Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…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
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…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
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, August 19, 2025

AI Summary. The US yield curve is steepening across both the 2-to-10-year and 10-to-30-year segments. The article attributes this to Federal Reserve rate cuts, the risk that markets read those cuts as politically motivated and raise inflation expectations and long-term rates, and growing Treasury debt issuance pushing long rates up.

Torsten Sløk, Rajvi Shah, and Shruti Galwankar Apollo
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Torsten Sløk attributes the steepening of the US yield curve to accelerating Treasury issuance, an expectation of politically motivated cuts in the short rate, and a rise in expected inflation.

Why is the yield curve steepening?

Core argument: The US yield curve has begun steepening in both 2s10s and 10s30s, attributed to Federal Reserve rate cuts, growing Treasury issuance, and fiscal challenges.

The US yield curve has started steepening, not only 2s10s but also 10s30s. There are three reasons why this is happening: The Fed is cutting rates. If the market thinks the Fed is cutting for political reasons, it puts upward pressure on inflation expectations and ultimately long rates, which also steepens the curve. Growing Treasury issuance is putting upward pressure on long rates. If Fed Chair Powell, in his Jackson Hole speech on Friday, is going to signal less commitment to the Fed’s 2% inflation target, the curve will steepen further.

Takeaways by Macro Roundup® AI

  1. The US yield curve has begun steepening in both 2s10s and 10s30s, attributed to Federal Reserve rate cuts, growing Treasury issuance, and fiscal challenges.
  2. If markets conclude the Federal Reserve is cutting rates for political reasons, inflation expectations and long rates face upward pressure, steepening the yield curve further.
  3. Growing Treasury issuance is putting upward pressure on long rates, and a signal from Fed Chair Powell at Jackson Hole of less commitment to the 2% inflation target would steepen the curve further.

Related Articles:

  • Data Update 4 for 2025: Interest Rates, Inflation and Central Banks! — Interest rates are ultimately driven by macroeconomic fundamentals, with an "intrinsic risk-free rate" defined as the sum of the inflation rate and real GDP growth tracking the observed 10-year Treasury bond yield closely. On this view, central banks' influence comes from preferential access to data on those fundamentals, their capacity to alter them, and their credibility.
  • 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 equal-weight S&P 500, which treats every company as 0.2% of the index, has hit its weakest performance relative to the market-cap-weighted index in 22 years, as a small group of companies captures a large share of profits. Big Tech's capital spending on AI computing and energy has surged, leaving little free cash flow for buybacks or dividends.

John Authers Bloomberg
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Since the release of ChatGPT in November of 2022, earnings per share of the MAG 7 have risen 125% (through 8/18), while earnings per share of the other 493 companies comprising the S&P 500 have risen just 4%.

Are a small group of companies capturing most stock market gains?

Core argument: The equal-weight S&P 500, which weights each constituent at 0.2% regardless of size, has fallen to its weakest performance relative to the cap-weighted index in 22 years.

The performance of the equal-weight version of the S&P 500 — which effectively measures the average stock by weighting each constituent as 0.2% of the index regardless of their size — compared to the cap-weighted index has dropped to its weakest in 22 years. This is not like the dot-com bubble, when hot companies hoovered up cash from investors. This time, a very small group is siphoning profits from everyone else. Rather than the market, the concern lies with the companies themselves. How can they make such big profits, and can they possibly retain them? The big tech groups have also been spending money far faster than ever before. This is a new development. Tech is usually “capital-light.” Capital expenditures on the computing capacity needed for AI and the energy to back it have surged, so that the companies now invest almost as much of their cash as everyone else combined. Well-deployed capital expenditures pay for themselves with higher profits, but those still have to happen. Meanwhile, Big Tech’s free cash flow yield (operating cash flows minus capital expenditures as a proportion of market cap) leaves little wiggle room for share buybacks or dividends.

Takeaways by Macro Roundup® AI

  1. The equal-weight S&P 500, which weights each constituent at 0.2% regardless of size, has fallen to its weakest performance relative to the cap-weighted index in 22 years.
  2. Unlike the dot-com bubble, when hot companies absorbed cash from investors, a very small group of companies is now siphoning profits from everyone else, raising the question of whether such profits can be retained.
  3. Big Tech's capital expenditures on AI computing capacity and energy have surged so that these companies invest almost as much of their cash as everyone else combined, while their free cash flow yield leaves little room for buybacks or dividends.

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. About a sixth of America's 2% real GDP growth over the past year came from investment in computer and communications equipment and data centres, and one estimate puts the artificial intelligence boom's total contribution to growth at 40%. Average electricity bills rose 7%, attributed in part to data-centre demand, while housebuilding and non-AI business investment slumped and real consumption flatlined.

Economist Staff The Economist
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As AI-related investment has risen since 2023, residential and nonresidential investment have declined or flatlined. This may suggest that a relatively rate-insensitive AI buildout is crowding out more interest-sensitive forms of investment.

Is the AI investment boom crowding out the rest of the economy?

Core argument: Roughly a sixth of the 2% rise in American real GDP over the past year came from investment in computer and communications equipment, including chips, and data centres; one estimate puts the AI boom's contribution at 40% once grid upgrades and software intellectual property are included.

Something like a sixth of the 2% rise in American real GDP over the past year has come from investments in computer and communications equipment, including chips, and data centres. Add in the grid upgrades to power AI models, plus the intellectual-property value of the software itself, and one estimate puts the boom’s contribution to real GDP growth at 40%. The trouble is that the very sector powering so much of America’s economic growth is squeezing the rest of its output. Housebuilders, for instance, cannot afford to be blithe about higher borrowing costs. Data centres have also constrained the rest of the economy by keeping energy prices high. Average American electricity bills have risen by 7% so far in 2025, at least in part due to the extra strain data centres have put on the grid. Real consumption has flatlined since December. Housebuilding has slumped, as has non-AI business investment.

Takeaways by Macro Roundup® AI

  1. Roughly a sixth of the 2% rise in American real GDP over the past year came from investment in computer and communications equipment, including chips, and data centres; one estimate puts the AI boom's contribution at 40% once grid upgrades and software intellectual property are included.
  2. Average American electricity bills have risen by 7% so far in 2025, at least in part due to the extra strain data centres have put on the grid.

Related Articles:

  • 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.
  • 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. The author argues the AI infrastructure build-out resembles an arms race fought to avoid defeat rather than to win, with Apple the only major tech platform largely sitting it out. Google's advertising model, which depends on engagement with search result pages, could erode if chatbots answer queries in a single exchange with no click-through.

Brad DeLong Grasping Reality
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Brad DeLong suggests that AI investment is largely defensive in nature, “with fear of AI‑driven disruption defining the moment,” and is skeptical regarding its prospects. ”What, concretely, are the ‘new-and-improved’ services that justify the AI boom?”

Does the AI infrastructure build-out threaten search advertising economics?

Core argument: The author characterizes the AI-infrastructure build-out as an arms race waged to avoid defeat rather than to win decisively, with Apple the only tech platform oligopolist essentially sitting it out.

This build‑out resembles an old-fashioned arms race: not to win decisively, but to avoid defeat. And so of all the tech platform oligopolists, only Apple is essentially sitting this one out. Google’s search monopoly, once an unassailable gold mine, now perhaps faces an existential threat. First, its search is crippled because it swims in an ocean of SEO‑optimized content—a potential Achilles’ heel. Chatbot rivals, free of SEO baggage and possessing a natural-language interface, deliver plausible conversational answers that are not SEO-warped as they bypass click-and-scroll. And even if Google manages to match answer quality, the economics shift. An ad model built on result‑page engagement can evaporate when a single exchange answers the query with no click‑through. Victory here may well be Pyrrhic. The old money flow may not exist in the new régime, no matter how strong the constructed defensive moat. But I am given pause by the fact that I do not understand why AWS today is so massively profitable. There are clearly important things that I do not understand here.

Takeaways by Macro Roundup® AI

  1. The author characterizes the AI-infrastructure build-out as an arms race waged to avoid defeat rather than to win decisively, with Apple the only tech platform oligopolist essentially sitting it out.
  2. Google's search monopoly may face an existential threat, in the author's view, because its results swim in SEO-optimized content while chatbot rivals offer natural-language answers that bypass click-and-scroll.
  3. The author argues that Google's victory could prove Pyrrhic, since an ad model built on result-page engagement can evaporate when a single exchange answers a query with no click-through, and concedes not understanding why AWS is so profitable.

Related Articles:

  • ‘Absolutely Immense’: The Companies On The Hook For The $3tn AI Building Boom — 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.
  • Is AI Hitting A Wall? — Artificial intelligence gains have come from a formula of more data and more computing power, but companies have exhausted freely available internet training data and are now striking data-sharing deals with publishers and copyright holders. Training and running large models is energy-intensive, requiring vastly more Nvidia chips with each generation.
  • 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.

AI Summary. Canada's unemployment rate has risen to 6.9% from 6.6% at the start of the year, with youth unemployment at 15% and the share of young people employed at its lowest level since 1998, excluding the Covid-19 years. The share of job seekers unemployed longer than six months is also the largest since 1998.

Ari Altstedter Bloomberg
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Alberta Central, a Canadian bank, estimates Canada’s unemployment rate for 16–24 year olds is 15%. The overall unemployment rate according to Statistics Canada is 6.9%.

Are young Canadians facing the weakest job market since 1998?

Core argument: Canada's youth unemployment rate stands at 15%, and the share of young people with jobs has fallen to its lowest level since 1998, excluding the years affected by Covid-19.

Canada’s unemployment rate has crept up to 6.9%, from 6.6% at the beginning of the year, according to Statistics Canada data. The share of job seekers who have been out of work for more than six months is the largest since 1998. Across Canada, the percentage of young people with jobs has collapsed to the lowest level since 1998, excluding the years impacted by Covid-19. Employment growth for 16- to 24-year-olds was the weakest on record in July, according to calculations by economists at credit union Alberta Central. The country's youth unemployment rate stands at 15%.

Takeaways by Macro Roundup® AI

  1. Canada's youth unemployment rate stands at 15%, and the share of young people with jobs has fallen to its lowest level since 1998, excluding the years affected by Covid-19.
  2. Canada's unemployment rate has risen to 6.9% from 6.6% at the start of the year, according to Statistics Canada, with the share of job seekers out of work more than six months the largest since 1998.
  3. Employment growth for Canadians aged 16 to 24 was the weakest on record in July, according to calculations by economists at credit union Alberta Central.

Related Articles:

  • Canada’s Growth Challenge: Why The Economy Is Stuck In Neutral — Canada's labor productivity is about 30% below the United States and roughly 10% below Australia's, and Canada has fallen from the 6th to the 18th most productive economy in the OECD. The authors attribute this to a shortfall in investment outside real estate, construction, and public services, plus negative multifactor productivity growth.
  • A “Heat Dome” of Immigration — Canada has adopted some of the most aggressive immigration policies in the OECD, adding 1.273m residents in a year to reach a population of 41m — proportionally equivalent to the US admitting more than 10m immigrants annually. Canadians are increasingly angry as housing prices soar, sprawl expands, and traffic worsens.
  • Immigration Surge Fuels Male Population Boom in Canada — Canada's adult male population grew 3.4% over the past year versus 2.9% for women, the widest gap in nearly 50 years of records, as a higher share of male newcomers shifts the gender ratio. Among those aged 25 to 44, men outnumber women by 141,000, against a long-run average of zero.

AI Summary. The United Nations Office on Drugs and Crime reports that cocaine production, seizures, and use all hit record highs, with illegal output rising nearly 34% to 3,708 tonnes in a single year and making cocaine the world's fastest-growing illicit drug market. Europe has overtaken the US as the largest cocaine market, and production in Colombia, the biggest producer, rose 53%.

Michael Stott, Michael Pooler, Ciara Nugent and Christine Murray Financial Times
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Cocaine is making a comeback, driven by European demand which has overtaken the US as the world’s largest market. In Columbia, the world’s largest producer, cocaine production rose 53% btw 2022 and 2023.

Is global cocaine production and use reaching record highs?

Core argument: The UN Office on Drugs and Crime reported that illegal cocaine production reached 3,708 tonnes in 2023, nearly 34% more than in 2022, with production, seizures and use all hitting new highs, making cocaine the world's fastest-growing illicit drug market.

The global cocaine business is booming as never before. Europe’s drug habit has grown so fast in the past two decades that it has overtaken the US as the biggest cocaine market. At the heart of Latin America’s vast criminal enterprises is cocaine, by far the most profitable illegal business. “Production, seizures and use of cocaine all hit new highs in 2023, making cocaine the world’s fastest-growing illicit drug market,” said the UN Office on Drugs and Crime in its latest annual report. “Illegal production skyrocketed to 3,708 tonnes, nearly 34% more than in 2022.” In Colombia, the world’s biggest producer, cocaine production rocketed 53% from 2022 to 2023. A senator and presidential hopeful, Miguel Uribe, was shot in June at a rally in Bogotá and later died of his wounds, raising fears that the Andean nation might relapse into the cocaine-fuelled political violence which scarred it in the 1980s and 1990s.

Takeaways by Macro Roundup® AI

  1. The UN Office on Drugs and Crime reported that illegal cocaine production reached 3,708 tonnes in 2023, nearly 34% more than in 2022, with production, seizures and use all hitting new highs, making cocaine the world's fastest-growing illicit drug market.
  2. Colombia, the world's biggest cocaine producer, saw production rise 53% from 2022 to 2023, while Europe's drug habit has grown over two decades to overtake the US as the biggest cocaine market.
  3. Colombian senator and presidential hopeful Miguel Uribe was shot in June at a rally in Bogotá and later died of his wounds, raising fears the country might relapse into the cocaine-fuelled political violence of the 1980s and 1990s.

Related Articles:

  • Drug Overdoses Are On the Decline, in Charts — Preliminary estimates from the Centers for Disease Control and Prevention show US overdose deaths fell 25% over a 12-month period to about 82,000, led by a falling number of fatalities involving synthetic opioids such as bootleg fentanyl.
  • Generation Xanax: The Dark Side of America’s Wonder Drug — Benzodiazepines such as alprazolam, clonazepam, lorazepam, and diazepam are among the most commonly prescribed psychiatric medications in America, with nearly 24m Americans using them and more than 86m prescriptions written in a year. The Food and Drug Administration has required manufacturers to warn of serious risks of abuse, physical dependence, and withdrawal reactions.
  • Importing the Opioid Crisis? International Trade and Fentanyl Overdoses — A study using U.S. mortality and import data finds a positive state-level association between imports per resident and drug overdose death rates, driven by fentanyl and accounting for an estimated 15,000–20,000 deaths per year. The authors estimate that 10% higher imports per resident is associated with an 8.1% higher fentanyl death rate.

Wednesday, August 20, 2025

AI Summary. The author argues the housing affordability crisis stems from the sharp decline in 30-year fixed mortgage rates rather than their subsequent rise, since fixed rates let rate dips boost purchasing power, lifting existing-home sales 25% and prices 32% relative to rents. A costly data center buildout is crowding out for-sale housing.

Jason Thomas Carlyle Group
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Jason Thomas argues that high rates driven by the AI buildout and US fiscal policy are “crowding out interest-sensitive sectors like for-sale housing.”

Do falling mortgage rates, not rising ones, drive housing unaffordability?

Core argument: During the pandemic, U.S. existing-home sales rose 25% and house prices increased 32% relative to rents, which the author attributes to the sharp downward adjustment in rates in 2020–22 rather than their post-pandemic rise.

To speak of a rate-induced “affordability crisis” is no exaggeration. But this crisis resulted from the sharp downward adjustment in rates in 2020-22 rather than their post-pandemic rise. With implicit housing costs fixed over the entire term of residency, cyclical dips in 30-year rates boost purchasing power to an extent not observed with 2 floating rate loans. House prices and sales volumes rise predictably in response. During the pandemic, sales of existing homes rose 25% and house prices increased by 32% relative to rents. What the for-sale housing market really needs is a sharp reduction in interest rates. But the U.S. finds itself in the midst of a really expensive data center/supercomputer buildout. The issue is not whether high rates are “crowding out” interest-sensitive sectors like for-sale housing. Clearly, they are.

Takeaways by Macro Roundup® AI

  1. During the pandemic, U.S. existing-home sales rose 25% and house prices increased 32% relative to rents, which the author attributes to the sharp downward adjustment in rates in 2020–22 rather than their post-pandemic rise.
  2. Because implicit housing costs are fixed over the entire term of residency, cyclical dips in 30-year rates boost purchasing power to an extent not observed with floating-rate loans, and house prices and sales volumes rise predictably in response.
  3. The author argues that the for-sale housing market needs a sharp reduction in interest rates, but the United States is in the midst of an expensive data center and supercomputer buildout, with high rates crowding out interest-sensitive sectors such as for-sale housing.

Related Articles:

  • How America’s AI Boom Is Squeezing The Rest Of The Economy — About a sixth of America's 2% real GDP growth over the past year came from investment in computer and communications equipment and data centres, and one estimate puts the artificial intelligence boom's total contribution to growth at 40%. Average electricity bills rose 7%, attributed in part to data-centre demand, while housebuilding and non-AI business investment slumped and real consumption flatlined.
  • 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.
  • 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. The authors argue that technological rivalry, measured by rival firms' research and development spending within an industry, raises obsolescence risk and shortens the period over which technology-specific adjustment costs can be recovered, making productive firms slower to expand employment. They estimate growing rivalry accounts for most of the decline in job reallocation.

Yoshiki Ando, James Bessen, and Xiupeng Wang Boston University School of Law
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Technological rivalry raises obsolescence risk, reducing the time over which adjustment costs can be recovered and thus reducing firm growth in response to innovation, reconciling an increase in the rate of innovation with a slowdown in aggregate TFP.

Does technological rivalry explain why productive firms hire more slowly?

Core argument: Over 1997–2018, growing technological rivalry, measured by R&D investment of other firms in the same industry, accounts for most of the decline in job reallocation, the authors find.

Why should firms become less responsive to productivity? Under standard labor demand models, a firm with a new productive idea (positive productivity shock) will seek to increase its employment to produce more. A new, higher level of productivity raises the firm’s target employment level, but adjustment costs tend to slow growth toward that target. This paper proposes a new factor that contributes to slower firm responsiveness: technological rivalry, measured by the magnitude of R&D investments by other firms in the same industry. Our insight is that technological rivalry exacerbates the effect of adjustment costs. Technological rivalry raises obsolescence risk, reducing the time over which technology specific adjustment costs can be recovered. [Over the period] 1997-2018, we find that growing technological rivalry accounts for most of the decline in job reallocation. Counterintuitively, rising technological rivalry may slow reallocation, dampening aggregate productivity growth.

Takeaways by Macro Roundup® AI

  1. Over 1997–2018, growing technological rivalry, measured by R&D investment of other firms in the same industry, accounts for most of the decline in job reallocation, the authors find.
  2. The authors argue that technological rivalry raises obsolescence risk, shortening the period over which technology-specific adjustment costs can be recovered and thereby exacerbating the effect of adjustment costs on firm growth.
  3. The paper proposes that rising technological rivalry may slow reallocation and dampen aggregate productivity growth.

Related Articles:

  • The Rising Returns to R&D: Ideas Are Not Getting Harder to Find — Using US Census Bureau micro-data on manufacturing, the authors estimate that both the output elasticity of research and development and its marginal returns have risen, alongside rising technological rivalry and obsolescence. They conclude ideas are not getting harder to find, but innovations are more transient, so rising R&D need not raise aggregate productivity growth.
  • The R&D Puzzle in U.S. Manufacturing Productivity Growth — Research and development spending in U.S. manufacturing has been rising relative to output and hours worked while productivity has been flat, which suggests the ability of research and development to boost productivity growth has been declining.
  • 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. Foreign net inflows into long-term US assets, measured as a rolling 12-month sum, are at record highs, with equities showing particularly strong inflows. Flows into other asset classes are weaker but show no sign of an exodus from US assets.

Robin Brooks Robin Brooks Substack
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On a rolling one-year basis, foreign inflows into American assets hit a record high in June, driven by equity inflows, which offset directionally weaker foreign demand for Treasury notes and bonds.

Are foreign investors pulling out of US assets?

Core argument: Foreign net inflows into long-term US assets, measured as a rolling 12-month sum through June, stand at record highs, with equity inflows especially strong, which the analysis reads as growing market optimism on US growth.

The chart shows a rolling 12-month sum of foreign net inflows into long-term US assets. The latest data through June show very strong inflows into equities (purple) in particular, which points to growing market optimism on US growth. Foreign flows into other asset classes are weaker, but there is no sign of an exodus, which is what you might expect to see if you listen to the prevailing narrative on the US.

Takeaways by Macro Roundup® AI

  1. Foreign net inflows into long-term US assets, measured as a rolling 12-month sum through June, stand at record highs, with equity inflows especially strong, which the analysis reads as growing market optimism on US growth.
  2. Foreign flows into US asset classes other than equities are weaker but show no sign of an exodus, contrary to what the prevailing narrative on the US would imply.

Related Articles:

  • Why Is The Yield Curve Steepening? Because Of Coming Fed Cuts And Fiscal Challenges — The US yield curve is steepening across both the 2-to-10-year and 10-to-30-year segments. The article attributes this to Federal Reserve rate cuts, the risk that markets read those cuts as politically motivated and raise inflation expectations and long-term rates, and growing Treasury debt issuance pushing long rates up.
  • 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.
  • 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.

AI Summary. Across the 30 states and Washington, D.C. that register voters by party, Democrats lost about 2.1m registered voters over a recent four-year period while Republicans gained 2.4m, cutting the Democratic registration edge from nearly 11 percentage points to just over 6. Republicans have also overtaken Democrats among new registrants.

Shane Goldmacher and Jonah Smith New York Times
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New voters are breaking Republican. In 2018, 34% of new voter registrations were Democrats and 20% GOP. By 2024, the GOP’s share of new voters rose 9pp relative to 2018 and the Democrats share declined 8pp, giving the GOP an edge among new registrants.

Are Democrats losing registered voters to Republicans across every party-registration state?

Core argument: Democrats lost about 2.1 million registered voters between the 2020 and 2024 elections across the 30 states plus Washington, D.C. with partisan registration, while Republicans gained 2.4 million, a four-year swing of 4.5 million voters.

Of the 30 states that track voter registration by political party, Democrats lost ground to Republicans in every single one between the 2020 and 2024 elections — and often by a lot. Democrats lost about 2.1 million registered voters between the 2020 and 2024 elections in the 30 states, along with Washington, D.C., that allow people to register with a political party. (In the remaining 20 states, voters do not register with a political party.) Republicans gained 2.4 million. That four-year swing toward the Republicans adds up to 4.5 million voters. Democrats went from nearly an 11-percentage-point edge over Republicans on Election Day 2020 in those places with partisan registration, to just over a 6-percentage-point edge in 2024. In 2018, Democrats accounted for 34% of new voter registrations nationwide, while Republicans were only 20%. Yet by 2024, Republicans had overtaken Democrats among new registrants. In six years, the G.O.P.’s share rose by 9 percentage points; the Democratic share dropped nearly 8 points. There are now roughly 160,000 fewer registered Democrats than on Election Day 2024, according to L2’s data, and 200,000 more Republicans.

Takeaways by Macro Roundup® AI

  1. Democrats lost about 2.1 million registered voters between the 2020 and 2024 elections across the 30 states plus Washington, D.C. with partisan registration, while Republicans gained 2.4 million, a four-year swing of 4.5 million voters.
  2. The Democratic registration edge over Republicans in states with partisan registration narrowed from nearly 11 percentage points on Election Day 2020 to just over 6 points in 2024, with Democrats losing ground in all 30 states.
  3. Democrats accounted for 34% of new voter registrations nationwide in 2018 against 20% for Republicans, but by 2024 Republicans had overtaken them, their share up 9 percentage points as the Democratic share fell nearly 8.

Related Articles:

  • Behind Trump’s 2024 Victory, a More Racially and Ethnically Diverse Voter Coalition — Republican support in the 2024 presidential election rose among Hispanic voters (48%, up from 36% in 2020), Black voters (15% from 8%), Asian voters (40% from 30%), and naturalized citizens (47% from 38%). Men backed Trump by 12 points (55%-43%) after splitting closely in 2020, with gains concentrated among men under 50.
  • What Happened In 2024 — Democratic two-way presidential support fell 3 points from 52% to 49% between the two most recent elections, with larger declines among overlapping demographic groups: 12 points among young Latinos, 16 among young Latino men, and 17 among young Latino men who vote irregularly.
  • Democrats Need to Face Why Trump Won — Among American voters over 30, the gender gap in presidential support has held at roughly 10%, but among those under 30 it has widened dramatically, with 18-year-old men 23 percentage points more likely than 18-year-old women to support Donald Trump. Similar divides are appearing in other countries.

AI Summary. China generates more electricity annually than the United States and European Union combined, having added capacity equivalent to the United Kingdom's total supply each year. Electricity makes up nearly 30% of China's energy use, versus 22% in the US and 21% globally, and its share is growing about 6% a year.

Dan Wang and Arthur Kroeber Foreign Affairs
Date Posted:
Is Database:
Database

Electricity supplies nearly 30% of China’s energy use today and is growing at an annual rate of 6%. In the US, electricity accounts for 22% of energy use and is growing at an annual rate of 0.6%.

Is China becoming the world's first mainly electric economy?

Core argument: China has added power generation equal to the United Kingdom's entire supply every year for the past quarter century, and now generates more electricity annually than the United States and European Union combined.

Over the past quarter century, China has led the world in building power plants, adding the equivalent of the United Kingdom’s total supply every year. It now generates more electricity each year than the United States and the European Union combined. China is well on its way to becoming the world’s first economy powered mainly by electricity. Electricity accounts for 21% of energy use in the world as a whole and 22% of energy use in the United States. In China, electricity is nearly 30% of energy use, more than in any other large country except Japan. And this share is growing fast: about six percent a year, compared with 2.6 percent for the world as a whole and 0.6% for the United States.

Takeaways by Macro Roundup® AI

  1. China has added power generation equal to the United Kingdom's entire supply every year for the past quarter century, and now generates more electricity annually than the United States and European Union combined.
  2. Electricity accounts for nearly 30% of China's energy use, more than any other large country except Japan, against 22% in the United States and 21% worldwide.
  3. China's electricity share of energy use is growing about 6% a year, compared with 2.6% for the world and 0.6% for the United States, putting China on course to become the world's first economy powered mainly by electricity.

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.
  • 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.
  • Xi Ties His Legacy and China’s Economy to $167 Billion Dam — 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.

AI Summary. China's National Bureau of Statistics reported that urban unemployment among 16-24 year-olds excluding students rose to 17.8% from 14.5%, ending four straight months of decline. A record 12.2m university students are graduating into a job market where many have had trouble finding positions matching their education and skill levels.

Xinyi Wu South China Morning Post
Date Posted:

China’s youth unemployment (16–24) rose to 17.8% in July. 12.2mm college students will graduate this summer and enter the labor force.

Is China's youth unemployment rising as record graduates enter the workforce?

Core argument: China's urban jobless rate for 16–24 year-olds excluding students rose to 17.8% in July from 14.5% in June, the highest level since last August, according to National Bureau of Statistics data.

China’s youth unemployment rate rose to its highest level in 11 months in July, as a record number of graduates enter an already shaky labour market. The urban jobless rate for the 16-24 age group, excluding students, rose to 17.8% last month from 14.5% in June, putting an end to four straight months of decline and marking the metric’s highest level since last August, according to data released by the National Bureau of Statistics on Tuesday. The figures come as a record 12.2 million university students graduate this summer, with a majority of them joining a sizeable applicant pool that has had trouble finding open positions that meet their education and skill levels.

Takeaways by Macro Roundup® AI

  1. China's urban jobless rate for 16–24 year-olds excluding students rose to 17.8% in July from 14.5% in June, the highest level since last August, according to National Bureau of Statistics data.
  2. The July increase in China's youth unemployment rate ended four straight months of decline in the metric.
  3. A record 12.2 million Chinese university students graduate this summer, with a majority joining an applicant pool that has had trouble finding open positions matching their education and skill levels.

Related Articles:

  • China Already Had a Graduate Jobs Crisis. The Trade War is Making it Worse — China's graduate job market faces multiple simultaneous pressures, including a real estate slump, tighter financial-sector regulation with pay cuts and layoffs, and cautious private-sector hiring. Major state banks have cut graduate recruitment sharply, with Agricultural Bank of China planning 4,530 hires, down 68.9%, and Industrial and Commercial Bank of China down 47%.
  • China is Suffering its Own ‘China Shock’ — Academic analysis of 12 labour-intensive Chinese manufacturing industries estimates average employment fell about 14%, or nearly 4mn jobs, between 2011 and 2019, with textile roles down 40%; a further analysis of the same sectors found 3.4mn more jobs lost through 2023. Researchers argue industrial upgrading and automation are cutting demand for lower-skilled workers and depressing their wages.
  • 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.