Edward Conard

Top Ten New York Times Bestselling Author

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

Macro Roundup


Monday, September 8, 2025

AI Summary. The Congressional Budget Office estimates that the top 10% of U.S. families held 60% of all wealth in 2022, up from 56% in 1989, with the top 1% holding 27%, up from 23%. The rest of the top half saw its share fall from 37% to 33%, while the bottom half held 6% in both years.

Nadia Karamcheva, Xiaotong Niu, and Julie Topoleski Congressional Budget Office
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In 2022, the present value of Social Security was ~50% of the wealth of American families at the median of the wealth distribution, ~34% at the 75th percentile, and 20% at the 90th. The wealth shares of the top 1% and top 5% both rose by 4pp since 1989.

Has the share of wealth held by the richest families risen?

Core argument: CBO reports that families in the top 10% of the wealth distribution held 60% of all wealth in 2022, up from 56% in 1989, while families in the top 1% held 27%, up from 23%.

In 2016, CBO published a report that defined family wealth as marketable wealth—that is, its easily tradable assets minus its debts—and in 2022, CBO published a report that defined family wealth as the sum of a family’s marketable wealth and its promised income from defined benefit pension plans. This report updates those prior analyses with more recent data and expands the measure of wealth to account for future streams of income from Social Security benefits. In 2022, families in the top 10% of the distribution held 60% of all wealth, up from 56% in 1989, and families in the top 1% of the distribution held 27%, up from 23% in 1989. The share of wealth held by the rest of the families in the top half of the distribution shrank from 37% to 33% over the same period. Families in the bottom half of the distribution held 6% of all wealth in both 1989 and 2022.

Takeaways by Macro Roundup® AI

  1. CBO reports that families in the top 10% of the wealth distribution held 60% of all wealth in 2022, up from 56% in 1989, while families in the top 1% held 27%, up from 23%.
  2. The share of wealth held by families in the top half of the distribution outside the top 10% fell from 37% in 1989 to 33% in 2022, according to CBO.
  3. Families in the bottom half of the wealth distribution held 6% of all wealth in both 1989 and 2022, under a CBO measure that expands marketable wealth to include promised defined benefit pension income and future Social Security benefits.

Related Articles:

  • Social Security and Trends in Wealth Inequality — The authors estimate that including Social Security in household wealth leaves top wealth shares little changed over three decades, with the top 10% and top 1% shares rising 1.1 and 1.6 percentage points versus roughly 9 and 6 points for marketable wealth alone. Social Security wealth grew from $7tn to $39tn.
  • The Gilded Age and Beyond: The Persistence of Elite Wealth in American History — The authors find that most extremely wealthy Americans fall out of the top tail within their lifetimes, and that grandparental wealth is associated with reaching the top 1% in a non-linear way. Still, over 90% of grandchildren of top 1% grandfathers did not reach that level.
  • Inequality Hasn’t Risen. Here’s Why It Feels Like It Has — In both the US and UK, the lowest earners have seen the fastest wage growth and aggregate inequality has not increased, as low-skilled workers gained and middle-skilled workers lost from the hollowing out of the middle of the jobs distribution. The author argues middle earners face both resentment and precarity.

AI Summary. The top 10 stocks in the S&P 500 by market capitalization accounted for 54% of the index's increase in market capitalization since the start of 2021, reflecting concentration in market cap, returns, earnings, and capital spending tied to artificial intelligence.

Torsten Slok, Rajvi Shah, and Shruti Galwankar Apollo
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Since the beginning of 2021, the top 10 stocks in the S&P 500 by market cap accounted for 54% of the index’s increase in market capitalization.

How concentrated is the S&P 500 in AI-linked stocks?

Core argument: The top 10 stocks in the S&P 500 by market cap accounted for 54% of the index's increase in market capitalization since the beginning of 2021.

[Torsten Sløk's] chart book documents the extreme AI concentration within the S&P 500’s market cap, returns, earnings and capex.

Takeaways by Macro Roundup® AI

  1. The top 10 stocks in the S&P 500 by market cap accounted for 54% of the index's increase in market capitalization since the beginning of 2021.
  2. Torsten Sløk's chart book documents AI concentration within the S&P 500 across market cap, returns, earnings, and capital expenditure.

Related Articles:

  • American Unexceptionalism — The S&P 500 has outperformed other developed-market equities by a cumulative 150% over the past fifteen years, but the authors attribute about 80% of that gap to a strengthening dollar and expanding relative valuations rather than fundamentals such as dividends, buybacks, and organic growth. U.S. valuations sit around the 90th percentile on price-to-earnings measures.
  • 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.
  • 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.

AI Summary. Total annual revenue from AI at the West's leading AI firms is estimated at $50bn, less than 2% of the $2.9tn in global data-centre investment Morgan Stanley forecasts over a four-year period, excluding energy costs. The average American tech firm's assets are estimated to last nine years, versus 15 for 1990s telecoms assets.

Mike Bird and Callum Williams The Economist
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Americans’ exposure to the stock market, at 30% of household net worth, exceeds the dotcom era’s 26%. The Economist’s Bird and Williams warn, “Should Digital God fail to arrive, the fall will be brutal.”

Does AI revenue justify the scale of data-centre investment?

Core argument: The West's leading AI firms take in about $50bn a year in total revenue from the technology, less than 2% of the $2.9trn in global new data-centre investment Morgan Stanley forecasts for 2025-2028, a figure that excludes energy costs.

By our reckoning, the total revenue from the tech accruing to the West’s leading AI firms is currently $50B a year. Although such revenues are growing fast, they are still less than 2% of the $2.9T investment in new data centres globally that Morgan Stanley forecasts between 2025 and 2028—a figure which excludes energy costs. An unusually large share of capital investment is being devoted to assets that depreciate quickly. Nvidia’s cutting-edge chips will look clunky in a few years’ time. We estimate that the average American tech firm’s assets have a shelf-life of just nine years, compared with 15 for telecoms assets in the 1990s.

Takeaways by Macro Roundup® AI

  1. The West's leading AI firms take in about $50bn a year in total revenue from the technology, less than 2% of the $2.9trn in global new data-centre investment Morgan Stanley forecasts for 2025-2028, a figure that excludes energy costs.
  2. The average American tech firm's assets have an estimated shelf-life of just nine years, compared with 15 years for telecoms assets in the 1990s.
  3. An unusually large share of capital investment is going into fast-depreciating assets, with Nvidia's cutting-edge chips likely to look clunky within a few years.

Related Articles:

  • 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.
  • The Kanye/Data Center Crossover — Data center capital spending differs from fiber and railroad investment because most of the cost sits in processors that are replaced every 3-4 years rather than in long-lived shells, power, and cooling connections. That short replacement cycle requires returns high enough to exceed a risk-adjusted cost of capital of 12-14% before the hardware must be replaced.
  • Back to Our Regularly Scheduled Programming — The four largest US hyperscalers spent $440bn on capital expenditure and research in 2024, with $596bn projected for 2025, a 35% increase, leaving large gaps between AI spending and AI revenues. These firms account for more than half of all capital expenditure growth in the US equity market.

AI Summary. The Netherlands' $2tn pension system, the European Union's largest, is shifting from defined-benefit to defined-contribution plans, reducing its need to hold long-dated government bonds as a hedge against promised future payouts. The expected drop in demand for long-duration bonds is putting upward pressure on yields.

Joseph Wang Fed Guy Blog
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The key drivers of elevated European long yields are higher inflation and chronic fiscal deficits, but another catalyst may be lower demand for long-dated debt, as the $2T Dutch pension system transitions from a defined benefit to a defined contribution system.

Does a pension shift to defined contribution push long-term yields higher?

Core argument: The $2tn Dutch pension system, the largest in the EU, is expected to reduce its demand for long-dated bonds significantly, putting upward pressure on yields.

The Dutch pension fund system has been a large investor in long dated bonds, but its appetite for duration will be significantly lower going forward. The system is transitioning from a defined benefit system to a defined contribution system where beneficiaries will simply receive their contributions plus investment returns at retirement. Previously, beneficiaries were promised a certain payout regardless of market performance. This prompted the fund to invest heavily in safe long duration assets like government bonds to hedge their future liabilities. That is no longer a concern under the new system. The $2T Dutch pension fund system is the largest in the E.U., so the expected reduction in bond demand is putting upward pressure on yields.

Takeaways by Macro Roundup® AI

  1. The $2tn Dutch pension system, the largest in the EU, is expected to reduce its demand for long-dated bonds significantly, putting upward pressure on yields.
  2. The Dutch pension system's shift from defined benefit to defined contribution removes the need to hedge promised payouts with long-duration government bonds, since beneficiaries will receive contributions plus investment returns at retirement.
  3. Under the prior defined benefit arrangement, Dutch beneficiaries were promised a set payout regardless of market performance, prompting heavy investment in safe long-duration assets such as government bonds to hedge future liabilities.

Related Articles:

  • Global Debt Report 2025 — About 60% of fixed-rate government debt in advanced economies maturing by 2027 — roughly $9tn — was issued before the recent interest-rate tightening, with weighted average yields below 2% versus projected 10-year rates near 3.6%, implying refinancing at nearly double the original cost. France, Spain, the UK, and the US face heightened vulnerability, with maturing debt exceeding 15% of GDP.
  • Why Denmark is Raising its Retirement Age to 70, Europe’s Highest — Denmark's state pension age is tied to life expectancy under a parliamentary agreement that sets adjustments every five years with 15 years' notice and caps increases at one year at a time. Under this system the pension age is set to rise from 67 to 70, keeping public finances healthy long term.
  • European Views: Back to School with Confidence — A French government confidence vote is expected to be lost, with the likely outcome a newly appointed government, though fresh elections remain possible. The authors project slower fiscal adjustment, with the deficit easing from 5.4% to 5.2% in 2026, adding to debt and raising the risk of credit rating changes.

AI Summary. The employment rate for Americans aged 25–54 has held essentially unchanged at a multi-decade high of 80.7%, just below its recent peak of 80.9%, alongside robust growth in hours worked. Because overall unemployment has risen while prime-age employment stayed stable, job market weakness is concentrated among Americans under 25.

Matt Klein The Overshoot
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Labor demand and employment remain strong; 80.7% of US residents aged 25–54 have a job – near the recent peak. Hiring, however, has slowed; unemployment for those <25 has risen enough to affect the aggregate unemployment rate.

Is job market weakness concentrated among the youngest workers?

Core argument: The U.S. prime age employment rate stands at 80.7%, just below its recent peak of 80.9% and essentially unchanged over the past 2.5 years at a multi-decade high.

The “prime age employment rate” remains essentially unchanged over the past 2.5 years at a multi-decade high. The current reading of 80.7% is only just below the recent peak of 80.9%. For perspective, this indicator had dropped by 1.6 percentage points between January 2000 and August 2001. The stability of the prime age employment rate and the robust growth in hours worked stands in contrast to the overall unemployment rate, which seems to be breaking out of the range it had been sitting in since last summer. By definition, if prime age employment has been stable at the same time that [the overall unemployment rate] has been rising and at the same time that workers have been dropping out of the labor force, job market weakness must be concentrated elsewhere. Specifically, Americans under 25. While jobless rates for the 16-24 age cohort [are normally] higher and more volatile, that does not explain the relentless surge since the beginning of 2025, and the magnitude of [that] unemployment rate increase has been big enough to affect the aggregate numbers.

Takeaways by Macro Roundup® AI

  1. The U.S. prime age employment rate stands at 80.7%, just below its recent peak of 80.9% and essentially unchanged over the past 2.5 years at a multi-decade high.
  2. The prime age employment rate dropped 1.6 percentage points between January 2000 and August 2001, in contrast to its current stability and robust growth in hours worked, even as the overall unemployment rate appears to break out of the range it held since last summer.
  3. With prime age employment stable while overall unemployment rises and workers drop out of the labor force, job market weakness is concentrated among Americans under 25, whose unemployment rate has surged since the beginning of 2025 by enough to affect the aggregate numbers.

Related Articles:

  • Canaries in the Coal Mine? Six Facts about the Recent Employment Effects of Artificial Intelligence — 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.
  • Shorting the AI Jobs Apocalypse — Employment for workers aged 22-25 and 26-30 has declined relative to its pre-ChatGPT trend and relative to older workers in the same occupation, but the age groups shown are not equally sized. The authors argue that combining all age groups shows software developer jobs have continued to grow overall.
  • 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.

AI Summary. Japan's Chinese population held at roughly 700,000 from 2010 to 2021 before climbing, part of a foreign-resident population that has reached about 3.5m, just under 3% of the total. Without declaring an open-door immigration policy, Japan has used this influx to address demographic decline and worker shortages.

Leo Lewis Financial Times
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Japan’s non-Japanese population has surged to 3.5mm, 3% of the population. By 2026, there will be 1mm Chinese nationals living full-time in Japan, largely middle-class Chinese – a phenomenon referred to as Run-ri.

Is Japan addressing demographic decline without declaring an open-door immigration policy?

Core argument: Japan's foreign resident population has risen to about 3.5 million, just under 3% of the total, with numbers growing by an average of roughly 1,000 per day during 2024, about 10% of them Chinese.

The word Run-ri — broadly used to cover the middle-class entrepreneurs, white-collar workers, wealthier academics, retirees and intellectuals moving to Japan for aspirational reasons — combines two Chinese characters. The run primarily means liquidity or prosperity, but its similarity in sound to the English word “run” also conveys the idea of flight. The second character, ri, is the first in the Chinese word for Japan. The total size of the Chinese population residing in Japan was about 200,000 in 1995. It rose through the early 2000s, and settled at roughly 700,000 between 2010 and 2021. Since then, though, the numbers have soared. Without ever having declared any kind of open-door policy on immigration, Japan has quietly addressed both its demographic decline and worker shortage by allowing its non-Japanese population to surge to about 3.5 million, or just under 3% of the population. The number of foreign residents rose by an average of roughly 1,000 per day over the course of 2024, of which about 10% were Chinese.

Takeaways by Macro Roundup® AI

  1. Japan's foreign resident population has risen to about 3.5 million, just under 3% of the total, with numbers growing by an average of roughly 1,000 per day during 2024, about 10% of them Chinese.
  2. The Chinese population in Japan grew from about 200,000 in 1995 to roughly 700,000 between 2010 and 2021, and has soared since then.
  3. The term Run-ri covers Chinese middle-class entrepreneurs, white-collar workers, wealthier academics, retirees and intellectuals moving to Japan, combining a character meaning liquidity or prosperity that also echoes the English "run" with the first character of the Chinese word for Japan.

Related Articles:

  • China to See Biggest Millionaire Exodus in 2024 as Many Head to U.S. — China is projected to see a record 15,200 high-net-worth individuals — those with at least $1m in assets — leave the country, the world's largest such outflow, according to a Henley & Partners report. The prior year's 13,800 departures went mostly to the US, Canada, and Singapore.
  • Chinese Migrants Rush to Find Way to U.S. Border Before Doors Close — Ecuador has suspended visa-free entry for Chinese nationals, closing the most popular access route for Chinese migrants seeking to reach the U.S. border. Tens of thousands of Chinese migrants have attempted to enter the U.S. by flying into Ecuador and crossing the Darién Gap to Mexico.
  • 2023 Letter — Rising numbers of Chinese nationals are being apprehended at the US-Mexico border, with US officers encountering around 1,000 in one month early in the year and nearly 5,000 by November. Most Chinese emigrants leave through legal means, going primarily to Singapore, Japan, and Thailand.

Tuesday, September 9, 2025

AI Summary. Artificial intelligence adoption is increasing across most sectors, with construction and manufacturing as exceptions, and those two sectors make up as much as 40% of firms with 250+ employees. The author argues that apparent declines in adoption among large companies are likely skewed by this composition, plus measurement error — an instance of Simpson's Paradox.

Paul Kedrosky Applied Complexity
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Applying a sector-by-sector analysis of Census Bureau survey data, Paul Kedrosky finds that AI adoption is sharply increasing in sectors outside of construction and manufacturing and is advancing in companies of all sizes.

Is AI adoption among large companies actually declining?

Core argument: Construction and manufacturing, the sectors with the lowest AI adoption rates, make up as much as 40% of the 250+ employee cohort, likely skewing Apollo's chart showing large companies reversing their AI adoption.

Most sectors are seeing sharply increasing AI adoption, with the unsurprising exceptions of construction and manufacturing. But those two sectors make up a large share of the 250+ employee cohort, as much as 40%. So [Apollo's chart showing that large companies are reversing their recent rate of adoption for AI] by employee count are likely skewed badly by companies with the lowest AI adoption rates of any form, further helping explain the "AI decline" graph, in addition to measurement error. This is a kind of example of Simpson's Paradox, where multiple subgroups within a larger population might show an improving trend, while a line of best fit through all the groups shows a declining one.

Takeaways by Macro Roundup® AI

  1. Construction and manufacturing, the sectors with the lowest AI adoption rates, make up as much as 40% of the 250+ employee cohort, likely skewing Apollo's chart showing large companies reversing their AI adoption.
  2. Most sectors show sharply increasing AI adoption, with construction and manufacturing as exceptions, suggesting the apparent "AI decline" among large firms reflects composition effects alongside measurement error.
  3. The apparent decline illustrates Simpson's Paradox, in which multiple subgroups each show an improving trend while a line of best fit through all groups slopes downward.

Related Articles:

  • 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.
  • Honey, AI Capex Keeps Eating … Everything — The author estimates that AI-related capital spending contributed between 0.6% and 1.3% of a quarter's 3% U.S. GDP growth, based on information technology equipment and intellectual property investment data. Google, Amazon, Meta, and Microsoft alone spent about $69bn in the quarter, roughly half of all information technology equipment spending on an annualized basis.
  • AI Adoption Is Accelerating In 2025 — Nvidia's data center revenue growth is used as a simple extrapolation to project the broader capital-expenditure impact of AI-specific investment on GDP. The aim is not precision but a timely sense of whether the growth contribution from AI capital spending is accelerating or potentially peaking.

AI Summary. U.S. twelfth-graders' average math and reading scores on the National Assessment of Educational Progress fell to their lowest levels on record, with math the worst since that test began in 2005 and reading below any point since 1992. The share rated proficient slid 2 percentage points to 35% in reading and 22% in math.

Matt Barnum Wall Street Journal
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New National Assessment of Educational Progress results show the share of American high school seniors who scored basic or above on national tests fell to the lowest level on record: 68% in reading and 55% in math.

Have U.S. twelfth-grade math and reading scores fallen to record lows?

Core argument: U.S. twelfth-graders' average math score was the worst since the current National Assessment of Educational Progress math test began in 2005, and their reading score fell below any point since that assessment started in 1992.

American high-school seniors’ scores on major math and reading tests fell to their lowest levels on record, according to results released Tuesday by the U.S. Education Department. Twelfth-graders’ average math score was the worst since the current test began in 2005, and reading was below any point since that assessment started in 1992. The share of 12th-graders who were proficient slid by 2 percentage points between 2019 and 2024—to 35% in reading and 22% in math. The results are from tests that are part of the National Assessment of Educational Progress, administered to tens of thousands of students in early 2024. In reading, two-thirds of seniors could determine the purpose of a persuasive essay, but only one in five was able to draw a conclusion from such an essay, supported by the text. In math, 60% of students deduced the population of an area using information on size and density, while just under half correctly turned a real-world scenario into an algebraic expression.

Takeaways by Macro Roundup® AI

  1. U.S. twelfth-graders' average math score was the worst since the current National Assessment of Educational Progress math test began in 2005, and their reading score fell below any point since that assessment started in 1992.
  2. The share of U.S. 12th-graders scoring proficient fell 2 percentage points between 2019 and 2024, to 35% in reading and 22% in math, according to results released by the U.S. Education Department.
  3. In reading, two-thirds of seniors could determine the purpose of a persuasive essay but only one in five could draw a text-supported conclusion from it, while in math just under half converted a real-world scenario into an algebraic expression.

Related Articles:

  • Do Adults Have the Skills They Need to Thrive in a Changing World? — An international assessment of adult skills describes numeracy proficiency levels ranging from counting objects and adding small whole numbers at the lowest level, to extracting information from tables and graphs and performing basic arithmetic with money and percentages at Level 1, up to analysing complex mathematical information and critically evaluating whether data support a claim at Level 5.
  • Many Children Left Behind: The 2024 National Assessment of Educational Progress Results Indicate a Five-Alarm Fire — The share of US fourth-grade students meeting the National Assessment of Educational Progress reading proficiency standard fell from 35% in 2019 to 33% in 2022 and 30% in 2024. More fourth-graders now score below the basic level than score proficient.
  • Have Humans Passed Peak Brain Power? — The share of Americans reporting they read a book in the past year has fallen below half, alongside declining performance in numeracy and problem-solving in most countries. The share of adults unable to use mathematical reasoning to evaluate the validity of statements averages 25% in high-income countries and 35% in the US.

AI Summary. A study comparing survey responses of citizens and parliamentarians across 27 European countries finds that policymaking reflects voters' economic attitudes well, but the average parliamentarian is about one standard deviation more culturally liberal than the national mean voter. The author finds this cultural gap spans nearly all issues, countries, and established parties, and that right-wing populists fill it.

Laurenz Guenther Social Science Research Network
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Surveys in 27 European countries show that MPs’ policy views generally match those of their voters on economic issues, but are systematically to the left on cultural issues. This “representation gap” is filled by right-wing populist parties.

Do cultural gaps between lawmakers and voters explain populism's rise?

Core argument: Comparing identical survey policy questions answered by citizens and parliamentarians in 27 European countries, the author finds the average parliamentarian is about 1 standard deviation more culturally liberal than the national mean voter.

Populists are often defined as those who claim that they fill "political representation gaps" —differences between the policymaking by established parties and the "popular will." I study descriptively whether representation gaps exist and their relationship with populism. To this end, I analyze the responses of citizens and parliamentarians from 27 European countries to identical survey policy questions, which I compile and verify to be indicative of voting in referendums. I find that policymaking represents the economic attitudes of citizens well. However, I document that the average parliamentarian is about 1SD more culturally liberal than the national mean voter. This cultural representation gap is systematic in four ways: i) it arises on nearly all cultural issues, ii) in nearly all countries, iii) nearly all established parties are more culturally liberal than the national mean voter, and iv) all major demographic groups tend to be more conservative than their parliamentarians. Demographic differences between voters and parliamentarians or lack of political knowledge cannot fully account for representation gaps. Finally, I show that right-wing populists fill the cultural representation gap.

Takeaways by Macro Roundup® AI

  1. Comparing identical survey policy questions answered by citizens and parliamentarians in 27 European countries, the author finds the average parliamentarian is about 1 standard deviation more culturally liberal than the national mean voter.
  2. The cultural representation gap is systematic across nearly all cultural issues, nearly all countries, and nearly all established parties, with all major demographic groups tending to be more conservative than their parliamentarians.
  3. Policymaking represents citizens' economic attitudes well, demographic differences and lack of political knowledge cannot fully account for the representation gaps, and right-wing populists fill the cultural gap, according to the author.

Related Articles:

  • The Rich World Revolts Against Sky-High Immigration — 15m people moved to rich countries over three years, the biggest surge in modern history, with net migration exceeding 3m to America, 1.3m to Canada and about 700,000 to Britain. As immigration surged, output per person fell in Britain and Germany, partly because recent arrivals are on average less skilled than residents.
  • Changing Sub-Saharan Africa’s Growth Trajectory — Sub-Saharan Africa's working-age population is growing nearly 3% a year, versus close to zero in much of the world, and is projected to exceed China's within about a decade and reach a quarter of the global total. With modest productivity growth near 2%, the region is likely among the world's fastest-growing.
  • Europe Grasps for Ways to Stop the Migrant Surge — Around 1.14m people filed asylum claims in Europe in a year, the highest since the 2015 migration crisis, with claims expected to top 1m again; these figures exclude more than 4m Ukrainian refugees granted temporary protection in the European Union. Asylum seekers tend to be less educated and lower skilled than other immigrant groups.

AI Summary. France's 10-year government borrowing cost of 3.47% exceeds Greece's 3.35% and approaches Italy's 3.51%, after the French government fell over a deficit-cutting budget. The extra interest France pays over German bonds stands at 0.8 percentage points.

Ian Smith, Emily Herbert and Leila Abboud Financial Times
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As expected, French Prime Minister François Bayrou lost a no-confidence vote this Monday on his proposed budget-cutting measures. French 10-year yields, at 3.47%, are now above those of Greece, and closing in on Italy’s 3.51%.

Are French borrowing costs now exceeding those of Greece?

Core argument: France's 10-year borrowing costs stand at 3.47%, above Greece's 3.35% and near Italy's 3.51%, close to their highest level since the Eurozone debt crisis.

French Prime Minister François Bayrou lost a crucial confidence vote on his deficit-cutting budget efforts on Monday, bringing down his government and worsening a crisis that has already pushed Paris’s borrowing costs close to their highest level since the Eurozone debt crisis. At 3.47%, France’s benchmark 10-year borrowing costs are above those of longtime Eurozone troubled borrower Greece at 3.35%, and closing in on Italy at 3.51%, two of the borrowers long deemed riskier by global investors. The additional interest rate paid on France’s 10-year bonds over benchmark German Bunds — a measure of the additional borrowing costs investors are demanding to lend to Paris — rose back to 0.8 percentage points on Tuesday, as nerves continued over the economic outlook.

Takeaways by Macro Roundup® AI

  1. France's 10-year borrowing costs stand at 3.47%, above Greece's 3.35% and near Italy's 3.51%, close to their highest level since the Eurozone debt crisis.
  2. French Prime Minister François Bayrou lost a confidence vote on his deficit-cutting budget efforts, bringing down his government and worsening a crisis over France's borrowing costs.
  3. The additional interest rate France pays on 10-year bonds over German Bunds rose back to 0.8 percentage points, as nerves continued over the economic outlook.

Related Articles:

  • Back to the Barricades, and the Bond Spreads — The gap between French and German 10-year government bond yields is near the highs reached during France's political crises, and French stocks have resumed sharp underperformance versus the rest of Europe. France's finance minister warned the country might need assistance from the International Monetary Fund.
  • Global Debt Report 2025 — About 60% of fixed-rate government debt in advanced economies maturing by 2027 — roughly $9tn — was issued before the recent interest-rate tightening, with weighted average yields below 2% versus projected 10-year rates near 3.6%, implying refinancing at nearly double the original cost. France, Spain, the UK, and the US face heightened vulnerability, with maturing debt exceeding 15% of GDP.
  • 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.

AI Summary. Gold has risen more than 37% over the year, its strongest annual showing in more than three decades and a plausible path toward $4,000 an ounce, even as the Nasdaq Composite Index sets records. Central bank accumulation has been crucial, with gold purchases topping 1,000 tons for a third consecutive year.

John Authers and Richard Abbey Bloomberg
Date Posted:

Gold is up 37% for the year, outperforming the “impressive, AI-fueled” S&P since the start of 2020. Central bank accumulation reached 1,000 tons for the third consecutive year.

Are central bank purchases driving gold's surge alongside record stock prices?

Core argument: Gold is up more than 37% for the year, on course for its strongest annual showing in more than three decades and on a plausible trajectory toward $4,000 an ounce.

Gold is up more than 37% for the year, and on course for its strongest annual showing in more than three decades. It’s on a plausible trajectory toward $4,000 an ounce. All of this seems strange as the Nasdaq Composite Index also hit yet another record. So far this decade, remarkably, it has beaten the AI-fueled gains of the S&P 500. Gold’s surge measured against the equity performance of the rest of the world is even more impressive, especially in the past year. Central bank accumulation has been crucial. Rohit Paul of Acuity Knowledge Partners shows that, for the third consecutive year, gold purchases topped 1,000 tons.

Takeaways by Macro Roundup® AI

  1. Gold is up more than 37% for the year, on course for its strongest annual showing in more than three decades and on a plausible trajectory toward $4,000 an ounce.
  2. Gold's surge coincides with the Nasdaq Composite Index hitting another record, and so far this decade gold has beaten the AI-fueled gains of the S&P 500.
  3. Central bank accumulation has been crucial to gold's rise, with purchases topping 1,000 tons for the third consecutive year, according to Rohit Paul of Acuity Knowledge Partners.

Related Articles:

  • Taking Stock: Dollar Assets, Gold, and Official Foreign Exchange Reserves — Gold accounts for about 10% of aggregate official foreign exchange reserves, roughly its level in the early 2000s. International Monetary Fund country data indicate most added official gold holdings came from a few central banks, with over half of reported accumulation from China and Russia and about a quarter from several emerging markets.
  • How Gold Became the World’s Refuge from Uncertainty — Gold prices reached a record intraday high in real terms, surpassing the prior 1980 peak, with roughly a 30% gain over the year. Central banks have bought more than 1,000 tonnes net annually for three years — record levels — led by emerging markets including China, India and Turkey as they scale back dollar exposure.
  • Gold Overtakes Euro as Global Reserve Asset, ECB Says — Gold has overtaken the euro as a global reserve asset, with central bank gold holdings reaching 36,000 tons, near the mid-1960s peak of 38,000 tons, helped by a 30% rise in the gold price. The European Central Bank finds countries geopolitically close to China and Russia accumulated gold more than others.

AI Summary. European defence technology start-ups have raised €2.4bn since the start of 2022, including €1.4bn in the first seven months of the most recent year, up from €30mn in 2020 and €150mn in 2021, according to PitchBook data. Three of them — drone makers Helsing, Quantum Systems and Tekever — are valued above €1bn.

Tim Bradshaw, Sylvia Pfeifer, Clara Murray, Laura Pitel, et al. Financial Times
Date Posted:

Europe now has 3 drone manufacturers with “unicorn” status as venture capital investment in the defense sector surges in both the US and Europe.

Is venture capital investment in European defence start-ups rising sharply?

Core argument: European defence technology start-ups have raised €2.4bn since the start of 2022, including €1.4bn in the first seven months of this year, up from €30mn in 2020 and €150mn in 2021, according to PitchBook data compiled for the Financial Times.

Investment in Europe’s booming defence technology start-ups has surged since Russia’s full-scale invasion of Ukraine, as venture capital firms abandon earlier caution and pile into military businesses. Companies in the sector have raised €2.4bn since the start of 2022 including €1.4bn in the first seven months of this year alone, up from just €30mn in 2020 and €150mn in 2021, according to data compiled for the Financial Times by PitchBook. The figures are the latest evidence of the strength of investor appetite for the wave of new companies developing everything from unmanned mini-submarines and autonomous drones to “bio-robotic” cockroaches. Europe now boasts three defence start-ups with a “unicorn” valuation of more than €1bn: drone makers Helsing, Quantum Systems and Tekever.

Takeaways by Macro Roundup® AI

  1. European defence technology start-ups have raised €2.4bn since the start of 2022, including €1.4bn in the first seven months of this year, up from €30mn in 2020 and €150mn in 2021, according to PitchBook data compiled for the Financial Times.
  2. Venture capital firms have abandoned earlier caution about military businesses since Russia's full-scale invasion of Ukraine, backing companies developing unmanned mini-submarines, autonomous drones and "bio-robotic" cockroaches.
  3. Europe has three defence start-ups with valuations above €1bn: drone makers Helsing, Quantum Systems and Tekever.

Related Articles:

  • The Intellectual Spoils of War? Defense RD, Productivity and International Spillovers — The authors estimate that a 10% increase in government-financed R&D, largely defense, is associated with a 4.3% rise in privately funded R&D across OECD countries, indicating "crowding in" rather than "crowding out." They also find international spillovers raise private R&D abroad, though the overall effect on US productivity growth is modest.
  • Behind NATO’s 2 Percent: Measuring the True Scope of Alliance Defense Investments and the NATO Defense Deficit — NATO's collective defense spending averaged 1.72% of GDP over roughly two and a half decades, below the alliance's agreed 2% threshold, leaving a cumulative shortfall the authors estimate at over $2tn that was not invested in force structure, modernization, and readiness. The authors argue closing the gap requires years of sustained investment beyond current commitments.
  • From Trains to Tanks: Germany’s Rearmament Marks Industrial Shift — Germany's defense spending has risen almost 80% since 2020 to over €90bn, according to NATO estimates, offering hiring growth in a country where nearly 250,000 manufacturing jobs have disappeared since the pandemic began. Four major defense contractors added more than 16,500 employees over three years, a gain exceeding 40%, and plan roughly 12,000 more hires.