Edward Conard

Top Ten New York Times Bestselling Author

  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, August 13, 2025

AI Summary. New U.S. tariffs are estimated to generate $1.3tn in net new revenue through the end of the current presidential term and $2.8tn through 2034 before economic effects, about $600bn more than previously enacted tariffs. If a court ruling striking down some tariffs is upheld, the remainder could raise as little as $800bn through 2034.

Marc Goldwein Committee For A Responsible Federal Budget
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The current tariff regime will raise ~$2.8T net new revenue through 2034, conventionally scored, according to a CRFB estimate. “Those who wish to reduce or reverse the tariffs should put forward alternative sources of deficit reduction to replace them.”

How much new revenue do the new tariffs generate?

Core argument: Tariffs introduced by the Trump Administration are estimated to generate $1.3 trillion of net new revenue through the end of his term and $2.8 trillion through 2034 before economic effects, about $600 billion more than the tariffs in effect as of May.

The new tariffs introduced by the current Trump Administration will generate an estimated $1.3 trillion of net new revenue through the end of his term and $2.8 trillion through 2034, before accounting for economic effects – about $600 billion more than the tariffs in effect as of May. The U.S. Trade Court has ruled some of these tariffs illegal, pending appeal. If the ruling is upheld, the remaining tariffs could raise as little as $800 billion through 2034. Depending on the legal outcome, recent tariff increases will generate 0.2 to 0.8 percent of GDP of net new revenue through 2034 under conventional scoring.

Takeaways by Macro Roundup® AI

  1. Tariffs introduced by the Trump Administration are estimated to generate $1.3 trillion of net new revenue through the end of his term and $2.8 trillion through 2034 before economic effects, about $600 billion more than the tariffs in effect as of May.
  2. The U.S. Trade Court has ruled some of these tariffs illegal, pending appeal, and if the ruling is upheld the remaining tariffs could raise as little as $800 billion through 2034.
  3. Depending on the legal outcome, the recent tariff increases will generate 0.2 to 0.8 percent of GDP in net new revenue through 2034 under conventional scoring.

Related Articles:

  • State of U.S. Tariffs: August 7, 2025 — 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.
  • Trump’s Tariffs Are Making Money. That May Make Them Hard to Quit — Tariff revenue may make future administrations of either party reluctant to roll back tariffs, since repeal would add to the federal debt and replacing the revenue with other taxes would require a politically risky vote in Congress. Democrats may also be tempted to use tariff revenue to fund new social programs.
  • 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.

AI Summary. Capital has flowed at the margin away from US markets and toward Europe, with the euro posting its longest stretch of monthly gains against the dollar in eight years and Germany's DAX index up 33% in dollar terms, more than four times the S&P 500's gain. US outflows remain modest, as Treasury auctions continue to find steady demand.

John Cortese, Rob Bittencourt, Akila Grewal, Shobhit Gupta, et al. Apollo
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Btw the start of the year and the end of July, Germany’s DAX has experienced a 33% total return in dollar terms – 4x the S&P 500’s gains. Still, Apollo notes, “capital outflows from the US so far have been modest.”

Is capital shifting away from US markets toward Europe?

Core argument: Germany's DAX index has gained 33% year-to-date in dollar terms, more than four times the S&P 500's gains, as capital has flowed at the margin away from the US and toward European markets.

One of the clearest themes to emerge has been the shift in capital flows—where at least on the margin, money has flowed away from the US and toward European markets. These capital flow shifts are being reinforced by stronger relative performance in European assets. The euro posted its longest stretch of monthly gains against the dollar in eight years, rallying over the first six months of the year. The Bloomberg Dollar Spot Index hit its lowest level in more than three years in early July. Germany’s DAX benchmark Index is up 33% so far this year in dollar terms, more than four times the gains of the S&P 500 Index. Still, the capital outflows from the US so far have been modest. Treasury auctions, while volatile, continue to find buyers. Recent 30-year bond sales illustrate this resilience: April’s 2.4 bid-to-cover ratio came in slightly above the average for the past six reopenings, May’s 2.3 was modestly below the average for new issues, and June’s 2.4 matched the recent reopening average—highlighting steady demand even amid elevated uncertainty.

Takeaways by Macro Roundup® AI

  1. Germany's DAX index has gained 33% year-to-date in dollar terms, more than four times the S&P 500's gains, as capital has flowed at the margin away from the US and toward European markets.
  2. The euro posted its longest stretch of monthly gains against the dollar in eight years over the first six months of the year, and the Bloomberg Dollar Spot Index hit its lowest level in more than three years in early July.
  3. Capital outflows from the US have been modest, with 30-year Treasury bond sales showing steady demand: bid-to-cover ratios of 2.4 in April, 2.3 in May, and 2.4 in June, broadly in line with recent averages.

Related Articles:

  • Are Foreigners Selling US Assets (Part II) — Proprietary flow tracking shows foreign bond flows into US assets, an outlier low in one month, have substantially normalized, suggesting an allocation shift away from dollar assets may have peaked. The authors argue traditional fundamentals, such as the US business cycle and Federal Reserve policy, will matter more for any further dollar weakness.
  • Are Foreigners Selling US Assets? — European and Japanese investors hold roughly 30% and 20% of their fixed income in foreign debt, versus under 10% for US investors, with US bonds making up about 15% of Eurozone and Japanese portfolios. Because foreign investors are less sticky than domestic ones, turmoil in US bond markets has greater potential to unsettle them.
  • The Great European Disentanglement From US Stocks Has Only Just Started — Federal Reserve data show European investors held about $9tn in US stocks, roughly 17% of the total value of the US market. After inflation, a dollar invested in the US at the start of 2000 was worth $3.28 by the end of 2024, versus $1.63 for the rest of the world.

AI Summary. US healthcare stocks tracked technology-sector returns from 1989 to 2019 with lower volatility (15% vs 24%), but have since stagnated as technology advanced. Major pharmaceutical firms trade at forward price-to-earnings ratios of 8x–9x, biotech carries one of the market's largest valuation discounts, and 80% of biotech initial public offerings since 2018 have collapsed.

Michael Cembalest J.P. Morgan
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Btw 1989 and 2019, US healthcare returns tracked the US tech sector’s returns, albeit with lower volatility. Since 2020, healthcare returns have stagnated as overall US healthcare spending has flatlined at ~17% of GDP since 2008.

Have healthcare stocks stopped tracking technology sector returns?

Core argument: From 1989 to 2019, US healthcare equities tracked technology sector returns with considerably lower volatility, 15% versus 24%, but healthcare has stagnated since then while technology has surged ahead.

For the 30-year period from 1989 to 2019, the US healthcare sector tracked technology returns, with considerably lower volatility (15% vs 24%). Things have changed markedly since then as tech barrels ahead while healthcare stagnates. Remaining pharma stalwarts like Merck, Pfizer and Bristol Myers trade at forward P/E ratios of just 8x-9x; biotech trades at one of the largest valuation discounts in the market, while 80% of biotech IPOs since 2018 have imploded; managed care returns have collapsed; and life sciences companies may be hurt by cuts to the NIH, NSF, CDC and other scientific research organizations, a trend which is already visible in the form of sharply reduced NIH grants through July of this year. There may not be much room for the US public or private sector to add to healthcare spending. [Overall] US healthcare spending was consistently rising as a share of GDP during the period when healthcare was tracking the returns of the technology sector, from the 1980s to 2019.

Takeaways by Macro Roundup® AI

  1. From 1989 to 2019, US healthcare equities tracked technology sector returns with considerably lower volatility, 15% versus 24%, but healthcare has stagnated since then while technology has surged ahead.
  2. Merck, Pfizer and Bristol Myers trade at forward P/E ratios of just 8x–9x, biotech carries one of the market's largest valuation discounts, and 80% of biotech IPOs since 2018 have imploded.
  3. Life sciences companies may be hurt by cuts to the NIH, NSF, CDC and other scientific research organizations, a trend already visible in sharply reduced NIH grants.

Related Articles:

  • U.S. Health Spending is Slowing Down — U.S. health spending fell to 17.1% of GDP from 17.5% a year earlier and 17.9% the year before, the smallest share since 2014 and below the pre-pandemic level. Adjusted for overall and medical inflation the share was largely unchanged, with the decline driven by higher inflation outside health and lagging medical inflation.
  • Where is Health Care The Biggest Part of the Economy? — Health spending as a share of state economic output is highest in West Virginia, at more than one-fourth, and lowest in Washington State and Washington D.C., at less than one-ninth. Poorer states such as Arkansas, Alabama, and Mississippi rank far higher by share of output than by dollars spent per person.
  • Saved by Medicaid: New Evidence on Health Insurance and Mortality from the Universe of Low-Income Adults — Using linked Census and tax records for 37m low-income adults, the authors estimate that state Medicaid expansions raised enrollment by 12 percentage points and cut mortality among low-income adults by 2.5%, implying a 21% reduction in the mortality hazard of new enrollees. They estimate direct budgetary costs of $5.4m per life saved and $179,000 per life-year saved.

AI Summary. Trade deficits can reflect strength when a fast-growing economy imports capital to build infrastructure and expand production, as the US did for most of the 19th century. The author argues today's persistent US deficits instead raise the dollar, weaken manufacturers' competitiveness, increase debt and inequality, and make growth more dependent on asset bubbles.

Michael Pettis Financial Times
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In contrast to the 19th century, when trade deficits increased US investment, Pettis argues, in the 21st century, trade deficits “cause the debt to rise, [the share of] productive sectors like manufacturing to decline, [and] income inequality to rise.”

Do today's US trade deficits benefit American consumers?

Core argument: Trade deficits are not necessarily harmful: a fast-growing developing economy importing capital to build infrastructure or expand production can run a deficit that reflects strength, as the US did for most of the 19th Century.

Trade deficits are not necessarily harmful. A rapidly growing developing economy with strong investment opportunities might import more capital than it exports as it builds new infrastructure or expands production. In that context, a deficit can reflect strength. That is what characterised the US economy for most of the 19th Century. But that is not what happens in the US today. In fact, by pushing up the value of the dollar and making American manufacturers less globally competitive, foreign capital may actually put downward pressure on US investment. As a result, whereas persistent US deficits in the 19th Century allowed American investment to rise and American manufacturing to grow, in the 21st Century persistent American deficits cause American debt to rise, productive sectors like manufacturing to decline as a share of the American economy, income inequality to rise, and growth in the economy to become more dependent on asset bubbles. None of these benefit American consumers.

Takeaways by Macro Roundup® AI

  1. Trade deficits are not necessarily harmful: a fast-growing developing economy importing capital to build infrastructure or expand production can run a deficit that reflects strength, as the US did for most of the 19th Century.
  2. Foreign capital inflows push up the dollar's value and make American manufacturers less globally competitive, which may put downward pressure on US investment rather than raising it.
  3. Persistent 21st Century US deficits cause American debt to rise, manufacturing to decline as a share of the economy, income inequality to rise, and growth to depend more on asset bubbles, none of which benefit consumers.

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.
  • Why Global Imbalances Do Matter — From 2008 to 2023 the US household and corporate sectors ran average savings surpluses of 3.5% and 1.6% of GDP respectively, leaving the federal government as the dominant net borrower in the US economy. This suggests the benefit of persistent net capital inflows is the ability to run larger fiscal deficits and grow public debt.
  • The U.S. Trade Deficit: Myths and Realities — Taxing capital inflows would weaken the dollar but could raise domestic interest rates and depress investment, harming long-term growth, while an interest rate cut absent recession would be inflationary and erode any real depreciation needed to durably improve the trade balance. Fiscal restraint could weaken the dollar and reduce the trade deficit.

AI Summary. The United States exported about 30% of its domestic primary energy production, a share that has grown considerably in recent decades, with nearly all exports being fossil fuels sent to North America, Europe, or Asia. It exported 55% of its crude oil and natural gas plant liquids output as crude or processed petroleum products.

Mickey Francis Energy Information Administration
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In 2024, the United States exported about 30% of its domestic primary energy production. Nearly all of the exports were fossil fuels destined for other countries in North America, Europe, or Asia.

How much of US energy production is exported?

Core argument: The United States exported about 30% of its domestic primary energy production in 2024, a share that has grown considerably in recent decades, with nearly all exports being fossil fuels bound for North America, Europe, or Asia.

In 2024, the United States exported about 30% of its domestic primary energy production. This percentage has grown considerably in recent decades. Nearly all of the exports were fossil fuels destined for other countries in North America, Europe, or Asia. In 2024, the United States exported 55% of its domestic crude oil and natural gas plant liquids (NGPL) production either directly as crude oil or as processed petroleum products such as propane, distillate fuel oil, and motor gasoline. During the past decade, U.S. crude oil and NGPL production as well as crude oil and petroleum products exports grew rapidly, outpacing modest domestic petroleum demand growth and declining U.S. imports.

Takeaways by Macro Roundup® AI

  1. The United States exported about 30% of its domestic primary energy production in 2024, a share that has grown considerably in recent decades, with nearly all exports being fossil fuels bound for North America, Europe, or Asia.
  2. The United States exported 55% of its 2024 crude oil and natural gas plant liquids production, either directly as crude oil or as processed products such as propane, distillate fuel oil, and motor gasoline.
  3. U.S. crude oil and natural gas plant liquids production and crude oil and petroleum product exports grew rapidly over the past decade, outpacing modest domestic petroleum demand growth as U.S. imports declined.

Related Articles:

  • Heliocentrism — An energy use must be electrified before green grid electricity can decarbonize it, and while US grid decarbonization continues at a steady pace, the electricity share of final US energy consumption has grown little. Transmission line growth runs well below Department of Energy targets for 2030 and 2035, and transformer delivery times have stretched from 4–6 weeks to 2–3 years.
  • The New Joule Order — Ample physical capacity keeps inflation low and stable and allows lower interest rates, but when demand catches up to capacity constraints, better returns in the physical economy pull capital back to fund expansion, making a commodity super-cycle a capital-expenditure cycle. In real terms, total energy investment is below its level 15 years ago.
  • U.S. Primary Energy Production, Consumption, and Exports Increased In 2024 — The United States produced more energy than it consumed, with primary energy production reaching a record 103.3 quadrillion British thermal units and consumption at 94.2 quadrillion, still below the 2007 peak of 99.0 quadrillion. Energy exports rose 4% to a record 30.9 quadrillion while imports held at 21.7 quadrillion, the largest net exports in records back to 1949.

AI Summary. IBM and Google each say they are on course to build an industrial-scale quantum computer by the end of the decade, with IBM publishing a blueprint filling in missing pieces from its earlier designs. The Pentagon's advanced research agency has begun studying quantum companies to identify which could reach practical size fastest.

Richard Waters Financial Times
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Engineering teams at IBM and Google both believe they are on track to build industrial-scale quantum computers by the end of the decade.

Is an industrial-scale quantum computer within reach this decade?

Core argument: IBM published a blueprint filling in critical missing pieces from its earlier designs, with quantum head Jay Gambetta saying the company has cracked the code and will be able to build the machine by the end of the decade.

In June, IBM became the latest to claim its path was now clear to a full-scale machine, after publishing a blueprint for a quantum computer that filled in critical missing pieces from its earlier designs. Quantum computers hold the potential to solve problems beyond today’s machines in fields such as materials science and AI. “It doesn’t feel like a dream anymore,” said Jay Gambetta, head of IBM’s quantum initiative. “I really do feel like we’ve cracked the code and we’ll be able to build this machine by the end of the decade.” That has intensified a race against Google, which cleared one of the biggest remaining hurdles late last year and says it is also on course to build an industrial-scale quantum computer by the end of the decade. In one sign of growing official interest in sorting out the winners, DARPA, the Pentagon’s advanced research agency, last year began a broad study of different quantum companies with the aim of identifying which could be expanded to reach practical size the fastest.

Takeaways by Macro Roundup® AI

  1. IBM published a blueprint filling in critical missing pieces from its earlier designs, with quantum head Jay Gambetta saying the company has cracked the code and will be able to build the machine by the end of the decade.
  2. Google cleared one of the biggest remaining hurdles late last year and says it is on course to build an industrial-scale quantum computer by the end of the decade.
  3. DARPA, the Pentagon's advanced research agency, began a broad study of quantum companies aimed at identifying which could be expanded to reach practical size the fastest.

Related Articles:

  • IBM Has a Roadmap to a ‘Fault-Tolerant’ Quantum Computer by 2029 — IBM has laid out a roadmap for building a fault-tolerant quantum computer by 2029, citing advances in reducing errors in quantum bits and a technique for identifying and correcting errors in real time using conventional computing. Amazon and Google are also pursuing quantum error correction with dedicated chips.
  • Microsoft’s Majorana 1 Chip Carves New Path for Quantum Computing — Microsoft unveiled Majorana 1, a quantum chip built on a Topological Core architecture using a new materials stack of indium arsenide and aluminum, which the company expects will enable quantum computers capable of solving industrial-scale problems within years rather than decades. The topological superconductor produces a qubit that is fast, small, stable, and digitally controlled.
  • Physicists Question Microsoft’s Quantum Claim — Physicists outside the work have responded cautiously to Microsoft's topological quantum computing claim, noting that the search for topological qubits and the "Majorana" particles underpinning them has a history of bold announcements later withdrawn. Researchers describe the technology as excruciatingly difficult to actually build.

Thursday, August 14, 2025

AI Summary. Google, Amazon, Microsoft and Meta are projected to spend more than $400bn on data centres in 2026, following more than $350bn this year. Morgan Stanley analysts estimate global data centre spending will approach $3tn through 2029, of which about $1.4tn comes from Big Tech capital expenditure, leaving roughly $1.5tn to be financed by investors and developers.

Tabby Kinder Financial Times
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Hyperscalers’ generative AI revenues were just $45B in 2024, according to a MS analysis which predicts revenues will exceed $1T by 2028. Hyperscalers’ cashflows will fund ~50% of the $2.9T projected AI buildout.

How much of the AI data centre buildout needs outside financing?

Core argument: Google, Amazon, Microsoft and Meta will spend more than $400bn on data centres in 2026, on top of more than $350bn this year, as generative AI's computing demands shift hyperscalers away from the self-funded model that historically covered such spending.

Google, Amazon, Microsoft and Meta will spend more than $400bn on data centres in 2026 — on top of more than $350bn this year. Historically, most of the spending by the “hyperscalers” — Amazon Web Services, Microsoft Azure and Google Cloud — building data centres for their cloud services businesses was self-funded. But the scale of computing power needed for generative AI is changing that. While internal cash flows largely covered costs of up to $200bn last year, costs are projected to double this year and increase further next. Hyperscalers’ generative AI revenues were just $45bn last year, according to Morgan Stanley analysts — although they predicted revenues would exceed $1tn by 2028. Between now and 2029, however, global spending on data centres will hit almost $3tn, according to Morgan Stanley analysts. Of that, just $1.4tn is forecast to come from capital expenditure by Big Tech groups, leaving a mammoth $1.5tn of financing required from investors and developers.

Takeaways by Macro Roundup® AI

  1. Google, Amazon, Microsoft and Meta will spend more than $400bn on data centres in 2026, on top of more than $350bn this year, as generative AI's computing demands shift hyperscalers away from the self-funded model that historically covered such spending.
  2. Morgan Stanley analysts project global data centre spending of almost $3tn between now and 2029, of which just $1.4tn is forecast to come from Big Tech capital expenditure, leaving $1.5tn to be financed by investors and developers.
  3. Hyperscalers' generative AI revenues were $45bn last year, according to Morgan Stanley analysts, who predicted those revenues would exceed $1tn by 2028.

Related Articles:

  • The Kanye/Data Center Crossover — 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.
  • 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.
  • The AI Boom’s Hidden Risk to the Economy — Net income at Alphabet, Amazon, Meta and Microsoft rose 73% to $91bn in a quarter two years on, while their combined free cash flow fell 30% to $40bn, as heavy AI investment absorbs cash these firms once recycled into financial markets. That spare cash previously helped hold down long-term interest rates despite large federal deficits.

AI Summary. U.S. manufacturing employment and establishments grew 5% and 19% over the past decade, to 12.6m workers and 401,000 establishments, after declining through most of the prior 60 years as the economy shifted toward services. Food manufacturing accounted for about half the employment gain, and Florida and Texas jointly explained 32%.

Ricardo Marto and Hoang Le Federal Reserve Bank of St. Louis
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A St. Louis Fed analysis finds that US manufacturing employment hit bottom just after the trough of the Great Recession. Half of the rise in the sector’s employment btw 2014 and 2024 was in food manufacturing.

Is U.S. manufacturing employment growing again after decades of decline?

Core argument: U.S. manufacturing employment grew 5% over the past decade to 12.6 million people while the number of manufacturing establishments rose 19% to 401,000, following decades of decline as the economy shifted toward services.

The U.S. manufacturing sector has declined for most of the past 60 years as the economy has shifted toward service industries. Starting in 2014, manufacturing employment has been slowly recovering, pushed by an upswing in the number of manufacturing establishments. Over the past decade, manufacturing employment and establishments grew 5% and 19%, respectively, to 12.6 million people and to 401,000 establishments. About half of the sector’s increase in employment over the past 10 years was driven by the food manufacturing subindustry. That subindustry also contributed the most to the increase in manufacturing establishments during this period. In terms of geography, Florida and Texas were the engines of the revival, jointly explaining 32% of the increase in manufacturing employment and 25% of the rise in manufacturing establishments.

Takeaways by Macro Roundup® AI

  1. U.S. manufacturing employment grew 5% over the past decade to 12.6 million people while the number of manufacturing establishments rose 19% to 401,000, following decades of decline as the economy shifted toward services.
  2. The food manufacturing subindustry drove about half of the increase in U.S. manufacturing employment over the past 10 years and contributed the most to the rise in manufacturing establishments.
  3. Florida and Texas jointly account for 32% of the increase in U.S. manufacturing employment and 25% of the rise in manufacturing establishments over the past decade.

Related Articles:

  • What Would It Take to Bring Back US Manufacturing? Part 1: America’s Structural Headwinds — The US imports roughly 40% of the goods it consumes, directly and through imported inputs, with labor-intensive goods like apparel almost entirely imported. The authors argue America's main comparative disadvantage is its cost of production, driven mainly by labor costs, with real estate costs and a strong dollar also contributing.
  • Why Is Manufacturing Productivity Growth So Low? — Manufacturing productivity growth fell behind other sectors after computer and semiconductor manufacturing productivity, which had grown at roughly 15% and 11% a year, decelerated substantially. The authors also present suggestive evidence that quality improvements are missed in price measures, estimating manufacturing productivity growth is understated by 0.8 percentage points, including 1.7 points for durable goods.
  • The Mysterious Slowdown in U.S. Manufacturing Productivity — US manufacturing labor productivity growth slowed broadly after the Great Recession, with the four largest firms in each industry averaging –0.5% growth from 2010 to 2022 versus 3.7% from 1987 to 2007, and smaller follower firms showing an identical 4.2 percentage-point decline. The authors find the slowdown spans all industries and firm sizes.

AI Summary. Drawing on over 100 million household records, the authors trace US homeownership from 47% in 1900 to a 69% peak and 65% today, arguing the major gains came from making mortgages cheaper and more accessible rather than building more homes. Homes now cost nearly 6x median household income versus 3x in the 1990s.

Aziz Sunderji Home Economics
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At 65%, the US homeownership rate is 4pp under the 2004 peak but on par with its 1995 level. Sunderji argues that as credit expansion “reaches its limits, the prospects for maintaining even current ownership rates are growing increasingly uncertain.”

Has cheaper credit, not homebuilding, driven a century of homeownership gains?

Core argument: Drawing on over 100 million household records from census microdata and quarterly housing surveys, the authors trace U.S. homeownership from 47% in 1900 to a 2004 peak of 69% and 65% today.

Using over 100 million household records from census microdata and quarterly housing surveys, we trace American homeownership from 47% in 1900 to its peak of 69% in 2004, and back down to 65% today. The major jumps in homeownership have come not from building more homes, but from financial engineering—making mortgages cheaper and more accessible to marginal borrowers. Recent data shows renewed weakness. Mortgage rates have spiked. Homes now cost nearly six times median household income versus three times in the 1990s. First-time buyers average 36 years old, up from 29 in 1981. Student debt delays down payment accumulation. Home prices have outpaced wage growth by nearly 2:1 since 2000.The century-long expansion of American homeownership was achieved almost entirely through financial engineering—making it easier to borrow rather than cheaper to build. As that lever reaches its limits, the prospects for maintaining even current ownership rates are growing increasingly uncertain.

Takeaways by Macro Roundup® AI

  1. Drawing on over 100 million household records from census microdata and quarterly housing surveys, the authors trace U.S. homeownership from 47% in 1900 to a 2004 peak of 69% and 65% today.
  2. The authors argue that the major jumps in homeownership came from financial engineering — cheaper, more accessible mortgages for marginal borrowers — rather than from building more homes.
  3. Homes cost nearly six times median household income versus three times in the 1990s, home prices have outpaced wage growth by nearly 2:1 since 2000, and first-time buyers average 36 years old, up from 29 in 1981.

Related Articles:

  • Inflation Adjusted House Prices 2.0% Below 2022 Peak — 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%.
  • 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.
  • 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.

AI Summary. Shelter, about 35% of the consumer price index, responds to market rents with a lag because of long-term leases, smoothing at lease renewal, and measurement using six-month rent changes. The authors' model reproduces the lagged, dampened response of shelter inflation to swings in market-rent inflation.

Laurence Ball and Kyung Woong Koh National Bureau of Economic Research
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Shelter inflation lags changes in overall CPI due to the delayed adjustment of market rents. This dynamic explains “the lagged and dampened responses of shelter inflation to the post-pandemic surge and then retreat of market-rent inflation.”

Why does shelter inflation lag changes in market rents?

Core argument: The shelter component carries a weight of about 35% in the CPI and is determined primarily by tenant rents paid and imputed rents for owner-occupied housing, responding with a substantial lag to market rents.

The shelter component of the consumer price index has a weight of about 35% in the CPI. It is determined primarily by rents for dwellings, both actual rents paid by tenants and imputed rents for owner-occupied housing. It is well-known that the CPI shelter index responds with a substantial time lag to movements in “market rents.” [Our] model incorporates three reasons [for this lag]: long-term leases, smoothing of rents when leases are renewed, and the measurement of shelter inflation with six-month rent changes. We incorporate these lags in a model of shelter inflation and compare the model to monthly data since 2015, using the Zillow Observed Rent Index to measure market rents, [which] is a monthly index and begins in January 2015. The model captures the lagged and dampened responses of shelter inflation to the post-pandemic surge and then retreat of market-rent inflation. As this paper is completed, the level of market-rent inflation has been steady for two years and CPI shelter inflation is converging to that level. The next time market-rent inflation changes significantly, CPI shelter will again respond with a lag.

Takeaways by Macro Roundup® AI

  1. The shelter component carries a weight of about 35% in the CPI and is determined primarily by tenant rents paid and imputed rents for owner-occupied housing, responding with a substantial lag to market rents.
  2. The authors attribute the lag between market rents and CPI shelter inflation to three factors: long-term leases, smoothing of rents at lease renewal, and measurement of shelter inflation using six-month rent changes.
  3. Using the Zillow Observed Rent Index for market rents in monthly data since 2015, the model captures the lagged and dampened response of shelter inflation to the post-pandemic surge and retreat in market-rent inflation.

Related Articles:

  • When Is Shelter Services Inflation Coming Down? — A gap between housing demand and supply emerged after the COVID-19 pandemic that has likely put upward pressure on rents. Leading indicators including units under construction, the gap between completed units and net household formation, and market rents on new leases tend to foreshadow shelter inflation by about a year, and suggest it will keep declining toward more traditional levels.
  • Creating Shortages — Shelter inflation remains higher than before the pandemic and accounts for much of the remaining inflation, with reduced housing construction attributed to higher financing costs. Tighter bank lending standards have stalled construction loans while high mortgage rates keep prospective buyers in the rental market, adding upward pressure on rents.
  • Disentangling Rent Index Differences: Data, Methods, and Scope — Housing costs make up 32% of the Consumer Price Index, so measured inflation depends heavily on rent measurement. The authors find most of the gap between the official U.S. rent index and private measures reflects scope: rent increases for all tenants versus only new tenants, whose rents rose far faster.

AI Summary. The share of US high school seniors describing themselves as "very happy" peaked at 24.8% and remained around 24.4% before falling to 11.4% at its low, recovering only to 12.7%, well below the 17.9% recorded before the pandemic. The decline coincided with smartphones and social media becoming pervasive.

Jean Twenge Generation Tech
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According to a long-running survey, the number of high school seniors reporting they were “very happy” fell from 24.8% in 2007 to 17.9% in 2019 and 12.7% in 2023. Jean Twenge cautions, “The constant pressure of social media [is] a trap of unhappiness.”

Why has the share of teens describing themselves as very happy fallen?

Core argument: The share of U.S. high school seniors describing themselves as "very happy" peaked at 24.8% in 2007 and was still 24.4% in 2012, before falling to 17.9% in 2019 and 11.4% in 2021, per Monitoring the Future.

Happiness has been measured in exactly the same way among high school seniors (17- and 18-year-olds) since 1976 in Monitoring the Future. The happiness item (“Taking all things together, how would you say things are these days – would you say you’re very happy, pretty happy, or not too happy these days?”) thus gives us the longest-running view of any indicator of psychological well-being among adolescents. By 2007, 24.8% of high school seniors said they were “very happy,” the highest ever recorded (before or since). Happiness stayed fairly high even through the years of the Great Recession (2007-09) and was at 24.4% as recently as 2012. That, as it turned out, was the end of an era. As smartphones and social media became pervasive in the 2010s, teen happiness plummeted. Teen happiness fell precipitously during the COVID years – only 11.4% of high school seniors described themselves as “very happy” in 2021. Coming out of the pandemic in 2023, that increased to 12.7%. But that is still much, much lower than the 17.9% of high school seniors who said they were “very happy” in 2019.

Takeaways by Macro Roundup® AI

  1. The share of U.S. high school seniors describing themselves as "very happy" peaked at 24.8% in 2007 and was still 24.4% in 2012, before falling to 17.9% in 2019 and 11.4% in 2021, per Monitoring the Future.
  2. Teen happiness stayed fairly high through the Great Recession of 2007–09 but fell in the 2010s as smartphones and social media became pervasive, according to Monitoring the Future.
  3. Monitoring the Future has asked high school seniors the identical happiness question since 1976, providing the longest-running indicator of adolescent psychological well-being, with the 2023 reading of 12.7% still well below 2019's 17.9%.

Related Articles:

  • The Troubling Decline In Conscientiousness — 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.
  • 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.
  • The Anti-Social Century — Americans spend less time with other people than in any period with reliable data back to 1965, with in-person socializing down more than 20% from 2003 to 2023 according to the Bureau of Labor Statistics' American Time Use Survey. Among unmarried men and people under 25, the decline exceeded 35%.

AI Summary. In the United States, between one in four and one in three Black men eventually serve prison time, compared with one in seven Hispanic men and roughly one in fifteen non-Hispanic white men. In Denmark, about 9% of men of Danish origin and 27% of men of non-Western origin have a criminal conviction by age 24.

Inquisitive Bird Patterns In Humanity
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“There are still more criminals than you might expect.” 6.2% of white American men, 14.4% of hispanic men, and 26% of black men born in 1991 will have been imprisoned by the time they turn 50.

How large a share of men have criminal records?

Core argument: One in four to one in three black men in the United States eventually end up in prison, compared with one in seven Hispanic men and about one in fifteen non-Hispanic white men.

People don’t end up in prison for trivialities. Prison, as opposed to jail, is designed for long-term incarceration—prison sentences in the United States are rarely shorter than a year. Jails are where people are held while awaiting trial or sentence, or while serving short sentences. As the figure shows, one in four to one in three black men eventually end up in prison. The same is true for one in seven Hispanic men, and about one in fifteen (non-Hispanic) white men. If we consider all crimes under the Danish criminal code, which includes a larger number of offense types but still excludes minor traffic offenses, the number of criminals increases markedly. We also see large ethnic disparities. By age 24, about 9% of men of Danish origin and 27% of men of non-Western origin have been convicted under the criminal code. In summary, while it is certainly true that a large share of crime is committed by a small number of persistent offenders, there are still more criminals than you might expect.

Takeaways by Macro Roundup® AI

  1. One in four to one in three black men in the United States eventually end up in prison, compared with one in seven Hispanic men and about one in fifteen non-Hispanic white men.
  2. In Denmark, about 9% of men of Danish origin and 27% of men of non-Western origin have been convicted under the criminal code by age 24, a measure that excludes minor traffic offenses.
  3. U.S. prisons, unlike jails, are designed for long-term incarceration with sentences rarely shorter than a year, while jails hold people awaiting trial or sentence or serving short sentences.

Related Articles:

  • The Great Crime Paradox — Just over half of violent crime victims know the perpetrator and have been attacked before, and much of it occurs away from public view, while snatch theft is almost always committed in public by a stranger against a first-time victim. Shoplifting erodes the sense of public order through visible security measures and locked merchandise.
  • The Collapse of Broken-Windows Policing in New York City, Los Angeles, and Washington, DC, 2013–22 — Arrests for minor "broken-windows" offenses—counted as misdemeanors, violations, and infractions per 100,000 residents—fell 74% in New York, 77% in Washington, DC, and 81% in Los Angeles over the period studied, declining steadily in New York and Los Angeles.
  • Number of Young People Accused of Serious Crimes Surges in New York City — New York City Police Department figures show 4,858 major crimes with a minor accused or arrested in the most recent year, up 37% from 3,543 seven years earlier, with robberies and felony assaults continuing to rise. Police officials attribute the increase to a state law diverting most 16- and 17-year-old defendants from adult courts.