Edward Conard

Top Ten New York Times Bestselling Author

  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…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 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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Friday, September 26, 2025

AI Summary. The dollar is projected to depreciate as less exceptional US economic and market performance makes it harder to attract unhedged capital flows to fund a large current account and fiscal deficit, leaving a high currency valuation to correct further. A softening US labor market supports that view.

Kamakshya Trivedi and Stuart Jenkins Goldman Sachs
Date Posted:

A broad dollar trade-weighted index has depreciated by ~ 7% this year, and Goldman argues it remains 14% overvalued on a trade-weighted basis, as macroeconomic policies make it harder for the US to attract unhedged capital flows.

Will the dollar keep depreciating as US performance looks less exceptional?

Core argument: The authors expect the Dollar to depreciate because US economic and market performance is less exceptional than before, leaving the US finding it harder to attract unhedged capital flows to fund its large current account and underlying fiscal deficit.

We expect the Dollar to depreciate largely because US economic and market performance is less exceptional than before; so the US is finding it harder to attract unhedged capital flows to fund its large current account (and underlying fiscal deficit), and the currency’s high valuation needs to correct further. We think that the softening in the US labor market is providing support to that view, and our read of both the incoming data and latest Fed speak is consistent with our baseline expectation of some further room to run in front-end rates. And we expect the Dollar can continue to underperform its typical relationship with other cyclical assets against the backdrop of a more globally balanced economic outlook and portfolio flows.

Takeaways by Macro Roundup® AI

  1. The authors expect the Dollar to depreciate because US economic and market performance is less exceptional than before, leaving the US finding it harder to attract unhedged capital flows to fund its large current account and underlying fiscal deficit.
  2. The authors see softening in the US labor market as supporting their depreciation view, and read incoming data and recent Fed commentary as consistent with their baseline expectation of some further room to run in front-end rates.
  3. The authors expect the Dollar to keep underperforming its typical relationship with other cyclical assets, given a more globally balanced economic outlook and portfolio flows, and see its high valuation needing to correct further.

Related Articles:

  • ‘Hedge America’ Trade Fuels Global Rush Into Short-Dollar Wagers — Global investors are continuing to buy US stocks and bonds while purchasing derivatives that hedge against further dollar declines, with Deutsche Bank reporting that flows into dollar-hedged exchange-traded funds holding US assets have outpaced unhedged funds for the first time this decade. Foreign investors own roughly $20tn of US stocks and about $14tn of US debt.
  • 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.
  • The International Role of the U.S. Dollar – 2025 Edition — The US dollar accounted for 58% of disclosed global official foreign reserves, versus 20% for the euro and 2% for China's renminbi, and roughly 50% of international payments made through the SWIFT messaging system. About 55% of international claims and 60% of liabilities are denominated in dollars, a share relatively stable since 2000.

AI Summary. Unlike International Monetary Fund programs, whose conditionality and stigma push borrowing countries to reform quickly, the euro system's internal cross-border payment imbalances carry neither and have persisted far longer. The author argues their persistence is evidence that the European Central Bank's de facto yield caps keep high-debt countries' borrowing costs artificially low.

Robin Brooks Robin Brooks Substack
Date Posted:

Loans from the Bundesbank and other north European central banks prevented a sudden stop in southern Europe during the Euro Crisis. Now the same TARGET2 balances are growing as the French fiscal situation deteriorates, reducing pressure on French yields.

Do persistent payment imbalances show central bank yield caps suppress borrowing costs?

Core argument: The author argues that persistent TARGET2 balances are evidence the ECB is keeping periphery yields artificially low, since without de facto yield caps private markets would replace official loans while demanding much higher yields.

In emerging markets, this kind of “official” flow comes in the form of an IMF program that has conditionality. This conditionality is key because it ensures there’s stigma (countries want to rid themselves of the IMF as quickly as possible), which incentivizes them to reform. There’s no conditionality (or stigma) associated with TARGET2 balances and - as a result - they’ve persisted way longer than any IMF program ever would. It’s the lack of stigma that - indirectly - is also responsible for France (red) slowly slipping into debtor status. If there were stigma, French politicians would make needed reforms to get their fiscal house in order, instead of being locked in an indefinite stand-off. Persistent TARGET2 balances are a symptom of artificially low yields for high debt countries. After all, if there weren’t de facto ECB yield caps, private markets would take the place of official loans, only that they’d demand much higher yields. The fact that TARGET2 imbalances persist - after all this time - is just one more piece of evidence that periphery yields are being kept artificially low by the ECB.

Takeaways by Macro Roundup® AI

  1. The author argues that persistent TARGET2 balances are evidence the ECB is keeping periphery yields artificially low, since without de facto yield caps private markets would replace official loans while demanding much higher yields.
  2. Unlike IMF programs, TARGET2 balances carry no conditionality or stigma, which the author argues explains why they have persisted far longer than any IMF program would and removes the incentive to reform.
  3. The author attributes France's slow slide into debtor status to this absence of stigma, contending that French politicians would undertake fiscal reforms rather than remain in an indefinite stand-off if stigma existed.

Related Articles:

  • The Gold Rally and Fiat Debasement — Long-term government bond yields have risen in the US and globally, while the dollar has stayed broadly stable against other major currencies even as gold prices rise. The authors argue this pattern signals debasement of fiat currencies against gold, driven by a crisis of confidence as high government debt and deficits raise incentives to inflate away obligations.
  • French Companies’ Borrowing Costs Fall Below Government’s As Debt Fears Intensify — Bond yields for French companies including L'Oréal, Airbus and Axa have fallen below those on French government debt of similar maturity, with 10 French firms trading at a negative spread to the sovereign — the most in data going back to 2006, according to Goldman Sachs. Sovereign yields typically set a baseline for corporate bonds.
  • 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.

AI Summary. Right-wing populist parties across Europe, including the Sweden Democrats, Austria's Freedom Party, Germany's Alternative for Germany and France's National Rally, have shifted from small-government, low-tax, free-trade platforms toward calls for higher welfare benefits, subsidies and protectionism, often alongside pro-market positions.

Bertrand Benoit Wall Street Journal
Date Posted:

Le Pen’s National Rally is campaigning on rolling back recent rises in the retirement age, despite a 5.4% deficit and rising yields, in an example of how right-leaning parties across Europe are embracing leftist economic policies.

Are Europe's right-wing populist parties shifting toward bigger government economics?

Core argument: Right-wing populist parties from Sweden to Greece and Austria that long favored a small state, low taxes, free trade and deregulation are now calling for higher welfare benefits, subsidies and protectionism, often alongside pro-market positions.

Right-wing populists have a new strategy to woo European voters frustrated with cash-strapped governments: Veer left. From Sweden to Greece and Austria, parties that for years favored a small state, low taxes, free trade and deregulation are now calling for higher welfare benefits, subsidies and protectionism—often alongside pro-market positions. The right-wing Sweden Democrats party and Austria’s Freedom Party have seen their poll ratings rise in recent years as they promised more state spending on citizens. Germany’s right-wing Alternative for Germany, or AfD, has maintained many of its pro-market positions but now stresses its welfare credentials too, campaigning this year on raising state pensions. In France, the right-wing National Rally, long a practitioner of economic eclecticism, has talked about rolling back a recent rise in the retirement age and introducing import controls.

Takeaways by Macro Roundup® AI

  1. Right-wing populist parties from Sweden to Greece and Austria that long favored a small state, low taxes, free trade and deregulation are now calling for higher welfare benefits, subsidies and protectionism, often alongside pro-market positions.
  2. The Sweden Democrats and Austria's Freedom Party have seen their poll ratings rise in recent years as they promised more state spending on citizens.
  3. Germany's Alternative for Germany has kept many pro-market positions while campaigning on raising state pensions, and France's National Rally has talked about rolling back a recent retirement-age increase and introducing import controls.

Related Articles:

  • The Global Race to the Bottom — Rising longer-term bond yields, outperformance of safe-haven assets like gold, and a stable US Dollar against other major currencies together suggest markets are pricing debasement across many developed-market currencies, not just the Dollar. Market-implied real 10-year yields remain higher in emerging markets, but the divide is blurring, with Chile already below New Zealand.
  • French Companies’ Borrowing Costs Fall Below Government’s As Debt Fears Intensify — Bond yields for French companies including L'Oréal, Airbus and Axa have fallen below those on French government debt of similar maturity, with 10 French firms trading at a negative spread to the sovereign — the most in data going back to 2006, according to Goldman Sachs. Sovereign yields typically set a baseline for corporate bonds.
  • 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.

AI Summary. An analysis finds that voters and mainstream politicians have long been broadly aligned on economic issues such as tax and spending, but diverge widely on sociocultural issues like immigration and criminal justice, with publics favoring more order and cultural integration while politicians lean toward more inclusive, permissive approaches.

John Burn-Murdoch Financial Times
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John Burn-Murdoch argues Guenther’s “representation gap” theory is “visible in the US,” where the mean voter’s preferences on immigration are “far more conservative than those of Democratic party elites,” and closer to those of Republican politicians.

Do voters and mainstream politicians diverge on culture but not economics?

Core argument: Guenther's analysis finds voters and mainstream politicians broadly aligned on economic issues such as tax and spend or public ownership, but divided by a yawning gulf on sociocultural issues like immigration and criminal justice.

Guenther’s analysis shows that voters and mainstream politicians have long been broadly aligned on economic issues like tax and spend or public ownership. But on sociocultural issues such as immigration and criminal justice there is a yawning gulf. Western publics have long desired greater emphasis on order, control and cultural integration. Their politicians have tilted in the opposite direction, favouring more inclusive and permissive approaches. Extending Guenther’s European analysis to include more recent data and a wider set of countries, I find the thesis aligns well with several recent developments. First, the same pattern is visible in the US, where the average voter’s preferences on immigration are close to those of Republican politicians, but far more conservative than those of Democratic party elites.

Takeaways by Macro Roundup® AI

  1. Guenther's analysis finds voters and mainstream politicians broadly aligned on economic issues such as tax and spend or public ownership, but divided by a yawning gulf on sociocultural issues like immigration and criminal justice.
  2. Western publics have long desired greater emphasis on order, control and cultural integration, while their politicians have tilted toward more inclusive and permissive approaches, according to Guenther's analysis.
  3. Extending Guenther's European analysis to more recent data and a wider set of countries, the author finds the same pattern in the US, where the average voter's immigration preferences sit close to Republican politicians' and far more conservative than Democratic party elites'.

Related Articles:

  • Political Representation Gaps and Populism — 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.
  • 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.
  • 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.

AI Summary. A US ownership deal for TikTok's American operations values the app at $14bn, with Oracle, Silver Lake Management and Abu Dhabi-based MGX in talks to invest and take board seats. The US entity would lease a copy of ByteDance's algorithm and retrain it under Oracle's oversight, which some US lawmakers doubt satisfies the divestment law.

Alexandra Levine and Kate Sullivan Bloomberg
Date Posted:

President Trump signed an executive order declaring the spinoff of TikTok’s US operations to American investors for $14B compliant with current law. Congress may remain skeptical that the deal taking shape meets the 2024 law’s terms.

Does leasing and retraining a foreign algorithm satisfy divestment requirements?

Core argument: President Trump signed an order on a TikTok deal valuing the US app at $14 billion, with key elements including the composition of the buyers group still unclear.

Key elements of the deal remain unclear, including the composition of the buyers group. Oracle, Silver Lake Management LLC, and the Abu Dhabi-based investment company MGX are in talks to invest in TikTok US and receive board seats in the new venture, according to people familiar with the discussions who cautioned that the talks remain fluid. Under the deal, owners of the US-based TikTok would lease a copy of the algorithm from ByteDance that would then be retrained “from the ground up” with Oracle’s oversight, according to a US official. Oracle would inspect the retrained algorithm, and how it’s feeding content to users, to help the US entity ensure it’s not being used for malicious purposes or otherwise influenced. The president’s move sets up a potential confrontation with US lawmakers who remain skeptical that the deal taking shape meets the terms of the 2024 law.

Takeaways by Macro Roundup® AI

  1. President Trump signed an order on a TikTok deal valuing the US app at $14 billion, with key elements including the composition of the buyers group still unclear.
  2. Oracle, Silver Lake Management LLC, and Abu Dhabi-based MGX are in talks to invest in TikTok US and receive board seats in the new venture, according to people familiar with the discussions, who cautioned the talks remain fluid.
  3. Owners of the US-based TikTok would lease a copy of ByteDance's algorithm and retrain it "from the ground up" under Oracle's oversight, with Oracle inspecting the retrained algorithm and how it feeds content to users, according to a US official.

Related Articles:

  • Beijing Says TikTok’s US App Will Use Chinese Algorithm — China's cyber security regulator says the US spin-off of TikTok, to be sold to American investors, will license parent company ByteDance's Chinese algorithm and other intellectual property, with ByteDance entrusting the operation of TikTok's US user data and content security. The US Treasury says the app will be controlled by American investors while preserving some "Chinese characteristics".
  • China Orders Apple to Remove Popular Messaging Apps — Chinese authorities ordered Apple to remove WhatsApp, Threads, Signal and Telegram from its App Store in China, citing national security concerns. The apps, which together have roughly 3bn users globally, were already accessible in China only through virtual private networks but remained commonly used.
  • Why the TikTok Era Spells Trouble For The Establishment — Video-first platforms like TikTok and Instagram reward charisma, energy and delivery over being first with news, a shift that favors political outsiders and upstart media outlets less tied to establishment politicians and freer to publish what mainstream outlets would not. Research finds the newest class of news influencers lean slightly right, and even those with other politics are anti-establishment.

Monday, September 29, 2025

AI Summary. Two AAA-rated Microsoft bonds trade at yields slightly below equivalent U.S. Treasurys, an unusual negative spread given that companies are more likely to default than a government able to tax and that corporate bonds are harder to sell. Demand for high-quality corporate debt has compressed the AAA corporate spread to 0.3 percentage point over Treasurys.

James Mackintosh Wall Street Journal
Date Posted:

Two AAA-rated MSFT bonds trade at lower yields than their Treasury equivalents. Mackintosh suggests that the “combination of more Treasurys and fewer top-grade corporate bonds has naturally squeezed the gap btw their yields.”

Can a top-rated company borrow more cheaply than the government?

Core argument: Two Microsoft bonds rated AAA trade at yields slightly below equivalent Treasurys, a negative spread that is unusual because companies are in principle more likely to default than a government that can tax.

Two pristine-rated bonds from Microsoft trade at lower yields than equivalent Treasurys. Among U.S. corporate bonds rated AAA, two in the main index currently trade a little below the equivalent yield on Treasurys, known as a negative spread. This is extremely unusual, both because companies are in principle much more likely to default than the government that can tax them, and because the corporate bonds are harder to trade, so should yield a little more to compensate buyers for the difficulty in selling them quickly. Yet, demand for high-quality corporate bonds has been so great that it’s driven the ICE B of A AAA U.S. Corporate index to a spread of only 0.3 percentage point over Treasurys, a tiny reward for the additional risks of holding company debt and far below the 2-plus points reached in the past two recessions. It’s small enough that some of the best bonds get pushed to yield less than the government.

Takeaways by Macro Roundup® AI

  1. Two Microsoft bonds rated AAA trade at yields slightly below equivalent Treasurys, a negative spread that is unusual because companies are in principle more likely to default than a government that can tax.
  2. The ICE BofA AAA U.S. Corporate index trades at a spread of only 0.3 percentage point over Treasurys, far below the 2-plus points reached in the past two recessions, amid strong demand for high-quality corporate bonds.
  3. Corporate bonds are harder to trade than Treasurys and in principle should yield a little more to compensate buyers for the difficulty of selling them quickly.

Related Articles:

  • What’s Driving the Surge in U.S. Corporate Profits? — U.S. corporate profits reached $4tn, 2.3 percentage points higher as a share of national income than before the COVID-19 pandemic, an increase driven by domestic nonfinancial industries and offset mainly by declines in net interest and miscellaneous asset payments and in income of unincorporated businesses. Employee compensation's share edged down, and higher profits mostly went to shareholders through dividends.
  • End of an Era: The Coming Long-Run Slowdown in Corporate Profit Growth and Stock Returns — The authors estimate that declining interest and corporate tax rates accounted for over 40% of real corporate profit growth from 1989 to 2019, while falling risk-free rates explain the entire expansion in price-to-earnings multiples. Real earnings before interest and taxes grew slightly more slowly than in 1962–1989, at 2.2% versus 2.4% per year.
  • French Companies’ Borrowing Costs Fall Below Government’s As Debt Fears Intensify — Bond yields for French companies including L'Oréal, Airbus and Axa have fallen below those on French government debt of similar maturity, with 10 French firms trading at a negative spread to the sovereign — the most in data going back to 2006, according to Goldman Sachs. Sovereign yields typically set a baseline for corporate bonds.

AI Summary. A county's share of adults on Social Security Disability Insurance is a strong predictor of later growth in local drug death rates, a relationship the authors find is not primarily explained by local economic conditions or health-service access. They estimate drug mortality would have been 43% lower absent this divergence.

William Evans and Ethan Lieber National Bureau of Economic Research
Date Posted:
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The fraction of a county’s adults on SSDI in 1990 predicts growth in its drug death rate after 2000 because it is a measure of the county’s pain level. Had opioid prescribing practices stayed at 1995 levels, drug deaths in 2015 would have been 43% lower.

Does local disability enrollment predict later growth in drug death rates?

Core argument: A back-of-the-envelope calculation suggests drug mortality would have been 43% lower in 2015 had pre-1996 differences in drug poisoning mortality across 1990 SSDI rates persisted after 1995.

A county’s fraction of adults in 1990 on Social Security Disability Insurance (SSDI) is a strong predictor of growth in local drug death rates after 2000. Our [county level regression] results suggest that the relationship between the 1990 SSDI rate and drug death rates is not primarily driven by local economic conditions, general access to health services, the decline of institutions, or the rise and marketing of OxyContin. We know that the rise in drug death rates is driven by the rise in opioid death rates and that opioids are used to treat chronic pain. In addition, as seen in Figure 5, higher 1990 SSDI rate counties saw much larger increases in prescription opioid use than lower 1990 SSDI rate counties. The evidence is consistent with the hypothesis that the part of the 1990 SSDI rate that is correlated with drug death rates is proxying for the amount of pain in the county. This, combined with the liberalization of opioid prescribing in the 1990s and 2000s that we document, could explain a significant portion of the rise in drug deaths between 1995 and 2015. A simple back of the envelope calculation suggests that if pre-1996 differences in drug poisoning mortality across 1990 SSDI rates had been maintained after 1995, drug mortality would have been 43% lower in 2015.

Takeaways by Macro Roundup® AI

  1. A back-of-the-envelope calculation suggests drug mortality would have been 43% lower in 2015 had pre-1996 differences in drug poisoning mortality across 1990 SSDI rates persisted after 1995.
  2. County-level regressions find a county's 1990 share of adults on Social Security Disability Insurance strongly predicts growth in local drug death rates after 2000, a relationship not primarily driven by local economic conditions, health services access, institutional decline, or OxyContin marketing.
  3. Counties with higher 1990 SSDI rates saw much larger increases in prescription opioid use, evidence consistent with the hypothesis that the 1990 SSDI rate proxies for the amount of pain in a county.

Related Articles:

  • Republican Support and Economic Hardship: Enduring Effects of the Opioid Epidemic — The authors estimate that geographic exposure to prescription-opioid marketing raised drug-related mortality and reliance on public transfer programs, and continuously increased the Republican vote share in House, presidential, and gubernatorial elections. They estimate a one-standard-deviation increase in exposure raised the Republican House vote share by 4.5 percentage points.
  • Democracy and the Opioid Epidemic — Using US commuting zone data and the concentration of early prescription opioid marketing in cancer pain markets, the authors estimate that exposure to the opioid epidemic substantially increased the Republican vote share in congressional and presidential elections, with a one standard deviation rise in initial cancer mortality corresponding to 13.8 percentage points.
  • The Rise in American Pain: The Importance of the Great Recession — The authors find that the rise in reported pain among Americans was almost entirely concentrated in the 2007–2010 recession period rather than following a smooth upward trend, with the disproportionate increase among the less educated also occurring primarily then. The authors state they find this jump difficult to explain.

AI Summary. Economists expect anemic payroll growth with unemployment holding at 4.3%, a relatively low rate that masks workers stuck in unwanted jobs or underemployed. Goldman Sachs economists say labor market churn—the flow into and out of jobs—has fallen well below pre-Covid levels, and unemployment among 16-to-24-year-olds reached 10.5%.

Michael Sasso, Augusta Saraiva, and Mark Niquette Bloomberg
Date Posted:

The US’s low jobless rate of 4.3% in August may mask some labor market deterioration; 25% of these workers have been out of work for 6m and the unemployment rate for workers 16–24 hit 10.5% in August, the highest level since 2016, excluding the pandemic.

Does a low unemployment rate hide workers stuck in unwanted jobs?

Core argument: Unemployment among US workers ages 16 to 24 jumped to 10.5% in August, the highest since 2016 when excluding the Covid era, leaving young Americans with one of the toughest job markets in nearly a decade.

Economists forecast that September’s employment report, expected to publish on Friday, will show another month of anemic payrolls growth. They see the jobless rate remaining at 4.3%, a level that is still relatively low but masks the reality of a growing number of people who feel stuck in jobs they don’t want or underemployed. The “churn” in the labor market — or the flow into and out of existing jobs — has fallen well below pre-Covid levels, according to Goldman Sachs Group Inc. economists. Young Americans face one of the toughest job markets in nearly a decade. The unemployment rate among workers ages 16 to 24 jumped to 10.5% in August, the highest since 2016 when excluding the Covid era.

Takeaways by Macro Roundup® AI

  1. Unemployment among US workers ages 16 to 24 jumped to 10.5% in August, the highest since 2016 when excluding the Covid era, leaving young Americans with one of the toughest job markets in nearly a decade.
  2. Economists expect September's employment report to show another month of anemic payrolls growth with the jobless rate holding at 4.3%, a level that masks a growing number of people stuck in jobs they don't want or underemployed.
  3. Goldman Sachs Group Inc. economists find that labor market churn — the flow into and out of existing jobs — has fallen well below pre-Covid levels.

Related Articles:

  • U.S. Job Market Still (Surprisingly?) Good. Inflation Risk Is Paramount — 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.
  • 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 Summary. New foreign direct investment into China has fallen sharply, while new inflows to the rest of the emerging markets have remained stable. Reinvested earnings of foreign subsidiaries in China, historically strongly positive, have turned negative, a sign those subsidiaries may be making losses.

Robin Brooks Robin Brooks Substack
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FDI flows into China have decreased, while flows into other emerging markets remain steady. Robin Brooks suggests “China’s status as an export hub for the world looks increasingly challenged over the medium term.”

Is foreign direct investment shifting away from China toward other emerging markets?

Core argument: Genuine new foreign direct investment into China has fallen sharply, a trend that has picked up in recent years.

The left chart above shows non-resident FDI into China (black line), breaking this down into genuine new FDI investment (blue bars) and reinvested earnings (red bars), which reflect retained profits of foreign subsidiaries in China. The latter have in the past been strongly positive, as foreign subsidiaries found it difficult to repatriate earnings back to their home countries. More recently, these reinvested earnings have gone negative, a sign that foreign subsidiaries in China may be making losses. The more interesting development is the sharp fall in genuine new FDI flows into China, a trend that’s picked up in recent years. The right chart shows that this drop-off in genuine new FDI stands in stark contrast to the rest of EM, where new FDI inflows are stable.

Takeaways by Macro Roundup® AI

  1. Genuine new foreign direct investment into China has fallen sharply, a trend that has picked up in recent years.
  2. Reinvested earnings of foreign subsidiaries in China have turned negative after long being strongly positive, which may indicate that those subsidiaries are making losses.
  3. New FDI inflows to the rest of emerging markets remain stable, in contrast to the drop-off in genuine new FDI into China.

Related Articles:

  • US Share of Global Foreign Direct Investment Surges to Record — The US share of newly announced global greenfield foreign direct investment projects rose to 14.3% from 11.6%, with the estimated value of new US projects up by more than $100bn to $227bn. Over the same period China secured just under 400 new projects, close to a record low, while Germany's fell to 470, an 18-year low.
  • The Rise & Fall of Foreign Direct Investment in China — Net foreign direct investment into China has been negative for four consecutive quarters, as foreign investors shifted from reinvesting earnings from their Chinese operations to repatriating them. Whether this reflects cash management or signals a future slowdown in foreign direct investment is unclear, but the repatriation of profits is negative for China's currency.
  • Globalization and Growth In A Bipolar World — Trade and investment flows between the US and China have declined, with protectionist measures prompting some reshoring alongside rerouting of trade and investment through third countries such as Vietnam and Mexico. The result is a loosening of US-China economic links rather than an end to globalization.

AI Summary. China has opened an investigation into Mexico's tariffs and trade restrictions on Chinese exports, including a proposed 50% tariff on Chinese cars and levies on about 1,400 products from countries lacking a trade deal with Mexico. China's commerce ministry says the measures would seriously damage Chinese companies' trade and investment interests.

Joe Leahy and Christine Murray Financial Times
Date Posted:

China is planning to retaliate against Mexican tariffs on Chinese automotive exports. The effort is one of the highest-profile actions by Beijing to deter third countries from working with the US to enact barriers to Chinese trade.

Is China retaliating against countries that restrict Chinese exports?

Core argument: China has opened an investigation into Mexico's trade restrictions, after Mexico announced a 50% tariff on Chinese cars as part of a bill proposing levies on about 1,400 products, from textiles to steel, applying to countries lacking a trade deal with Mexico.

China has launched a sweeping probe into Mexico’s imposition of tariffs and other trade restrictions on its exports. Mexico this month announced that it would slap a 50% tariff on Chinese cars, part of a bill that proposed levies on about 1,400 products, from textiles to steel, that will apply to all countries with which Mexico does not have a trade deal. The investigation, which was accompanied by an anti-dumping probe into Mexican pecan nut exports to China, marked one of Beijing’s most significant actions to deter third countries from co-operating with Washington’s efforts to curb Chinese trade. China’s commerce ministry said a Mexican proposal to “increase import tariffs on products from non-free trade partners such as China…will seriously damage the trade and investment interests of Chinese companies”. It said Mexico’s tariffs would be investigated under a Chinese law aimed at maintaining the “foreign trade order”. Beijing has limited direct leverage on Mexico through trade. Mexico exported $5.7bn worth of goods to China last year, compared with $115bn of imports from China.

Takeaways by Macro Roundup® AI

  1. China has opened an investigation into Mexico's trade restrictions, after Mexico announced a 50% tariff on Chinese cars as part of a bill proposing levies on about 1,400 products, from textiles to steel, applying to countries lacking a trade deal with Mexico.
  2. China's commerce ministry said Mexico's proposal to raise import tariffs on products from non-free trade partners such as China would "seriously damage the trade and investment interests of Chinese companies," and would be investigated under a law aimed at maintaining the "foreign trade order.".
  3. Mexico exported $5.7bn of goods to China last year against $115bn of imports from China, leaving Beijing limited direct leverage on Mexico through trade; the probe was accompanied by an anti-dumping investigation into Mexican pecan nut exports.

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AI Summary. The Pentagon is pressing weapons makers to detail how they could raise output of 12 priority munitions for a potential conflict with China to 2.5x current volumes, and to describe how they might attract private capital or license technology to third-party manufacturers. Patriot interceptors are a particular priority, with the goal of roughly 2,000 per year.

Drew FitzGerald and Lara Seligman Wall Street Journal
Date Posted:

DoD is mobilizing US missile manufacturers “to double or even quadruple production rates on a breakneck schedule.” While the Big Beautiful Bill allocated $25B over the next 5 years, additional money will be required to hit DoD’s production goals.

Can weapons makers multiply munitions output for a potential China conflict?

Core argument: The Pentagon's acceleration council is targeting 12 weapons it wants on hand for a potential conflict with China, and an early request for information asked makers at a June roundtable how they could reach 2.5 times current volumes over the following six, 18 and 24 months.

The new acceleration council is focused on 12 weapons that the Pentagon wants on hand for a potential conflict with China. [The] Patriot is a particular priority because Lockheed has struggled to keep pace with surging global demand. An early request for information asked weapons makers at the June roundtable to detail how they could increase production to 2.5 times current volumes through steps taken over the following six, 18 and 24 months, according to documents reviewed by the Journal. The military also asked suppliers to describe how they might attract new private capital and potentially license their technology to third-party manufacturers. The Army in September awarded Lockheed almost $10 billion to make nearly 2,000 PAC-3 missiles from fiscal year 2024 to 2026. The Pentagon wants suppliers to eventually pump out that same number of Patriots each year—nearly four times the current production rate, according to some of the people familiar with the matter.

Takeaways by Macro Roundup® AI

  1. The Pentagon's acceleration council is targeting 12 weapons it wants on hand for a potential conflict with China, and an early request for information asked makers at a June roundtable how they could reach 2.5 times current volumes over the following six, 18 and 24 months.
  2. The Army awarded Lockheed almost $10 billion in September for nearly 2,000 PAC-3 missiles from fiscal year 2024 to 2026, and the Pentagon wants suppliers to eventually produce that same number of Patriots each year, nearly four times the current rate, according to some people familiar with the matter.
  3. Patriot is a particular priority because Lockheed has struggled to keep pace with surging global demand, and the military asked suppliers to describe how they might attract new private capital and potentially license their technology to third-party manufacturers.

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