Edward Conard

Top Ten New York Times Bestselling Author

  • “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
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…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 must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…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
  • “…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
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, July 30, 2025

AI Summary. Japan's 30-year government bond yield reached an all-time high of 3.21% following weak auctions, while Morgan Stanley reports the budget deficit was nearly eliminated in the first quarter, the best public finances in almost three decades. The return of nominal wage and price growth lifted income and consumption tax revenues, offset by lower household savings.

Robin Harding Financial Times
Date Posted:

Reflation in Japan has increased tax revenue, which has improved public finances. Btw 2020 and 2024, gross debt fell from 258% of GDP to 235%. The decline in the government deficit has been offset by a decline in household saving.

Does rising inflation improve government finances while pushing bond yields higher?

Core argument: Japan's 30-year government bond yield reached an all-time high of 3.21% after a series of weak auctions.

Here are two contrasting facts about Japan. Number one: the yield on 30-year government bonds hit an all-time high of 3.21% earlier this month after a series of weak auctions. Number two: according to Morgan Stanley, Japan’s budget deficit was almost completely eliminated in the first quarter of this year, putting [its] public finances in their best position [in] almost three decades. Prices have risen faster than the Bank of Japan’s 2% goal for the past three years; interest rates, at 0.5%, are off the lower limit of zero; and wages are rising. This return to nominal growth in wages and prices has led to an immediate rise in revenues from income and consumption taxes, which is what has brought the public finances back into balance. Expressed in terms of financial balances, a decline in the government deficit has been offset by lower household savings, while the corporate sector continues to run a surplus.

Takeaways by Macro Roundup® AI

  1. Japan's 30-year government bond yield reached an all-time high of 3.21% after a series of weak auctions.
  2. Morgan Stanley reports Japan's budget deficit was almost completely eliminated in the first quarter of this year, putting its public finances in their best position in almost three decades.
  3. Japan's return to nominal wage and price growth — with inflation above the Bank of Japan's 2% goal for three years and interest rates at 0.5% — raised income and consumption tax revenues, while the decline in the government deficit was offset by lower household savings.

Related Articles:

  • Japan’s Crazy Low Government Bond Yields — Japan's 30-year government bond yield remains below Germany's even after rising, despite Japanese government debt of 240% of GDP versus Germany's 65%. The author argues years of Bank of Japan quantitative easing and yield curve control, along with its continued gross purchases of government debt, keep Japanese yields artificially low.
  • Japan Leads Global Long-Bond Drop as Spending Takes Center-Stage — Long-term government bond yields rose in Japan, Germany, the UK and France as concern over widening fiscal deficits dented demand, with 30-year German yields near their highest levels in 14 years. Fiscal worries — including heavy government debt, spending, bond supply and sticky inflation — are displacing central-bank interest-rate policy as the main driver for these markets.
  • Global Debt Report 2025 — About 60% of fixed-rate government debt in advanced economies maturing by 2027 — roughly $9tn — was issued before the recent interest-rate tightening, with weighted average yields below 2% versus projected 10-year rates near 3.6%, implying refinancing at nearly double the original cost. France, Spain, the UK, and the US face heightened vulnerability, with maturing debt exceeding 15% of GDP.

AI Summary. The author's calculation of the 10-year US Treasury yield minus a currency-hedged, trade-weighted average of 10-year government bond yields in Germany, Japan, the UK, Canada, Switzerland, Sweden and Australia indicates the "convenience yield" on US government debt has disappeared. Where the US yield averaged about 10 basis points below those dollar-hedged peers, it now carries a 20 basis point premium.

Robin Brooks Robin Brooks Substack
Date Posted:

Brooks argues that the US’s “exorbitant privilege” – the ability to sell US debt to global markets at anomalously low yields – has faded; 10-year Treasury yields are now at a 20 bps premium relative to $ denominated yields in the rest of the G10.

Have US Treasuries lost their yield advantage over hedged foreign bonds?

Core argument: The 10-year US Treasury yield, once averaging roughly 10 bps below currency-hedged G10 government bond yields, now carries a 20 bps premium, which the author reads as the disappearance of the "convenience yield" on US government debt.

I calculate the differential of the 10-year US Treasury yield minus the trade-weighted average 10-year yield on government bonds in Germany (DE), Japan (JP), the UK (GB), Canada (CA), Switzerland (CH), Sweden (SE) and Australia (AU), where I use 10-year currency forwards to hedge the returns on these government bonds back into Dollars. This rate differential is therefore purely in Dollar terms and thus a good proxy for the “convenience yield,” i.e. whether global markets are willing to buy US debt at lower yields than debt from other countries because Treasuries are “special.” The left chart shows a daily time series for this 10-year Dollar differential, starting in January 2010 and going through July 2025. It’s clear that the “convenience yield” on US government debt has disappeared. Where it used to be that the 10-year yield was on average around 10 bps below Dollar-denominated yields in the rest of the G10, there’s now a 20 bps premium.

Takeaways by Macro Roundup® AI

  1. The 10-year US Treasury yield, once averaging roughly 10 bps below currency-hedged G10 government bond yields, now carries a 20 bps premium, which the author reads as the disappearance of the "convenience yield" on US government debt.
  2. The measure is the 10-year Treasury yield minus the trade-weighted average 10-year government bond yield of Germany, Japan, the UK, Canada, Switzerland, Sweden and Australia, hedged into dollars with 10-year currency forwards.
  3. Because the differential is expressed purely in dollar terms, the author treats it as a proxy for whether global markets will buy US debt at lower yields than other countries' debt, using daily data from January 2010 through July 2025.

Related Articles:

  • Treasury Issuance Growing — US Treasury auction metrics show no current weakness in demand, with stable bid-to-cover ratios and no systematic tailing, even as debt-to-GDP rises, the term premium increases, and the government must refinance $9tn over the next year. The author argues Treasury issuance will keep outgrowing the economy, likely pushing long-term interest rates higher.
  • Rapidly Growing Treasury Supply Crowding Out Other Types of Credit Growth — Roughly half of all fixed income issuance coming to market over the past year has been US Treasuries, meaning investors must allocate a growing share of dollars to financing the government. The argument is that lower government debt would free up more funds for consumer borrowing and business investment.
  • The Long-Term Budget Outlook Under Alternative Scenarios for the Economy and the Budget — The Congressional Budget Office projects that if private investment were more sensitive to federal deficits, debt held by the public would exceed 250% of GDP and real national income per person would be 18% ($21,300) lower than its baseline, with the average interest rate on federal debt 2pp higher.

AI Summary. The share of total US market capitalization held by young unprofitable companies has fallen from its 2021–2022 peak, while over 40% of small-cap companies have negative earnings and the negative-earnings share among large caps is falling. The 10 largest stocks hold about 35% of market cap, a high since 1990, but their share of market earnings has roughly kept pace.

Michael Cembalest J.P. Morgan
Date Posted:

Michael Cembalest notes that the 10 largest American stocks represent ~ 35% of market capitalization. Earnings are “more or less keeping pace, particularly when measured based on forward earnings estimates.”

Is market concentration justified by megacap earnings share?

Core argument: The young unprofitable company share of total market cap peaked in 2021/2022 during the SPAC boom, served as a leading indicator of the subsequent rout in low-quality stocks, and has since fallen, a positive sign for markets.

Our YUC measure (the young unprofitable company share of total market cap) looks benign. This measure peaked in 2021/2022 with the SPAC boom and was an excellent leading indicator of the rout that was about to happen to low quality stocks. This risk index has fallen since, which is a positive sign for markets. Small cap remains a barren profitability desert (40%+ of small cap companies with negative earnings!) while a falling share of large cap companies have negative earnings. The 10 largest megacap stocks continue to hover at ~35% of market cap, which is an all-time high since 1990. But when looking at the megacap share of total market earnings, they’re more or less keeping pace, particularly when measured based on forward earnings estimates. Tech and TMT valuations are still hovering at the high end of the post-2020 range, ~30x forward earnings expectations. The rest of the market is less aggressively priced, and at 20x forward earnings is priced at the middle of the range since 1990. But these valuations have been creeping up steadily since early 2022.

Takeaways by Macro Roundup® AI

  1. The young unprofitable company share of total market cap peaked in 2021/2022 during the SPAC boom, served as a leading indicator of the subsequent rout in low-quality stocks, and has since fallen, a positive sign for markets.
  2. More than 40% of small cap companies have negative earnings, while a falling share of large cap companies are unprofitable.
  3. The 10 largest megacap stocks hover at about 35% of market cap, an all-time high since 1990, though their share of total market earnings roughly keeps pace, particularly on forward estimates.

Related Articles:

  • Back to Our Regularly Scheduled Programming — The four largest US hyperscalers spent $440bn on capital expenditure and research in 2024, with $596bn projected for 2025, a 35% increase, leaving large gaps between AI spending and AI revenues. These firms account for more than half of all capital expenditure growth in the US equity market.
  • Which U.S. Stocks Generated the Highest Long-Term Returns? — Of the 29,078 U.S. common stocks in a database spanning nearly a century, 51.6% had negative cumulative returns, while 17 stocks returned more than 5m% — led by Altria at 265m%. Those top performers averaged annualized returns of just 13.47%, underscoring the value of time invested.
  • Long-Term Shareholder Returns: Evidence From 64,000 Global Stocks — A study of about 64,000 global stocks estimates net global stock market wealth creation of $75.7tn, with returns highly concentrated: the top 159 firms (0.25%) account for half of net wealth creation and the top 1,526 (2.39%) account for all of it. Fewer than half of stocks beat one-month US Treasury bills, 42.6% of non-US and 44.8% of US stocks.

AI Summary. Analysis of Belgian business-to-business transaction data finds consulting use concentrated among large, high-labor-productivity firms, with new clients spending about 3% of payroll on engagements typically lasting under a year. The authors estimate consulting raises client labor productivity 3.6% over five years and average wages 2.7%, with larger gains for initially less productive firms.

Gert Bijnens, Simon Jäger and Benjamin Schoefer National Bureau of Economic Research
Date Posted:

Belgian data suggest that in the 5 years following “episodic engagement” with a management consultancy, firms see a 3.6% rise in labor productivity, associated with modest reductions in labor and capital input and no increase in profitability.

How does hiring management consultants affect client firm productivity and wages?

Core argument: Using Belgian VAT-linked business-to-business transaction data for 2002–2023 and difference-in-differences designs, the authors estimate that consulting engagements raise client firms' labor productivity by 3.6% over five years, driven by modest employment reductions alongside stable or growing revenue.

[We use] universal administrative business-to-business transaction data based on value-added tax links from Belgium (2002-2023) to document the nature of consulting engagements, take-up patterns, and the effects on client firms. Consulting take-up is concentrated among large, high-labor-productivity firms. For TFP and profitability, we find a U-shaped pattern: both high and low performers hire consultants. New clients spend on average 3% of payroll on consulting, typically in episodic engagements lasting less than one year. Using difference-in-differences designs exploiting these sharp consulting events, we find positive effects on labor productivity of 3.6% over five years, driven by modest employment reductions alongside stable or growing revenue. Average wages rise by 2.7% with no decline in labor’s share of value added. Our heterogeneity analysis reveals larger productivity gains for initially less productive firms, suggesting improvements in allocative efficiency, validating the productivity-enhancing view of consulting,while lending less support to a rent-shifting view favored by many economists.

Takeaways by Macro Roundup® AI

  1. Using Belgian VAT-linked business-to-business transaction data for 2002–2023 and difference-in-differences designs, the authors estimate that consulting engagements raise client firms' labor productivity by 3.6% over five years, driven by modest employment reductions alongside stable or growing revenue.
  2. Average wages at Belgian firms that take up consulting rise 2.7% with no decline in labor's share of value added, and new clients spend on average 3% of payroll on consulting in episodic engagements typically lasting under one year.
  3. Consulting take-up is concentrated among large, high-labor-productivity Belgian firms and follows a U-shaped pattern in TFP and profitability, with larger productivity gains for initially less productive firms, which the authors suggest indicates improvements in allocative efficiency.

Related Articles:

  • Management and Firm Dynamism — Using U.S. Census Bureau survey data on plant-level monitoring and human-resources practices, the authors find better-managed firms are more dynamic in acquiring, disposing, opening and closing plants, and that they create better-managed plants and improve plants they acquire. In international data, the authors estimate differences in management practices account for about 1/5 of cross-country productivity gaps.
  • The Power of One: How Standout Firms Grow National Productivity — An analysis of 8,300 large firms accounting for two-thirds of gross value added in Germany, the UK, and the US finds that fewer than 100 firms generated about two-thirds of positive labor productivity gains in each country. A still smaller group of 55 firms accounted for 50–65% of the firm-level productivity drag.
  • The Economics of Inequality in High-Wage Economies — Information technology created investment opportunities exceeding the supply of properly trained talent, while trade with low-wage economies, low-skilled immigration, trade deficits, and aging demographics eased constraints on low-skilled labor and risk-averse savings. The author argues this framework, rather than rising cronyism, explains high returns to success, slowing productivity growth, and low interest rates.

AI Summary. China's $167bn hydropower project on the Yarlung Tsangpo river in Tibet, where the river drops more than 2,000 meters over a 50-kilometer stretch, has a potential capacity as high as 70 gigawatts. That could generate 300 terawatt-hours a year, roughly equal to the UK's total annual electricity use.

Bloomberg Staff Bloomberg
Date Posted:

Construction has started on a $167B (2.2% of China’s 2024 GDP) Yarlung Tsangpo river dam. The project could generate ~ 300 terawatt-hours a year or about the UK’s total annual electricity use and increase GDP by 0.1–0.2 pp.

Can a single hydropower project generate as much electricity as Britain uses?

Core argument: China's $167 billion hydropower project on the Yarlung Tsangpo has a potential capacity as high as 70 gigawatts and could generate 300 terawatt-hours a year, roughly the UK's total annual electricity use.

The Yarlung Tsangpo flows from the melting glaciers of the Tibetan Plateau, cutting a sharp U-turn around Namcha Barwa, the highest peak in Nyingchi prefecture, before plunging more than 2,000 meters (1.2 miles) over a 50-kilometer stretch — forming one of the world’s deepest canyons and an irresistible source of hydropower potential. The hydropower project, with a potential capacity as high as 70 gigawatts, could generate 300 terawatt-hours a year — roughly the UK’s total annual electricity use.

Takeaways by Macro Roundup® AI

  1. China's $167 billion hydropower project on the Yarlung Tsangpo has a potential capacity as high as 70 gigawatts and could generate 300 terawatt-hours a year, roughly the UK's total annual electricity use.
  2. The Yarlung Tsangpo, fed by melting glaciers on the Tibetan Plateau, drops more than 2,000 meters over a 50-kilometer stretch around Namcha Barwa, the highest peak in Nyingchi prefecture, forming one of the world's deepest canyons.
  3. Xi Jinping has tied his legacy and China's economy to the $167 billion dam.

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.
  • China Is Struck By Foods and Drought—At The Same Time — China holds 6% of the world's freshwater while supporting 20% of its population, with most northern provinces—home to 40% of Chinese people—falling below the United Nations threshold for water scarcity. Himalayan glaciers feeding China's major rivers have lost a fifth of their ice cover, and meltwater runoff is expected to begin declining around mid-century.

AI Summary. The U.S. is building a strategy around dispersed, mobile land-based missile launchers that can operate in island environments while still inflicting heavy damage on an adversary. Australia is buying 42 Himars launchers from the U.S. and jointly developing the Precision Strike Missile, which it could eventually manufacture domestically alongside U.S. production lines.

Mike Cherney Wall Street Journal
Date Posted:

The US’s new precision strike missile will enable American or Australian Himar platforms to hit moving targets at sea at a range of 310 miles. The system would complicate a contested Chinese invasion or blockade of Taiwan.

Can dispersed mobile missile launchers strengthen deterrence in island environments?

Core argument: Australia is buying 42 Himars launchers from the U.S. and is partnering with Washington to develop the Precision Strike Missile, and could eventually produce PrSMs domestically to augment U.S. manufacturing lines.

The U.S. wants its units to be more nimble, more widely dispersedand more capable of operating in island environments, making them harder to find but still capable of inflicting heavy damage on an adversary. Land-based, mobile missile launchers are important to the strategy. Earlier in July, the U.S. fired its Typhon missile system in Australia—which can shoot Tomahawk missiles and the Standard Missile 6—for the first time in the region. Another U.S. missile system, called Nmesis, features an antiship missile launcher mounted on a remote-control truck. Australia is buying 42 Himars launchers from the U.S., and is also joining with Washington to develop the PrSM. Eventually, Australia could make PrSMs domestically, augmenting U.S. manufacturing lines.

Takeaways by Macro Roundup® AI

  1. Australia is buying 42 Himars launchers from the U.S. and is partnering with Washington to develop the Precision Strike Missile, and could eventually produce PrSMs domestically to augment U.S. manufacturing lines.
  2. The U.S. seeks units that are more nimble, more widely dispersed and capable of operating in island environments, harder to find but still able to inflict heavy damage on an adversary, with land-based mobile missile launchers important to the strategy.
  3. The U.S. fired its Typhon missile system, which can shoot Tomahawk missiles and the Standard Missile 6, in Australia for the first time in the region, while a separate system, Nmesis, mounts an antiship missile launcher on a remote-control truck.

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.
  • Israel’s 12-Day War Revealed Alarming Gap in America’s Missile Stockpile — 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.
  • 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 31, 2025

AI Summary. The author estimates that AI-related capital spending contributed between 0.6% and 1.3% of a quarter's 3% U.S. GDP growth, based on information technology equipment and intellectual property investment data. Google, Amazon, Meta, and Microsoft alone spent about $69bn in the quarter, roughly half of all information technology equipment spending on an annualized basis.

Paul Kedrosky Applied Complexity
Date Posted:

Paul Kedrosky estimates that AI capex drove 20 to 40% of US GDP growth of 3% per annum in Q2, noting “for practical purposes (AI capex) ate Q2 GDP growth.”

How much of U.S. GDP growth comes from AI capital spending?

Core argument: AI capex contributed an estimated 0.6 to 1.3 points of the 3% U.S. GDP growth in the quarter, with the high end implying roughly 40% of that growth, based on BEA data on IT equipment and intellectual property products.

The key data point is IT spending (IT equipment and IP products) [while the] two categories were not entirely AI-capex-related, obviously. But a significant fraction was, certainly more than half, given their anomalous size and growth in the BEA Q2 numbers. Summing it, a reasonable estimate is that AI capex contributed perhaps 1.3% of the 3% GDP growth in the quarter, around 40%. We can back into the estimate another way, bottoms-up from known AI capex at major tech companies spending in the period. Taking just Google, Amazon, Meta, and Microsoft, and their quarterly earnings and published data, they spent around $69B in the quarter, which is $276B annualized. Total IT equipment spending in the quarter was $608B annualized, so the Big Four alone were almost half of the spending, and most of that, we know, was AI capex. Given that information processing equipment spending added 1% to GDP growth in the quarter, from the BEA's own figures, then AI capex, including both software and equipment, was at least 0.6% in that. We now have a range: AI capex's contribution to Q2 growth was somewhere between 0.6% (on the low end, undercounting smaller players) and 1.3% (on the high end).

Takeaways by Macro Roundup® AI

  1. AI capex contributed an estimated 0.6 to 1.3 points of the 3% U.S. GDP growth in the quarter, with the high end implying roughly 40% of that growth, based on BEA data on IT equipment and intellectual property products.
  2. Google, Amazon, Meta, and Microsoft together spent around $69 billion on capex in the quarter, or $276 billion annualized, nearly half of the $608 billion annualized total IT equipment spending, most of it AI capex.
  3. Information processing equipment spending added 1 point to quarterly GDP growth in the BEA's figures, from which the author derives a floor of at least 0.6 points for AI capex covering both software and equipment.

Related Articles:

  • Back to Our Regularly Scheduled Programming — The four largest US hyperscalers spent $440bn on capital expenditure and research in 2024, with $596bn projected for 2025, a 35% increase, leaving large gaps between AI spending and AI revenues. These firms account for more than half of all capital expenditure growth in the US equity market.
  • Honey, AI Capex is Eating the Economy — Capital spending on AI data centers is around 20% of railroads' peak spending as a share of GDP and is rising quickly, having already surpassed the dot-com era peak in telecom investment. Unlike long-lived rail infrastructure, data centers are short-lived assets requiring frequent hardware replacement, and the capital is being reallocated from other sectors.
  • AI Adoption Is Accelerating In 2025 — Nvidia's data center revenue growth is used as a simple extrapolation to project the broader capital-expenditure impact of AI-specific investment on GDP. The aim is not precision but a timely sense of whether the growth contribution from AI capital spending is accelerating or potentially peaking.

AI Summary. Population aging and fertility below replacement levels are connected to a revolution in family structure in which families grow smaller, fewer people marry, and voluntary childlessness becomes common across countries. As a result, families become less able to bear the demands that may be placed on them.

Nicholas Eberstadt Fertility and Sterility
Date Posted:

Nicholas Eberstadt warns that depopulation will stress families as smaller families “become ever less able to bear weight—even as the demands that might be placed on them steadily rise.”

Does falling fertility weaken families' ability to support their members?

Core argument: Rapid aging and steep sub-replacement fertility are inextricably connected to a revolution in family structure in which families grow smaller and more atomized, fewer people marry, and voluntary childlessness takes hold country after country.

Families are society’s most basic unit and are still humanity’s most indispensable institution. Both precipitous aging and steep sub-replacement fertility are inextricably connected to the ongoing revolution in family structure. As familial units grow smaller and more atomized, fewer people get married, and high levels of voluntary childlessness take hold in country after country. As a result, families and their branches become ever less able to bear weight—even as the demands that might be placed on them steadily rise. Just how depopulating societies will cope with this broad retreat of the family is by no means obvious. Perhaps others could step in to assume roles traditionally undertaken by blood relatives. But it is hard to expect duty and sacrifice in childrearing from people who are not kin.

Takeaways by Macro Roundup® AI

  1. Rapid aging and steep sub-replacement fertility are inextricably connected to a revolution in family structure in which families grow smaller and more atomized, fewer people marry, and voluntary childlessness takes hold country after country.
  2. As families and their branches become less able to bear weight while the demands placed on them rise, how depopulating societies will cope with this retreat of the family is not obvious.
  3. Non-relatives might step into roles traditionally undertaken by blood relatives, but duty and sacrifice in childrearing is hard to expect from people who are not kin.

Related Articles:

  • The Demographic Future of Humanity: Facts and Consequences — The authors estimate the world total fertility rate is around 2.17, below the global replacement rate of roughly 2.21, meaning humanity is already below replacement, with fertility and births falling faster than anticipated. They project middle-income countries' fertility may fall below that of rich countries outside East Asia, with emigration compounding population decline.
  • World Depopulation: Prospects and Implications — The US is projected to account for a growing share of the rich world's labor force, youth, and highly educated talent, with continuing population and labor force growth and only moderate aging through 2050. Its fertility, though below replacement, exceeds that of East Asian and nearly all European countries, and sustained legal immigration is essential to this demographic advantage.
  • The 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. The trade-weighted dollar against other major currencies has risen roughly 2.5% in a week, an unusually large move for such a liquid currency. The author argues the rally reflects an unwinding of extreme short positioning and scope for priced-in Federal Reserve rate cuts to be removed, and that the dollar's decline is over.

Robin Brooks Robin Brooks Substack
Date Posted:

Citing excessive market expectations of upcoming rate cuts, a backlog of short positions accumulated at the height of the trade war, and momentum from this week’s 2.5% appreciation against the rest of the G10, Brooks argues “the dollar fall is over.”

Is the dollar's decline over?

Core argument: The trade-weighted Dollar against the G10 is up roughly 2.5% this week, which the author calls a highly unusual move for such a liquid and deeply-traded currency.

The chart shows the trade-weighted Dollar against the G10. The Dollar is up around 2.5% this week, which is a highly unusual move for such a liquid and deeply-traded currency. Market pricing for the Fed is still very dovish, which means there’s still plenty of scope for rate cuts to get priced out, especially in the remainder of 2025. As trade tensions fade, markets will likely refocus on US growth outperformance, which means the US “exceptionalism” narrative may come back stronger than ever. The extreme level of Dollar shorts took many months to build, so there’s still a lot of unwinding of this positioning to be done. This short squeeze is far from over. Most importantly, the single biggest disrupter of market narratives is price action. The overriding market narrative in recent months has been that the Dollar will keep falling. This kind of appreciation episode - its speed and violence - ends this kind of story telling. The Dollar fall is over.

Takeaways by Macro Roundup® AI

  1. The trade-weighted Dollar against the G10 is up roughly 2.5% this week, which the author calls a highly unusual move for such a liquid and deeply-traded currency.
  2. The author argues market pricing for the Fed remains very dovish, leaving plenty of scope for rate cuts to be priced out, especially over the remainder of 2025.
  3. The author contends that the extreme level of Dollar shorts took many months to build, leaving substantial unwinding ahead, and that the US "exceptionalism" narrative may return stronger than ever as trade tensions fade.

Related Articles:

  • The International Role of the U.S. Dollar – 2025 Edition — 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.
  • Explaining the US Dollar’s Depreciation in the First Half of 2025 — 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.
  • Tariffs, the Dollar, and Equities: High-Frequency Evidence from the Liberation Day Announcement — Following a sweeping US tariff announcement, the dollar's effective exchange rate depreciated rather than appreciating as standard international macroeconomic models predict: all G10 currencies gained against the dollar while the most freely floating emerging market currencies gained less or fell. The authors read this as advanced economies rebalancing away from dollar assets.

AI Summary. Inflation-adjusted US house prices are 2.0% below their 2022 peak. An affordability index built from median income, a 15% down payment, a 2% allowance for property taxes, insurance and maintenance, and 30-year fixed mortgage rates shows the monthly payment on the same house rose 101% over four years, with prices up 29% and mortgage rates at 6.82%.

Bill McBride Calculated Risk
Date Posted:

Nationally, real house prices are now 2% below the 2022 peak and 10.5% above the 2006 peak. “Affordability” remains at levels last seen in the early 1980s when 30-year mortgage rates were over 14%. @calculatedrisk

How much have house prices and monthly payments changed since the peak?

Core argument: Inflation-adjusted U.S. house prices stand 2.0% below their 2022 peak, based on the Case-Shiller National Index, seasonally adjusted.

I’ve put together my own affordability index [using] median income from the Census Bureau (estimated 2024 and 2025), assumed a 15% down payment, and used a 2% estimate for property taxes, insurance and maintenance. This is probably low for high property tax states like New Jersey and Texas, and too high for lower property tax states. For house prices, I used the Case-Shiller National Index, Seasonally Adjusted (SA). Also, for the down payment - there wasn’t a significant difference between 15% and 20%. For mortgage rates, I used the Freddie Mac PMMS (30-year fixed rates). Here is what the index looks like (lower is more affordable). The monthly payment for the same house in May 2021, with house prices up 29% over four years and mortgage rates at 6.82% in May 2025, would be $3,374 - an increase of 101%! Twice the payment for the same house!

Takeaways by Macro Roundup® AI

  1. Inflation-adjusted U.S. house prices stand 2.0% below their 2022 peak, based on the Case-Shiller National Index, seasonally adjusted.
  2. The monthly payment for the same house bought in May 2021 would be $3,374, an increase of 101%, with house prices up 29% over four years and 30-year mortgage rates at 6.82% in May 2025.
  3. The affordability index uses Census Bureau median income with 2024 and 2025 estimated, a 15% down payment, a 2% estimate for property taxes, insurance and maintenance, and Freddie Mac PMMS 30-year fixed rates, with no significant difference between 15% and 20% down.

Related Articles:

  • First-Time Home Buyers Are MIA. Landlords Are the Winners — The National Association of Realtors reports 1.1m first-time home buyers last year, 380,000 fewer than the prior year and about half the two-decade average of 2.1m a year, with the sharpest sales slowdown in homes under $500,000. Unaffordable prices and high mortgage rates have slowed the flow from renting to owning.
  • Rapidly Growing Treasury Supply Crowding Out Other Types of Credit Growth — Roughly half of all fixed income issuance coming to market over the past year has been US Treasuries, meaning investors must allocate a growing share of dollars to financing the government. The argument is that lower government debt would free up more funds for consumer borrowing and business investment.
  • Why Are Young Adults in the English-Speaking World So Unhappy? — 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.

AI Summary. Most semiconductors entering the US are not captured in trade data because they arrive embedded inside imported devices. With global chip sales of $627bn, the US is estimated to consume 25% ($156bn) while producing about $68bn and directly importing $40bn, implying roughly $50bn of net imports hidden inside other goods.

Chris Miller American Enterprise Institute
Date Posted:

“Much of the $40 billion of chips the US imports are actually made in the US, packaged abroad, and reimported,” Chris Miller argues. Thus “tariffs would senselessly penalize domestic manufacturers.”

Do trade data capture most semiconductors entering the US?

Core argument: Around $50 billion of US net semiconductor imports are "hidden" in trade data, entering embedded inside imported devices rather than recorded as chip imports.

Most of the chips that enter the US are not captured by trade data because these semiconductors are embedded inside imported devices. Global semiconductor sales in 2024 were $627 billion, of which the US is estimated to consume 25%, or $156 billion. The US produces 10% of the world’s semiconductors. On the assumption that US-made chips are roughly equivalent in value to the global average, the US thus produces $68 billion of chips. It imports only $40 billion. In other words, around $50 billion of net imports of semiconductors are “hidden” in the trade data, imported as components of other goods.

Takeaways by Macro Roundup® AI

  1. Around $50 billion of US net semiconductor imports are "hidden" in trade data, entering embedded inside imported devices rather than recorded as chip imports.
  2. Global semiconductor sales reached $627 billion in 2024, of which the US is estimated to consume 25%, or $156 billion, while producing 10% of the world's chips.
  3. Assuming US-made chips match the global average in value, US semiconductor production totals $68 billion against recorded chip imports of only $40 billion.

Related Articles:

  • TSMC To Speed Up Construction Of US Chip Plants By ‘Several Quarters’ — TSMC says it is accelerating construction of its second and third Arizona plants by several quarters to meet strong U.S. customer demand for smartphone and AI computing chips. The company has committed an additional $100bn to build five more facilities in the state and expects around 30% of its 2-nanometer and more advanced capacity to be located in Arizona.
  • TSMC’s Arizona Chip Production Yields Surpass Taiwan’s in Win for US Push — Taiwan Semiconductor Manufacturing Co. reports that the share of usable chips produced at its Phoenix, Arizona plant is about 4 percentage points higher than at comparable factories in Taiwan. Yield is a critical industry measure because it determines whether companies can cover the enormous costs of a chip plant.
  • The Chips Act Has Been Surprisingly Successful So Far — The US government has spent over half of its $39bn in Chips Act semiconductor incentives, and chip companies and supply chain partners have announced $327bn of investments over the next 10 years, according to Semiconductor Industry Association calculations. US data show a 15-fold increase in construction of computing and electronics manufacturing facilities.