assessors and loan interviewers have thousands fewer workers aged 20 to 24 than in 2022, while accountants, auditors and many tech roles saw youth employment booming.

Related Articles:

  • Rising Graduate Joblessness Is Mainly Affecting Men. Will That Last? — The US unemployment rate for recent male graduates has risen from below 5% to 7% over the past year while the rate for recent female graduates is unchanged or slightly lower, leaving young male graduates jobless at the same rate as non-graduates. Entry-level coding employment, however, has rebounded.
  • Educated but Unemployed, a Rising Reality for College Grads — Recent college graduates aged 22–27 account for 12% of the 60 basis-point rise in US unemployment, more than twice their 5% share of the labor force. In computer and mathematical occupations, employment for that age group has fallen 8% since 2022 while older workers' employment grew 0.8%.
  • Technological Disruption in the Labor Market — The authors measure US labor market structure since 1880 and find 1990–2017 less disruptive than any earlier period, because past changes from general-purpose technologies like steam and electricity were so profound. They identify four recent signs of accelerating change, including a 50%+ rise in science and technology employment share since 2010.

AI Summary. China is the world's largest shipbuilder, building 50.8m of the 89m deadweight tons of commercial ships produced in 2024 (57%) and holding 59% of new ship orders, aided by an estimated $90bn in government subsidies covering 15-20% of each new ship's cost. China still lags in the most complex ships, shipyard productivity, and marine components such as engines.

Brian Potter Construction Physics
Date Posted:

As measured by tonnage, China built 57% of ships globally in 2024 and has 59% of outstanding orders going forward. While it lags in production of the most complex ships, it still has ⅓ of the LNG orderbook.

How did China come to dominate global shipbuilding?

Core argument: China built 50.8 million of the 89 million deadweight tons of commercial ships completed in 2024 (57%), holds 59% of new ship orders worldwide, and accounts for 14 of the 20 largest shipyards by order book.

It’s estimated that [the Chinese government] spent $90 billion subsidizing the shipbuilding industry between 2006 and 2013, contributing an estimated 15-20% of the cost of each new ship. Between 2004 and 2007, annual investment in Chinese shipyards rose by a factor of seven. Since 2017, China has been the largest shipbuilder in the world. Of the 89 million deadweight tons of commercial ships built in 2024, 50.8 million of them (57%) were Chinese. China has a similarly large fraction (59%) of orders for new ships worldwide. Of the 20 largest shipyards in the world by the size of their order book, 14 of them are Chinese. According to the US Navy, China’s shipbuilding capacity is over 200 times that of the US. In 2023 China delivered 972 commercial ships; the US delivered 7. Until very recently China struggled to build ships that were as high quality or as complex as those from other countries. Even today, as the undisputed biggest shipbuilder in the world, it seems like China still lags in producing the most complex ships, in shipyard productivity, and in producing various marine components (most engines in Chinese ships, for instance, are still based on foreign designs) — though it wouldn’t surprise me if this gap continues to shrink.

Takeaways by Macro Roundup® AI

  1. China built 50.8 million of the 89 million deadweight tons of commercial ships completed in 2024 (57%), holds 59% of new ship orders worldwide, and accounts for 14 of the 20 largest shipyards by order book.
  2. The US Navy puts China's shipbuilding capacity at over 200 times that of the United States, with China delivering 972 commercial ships in 2023 versus 7 for the US.
  3. The Chinese government is estimated to have spent $90 billion subsidizing shipbuilding between 2006 and 2013, contributing an estimated 15–20% of each new ship's cost, while annual investment in Chinese shipyards rose sevenfold between 2004 and 2007.

Related Articles:

  • Ship Wars — Shipyards tied to China's defense industrial base account for 15% of the country's active shipyards but 40% of commercial output by tonnage, with over 75% of their production built for firms outside China and Hong Kong. The authors argue these commercial revenues offset fixed costs and effectively subsidize China's naval expansion.
  • How South Korea’s Shipyards Could Save the US Navy — US shipyards had just five commercial ships under construction compared with 1,749 in China, and China's naval fleet is projected to grow from 370 to 475 vessels in a decade versus 297 to between 305 and 317 for the US Navy, whose major shipbuilding programs are behind schedule.
  • Underestimating China — China's productive capacity is three times that of the United States and exceeds the next nine countries combined, with its share of global manufacturing quintupling to 30% while the U.S. share halved to about 15%. The authors argue Washington must convert its alliances into a platform for pooled capacity building.

AI Summary. US THAAD missile-defense operators fired more than 150 interceptors against Iranian ballistic missiles, nearly a quarter of the roughly 650 the Pentagon has purchased at about $13m each. Replenishing that stock would likely take over a year and cost $1.5bn–$2bn, according to a defense-procurement researcher's estimate, while the manufacturer says it can make about 100 interceptors this year.

Shelby Holliday, Anat Peled and Drew FitzGerald Wall Street Journal
Date Posted:

Israeli officials credit the US Thaad missile defense systems for saving thousands of lives during their recent war with Iran. The US fired ~25% of its stock during the 12-day war. Each missile costs ~$13mm, DoD has budgeted to buy 37 over the next year.

How quickly can the US replace missile interceptors spent in combat?

Core argument: U.S. Thaad operators fired more than 150 interceptors during the 12-day war against Iranian ballistic missiles, nearly a quarter of the roughly 650 interceptors the Pentagon has purchased since 2010, according to U.S. officials.

Operating alongside Israeli systems, Thaad operators burned through munitions at a furious clip, firing more than 150 missiles to shoot down the waves of Iranian ballistic missiles, according to U.S. officials. That is nearly a quarter of the interceptors ever purchased by the Pentagon. Israeli officials credited the American systems for saving thousands of lives. Each Thaad interceptor costs about $13 million, according to budget documents, and the Pentagon has purchased around 650 since 2010. Officials have sought to buy 37 in the next fiscal year. Lockheed Martin, which makes the systems, says it can make about 100 interceptors this year and is working with the government on options to increase production for new orders. It would likely take more than a year and cost between $1.5 billion and $2 billion to replenish the Thaad interceptors fired during the 12-day war, according to Wes Rumbaugh, a CSIS fellow who researches Pentagon missile procurement and budget details.

Takeaways by Macro Roundup® AI

  1. U.S. Thaad operators fired more than 150 interceptors during the 12-day war against Iranian ballistic missiles, nearly a quarter of the roughly 650 interceptors the Pentagon has purchased since 2010, according to U.S. officials.
  2. Each Thaad interceptor costs about $13 million according to budget documents, and officials have sought to buy 37 in the next fiscal year while Lockheed Martin says it can make about 100 interceptors this year.
  3. Replenishing the Thaad interceptors fired during the 12-day war would likely take more than a year and cost between $1.5 billion and $2 billion, according to CSIS fellow Wes Rumbaugh.

Related Articles:

  • Why is the U.S. Navy Running Out of Tomahawk Cruise Missiles? — The U.S. Navy has been firing Tomahawk land-attack cruise missiles faster than it can replace them, with opening-day strikes in Yemen expending more than 80 missiles against 30 targets. An entire year's purchase of 55 Tomahawks accounted for 68% of the precision munitions fired at the Houthis in a single day.
  • The West Badly Needs More Missiles—But The Wait To Buy Them Is Years Long — Each Nasams air-defense system, made by Norway's Kongsberg, takes two years to build and new buyers face a multiyear backlog, prompting the plant to run 24-hour, seven-day shifts. The defense industry faces a prolonged labor crunch, struggling to find workers with niche skills willing to undergo lengthy security checks.
  • Japan, U.S. Form Working Group For Joint Missile Production — Japan and the United States agreed to create working groups on joint missile production, ship and aircraft repair, and supply chain resiliency as part of a defense industry cooperation forum. U.S. officials say Japan's engineering, industrial, and manufacturing capacity is a significant addition for the U.S. defense industrial base.

AI Summary. China's kindergarten enrollment fell by 12mn children from a peak of 48mn, and the number of kindergartens serving children aged 3-5 dropped by 41,500 from a high of nearly 295,000, according to the country's ministry of education. Annual births have fallen by nearly half from a peak of 17.9mn to 9.3mn.

Joe Leahy, Wenjie Ding and Haohsiang Ko Financial Times
Date Posted:

Between 2020 and 2024, enrollments in China’s kindergartens (ages 3 to 5) declined from 48mm to 36mm, a 25% decline.

Are falling births shrinking China's kindergarten enrollment and school numbers?

Core argument: China's kindergarten enrollment fell by 12mn children between 2020 and 2024, a 25% drop from a peak of 48mn, according to data from the country's ministry of education.

Enrollments in China’s kindergartens have declined by 12mn children between 2020 and 2024, from a peak of 48mn, according to data from the country’s ministry of education. The number of kindergartens, serving Chinese children aged 3-5, has also fallen by 41,500 from a high of nearly 295,000 in 2021. While the number of births rose by about 520,000 last year to 9.3mn, following a record low in 2023, they were still outpaced by deaths and have declined by nearly half since the peak of 17.9mn in 2017.

Takeaways by Macro Roundup® AI

  1. China's kindergarten enrollment fell by 12mn children between 2020 and 2024, a 25% drop from a peak of 48mn, according to data from the country's ministry of education.
  2. The number of Chinese kindergartens serving children aged 3-5 has fallen by 41,500 from a high of nearly 295,000 in 2021.
  3. Chinese births rose by about 520,000 to 9.3mn following a record low in 2023, but remained outpaced by deaths and down nearly half from the 2017 peak of 17.9mn.

Related Articles:

  • ‘No Marriage, No Children’ Is China’s Ticking Timebomb — China registered about 6.1m marriages in its most recent year, the lowest since public records began in 1986 and less than half the 2013 peak, with roughly 30% of 30-year-olds unmarried versus 15% a decade earlier. Births of 9.54m were the second-lowest since the People's Republic of China was founded in 1949.
  • The Age of Depopulation: Surviving a World Gone Gray — The United States remains the main outlier among developed countries resisting depopulation, with fertility of just over 1.6 births per woman — high for a rich country but below the 2.1 replacement threshold — plus steady immigration. The Census Bureau projects the U.S. population will peak around 2080 and decline continuously thereafter.
  • 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.

Monday, July 28, 2025

AI Summary. The Budget Lab estimates that 2025 U.S. tariffs, if left in place, would raise $2.7tn over 2026-35 under conventional scoring. Accounting for the tariffs' negative effects on output, the estimate includes an additional $456bn revenue loss, bringing projected dynamic revenue to $2.3tn over the decade.

Ernie Tedeschi Yale University
Date Posted:

As of July 28, the US has an effective tariff rate of 17.3% including the new 15% rate for the EU. Dynamically scored, Ernie Tedeschi estimates this regime will raise $2.3T over 2026–2035.

How much revenue would the new tariffs raise over a decade?

Core argument: The Budget Lab estimates that the 2025 U.S. tariffs, if left in place, would raise $2.7 trillion over 2026–35 on a conventional score, or $2.6 trillion over 2025–34.

The 2025 tariffs to date, were they to remain in place, would raise $2.7 trillion over 2026-35 conventionally-scored ($2.6 trillion over 2025-34). Given the negative output effects of the tariffs, there would be additional dynamic reductions in tax revenue as a result. Based on Congressional Budget Office rules-of-thumb, The Budget Lab estimates that these effects would total -$456 billion over the decade (-$415 billion over 2025-34), bringing total dynamic revenue to $2.3 trillion over 2026-35 ($2.2 trillion over 2025-34).

Takeaways by Macro Roundup® AI

  1. The Budget Lab estimates that the 2025 U.S. tariffs, if left in place, would raise $2.7 trillion over 2026–35 on a conventional score, or $2.6 trillion over 2025–34.
  2. Accounting for the tariffs' negative output effects, The Budget Lab estimates additional revenue reductions of $456 billion over 2026–35 ($415 billion over 2025–34), based on Congressional Budget Office rules-of-thumb.
  3. Total dynamic revenue from the 2025 tariffs would come to $2.3 trillion over 2026–35 ($2.2 trillion over 2025–34), according to The Budget Lab.

Related Articles:

  • Skyrocketing Tariffs: Why Did Inflation Take So Long to React? — US inflation stayed stable for months after tariff rates rose steeply, which the author attributes to firms stockpiling imports ahead of the tariffs, importers absorbing some added cost through lower profits, and easing inflationary pressures elsewhere. The author argues the first two factors will fade as inventories deplete, pushing consumer prices higher.
  • The Tariff Inflation Shock Starts To Hit — Monthly core goods inflation — a category making up about 25% of the core consumer price index basket — ran roughly 80 basis points above its typical seasonal level, which the author attributes to tariffs. The author argues this effect will keep building as pre-tariff inventories are depleted and transshipments are curbed.
  • We Warned About the First China Shock. The Next One Will Be Worse. — The authors argue China is moving from follower to leader by aggressively contesting innovative sectors long dominated by the United States, including aviation, artificial intelligence, telecommunications, microprocessors, robotics, and nuclear and fusion power. They note the world's largest and most innovative makers of electric vehicles, EV batteries, drones, and solar wafers are all Chinese firms under 30 years old.

AI Summary. New tariffs would add roughly 1% of GDP to a federal tax burden that was 17% of GDP, an amount that aggregate corporate profits near $4tn and disposable personal income around $22tn could absorb at the cost of modestly slower activity. The burden would fall unevenly, concentrated in import-dependent sectors such as autos and clothing.

Joseph Wang Fed Guy Blog
Date Posted:

The conclusion of the trade war amounts to an effective tax hike worth about 1% of GDP, yielding annual revenue between $450B and $600B, Wang suggests. The tariffs will have uneven short-term economic impacts, with autos and clothing bearing the brunt.

Can the economy absorb tariffs that add 1% of GDP in taxes?

Core argument: A very rough estimate puts annual tariff revenue at full implementation between $450bn and $600bn, marginally increasing the tax burden by about 1% of GDP against federal tax revenue of 17% of GDP in 2024.

The tariffs appear small compared to consumer income and corporate profits, but the uneven distribution of the burden will magnify its economic impact. Corporate profits approach $4t with margins at historically high levels, and disposable personal income is around $22T with household wealth at all time highs. On paper, the extra tax could be easily absorbed at the cost of modestly slower economic activity. Federal tax revenue was 17% of GDP in 2024 and the new tariffs would marginally increase the tax burden by about 1% of GDP. However, the aggregate numbers may be misleading as the burden will fall particularly hard on a narrow set of sectors. Research suggests that the auto and clothing sector are particularly dependent on imported goods and would bear the brunt of tariffs. A very rough estimate suggests annual tariff revenue upon full implementation could be between $450b and $600b.

Takeaways by Macro Roundup® AI

  1. A very rough estimate puts annual tariff revenue at full implementation between $450bn and $600bn, marginally increasing the tax burden by about 1% of GDP against federal tax revenue of 17% of GDP in 2024.
  2. With corporate profits approaching $4tn at historically high margins and disposable personal income around $22tn alongside record household wealth, the tariffs could on paper be absorbed at the cost of modestly slower economic activity.
  3. The uneven distribution of the tariff burden will magnify its economic impact, and research suggests the auto and clothing sectors, being particularly dependent on imported goods, would bear the brunt.

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.
  • Are Businesses Absorbing the Tariffs or Passing Them on to Their Customers? — About three-quarters of manufacturing and service firms facing tariff-driven cost increases reported passing at least some of those costs to customers through higher prices, while roughly a quarter of each said they absorbed the full increase without raising prices. Nearly a third of manufacturers and about 45% of service firms reported full pass-through.
  • Help for the Heartland? The Employment and Electoral Effects of the Trump Tariffs in the United States — The authors find that the combined effect of U.S.-China trade war import tariffs, retaliatory tariffs, and farm subsidies on employment in exposed U.S. locations was at best a wash and possibly mildly negative, while residents of tariff-protected areas became less likely to identify as Democrats and more likely to vote Republican.

AI Summary. The International Monetary Fund's model implies a "normal" current account surplus for China just under 1% of GDP, while acknowledging that China's goods trade and investment income data look odd relative to customs figures, foreign asset data, and peer countries. Correcting these errors suggests official figures understate China's surplus by roughly $450bn a year.

Matt Klein The Overshoot
Date Posted:

A new IMF report “finally acknowledges” that China’s goods trade balance and its investment income balance are far too low relative to customs data and data on foreign assets and liabilities. China’s deficit is likely > $1T, 2x its official estimate.

Do official data understate China's current account surplus?

Core argument: The author estimates that errors in China's goods trade balance and investment income balance cause official balance of payments data to understate China's current account surplus by about $450 billion a year, putting the 2024 surplus near 4.4% of GDP versus the official 2.3%.

The specific coverage of China in the report has a lot of good points. The IMF’s model implies a “normal” surplus for China just under 1% of GDP, which is lower than the official number for 2024 (2.3%) and not obviously too high. Moreover, the IMF’s latest report finally acknowledges issues with the Chinese data, highlighting—as I and others have for years—that both China’s goods trade balance and its investment income balance look extremely odd relative to China’s customs data, relative to China’s data on foreign assets and liabilities, and relative to peer countries. Correcting for these two sources of error implies that China’s official balance of payments figures likely understate the country’s current account surplus by about $450 billion/year. My estimate is that China’s actual surplus was closer to 4.4% of GDP in 2024. This more plausible estimate of China’s surplus would, by itself, lift the IMF’s estimate of aggregate imbalances by about one-third. China’s current account surplus has likely increased sharply since the end of 2024 based on the monthly customs data. The imbalances described in this report have already gotten worse.

Takeaways by Macro Roundup® AI

  1. The author estimates that errors in China's goods trade balance and investment income balance cause official balance of payments data to understate China's current account surplus by about $450 billion a year, putting the 2024 surplus near 4.4% of GDP versus the official 2.3%.
  2. The IMF's model implies a "normal" surplus for China just under 1% of GDP, and the author's more plausible surplus estimate would by itself lift the IMF's estimate of aggregate imbalances by about one-third.
  3. The IMF's report acknowledges that China's goods trade and investment income balances look odd relative to China's customs data, its data on foreign assets and liabilities, and peer countries.

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.
  • Better Late Than Never: The IMF Starts to Recognize Balance of Payments Reality — 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.
  • 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. The authors estimate solar panel costs fall about 20% each time cumulative output doubles, creating a feedback loop in which lower costs raise demand and supply and lower costs further. They find panel investment costs have fallen faster than for any other investment good in modern history, including computers and communication equipment.

Daan Struyven, Eoin Dinsmore, Ephraim Sutherland, Samantha Dart, et al. Goldman Sachs
Date Posted:

A GS analysis argues the solar boom, driven by scale economies and the zero marginal cost of fuel, will persist despite falling subsidies. Prospects for additional growth hinge on price guarantees, cheap storage, and grid upgrades.

How fast do solar panel costs fall as output doubles?

Core argument: Solar panel costs are estimated to fall about 20% each time cumulative output doubles, with a positive feedback loop running from lower costs to higher demand, higher supply, and again lower costs.

Learning-by-doing has sharply reduced the cost of solar panels. Specifically, we estimate that costs tend to drop 20% if cumulative output doubles, with a positive feedback loop from lower costs to higher demand, higher supply, and again lower costs. The investment costs have fallen faster for panels than for any other investment good in modern history, including computers and communication equipment. Solar's marginal fuel costs are zero. Solar panels are modular as they come in small sizes available at constant fixed prices, making it easier to create a decentralized grid. In contrast, thermal or nuclear power stations are usually large with high fixed costs.

Takeaways by Macro Roundup® AI

  1. Solar panel costs are estimated to fall about 20% each time cumulative output doubles, with a positive feedback loop running from lower costs to higher demand, higher supply, and again lower costs.
  2. Investment costs for solar panels have fallen faster than for any other investment good in modern history, including computers and communication equipment, and solar's marginal fuel costs are zero.
  3. Solar panels are modular, coming in small sizes at constant fixed prices, which makes a decentralized grid easier to create, in contrast to thermal or nuclear power stations that are usually large with high fixed costs.

Related Articles:

  • 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.
  • Green Electricity Costs a Bundle — International Energy Agency data covering nearly 70 countries show a correlation between higher shares of solar and wind and higher average household and industry electricity prices, with costs about 12 cents a kilowatt-hour where solar and wind are minimal and rising more than 5 cents for each 10% increase in their share.
  • Heliocentrism — An energy use must be electrified before green grid electricity can decarbonize it, and while US grid decarbonization continues at a steady pace, the electricity share of final US energy consumption has grown little. Transmission line growth runs well below Department of Energy targets for 2030 and 2035, and transformer delivery times have stretched from 4–6 weeks to 2–3 years.

AI Summary. A Wall Street Journal analysis found insurers rated by Demotech were 30x as likely to become insolvent as those graded by its main rivals, with 17 failed home insurers leaving at least $1.7bn in unpaid claims. Demotech-rated insurers collect about half of all Florida home-insurance premiums.

Jean Eaglesham, Susan Pulliam and Caitlin Ostroff Wall Street Journal
Date Posted:

A WSJ analysis found insurers rated by Demotech were 30x as likely to become insolvent as those graded by its main rivals. Demotech-rated insurers collect ~50% of all home-related premia paid in Florida.

Are hurricane-state home insurers backed by unreliable financial strength ratings?

Core argument: Insurers rated by Demotech were 30 times as likely to become insolvent as those graded by its main rivals, according to a Wall Street Journal analysis of failures since 2017.

Florida’s Citizens Property Insurance, created by the Florida legislature in 2002 for homeowners who can’t get coverage elsewhere, has been able to move more than 200,000 policies this year from its books to 10 small insurers with A ratings from Demotech. Insurers Demotech rated were 30 times as likely to become insolvent as those graded by its main rivals, according to a Wall Street Journal analysis of failures since 2017. Insurers rated by Demotech collect about half of all home-insurance premiums paid in Florida, one-third in Louisiana and close to one-quarter in Rhode Island, South Carolina and Texas, the firm’s data show. Overall, one in 10 insurers nationwide that Demotech rated A as of Dec. 31, 2014, defaulted—meaning they were put into liquidation or had other solvency-related actions taken by regulators—by the end of last year, according to recent securities filings. Since 2017—the first year for which Demotech publishes historic ratings online—17 home insurers it rated have gone under, leaving behind at least $1.7 billion in unpaid claims, the analysis showed. Each had received a grade of A within a year of its collapse.

Takeaways by Macro Roundup® AI

  1. Insurers rated by Demotech were 30 times as likely to become insolvent as those graded by its main rivals, according to a Wall Street Journal analysis of failures since 2017.
  2. Since 2017, 17 home insurers rated by Demotech have gone under, leaving at least $1.7 billion in unpaid claims, and each had received a grade of A within a year of its collapse, the Wall Street Journal analysis showed.
  3. Florida's Citizens Property Insurance has moved more than 200,000 policies off its books this year to 10 small insurers carrying A ratings from Demotech, whose rated insurers collect about half of all home-insurance premiums paid in Florida.

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AI Summary. The US Bureau of Industry and Security, which administers export controls, has been instructed to avoid tough measures against China, according to current and former US officials. Officials cite the risk that China retaliates by restricting exports of critical rare earths and magnets to the US, as it has previously done.

Demetri Sevastopulo Financial Times
Date Posted:

The US is freezing new export controls on China as trade negotiations continue. The US may allow exports of Nvidia’s H20 after direct lobbying from Nvidia’s CEO though no exports have been approved formally.

Does China's rare earth leverage constrain US export controls?

Core argument: The Commerce Department's Bureau of Industry and Security has been told to avoid tough export-control moves on China, according to eight people including current and former US officials, as Trump seeks to avoid actions that could hurt efforts to meet Xi Jinping.

The commerce department’s Bureau of Industry and Security, which runs export controls, has been told in recent months to avoid tough moves on China, according to eight people, including current and former US officials. Trump wants to avoid actions that could hurt efforts to meet Xi, some officials have argued that the US is hamstrung on export controls because of the risk that China retaliates by restricting the export to the US of critical rare earths and magnets, as it did in May for the first time. Earlier this year, Trump was poised to restrict technology exports to China. In April, his team told Nvidia it would block the export of its H20 chip, which was designed for the Chinese market after the Biden administration restricted more advanced chips. But Trump reversed course following direct lobbying from Nvidia chief executive Jensen Huang. The H20 has become the focus of a battle between security officials, who say the chip will help the Chinese military, and Nvidia, which says blocking US technology exports forces Chinese groups to accelerate innovation.

Takeaways by Macro Roundup® AI

  1. The Commerce Department's Bureau of Industry and Security has been told to avoid tough export-control moves on China, according to eight people including current and former US officials, as Trump seeks to avoid actions that could hurt efforts to meet Xi Jinping.
  2. Some US officials argue the United States is hamstrung on export controls because China could retaliate by restricting exports of critical rare earths and magnets to the US, as it did for the first time in May.
  3. Trump's team told Nvidia in April it would block exports of the H20 chip, designed for the Chinese market after Biden administration restrictions on more advanced chips, but Trump reversed course after direct lobbying from chief executive Jensen Huang.

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