Edward Conard

Top Ten New York Times Bestselling Author

  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, August 7, 2025

AI Summary. The share of novel patents produced by the 50 largest US firms by sales followed a U-shaped path, falling from 1980 to the early 2000s before rising to its highest level by 2016. The authors find these firms' novel patents since 2001 generate more follow-on patents by other firms, suggesting knowledge diffusion.

Joonkyu Choi, Serguey Braguinsky, Yuheng Ding, Karam Jo, et al. Federal Reserve Board
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After a 20-year decline, the share of novel patents produced by “mega firms” began a sharp rebound in 2001, reaching a peak of 18% in 2016. A relative increase in cash holdings since the early 2000s likely facilitated mega firms’ funding of risky R&D.

Are the largest US firms driving more novel, widely built-upon innovation?

Core argument: The share of novel patents produced by mega firms — the top 50 Compustat firms by sales — followed a U-shape, declining from 1980 to the early 2000s before rebounding sharply to its highest level by 2016.

Our empirical analysis reveals a U-shaped trend in the share of novel patents produced by mega firms [the top 50 firms in Compustat by sales for that year], declining from 1980 to the early 2000s before rebounding sharply to reach its highest level by 2016. Since 2001, novel patents by mega firms have demonstrated greater technological impact, generating more follow-on patents and being more likely to become “hits” compared to those by non-mega firms. The self-follow-on rate—the proportion of follow-on patents generated by the same firm—has remained stable for mega firms over time, showing no evidence of impending knowledge spillover specifically for their novel patents. Combined with the higher volume of follow-on patents post-2001 for these novel innovations, this suggests that mega firms are facilitating knowledge diffusion to other firms through this selected subset of innovations. We find suggestive evidence that the relative increase in cash holdings since the early 2000s may have enabled mega firms to fund risky, experimental R&D, while the broadening technological scope of their inventor teams may have enhanced their capacity to pioneer new combinations.

Takeaways by Macro Roundup® AI

  1. The share of novel patents produced by mega firms — the top 50 Compustat firms by sales — followed a U-shape, declining from 1980 to the early 2000s before rebounding sharply to its highest level by 2016.
  2. Since 2001, novel patents from mega firms have generated more follow-on patents and been more likely to become "hits" than those from non-mega firms, while their self-follow-on rate remained stable, suggesting knowledge diffusion to other firms.
  3. Suggestive evidence indicates that mega firms' relative increase in cash holdings since the early 2000s may have enabled funding of risky, experimental R&D, while the broadening technological scope of their inventor teams may have enhanced their capacity to pioneer new combinations.

Related Articles:

  • 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.
  • Mega Firms and Recent Trends in the U.S. Innovation: Empirical Evidence from the U.S. Patent Data — Analysis of US patent data finds that the largest firms are more likely to file novel patents even after controlling for size, industry, and patent counts, and that firms produce more novel patents as they become mega firms. Venture-backed startups also account for a disproportionate share of novel patents.

AI Summary. Recent college graduate employment in sectors that use artificial intelligence intensively has kept pace with employment in less AI-intensive sectors since the release of ChatGPT, after declining relative to them over the prior four years. Majors identified as most exposed to AI, including mathematics, accounting, and business analytics, are not consistently the worst performers in the labor market.

Will Raderman Employ America
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Employment of college graduates in AI-intensive and non-intensive sectors both grew 5% on net btw the rollout of ChatGPT in Nov. 2022 and the most recent data. Unemployment is up in computer science, but down in a number of other AI-exposed majors.

Is AI driving the rise in recent graduate unemployment?

Core argument: Since ChatGPT's release in November 2022, recent college graduate employment in AI-intensive sectors has kept pace with non-intensive sectors on net, and has performed somewhat better relative to the most recent pre-generative-AI trend.

I plot recent college graduate employment in high and low AI intensive sectors relative to their respective levels in November 2022, the month when ChatGPT was first released. Over the four years prior to ChatGPT, recent graduate employment in AI-intensive sectors actually *declined* relative to recent graduate employment in non-intensive sectors. But, since the release of ChatGPT, recent graduate employment in AI-intensive sectors has kept pace with non-intensive sectors on net. If anything, recent graduate employment has performed a bit better of late (relative to the most recent pre-generative AI trend) in sectors where AI usage is more prevalent.[Further], the majors most exposed to AI (many in STEM fields) are not consistently the worst-performing majors in the labor market.While computer science, computer engineering, and chemistry fields have seen higher unemployment rates, this experience is not widely true of high-exposure majors. Mathematics, accounting, and business analytics majors—all of which are high-AI-exposure majors in Timmerman (2025)—are currently enjoying lower unemployment rates than pre-pandemic.

Takeaways by Macro Roundup® AI

  1. Since ChatGPT's release in November 2022, recent college graduate employment in AI-intensive sectors has kept pace with non-intensive sectors on net, and has performed somewhat better relative to the most recent pre-generative-AI trend.
  2. Over the four years before ChatGPT's November 2022 release, recent graduate employment in AI-intensive sectors declined relative to employment in non-AI-intensive sectors.
  3. Majors most exposed to AI, many in STEM, are not consistently the worst performers in the labor market: mathematics, accounting, and business analytics, all high-exposure in Timmerman (2025), have lower unemployment rates than pre-pandemic, while computer science, computer engineering, and chemistry have higher rates.

Related Articles:

  • AI Is Wrecking an Already Fragile Job Market for College Graduates — An analysis of labor data finds a shrinking share of each graduating class is landing jobs requiring a bachelor's degree. At the 15 largest tech companies by market value, entry-level hires as a share of total new hires have fallen 50%, and recent graduates made up 7% of new hires, down from 11%.
  • 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.
  • 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%.

AI Summary. The Budget Lab estimates U.S. consumers face an overall average effective tariff rate of 18.6%, the highest since 1933, falling to 17.7% after consumption shifts away from tariffed goods. The 2025 tariffs are projected to raise $2.7tn over 2026-35, or $2.2tn after $475bn in negative dynamic revenue effects.

Ernie Tedeschi Yale University
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As of August 7, reflecting new tariffs on India, the US has an overall effective tariff rate of 17.7%. Dynamically scored, Ernie Tedeschi estimates this tariff regime will raise $2.2T over 2026–2035.

How high are tariff rates and how much revenue will they raise?

Core argument: U.S. consumers face an overall average effective tariff rate of 18.6%, the highest since 1933.

Consumers face an overall average effective tariff rate of 18.6%, the highest since 1933. After consumption shifts, the average tariff rate will be 17.7%, the highest since 1934. All tariffs to date in 2025 raise $2.7 trillion over 2026-35, with $475 billion in negative dynamic revenue effects, bringing dynamic revenues to $2.2 trillion.

Takeaways by Macro Roundup® AI

  1. U.S. consumers face an overall average effective tariff rate of 18.6%, the highest since 1933.
  2. After consumption shifts, the average U.S. tariff rate falls to 17.7%, the highest since 1934.
  3. All U.S. tariffs imposed in 2025 raise $2.7 trillion over 2026–35, with $475 billion in negative dynamic revenue effects bringing dynamic revenues to $2.2 trillion.

Related Articles:

  • Tariffs are Dumb Enough to (Almost) Work — A universal 15% tariff on imported goods could raise roughly $300–$400bn annually, a fraction of what a value-added tax would generate but real revenue given U.S. imports of about $4tn. The author argues tariffs are a poorly designed form of consumption tax that could build political groundwork for replacing them with a more efficient value-added tax.
  • 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.
  • China Emerges From Trade Chaos With Record Exports, Surplus — China posted a record half-year trade surplus of about $586bn, with exports up 5.8% year-over-year to $325bn and imports up 1.1%. Shipments to the US fell 16.1% from a year earlier, while exports to the 10 Southeast Asian nations in the Asean group rose 17%.

AI Summary. Texas-based space company Firefly Aerospace raised $868m in its initial public offering, selling more than 19 million shares at $45 each, after its NASA-funded Blue Ghost lander completed the first fully successful private moon landing. Firefly is working with Northrop Grumman on Eclipse, a larger partially reusable rocket.

Micah Maidenberg and Corrie Driebusch Wall Street Journal
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Firefly Aerospace, whose Blue Ghost lander landed on the moon in March, raised $868mm in its IPO. Firefly is working with Northrop Grumman to develop a partially reusable rocket to compete with SpaceX’s Falcon 9.

Can a private space company raise capital after a successful moon landing?

Core argument: Firefly Aerospace sold more than 19 million shares at $45 apiece in its initial public offering, raising $868 million, five months after its Blue Ghost lander reached the lunar surface.

Firefly Aerospace pulled off a moon landing earlier this year. Its next destination: Wall Street. The Cedar Park, Texas-based space company sold more than 19 million shares in its initial public offering at $45 apiece, raising $868 million. Firefly’s listing comes five months after it successfully guided its Blue Ghost lander to the lunar surface, carrying scientific gear to research moon dust and ground temperatures. The NASA-funded mission marked the first fully successful private moon landing, following misfires on three other flights handled by competitors. Firefly is working with Northrop Grumman to develop a bigger, partially reusable rocket—similar to SpaceX’s market-leading Falcon 9—called Eclipse, aiming to launch it for the first time next year. It has launched its smaller Alpha rocket six times, but during its last flight in April, an engine on part of the vehicle lost thrust and couldn’t deliver a Lockheed Martin test satellite to orbit.

Takeaways by Macro Roundup® AI

  1. Firefly Aerospace sold more than 19 million shares at $45 apiece in its initial public offering, raising $868 million, five months after its Blue Ghost lander reached the lunar surface.
  2. Firefly's NASA-funded Blue Ghost mission, which carried gear to research moon dust and ground temperatures, marked the first fully successful private moon landing, following misfires on three other flights handled by competitors.
  3. Firefly is developing Eclipse, a bigger, partially reusable rocket similar to SpaceX's Falcon 9, with Northrop Grumman, aiming for a first launch next year; its smaller Alpha rocket lost engine thrust in April and failed to deliver a Lockheed Martin test satellite to orbit.

Related Articles:

  • Has Starlink Already Won the New Space Race? — Starlink has launched more than 8,417 satellites, 39% of all satellites launched since the first artificial satellite reached orbit, and its roughly 7,300 operational satellites make up almost two-thirds of all operational spacecraft. It delivers low-latency broadband to over 5mn customers in 125 countries and is projected to generate $12bn in revenue and $2bn in free cash flow this year.
  • It’s Not a Space Race, It’s the Space Olympics — The US operates 81% of commercial satellites in orbit and 86% of global effective launch capacity, with NATO allies second in satellites at 11% and China second in launch capacity at 9%. China is pursuing mega satellite constellations and reusable rockets, in many cases copying approaches already proven by US companies.
  • Building an Enduring Advantage in the Third Space Age — The United States and China each logged their highest-ever annual launch rates, at 103 and 66 launches, while Russia fell to 19 and Europe recorded three. The US accounted for roughly half of global launches but 81% of effective launch capacity, since Falcon 9 and Falcon Heavy comprised 93% of US launches.

Friday, August 8, 2025

AI Summary. Data center capital spending differs from fiber and railroad investment because most of the cost sits in processors that are replaced every 3-4 years rather than in long-lived shells, power, and cooling connections. That short replacement cycle requires returns high enough to exceed a risk-adjusted cost of capital of 12-14% before the hardware must be replaced.

Paul Kedrosky Applied Complexity
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Paul Kedrosky estimates given datacenter’s high deprecation rates – the replacement cycle for GPUs is 3 to 4 years – to be profitable, the return “must exceed the risk-adjusted, weighted average cost of capital, which is 12–14%.”

Does data center spending resemble investment in fiber and railroads?

Core argument: GPUs face a replacement cycle of 3–4 years at best, unlike long-lived assets such as backbone fiber and railroads, making data center capital expenditure different from those earlier buildouts.

Capital expenditure on data centers is very different from spending on fiber and railroads. Railroads and backbone fiber are long-lived assets. This is not the case with data centers. Almost all aspects have declining utility over time. First, and most obviously, the GPUs running and being used for training or inference purposes. The replacement cycle for GPUs is 3-4 years, at best, nothing like fiber or railroads. To turn it around, if you create a data center today and don't use it for four years, it would be better to never turn on the power. It's largely been superseded by subsequent technologies. Data centers also require power and water, and those connections, within reason, are useful longer. The outer shell—some would call it a building—also has a longer life. But most of the cost in a data center is not in the shell, or power, or cooling water. It is in the processors. And having to replace them every few years creates intense pressure on the investment. You must earn a high enough return before replacement to justify the expenditure. In financial terms, your income must exceed the risk-adjusted, weighted average cost of capital, which runs 12-14%.

Takeaways by Macro Roundup® AI

  1. GPUs face a replacement cycle of 3–4 years at best, unlike long-lived assets such as backbone fiber and railroads, making data center capital expenditure different from those earlier buildouts.
  2. Most of a data center's cost lies in the processors rather than the outer shell, power connections, or cooling water, which have longer useful lives.
  3. Data center investment must earn income exceeding a risk-adjusted weighted average cost of capital of 12–14% before processors are replaced, and a facility left unused for four years would be better never powered on.

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 Keeps Eating … Everything — 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.
  • 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 Summary. Nvidia holds the largest weight of any individual stock in the S&P 500 since the data series began in 1981, reflecting extreme concentration in AI-linked shares.

Torsten Sløk Apollo
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Nvidia’s 8% weight in the S&P 500 is the largest of any individual stock since the start of the data in 1981. Nvidia has a P/E ratio of 58.

Has stock market concentration reached its highest level on record?

Core argument: Nvidia holds the largest weight of any individual stock in the S&P 500 since the data series began in 1981, according to a chart of the index's biggest company by market capitalization.

The chart shows the biggest stock by market cap in the S&P 500, and it confirms the extreme AI concentration in the market today. Nvidia now has the biggest weight in the S&P 500 of any individual stock since the data began in 1981.

Takeaways by Macro Roundup® AI

  1. Nvidia holds the largest weight of any individual stock in the S&P 500 since the data series began in 1981, according to a chart of the index's biggest company by market capitalization.
  2. The S&P 500's largest-stock weighting points to extreme AI concentration in the market, with Nvidia exceeding every prior single-stock level recorded since 1981.

Related Articles:

  • Summer Mailbag — 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.
  • 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. Survey data show adults in their twenties and thirties increasingly report being easily distracted, careless, less tenacious, and less likely to make and keep commitments, a decline in conscientiousness. The same data show rising neuroticism and lower sociability, with young adults — long the most extroverted group — now reporting the most introversion.

John Burn-Murdoch Financial Times
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Btw 2014 and 2024, there was a “sustained erosion of conscientiousness” in young Americans (ages 16–39); they report “feeling increasingly easily distracted and careless, less tenacious and less likely to make and deliver on commitments.”

Are young adults becoming less conscientious, more anxious, and more introverted?

Core argument: People in their twenties and thirties report being increasingly easily distracted and careless, less tenacious, and less likely to make and deliver on commitments, according to the Understanding America Survey.

Digging deeper into the data, which comes from the Understanding America Survey, we can see that people in their twenties and thirties in particular report feeling increasingly easily distracted and careless, less tenacious and less likely to make and deliver on commitments. Collapsing conscientiousness is not the only personality shift visible in the data. Neuroticism — a function of the much-discussed increase in anxiety — has risen almost as much. Young adults also report feeling less amiable and outgoing. There’s a particularly steep drop shown in the latter during the pandemic, when young people bore the brunt of restrictions on contact in order to protect others from harm. In fact, long the most extroverted group in society, young adults are now the most introverted.

Takeaways by Macro Roundup® AI

  1. People in their twenties and thirties report being increasingly easily distracted and careless, less tenacious, and less likely to make and deliver on commitments, according to the Understanding America Survey.
  2. Neuroticism, a function of the increase in anxiety, has risen almost as much as conscientiousness has fallen in the Understanding America Survey data.
  3. Young adults, long the most extroverted group in society, now report being the most introverted, with a particularly steep drop during the pandemic, when they bore the brunt of restrictions on contact.

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.
  • 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.
  • US College Students’ Well-Being — A study of US college students finds moderate-to-severe depression reported by 26% of students at one elite institution, 22% reporting moderate-to-severe anxiety and 10% contemplating suicide. Poorer mental health is associated with being female, little exercise, low grades, and financial aid; financial stress is associated with higher suicidal thoughts.

AI Summary. China's goods exports to the US have fallen sharply—down 22% year-over-year—while exports to the rest of the world grew 12%, almost entirely offsetting the drop. The author argues this shift amounts to a deflationary shock for China, as exporters either transship goods to the US or discount them elsewhere, weighing on profits.

Robin Brooks Robin Brooks Substack
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China’s goods exports to the US are down 22% y/y but have been offset by a 12% increase in goods exports to the rest of the world. Robin Brooks notes that transshipping or selling outside the US will compress exporters’ margins, both acting as deflationary shocks.

Does redirecting exports away from the US create deflation in China?

Core argument: China's exports to the US fell 22% year-over-year in July 2025, while its exports to the rest of the world rose 12% year-over-year, a higher-than-normal growth rate.

The left chart above shows [China's overall goods exports] (black line) and breaks those down into goods going to the US (red bars) and those going to any other country (blue bars). Exports to the US have fallen sharply, with exports to the rest of the world almost completely offsetting this drop. The right chart zeros in on this dynamic. It shows year-over-year growth in exports to the US (red line) versus exports to everywhere else (blue line). In July 2025, China’s exports to the US were down a stunning 22% from a year before, while exports to everywhere else were up 12% year-over-year, a higher-than-normal growth rate. The rise in exports to places other than the US is a deflationary shock for China, which is either transshipping goods to the US (weighing on exporters’ profits) or discounting goods to boost demand for Chinese goods outside the US (also weighing on exporters’ profits).

Takeaways by Macro Roundup® AI

  1. China's exports to the US fell 22% year-over-year in July 2025, while its exports to the rest of the world rose 12% year-over-year, a higher-than-normal growth rate.
  2. China's overall goods exports held up as the sharp drop in shipments to the US was almost completely offset by rising exports to all other countries.
  3. The rise in exports to destinations other than the US amounts to a deflationary shock for China, which is either transshipping goods to the US or discounting goods to boost demand abroad, both weighing on exporters' profits.

Related Articles:

  • China Emerges From Trade Chaos With Record Exports, Surplus — China posted a record half-year trade surplus of about $586bn, with exports up 5.8% year-over-year to $325bn and imports up 1.1%. Shipments to the US fell 16.1% from a year earlier, while exports to the 10 Southeast Asian nations in the Asean group rose 17%.
  • Our Revamped China Wage Tracker Shows Gradual Softening in Wage Growth — A revamped wage tracker estimates China's wage growth slowed to 4.2% year-over-year in the first quarter and 3.9% in the second, down from 4.5% in the prior fourth quarter and about 1 percentage point below official figures. The authors argue sluggish wage growth may weigh on consumption growth.
  • Why US Tariffs Are Deflationary for China — China's exports to the US have fallen sharply while its exports to the rest of the world have risen by an almost offsetting amount. The author argues both adjustments are deflationary for China: routing goods through third countries raises transport costs and squeezes exporter margins, while redirecting goods to new markets requires cutting prices to generate demand.

AI Summary. U.S. flood insurance is provided almost exclusively through the federally managed National Flood Insurance Program, and direct property damage from flooding totaled nearly $144bn while program payouts covered roughly $50bn, or about 35% of that damage. These figures exclude indirect costs such as lost income and production, understating the full economic toll.

Kristian Blickle, Evan Perry, and João Santos Federal Reserve Bank of New York
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Btw 2010 and 2023, direct property damage from flooding totaled $144B (in 2023 $). The National Flood Insurance Program covered 35% of the direct damages.

How much U.S. flood damage does federal flood insurance cover?

Core argument: U.S. direct property damage from flooding totaled nearly $144 billion (2023 USD) between 2010 and 2023, while National Flood Insurance Program payouts on that damage came to roughly $50 billion, just 35% of direct damages.

Flood insurance in the U.S. is almost exclusively provided through the National Flood Insurance Program (NFIP), which is managed by the Federal Emergency Management Agency (FEMA). The U.S. has sustained substantial and largely uninsured damages from flooding over the past fifteen years. The chart displays the cumulative damages from flooding in the U.S. and the cumulative insurance payouts on these damages, starting in 2010. Between 2010 and 2023, the direct property damage from flooding totaled nearly $144 billion (in 2023 USD). In the same period, insurance payments on property damage from the National Flood Insurance Program totaled approximately $50 billion (in 2023 USD)—just 35% of the direct damages. These damage estimates understate the full economic cost of flooding by excluding indirect damages (for example, lost income and production associated with floods).

Takeaways by Macro Roundup® AI

  1. U.S. direct property damage from flooding totaled nearly $144 billion (2023 USD) between 2010 and 2023, while National Flood Insurance Program payouts on that damage came to roughly $50 billion, just 35% of direct damages.
  2. Flood insurance in the U.S. is almost exclusively provided through the National Flood Insurance Program, managed by the Federal Emergency Management Agency.
  3. The $144 billion damage estimate understates the full economic cost of U.S. flooding because it excludes indirect damages such as lost income and production associated with floods.

Related Articles:

  • Insurance: Climbing Costs Cut Into Consumer Budgets — Bank of America internal data show median household property insurance payments (auto and home) rose 6% year-over-year and more than 40% over five years, lifting such payments to 5% of income. Younger generations saw the largest increases, though Gen X payments also rose 45%.
  • Catastrophe Bond Sales Hit Record as Insurers Offload Climate Risks — Insurers are issuing catastrophe bonds, which transfer risk from events such as wildfires, hurricanes and earthquakes to bondholders, at a record pace, with issuance reaching $18.1bn against a prior full-year record of $17.7bn. A Swiss Re index of total returns on these bonds has risen 14% over the past year.
  • The World Is Getting Riskier. Americans Don’t Want to Pay for It — Americans' resistance to paying to insure against risks from illness, old age, and natural and financial disasters is growing alongside those risks; JPMorgan estimated wildfires around Los Angeles caused $50bn in losses, of which only $20bn were insured. Socializing risk removes the price signal that encourages the insured to mitigate their own exposure.