Edward Conard

Top Ten New York Times Bestselling Author

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

Macro Roundup


Monday, August 25, 2025

AI Summary. The authors estimate that demand for assets has outpaced supply by roughly 400% of GDP versus 100%, making rising asset demand the leading contributor to falling interest rates. They project that debt sustainability requires fiscal consolidation exceeding 10% of GDP, though debt could reach 250% of GDP without raising interest rates.

Adrien Auclert, Hannes Malmberg, Matthew Rognlie, and Ludwig Straub Federal Reserve Bank of Kansas City
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U.S. asset supply as a % of GDP doubled since 1982, but asset demand – driven by aging, rising inequality, increasing foreign desire for U.S. assets, and falling productivity growth – grew by 4x GDP. “Asset demand won the race, and interest rates fell.”

Has rising asset demand outpaced supply enough to drive interest rates down?

Core argument: Since the early 1980s, asset demand has risen by roughly 400% of GDP against a cumulative asset supply increase of about 100% of GDP, with demand winning the race and interest rates falling.

From 1950 to the present, rapid population aging, rising income inequality, increasing foreign demand for U.S. assets, and declining productivity growth all contributed to a surge in asset demand. Asset supply initially fell, then turned around sharply, mainly driven by increases in government debt and the value of capitalized profits. Overall, asset demand won the race, and interest rates fell. In the left panel, we see that asset supply and demand shifts, shown as shares of GDP, remain small until the late 1960s; then, asset supply declines through the early 1980s. Since then, both have risen dramatically, though asset demand has outpaced supply, rising by ~ 400% of GDP relative to a cumulative asset supply increase of only around 100% of GDP. [The 2nd and 3rd panels] use our recovered supply and demand shifts to decompose equilibrium movements in r∗ and A/Y. Falling asset supply is mostly responsible for the reductions in r∗ and A/Y early on. [Since] the 1980s, rising asset demand has been the leading contributor to the decline in interest rates and the rise in A/Y. Looking ahead, debt sustainability requires a fiscal consolidation of >10% of GDP, but debt could reach 250% of GDP without pushing up interest rates.

Takeaways by Macro Roundup® AI

  1. Since the early 1980s, asset demand has risen by roughly 400% of GDP against a cumulative asset supply increase of about 100% of GDP, with demand winning the race and interest rates falling.
  2. Population aging, rising income inequality, growing foreign demand for U.S. assets, and declining productivity growth contributed to the surge in asset demand, while asset supply rose mainly on higher government debt and the value of capitalized profits.
  3. Falling asset supply accounts for most of the early declines in r* and the asset-to-output ratio, while rising asset demand has led the decline in interest rates since the 1980s; debt sustainability requires a fiscal consolidation exceeding 10% of GDP.

Related Articles:

  • Demographics, Wealth, and Global Imbalances in the Twenty-First Century — Because the elderly hold much more wealth than the young and on average do not draw it down much as they age, the authors' model projects no "great demographic reversal": population aging is estimated to push global rates of return down by about 1.07pp and raise global wealth from 456% to 498% of world GDP.
  • Underlying Trends in the U.S. Neutral Interest Rate — An analysis attributes the pre-pandemic decline in the U.S. neutral real interest rate to international factors and population aging, with fiscal spending pushing rates up; since 2019 international factors have instead put upward pressure on U.S. real rates. The estimates suggest productivity growth has played a very minor role.
  • Foreign Flows Into The US At Record High — 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.

AI Summary. Payroll job growth slowed to an average 35,000 per month over three months, down from 168,000 per month in 2024, but labor supply softened in line with demand—slower labor force growth amid reduced immigration—leaving the labor market in balance with downside risks to employment and upside risks to inflation.

Jerome Powell Federal Reserve Board
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“The labor market appears to be in… a curious kind of balance that results from a marked slowing in both the supply of and demand for workers. Downside risks to employment are rising; risks to inflation are tilted to the upside, a challenging situation.”

Does slower job growth mean the labor market has slack?

Core argument: U.S. payroll job growth slowed to an average 35,000 per month over the past three months, down from 168,000 per month during 2024, according to the July employment report.

The July employment report released earlier this month showed that payroll job growth slowed to an average pace of only 35,000 per month over the past three months, down from 168,000 per month during 2024. But it does not appear that the slowdown in job growth has opened up a large margin of slack in the labor market. Labor supply has softened in line with demand, sharply lowering the "breakeven" rate of job creation needed to hold the unemployment rate constant. Indeed, labor force growth has slowed considerably this year with the sharp falloff in immigration, and the labor force participation rate has edged down in recent months. Overall, while the labor market appears to be in balance, it is a curious kind of balance that results from a marked slowing in both the supply of and demand for workers. This unusual situation suggests that downside risks to employment are rising, [while] risks to inflation are tilted to the upside, a challenging situation. When our goals are in tension like this, our framework calls for us to balance both sides of our dual mandate.

Takeaways by Macro Roundup® AI

  1. U.S. payroll job growth slowed to an average 35,000 per month over the past three months, down from 168,000 per month during 2024, according to the July employment report.
  2. The slowdown in job growth does not appear to have opened a large margin of labor market slack, as labor supply softened in line with demand, sharply lowering the breakeven rate of job creation needed to hold unemployment constant.
  3. Downside risks to employment appear to be rising while risks to inflation are tilted to the upside, a tension the Federal Reserve's framework calls for balancing across both sides of its dual mandate.

Related Articles:

  • Three Perceptions — Slowing wage growth suggests labor market weakness reflects weaker labor demand rather than a shortage of workers, since reduced immigration would push wages up even as job growth slowed. Real consumer spending has plateaued, and tariffs now taking effect are expected to further reduce corporate profits and consumer incomes.
  • Immigration and the U.S. Economy Since the Pandemic: An Accounting Exercise — The US native-born labor force fell by about 1.2m over four years, a decline driven overwhelmingly by population aging, while foreign-born labor supply grew by about 3m, leaving the overall labor force up roughly 2m. Without immigration, the total US labor force would have shrunk.
  • How Much Has the Cooling Economy Reduced Inflation? — Estimates based on labor market tightness measures — job vacancies relative to unemployment and to all job searchers — imply excess demand peaked at a contribution of 0.75 to 1.15 percentage points to inflation, and has since declined to a contribution of 0.3 to 0.4 percentage point.

AI Summary. Japan's fertility rate stood at 1.15 in 2024 and its working-age population peaked in 1995, with the total population peaking in 2008. Rising labor force participation among women and people 65 and over has more than offset the shrinking working-age population, but further gains are limited since both rates already rank among the highest internationally.

Kazuo Ueda Bank of Japan
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An ~18pp rise in female labor force participation between 2000 and 2025, an ~7pp rise in participation of seniors since 2012, and a 30-year low in youth unemployment have temporarily mitigated the decline in Japan’s labor force, which peaked in 1995.

Can rising participation among women and seniors keep offsetting a shrinking workforce?

Core argument: Japan's total fertility rate stood at 1.15 in 2024, after falling from around 4 to around 2 in the 1950s and resuming its decline in the early 1980s, with the working-age population peaking in 1995 and the total population in 2008.

Japan's demographics have been shaped by two major forces. First, the birth rate (total fertility rate) fell sharply from around 4 to around 2 in the 1950s, resumed its decline in the early 1980s, and stood at 1.15 in 2024. Second, the life expectancy of men rose from 63.6 years in 1955 to 81.1 years in 2024, and that of women rose from 67.8 years in 1955 to 87.1 years in 2024. As a result, the working-age population peaked in 1995, while the total population peaked later, in 2008. Rising labor force participation rates have mitigated the impact of demographics on labor supply. Labor force participation among women and seniors has increased sharply since the early 2010s, more than compensating for the fall in the working-age population. The scope for further increases is limited. The current female labor force participation rate is already comparable to Northern European economies. The labor force participation rate for people aged 65 and over was above 25% in 2024, which was the second highest among OECD countries, after South Korea.

Takeaways by Macro Roundup® AI

  1. Japan's total fertility rate stood at 1.15 in 2024, after falling from around 4 to around 2 in the 1950s and resuming its decline in the early 1980s, with the working-age population peaking in 1995 and the total population in 2008.
  2. Rising labor force participation among women and seniors since the early 2010s has more than compensated for Japan's falling working-age population, mitigating the impact of demographics on labor supply.
  3. Japan's labor force participation rate for people aged 65 and over was above 25% in 2024, the second highest among OECD countries after South Korea, while the female rate is already comparable to Northern European economies, leaving limited scope for further increases.

Related Articles:

  • Japanese Workers Secure Biggest Pay Rise In Three Decades — Japanese companies including Honda, Nippon Steel, and ANA Holdings granted workers their largest pay rise in more than three decades, with economists expecting large firms to give unionised workers average increases above 4%, up from 3.6% the prior year. The increases strengthen the case for the Bank of Japan to begin raising interest rates.
  • Japan Urged to Use Gloomier Population Forecasts After Plunge in Births — Japanese births fell to a record low of 686,000 in 2024, dropping below 700,000 for the first time since 19th-century records began and reaching a level Japan's official median population forecast had not projected until 2039. Because the government bases economic and fiscal policy on that median forecast, adopting lower estimates would require revising projections for taxes and pension benefits.
  • The Power of Demography and the Fate of East Asia — East Asia's total population has peaked and is projected to decline for at least a generation, with the pace of decline likely accelerating each decade, while US population is projected to keep growing for decades. The author argues such sustained divergence can shift the global balance of power.

AI Summary. Estimates of a falling immigrant population rely on the Census Bureau's Current Population Survey, which the agency cautions against using to track immigrant populations over time because its roughly 60,000-household sample is scaled to possibly outdated population estimates. Noncitizen responses have dropped 18%, versus 3.7% for others.

Paul Kiernan Wall Street Journal
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Pew and Center for Immigration Studies likely overstate immigration outflows from the US because the CPS calibrates to match out-of-date population estimates, and because non-citizen response to the CPS has dropped 18% since November.

Are survey-based estimates of a shrinking immigrant population reliable?

Core argument: The number of noncitizens responding to the Census Bureau's Current Population Survey fell 18% since November, possibly out of fear their information will be shared with immigration enforcement, versus a 3.7% drop among other respondents.

[The Pew and Center for Immigration Studies analysis] rely heavily on one source: the Census Bureau’s monthly Current Population Survey, or CPS. That survey is used to compute the monthly unemployment rate and other labor market barometers. But the agency cautions against using the CPS to estimate the population of immigrants over time. The CPS is based on a monthly sample of about 60,000 households, which is extrapolated to match independent estimates of the population size that are likely out of date. The estimates aren’t weighted to accurately capture the ratio of native- to foreign-born people. Moreover, since November, the number of noncitizens responding to the CPS plunged 18%, possibly out of fear their information will be shared with immigration enforcement, compared with a drop of 3.7% from others.

Takeaways by Macro Roundup® AI

  1. The number of noncitizens responding to the Census Bureau's Current Population Survey fell 18% since November, possibly out of fear their information will be shared with immigration enforcement, versus a 3.7% drop among other respondents.
  2. Pew and Center for Immigration Studies analyses of the immigration decline rely heavily on the Current Population Survey, which the Census Bureau cautions against using to estimate the immigrant population over time.
  3. The Current Population Survey samples about 60,000 households monthly and extrapolates to independent population estimates that are likely out of date, without weighting to accurately capture the ratio of native- to foreign-born people.

Related Articles:

  • U.S. Unauthorized Immigrant Population Reached a Record 14 Million in 2023 — Pew Research Center estimates the U.S. unauthorized immigrant population reached an all-time high of 14m in 2023, or 4.1% of the total population, after a record two-year increase of 3.5m. The overall immigrant population peaked above 53m before declining by more than 1m in the first half of 2025.
  • Illegal Population Down Since January — An analysis of the Current Population Survey finds the foreign-born population fell by 957,000 over a four-month period, with the labor force component down 601,000, one of the largest four-month declines in three decades. The decline was entirely among non-citizens, with non-citizens from Latin America arriving in 1980 or later down 1.07m.
  • America’s Immigration Mess: An Illustrated Guide — Current Population Survey estimates indicate America's foreign-born population surpassed 50m for the first time and exceeded 15% of the national population, above the prior peak of 14.8% recorded in 1890. Mass immigration during that earlier wave was associated in contemporary opinion with widening income and wealth gaps and depressed wages for less-skilled native-born men, and sweeping national restrictions followed.

AI Summary. Stock performance comparisons of Tractor Supply against Apple, Domino's Pizza against Google, and Old Dominion against Amazon show that unglamorous companies can deliver better and more stable returns than heavily discussed technology stocks. For investors seeking steady returns, boring is often a better strategy than fancy.

Torsten Sløk Apollo
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Since 2000, Domino’s Pizza has outperformed Google, Tractor Supply has outperformed Apple, and Old Dominion has outperformed Amazon. Torsten Sløk notes, “boring is often a better strategy than fancy.”

Do unglamorous stocks deliver better returns than popular tech stocks?

Core argument: Charts comparing Tractor Supply with Apple, Domino's Pizza with Google, and Old Dominion with Amazon underpin the argument that unglamorous companies can match or beat high-profile technology stocks.

The charts compare the stock performance of Tractor Supply and Apple, Domino’s Pizza and Google, and Old Dominion and Amazon. The bottom line is that fancy tech stocks are getting so much attention, and investors spend a disproportionate amount of time discussing their growth strategies and new products. But numerous other stocks and investment strategies can deliver better and more stable returns with fewer sleepless nights. Many people enjoy the adrenaline rush that comes with investing in the latest shiny toy, but for investors looking for steady and stable returns, boring is often a better strategy than fancy.

Takeaways by Macro Roundup® AI

  1. Charts comparing Tractor Supply with Apple, Domino's Pizza with Google, and Old Dominion with Amazon underpin the argument that unglamorous companies can match or beat high-profile technology stocks.
  2. Investors devote a disproportionate share of attention to technology stocks' growth strategies and new products, while numerous other stocks and strategies can deliver better and more stable returns.
  3. For investors seeking steady and stable returns, boring is often a better strategy than fancy, even though many people enjoy the adrenaline rush of investing in the latest shiny toy.

Related Articles:

  • AI Is Holding Up the Sky. The Rest Fell Back to Earth — 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.
  • 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. The U.S. government is taking a 10% stake in Intel, becoming the chip maker's largest shareholder, by converting $8.9bn in awarded but unpaid grants from the 2022 Chips Act into equity. The government could receive additional stock depending on the performance of Intel's chip manufacturing business.

Amrith Ramkumar, Robbie Whelan and Brian Schwartz Wall Street Journal
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The Federal government is taking a 10% stake in Intel by converting $8.9B in grants previously awarded under the Chips act, but not yet paid, into equity. The government will be the company’s largest shareholder and will not hold a board seat.

Is the government converting chip grants into an equity stake?

Core argument: The U.S. government is taking a 10% stake in Intel by converting $8.9 billion in awarded but unpaid 2022 Chips Act grants into equity, under terms that would make the government Intel's largest shareholder.

The U.S. government is taking a 10% stake in Intel, a deal that caps a two-week frenzy for the troubled chip maker and marks the latest in a series of extraordinary private-sector interventions by President Trump. Under the terms of the agreement, $8.9 billion in grants that had been awarded to Intel from the 2022 Chips Act, but not yet paid, will be converted to equity, the two sides said Friday. The government could get more stock depending on what happens to Intel’s chip manufacturing business. The deal is a remarkable turnaround. Just over two weeks ago, Trump called for Intel CEO Lip-Bu Tan to be fired for his ties to China. After meeting Tan and talking about the business last week, Trump became a fan and saw an opportunity to deepen their partnership, he said Friday. “I said, ‘I think you should pay us 10% of the company,’ and they said yes,” Trump said in the Oval Office. Under the terms of the agreement, the government would become Intel’s largest shareholder. Intel previously received $2.2 billion in Chips Act grants.

Takeaways by Macro Roundup® AI

  1. The U.S. government is taking a 10% stake in Intel by converting $8.9 billion in awarded but unpaid 2022 Chips Act grants into equity, under terms that would make the government Intel's largest shareholder.
  2. The government could receive additional Intel stock depending on what happens to the company's chip manufacturing business; Intel previously received $2.2 billion in Chips Act grants.
  3. Trump called for Intel CEO Lip-Bu Tan to be fired over his ties to China just over two weeks before the agreement, and later recounted telling the company, "I think you should pay us 10% of the company," and they said yes.

Related Articles:

  • The Chips Act Has Been Surprisingly Successful So Far — The US government has spent over half of its $39bn in Chips Act semiconductor incentives, and chip companies and supply chain partners have announced $327bn of investments over the next 10 years, according to Semiconductor Industry Association calculations. US data show a 15-fold increase in construction of computing and electronics manufacturing facilities.
  • Pentagon to Take Stake in Rare-Earth Company, Challenging China’s Control — Under a deal with the largest U.S. rare earths miner, the Defense Department will take a 15% stake, commit billions of dollars to investment and output purchases, and guarantee a price floor for rare earth minerals and magnets. The agreement calls for a new magnet factory, expected online in 2028, at a scale far exceeding current U.S. magnet production.
  • Nippon Steel Considers ‘Golden Share’ Idea For US Steel Deal — Nippon Steel is considering granting the U.S. government a "golden share" in U.S. Steel to advance its acquisition, a special class of stock whose holder can control board composition and wield influence over major management decisions. U.S.-listed companies generally cannot issue golden shares, but Nippon Steel plans to delist U.S. Steel.

Tuesday, August 26, 2025

AI Summary. Using payroll records covering millions of US workers, the authors find employment for workers aged 22–25 in occupations most exposed to artificial intelligence, such as software developers and customer service representatives, declined 6%, while employment for older workers in those occupations rose 6–9%. Employment in less-exposed occupations grew comparably across age groups.

Erik Brynjolfsson, Bharat Chandar and Ruyu Chen Stanford University
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In the 20% of occupations most exposed to AI, employment of 22- to 25-year-olds declined 6% since late 2022, driving this cohort’s “tepid overall job growth,” while employment in each of the >25 age groups rose between 6% and 8%.

Is AI reducing employment for young workers in exposed occupations?

Core argument: Workers aged 22–25 in the most AI-exposed occupations experienced a 6% decline in employment from late 2022 to July 2025, compared with a 6–9% increase for older workers, according to ADP payroll records through July 2025.

This paper [leverages] a large-scale, high-frequency administrative dataset from ADP, the largest payroll software provider in the United States [using] monthly, individual-level payroll records through July 2025, [with] millions of workers across tens of thousands of firms. We uncover substantial declines in employment for early-career workers (ages 22-25) in occupations most exposed to AI, such as software developers and customer service representatives. Employment trends for experienced workers in the same occupations, and workers of all ages in less-exposed occupations such as nursing aides, have remained stable or continued to grow, and in jobs less exposed to AI young [and old] workers have experienced comparable employment growth. In contrast, workers aged 22 to 25 have experienced a 6% decline in employment from late 2022 to July 2025 in the most AI-exposed occupations, compared to a 6-9% increase for older workers. These results suggest that declining employment in AI-exposed jobs is driving tepid overall employment growth for 22 to 25 year-olds as employment for older workers continues to grow.

Takeaways by Macro Roundup® AI

  1. Workers aged 22–25 in the most AI-exposed occupations experienced a 6% decline in employment from late 2022 to July 2025, compared with a 6–9% increase for older workers, according to ADP payroll records through July 2025.
  2. Employment for experienced workers in AI-exposed occupations and for workers of all ages in less-exposed occupations such as nursing aides remained stable or continued to grow, with young and older workers seeing comparable growth in less-exposed jobs.
  3. The paper suggests that declining employment in AI-exposed jobs, such as software developers and customer service representatives, is driving tepid overall employment growth for 22 to 25 year-olds while employment for older workers continues to grow.

Related Articles:

  • AI and Jobs: The Final Word (Until the Next One) — Unemployment has risen by 0.30 percentage points for the fifth of workers most exposed to artificial intelligence, compared with 0.94 percentage points for the least exposed fifth, leaving no visible AI effect on jobs. The share of workers leaving the labor force within a year is lowest among the most AI-exposed workers and roughly flat.
  • Technological Disruption in the Labor Market — The authors measure US labor market structure since 1880 and find 1990–2017 less disruptive than any earlier period, because past changes from general-purpose technologies like steam and electricity were so profound. They identify four recent signs of accelerating change, including a 50%+ rise in science and technology employment share since 2010.
  • Expertise — The authors' model of automation predicts that occupations with rising expertise requirements see higher wages but falling employment, while those with declining requirements see lower wages alongside rising employment. Analyzing employment and earnings data by occupation across four decades, they find changes in occupational expertise strongly predict changes in occupational wages.

AI Summary. The decline in gross migration between U.S. states over the past 50 years is modest and has been essentially flat since the early 2000s, with the net migration rate showing no trend and little evidence that demographic change explains the decline. Most moves offset each other, with only about 10–12 out of 100 producing a net population shift between states.

Andrea Foschi, Christopher House, Christian Proebsting, and Linda Tesar Federal Reserve Bank of Kansas City
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U.S. gross migration rates have fallen modestly over the past 50 years, but net migration has hardly budged. “On average, only 10–12 out of 100 moves reflect a net flow from one location to another.”

Has migration between U.S. states declined significantly?

Core argument: Only 10–12 of every 100 U.S. inter-state moves reflect a net flow from one location to another, with the majority of gross migration consisting of flows that offset each other.

The decline in gross inter-state migration over the last 50 years is relatively modest and has been essentially stable since the early 2000’s. The net migration rate, which is one of the main equilibrating mechanisms between locations, exhibits no trend. There is little evidence that demographic changes explain the decline in aggregate gross migration. Figure 2 plots gross migration and its decomposition into the contributions of absolute net migration and offsetting migration– since 1975 using the IRS data. We see again the slight decline in the gross migration rate, matched by a similar trend in the Offsetting Migration Rate. We also see that the majority of gross migration is given by flows that offset each other, and only a small fraction of flows actually induce a change in a given state’s population. On average, only 10-12 out of 100 moves reflect a net flow from one location to another. Net flows are a small fraction of overall labor migration and have remained fairly constant.

Takeaways by Macro Roundup® AI

  1. Only 10–12 of every 100 U.S. inter-state moves reflect a net flow from one location to another, with the majority of gross migration consisting of flows that offset each other.
  2. The decline in gross inter-state migration over the past 50 years is relatively modest and has been essentially stable since the early 2000s, with the net migration rate showing no trend.
  3. IRS data since 1975 show the slight decline in the gross migration rate matched by a similar trend in the offsetting migration rate, and there is little evidence that demographic changes explain the decline.

Related Articles:

  • Where is Standard of Living the Highest? Local Prices and the Geography of Consumption — The authors estimate that geographical differences in cost of living are especially large for low-income US households, and that expensive cities offer college graduates a standard of living similar to affordable cities while offering less-educated households a lower one. A high school dropout household moving from the most affordable to the most expensive commuting zone would see consumption fall 18.5%.
  • Housing Constraints and Spatial Misallocation — The authors estimate that housing supply constraints in high-productivity cities such as New York and San Francisco misallocated labor and lowered aggregate US growth by 36% over 1964–2009. Relaxing supply in those cities to the median US city's level is estimated to have raised output 3.7%, or about $3,685 in additional average annual earnings.
  • Why Is Geographic Mobility Declining? — As women's earnings and full-time employment rates converge with men's, geographic mobility would be expected to decline, since couples with similar earnings are less likely to relocate than those with unequal earnings. The convergence may also raise child care needs, encouraging families to locate near relatives who can help.

AI Summary. Government spending has marginally declined from the prior two years, so fiscal policy is no longer a tailwind for growth, though the deficit still adds about $2tn a year to private sector wealth. Tariff pass-through to consumer prices and resumed collections on defaulted student loans tighten spending among high-propensity consumers.

Joseph Wang Fed Guy Blog
Date Posted:

Joe Wang believes a small reduction in federal spending, along with tariffs and the resumption of student loan payments, suggest that fiscal policy will not be as supportive of growth as it was in 2023–2024.

Has government spending stopped being a tailwind for economic growth?

Core argument: Government spending has declined marginally this year from the prior two years, so fiscal spending is no longer a tailwind for economic growth, even as overall fiscal policy remains loose.

This year government spending has so far marginally declined from the prior two years, so fiscal spending is no longer a tailwind for economic growth. On a stock level, the fiscal deficit is still increasing the level of private sector wealth at $2t a year as it continues to print Treasuries. That additional wealth could be rebalanced into other financial assets, or potentially spent on goods and services. While overall fiscal policy remains loose, the Administration has enacted some fiscal tightening that is impactful on cohorts with a high propensity to consume. Tariffs will have some degree of pass through to consumer prices and in effect act as a modest consumption tax on goods. This has a larger impact on low income consumers where goods are a relatively large share of overall consumption. The resumption of collections on defaulted student loans for the first time since 2020 will reduce the disposable income and credit scores of several million borrowers. Student loans repayments were suspended in 2020, were resumed in Fall of 2023 with a one year on-ramp, and collections on defaults were restarted this past May.

Takeaways by Macro Roundup® AI

  1. Government spending has declined marginally this year from the prior two years, so fiscal spending is no longer a tailwind for economic growth, even as overall fiscal policy remains loose.
  2. The fiscal deficit continues to add about $2tn a year to private sector wealth through Treasury issuance, wealth that could be rebalanced into other financial assets or spent on goods and services.
  3. Tariffs act in effect as a modest consumption tax on goods, weighing more on low income consumers, while the May restart of collections on defaulted student loans, the first since 2020, reduces disposable income and credit scores for several million borrowers.

Related Articles:

  • Tariffs Are Generating Meaningful New Revenue — 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.
  • Significant Headwinds to Consumer Spending — With the pause on reporting delinquent federal student loans ended, up to 10% of US households may face a steep drop in their credit scores, leaving them unable to borrow for cars, homes, or furniture. Together with tariffs and high uncertainty, this is a significant headwind to consumer spending.
  • 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.

AI Summary. Replacing a Federal Reserve governor could give the president enough appointees on the seven-member board to outvote the chair and push interest rates in his preferred direction. Board members vote on rates alongside five independently appointed reserve-bank presidents, so more aligned governors could build momentum toward the rate cuts he has pressed for.

Matt Grossman and Greg Ip Wall Street Journal
Date Posted:

Greg Ip argues the potential firing of Lisa Cook is a credible threat to Fed independence, noting “No president has ever tried to fire a Fed board member.”

Can a president gain enough central bank appointees to steer interest rates?

Core argument: Replacing Fed governor Cook could give Trump enough voices on the seven-member board of governors to potentially outvote Powell and move interest rates in his preferred direction.

By replacing Cook, [Trump] could add enough voices to the seven-member board of governors to potentially outvote Powell and move interest rates in his preferred direction. The resignation this month of Fed governor Adriana Kugler, appointed by Biden, already gave Trump a vacancy on the board, to which he has nominated a close adviser, Stephen Miran. Miran now awaits Senate confirmation. The two governors whom Trump appointed during his first term, Michelle Bowman and Christopher Waller, voted against the committee’s decision last month to hold rates steady, arguing for a cut instead. Board members vote on interest rates alongside five independently appointed reserve-bank presidents. But more Trump-aligned governors on the board could mean more momentum toward the rate cuts that Trump has pressed for.

Takeaways by Macro Roundup® AI

  1. Replacing Fed governor Cook could give Trump enough voices on the seven-member board of governors to potentially outvote Powell and move interest rates in his preferred direction.
  2. The resignation of Biden-appointed Fed governor Adriana Kugler gave Trump a board vacancy, to which he nominated close adviser Stephen Miran, who awaits Senate confirmation.
  3. Michelle Bowman and Christopher Waller, the two governors Trump appointed in his first term, voted against the committee's decision to hold rates steady, arguing for a cut instead.

Related Articles:

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  • 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.
  • 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.

AI Summary. US steelmakers have gained market share from imports but have not prevented prices from slipping amid soft demand from major buyers such as the auto and construction industries. About 21m tons of additional US steel production capacity has been announced, started or completed over four years, roughly a quarter of last year's total US output.

Bob Tita and Andrew Mollica The Wall Street Journal
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American steel manufacturers have gained 7pp of market share since 2015 and are expanding domestic capacity by ~25% of 2024’s domestic production, though American steel prices are the highest globally.

Is new steel capacity growing faster than demand?

Core argument: Twenty-one million tons of additional U.S. steel capacity has been announced, put under construction or completed over the past four years, roughly a quarter of total U.S. steel production last year, per a Wall Street Journal analysis of Argus Media market data.

Domestic steelmakers have embraced a protectionist fervor and gained market share versus imports. But they haven’t been able to keep prices from slipping because of soft demand from major steel consumers such as the auto and construction industries. Twenty-one million tons of additional steel production capacity has been announced, placed under construction or completed in the past four years, according to a Wall Street Journal analysis of market data from Argus Media. That figure is roughly a quarter of total U.S. production of the metal last year.

Takeaways by Macro Roundup® AI

  1. Twenty-one million tons of additional U.S. steel capacity has been announced, put under construction or completed over the past four years, roughly a quarter of total U.S. steel production last year, per a Wall Street Journal analysis of Argus Media market data.
  2. U.S. steelmakers have gained market share against imports amid protectionist fervor, yet steel prices have slipped because of soft demand from major consumers such as the auto and construction industries.

Related Articles:

  • Steel Productivity has Plummeted Since Trump’s 2018 Tariffs — Output per hour in the U.S. steel industry has fallen 32% since 2017, following the imposition of 25% tariffs on steel imports, while output per hour for the economy as a whole rose 15%. U.S. steel-using firms, which employ roughly 45x as many Americans as steel producers, pay about 75% more for steel than global competitors.
  • “No Inventions; No Innovations,” A History of US Steel — US Steel lagged in adopting steelmaking technology, only moving into minimills through an acquisition and a new Alabama plant, with minimills now making about 25% of its domestic output. Rival minimill producer Nucor passed US Steel in output and is now the largest US steel producer.
  • Help for the Heartland? The Employment and Electoral Effects of the Trump Tariffs in the United States — The authors find that the combined effect of U.S.-China trade war import tariffs, retaliatory tariffs, and farm subsidies on employment in exposed U.S. locations was at best a wash and possibly mildly negative, while residents of tariff-protected areas became less likely to identify as Democrats and more likely to vote Republican.

AI Summary. Europe's share of global stock market valuations has fallen from 18% to 10% for the EU and from 8.3% to 2.6% for the UK, while America's has held at 48%. Tax revenue equals 38–44% of output in Germany, Italy and France versus 25% in the US, and industrial electricity costs 3–4x US levels.

David Luhnow and Tom Fairless Wall Street Journal
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Deutsche Bank notes that the German economy has grown 1% since 2017 relative to US growth of 19%. Since 2000, the US share of global market capitalization has held steady at 48% while the EU/UK shares fell from 18% to 10%, and 8.3% to 2.6%, respectively.

Why is Europe's share of global stock market value shrinking?

Core argument: The EU's share of global stock market valuations has fallen from 18% to 10% since 2000 and the UK's from 8.3% to 2.6%, while America's has held steady at 48%, according to Deutsche Bank.

Ten years ago, four European companies ranked in the global top 10 by revenues. Today, the continent’s biggest company by market value, German software firm SAP, ranks 28th. America’s share of global stock market valuations has held steady at 48% since 2000, but the EU’s has fallen from 18% to 10%, and the UK’s from 8.3% to 2.6%, according to Deutsche Bank. Tax revenue as a share of economic output is already around 38% in Germany, 43% in Italy and 44% in France, compared with 25% in the U.S., according to OECD data. In Germany, industrial electricity costs three times as much as in the U.S.; in the U.K., four times as much. Britons now consume less electricity per person than the Chinese, and Germany’s overall electricity consumption is lower than it was before the Berlin Wall fell. Yet Germany has banned nuclear energy, and the U.K. has scrapped new offshore oil and gas exploration.

Takeaways by Macro Roundup® AI

  1. The EU's share of global stock market valuations has fallen from 18% to 10% since 2000 and the UK's from 8.3% to 2.6%, while America's has held steady at 48%, according to Deutsche Bank.
  2. Europe's largest company by market value, German software firm SAP, ranks 28th globally, compared with four European companies in the global top 10 by revenues a decade ago.
  3. Industrial electricity costs three times as much in Germany and four times as much in the UK as in the U.S., while Germany has banned nuclear energy and the UK has scrapped new offshore oil and gas exploration.

Related Articles:

  • Why the U.S. Economy Is Trouncing Europe’s — Only about 12% of Americans score at the highest levels on international academic tests versus 34% at the lowest, yet the U.S. has created nearly 250 companies worth over $10bn ($30tn in value) against Europe's 14, and median U.S. disposable household income is 25% above Germany's. The author argues expanding high-skilled immigration is the fastest way to accelerate growth.
  • A Visualization of Europe’s Non-Bubbly Economy — The Draghi report notes that no European Union company with a market capitalization above €100bn was founded from scratch in the past fifty years, while all six US companies valued above €1tn were. The 13 EU companies founded in that period and worth at least $10bn total about $400bn, versus nearly $30tn for their US counterparts.
  • The Future of European Competitiveness – A Competitiveness Strategy for Europe — A European Union competitiveness report attributes the EU's labour productivity growth gap with the US largely to weaker activity in information and communications technology and large-scale digital services; excluding main ICT sectors, EU productivity was broadly at par with the US from 2000-2019. It estimates Europe's investment share must rise about 5 percentage points of GDP.