Edward Conard

Top Ten New York Times Bestselling Author

  • “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 comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…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 is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences 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


Tuesday, September 30, 2025

AI Summary. Bain estimates global AI computing needs could reach 200 gigawatts by 2030, with 100 gigawatts in the US, requiring about $500bn of annual capital investment in data centers. That spending corresponds to $2tn in annual revenue, and Bain's analysis finds plausible corporate IT and AI-driven savings would leave an $800bn shortfall.

David Crawford, Anne Hoecker, and Dana Aulanier Bain & Company
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Bain notes that anticipated capital investment in data centers is $500B annually. Bain’s analysis of sustainable ratios of capex to revenue for cloud service providers suggests that $500B of annual capex corresponds to $2T in annual revenue and cost savings, a number well short of their most optimistic scenario.

Can projected AI savings fund the data center investment required by 2030?

Core argument: Bain's analysis suggests global AI compute requirements could reach 200 gigawatts by 2030, with US demand alone reaching 100 gigawatts, adding electricity demand to a grid whose load has been relatively flat for 20 years.

Now, AI’s compute demand—that is, the number of computations that must be performed to support evolving models—has grown at twice that rate over the past decade. With continued growth of these models and more adoption of AI by enterprises, Bain’s analysis suggests that the total global compute requirements could reach 200 gigawatts by 2030. In the US alone, total demand could reach 100 gigawatts by that time, which would increase new electricity demand on a grid that has seen relatively flat load growth for the past 20 years. Bain’s research suggests that building the data centers with the computing power needed to meet anticipated demand would require about $500 billion of capital investment each year. Bain’s analysis of sustainable ratios of capex to revenue for cloud service providers suggests that $500 billion of annual capex corresponds to $2 trillion in annual revenue. What could fund this $2 trillion every year? If companies shifted all of their on-premise IT budgets to cloud and also reinvested the savings anticipated from applying AI in sales, marketing, customer support, and R&D (estimated at about 20% of those budgets) into capital spending on new data centers, the amount would still fall $800 billion short of the revenue needed to fund the full investment

Takeaways by Macro Roundup® AI

  1. Bain's analysis suggests global AI compute requirements could reach 200 gigawatts by 2030, with US demand alone reaching 100 gigawatts, adding electricity demand to a grid whose load has been relatively flat for 20 years.
  2. Bain estimates that building data centers to meet anticipated AI demand would require about $500 billion of capital investment each year, which its analysis of sustainable capex-to-revenue ratios for cloud service providers ties to $2 trillion in annual revenue.
  3. Bain's analysis indicates that even if companies shifted all on-premise IT budgets to cloud and reinvested AI savings in sales, marketing, customer support, and R&D—estimated at about 20% of those budgets—funding would fall $800 billion short of the revenue needed.

Related Articles:

  • The Blob: Capital, China, Chips, Chicago and Chilliwack — Data center construction spending has eclipsed office construction, and the specialized power rates most data centers pay fall short of covering the cost of a new natural gas plant, leaving other customers to bear part of the bill. In the PJM grid region, data center demand accounted for 70% of the increase in electricity costs over the past year.
  • 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.
  • How A Power Shortage Could Short-Circuit Nvidia’s Rise — Analysts estimate Nvidia will sell roughly 6m Blackwell and 5.5m GB chips over a two-year span, and that if half are installed and run at capacity in America they would add 25GW to power demand. Bernstein projects a US shortfall of 17–62GW by 2030 depending on chip efficiency; Morgan Stanley puts the gap at 45GW by 2028.

AI Summary. Data center developers can earn 12–15% returns on new construction while stabilized hyperscale campuses trade at 4–5% capitalization rates, drawing capital into development. Because long, flat leases to Amazon, Microsoft and Google make finished assets behave like annuities, few buyers exist, so developers turn to securitization instead of selling.

Paul Kedrosky Applied Complexity
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Paul Kedrosky notes that, since August, GPU rental rates in the US have declined 4%. He writes that a flood of liquidity from a robust securitization market has driven “a flywheel of data center development disconnected from true demand.”

Why are data center developers securitizing instead of selling finished projects?

Core argument: Data center developers can lock in 12–15% internal rates of return on new builds while stabilized hyperscale campuses trade at 4–5% cap rates, a spread that draws money into development.

[Datacenter] developers can lock in 12–15% IRRs on new data centers, while stabilized hyperscale campuses trade like long bonds at 4–5% cap rates. That spread is irresistible, so money floods into development. But the imbalance is obvious. Once the centers are built and leased, relatively few buyers want them. The tenant credit is pristine (Amazon, Microsoft, Google), but that’s precisely the problem: the leases are too safe, too long, and too flat. Stabilized data center assets behave like annuities, not growth real estate. Only mega-pensions and sovereigns can absorb them, and even then only sparingly. Developers and private credit increasingly don’t care. They’ve already learned how to sidestep the exit problem. The answer is a familiar word: securitization.

Takeaways by Macro Roundup® AI

  1. Data center developers can lock in 12–15% internal rates of return on new builds while stabilized hyperscale campuses trade at 4–5% cap rates, a spread that draws money into development.
  2. Stabilized data center assets behave like annuities rather than growth real estate because leases to Amazon, Microsoft, and Google are too safe, too long, and too flat, leaving only mega-pensions and sovereigns able to absorb them, and only sparingly.
  3. Developers and private credit are sidestepping the shortage of buyers for completed, leased data centers through securitization.

Related Articles:

  • The Blob: Capital, China, Chips, Chicago and Chilliwack — Data center construction spending has eclipsed office construction, and the specialized power rates most data centers pay fall short of covering the cost of a new natural gas plant, leaving other customers to bear part of the bill. In the PJM grid region, data center demand accounted for 70% of the increase in electricity costs over the past year.
  • SPVs, Credit, and AI Datacenters — Companies funding AI data centers through jointly owned special purpose vehicles keep the borrowing off their own balance sheets while retaining shared control and use of the facilities. AI data center spending already exceeds telecom spending during the dot-com bubble, and weak returns would quickly wipe out the thin equity cushion above the vehicles' debtholders.
  • Honey, AI Capex is Eating the Economy — Capital spending on AI data centers is around 20% of railroads' peak spending as a share of GDP and is rising quickly, having already surpassed the dot-com era peak in telecom investment. Unlike long-lived rail infrastructure, data centers are short-lived assets requiring frequent hardware replacement, and the capital is being reallocated from other sectors.

AI Summary. The US homeownership rate rose 20 percentage points over two decades in the mid-20th century, the largest shift in the past century, but lower-income renters largely had incomes too low to buy. The authors argue this rapid, unequal transformation may have contributed to the rise of the middle class.

Carola Frydman, Raven Molloy, and Austin Palis Federal Reserve Board
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Given subsequent price appreciation and the “stability of homeownership post-1960,” purchasing a home btw 1940 and 1960 was an entree into the middle class that renters in the bottom income-tercile in 1955 largely missed out on.

Did a rapid but unequal rise in homeownership build the middle class?

Core argument: The US homeownership rate rose 20 percentage points from 1940 to 1960, the largest change in American homeownership over the past 100 years, and with homeownership relatively stable after 1960, the families who owned by 1960 benefited from subsequent house price appreciation.

The aggregate US homeownership rate increased by 20 pp from 1940 to 1960, the largest change in American homeownership in the past 100 years. Given the strong intergenerational persistence of housing wealth and relative stability of homeownership post-1960, it was the types of families that were homeowners by 1960 who were able to benefit from the subsequent house price appreciation. In 1955, the only year in our sample period when the SCF recorded first-time buyer status, about 3/4 of first-time buyers were age 25-44. Figure 5 shows the distribution of income among families with a head in this age range that purchased a home recently (in the current year or previous year). Figure 5 also shows the distributions of income for renters in the bottom and middle terciles of predicted income. Most of the renters in the bottom tercile had incomes substantially lower than the incomes of (likely) first-time homebuyers, suggesting that their income was too low for them to transition into homeownership. Given the significance of owning a home as a source of wealth accumulation for most households, our findings suggest that the rapid yet unequal transformation in homeownership from 1940 to 1960 may have contributed to the rise of the middle class in this period.

Takeaways by Macro Roundup® AI

  1. The US homeownership rate rose 20 percentage points from 1940 to 1960, the largest change in American homeownership over the past 100 years, and with homeownership relatively stable after 1960, the families who owned by 1960 benefited from subsequent house price appreciation.
  2. In 1955, the only sample year in which the Survey of Consumer Finances recorded first-time buyer status, about three-quarters of first-time buyers were aged 25–44.
  3. Most renters in the bottom tercile of predicted income had incomes substantially below those of likely first-time homebuyers, suggesting their income was too low to transition into homeownership, and that the unequal 1940–1960 homeownership shift may have contributed to the rise of the middle class.

Related Articles:

  • Credit Drove 125 Years Of Homeownership Gains — Drawing on over 100 million household records, the authors trace US homeownership from 47% in 1900 to a 69% peak and 65% today, arguing the major gains came from making mortgages cheaper and more accessible rather than building more homes. Homes now cost nearly 6x median household income versus 3x in the 1990s.
  • The Price of Housing in the United States — Real housing price appreciation in the United States has varied widely across regions, with West Coast cities rising earlier while prices in other regions remained comparable in real terms to decades earlier. The authors find essentially no relationship between real price growth and zoning restrictiveness in the earliest period studied, and progressively steeper gradients in later periods.
  • Why Are Young Adults in the English-Speaking World So Unhappy? — The share of young adults regularly experiencing stress and anger has risen sharply in the US, Canada, UK, Ireland, Australia and New Zealand while remaining largely stable elsewhere in the West. Real house prices since 1995 are up 85% in the US and over 200% in the other five countries.

AI Summary. The US is redirecting allies' foreign reserves into designated domestic investments in exchange for lower tariffs, rather than asking them to buy long-dated Treasuries. The author argues this capital call would boost US domestic investment but put upward pressure on interest rates as foreign governments liquidate reserves to raise dollars.

Joseph Wang Fed Guy Blog
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Wang worries that White House efforts to induce surplus countries to liquidate dollar reserves and invest in US industrial projects in exchange for lower tariffs may raise interest rates and cause those nations “to seek to diversify their dependency.”

Does trading lower tariffs for allied investment raise US interest rates?

Core argument: Rather than asking allies to buy long-dated low-yielding Treasuries as in Miran's Mar-a-Lago Accord paper, the Administration is redirecting allies' foreign reserves into designated U.S. investments in exchange for lower tariffs.

The Mar-a-Lago Accord described in Miran’s paper looks to be taking shape in an unanticipated fashion. Instead of asking allies to buy long dated low yielding Treasuries, the Administration is redirecting their foreign reserves towards designated investments in the U.S. The Administration is likely to be successful in persuading countries to make substantial investments into the U.S. in exchange for lower tariffs. Over the decades a number of countries have run persistent trade surpluses with the U.S. and reinvested those surpluses into dollar financial assets. A U.S. “capital call” on allies will end up boosting domestic investment, but is also likely to place upward pressure on interest rates as foreign sovereigns raise dollars by liquidating their foreign reserves. This would [also] limit the country’s ability to deploy their reserves to manage their currency, but that could be mitigated with dollar swap lines. The expropriation of foreign reserves is a big move that takes advantage of the US’ dominant position and decades of built up good will. It is also possible that other countries will begin to look at the U.S. differently and seek to diversify their dependency. That would give them even more reasons to hold fewer dollar assets.

Takeaways by Macro Roundup® AI

  1. Rather than asking allies to buy long-dated low-yielding Treasuries as in Miran's Mar-a-Lago Accord paper, the Administration is redirecting allies' foreign reserves into designated U.S. investments in exchange for lower tariffs.
  2. A U.S. "capital call" on allies would likely boost domestic investment while placing upward pressure on interest rates as foreign sovereigns liquidate reserves to raise dollars, leaving less capacity to manage their currencies unless dollar swap lines mitigate it.
  3. The expropriation of foreign reserves draws on the U.S.' dominant position and decades of accumulated good will, and could lead other countries to diversify their dependency and hold fewer dollar assets.

Related Articles:

  • Trump Strikes Deal With Ally Japan Setting Tariff Rate at 15% — The US and Japan agreed to a trade deal setting 15% tariffs on Japanese imports including automobiles, alongside a $550bn Japanese investment fund for the US partly in loan guarantees. Japan also agreed to buy 100 Boeing aircraft, raise rice purchases 75%, and lift defense spending with American firms to $17bn annually.
  • A User’s Guide to Restructuring the Global Trading System — During the 2018–2019 U.S.–China trade war, the effective tariff rate on Chinese imports rose 17.9 percentage points while the renminbi depreciated 13.7% against the dollar, leaving after-tariff import prices in dollars up just 4.1%. The author argues this currency offset of more than three-fourths of the tariff explains why inflation pressure was negligible.

AI Summary. Boeing's aircraft-development programs have struggled, with two fatal 737 MAX crashes leading to a global grounding and delays to new variants, the cancellation of a planned midsize jet, and a 777 upgrade years behind schedule. Rival Airbus has become the world's biggest plane maker by deliveries and order backlog.

Benjamin Katz and Drew FitzGerald Wall Street Journal
Date Posted:

Boeing is planning on building a clean-sheet design aircraft to succeed the 737 MAX. It would be the first new commercial aircraft for Boeing since 2007’s 787 Dreamliner.

Has Boeing's troubled jet development let its rival take the lead?

Core argument: Boeing has begun work on a replacement for the 737 MAX, which entered commercial service in May 2017 before two deadly crashes led to a global grounding of the fleet in 2019 and delayed two new variants.

Boeing’s aircraft-development programs have struggled in recent years. The 737 MAX entered commercial service in May 2017. Two deadly crashes involving the jets resulted in a global grounding of the fleet in 2019 and delayed two new variants. The company later dropped plans to build a new midsize aircraft that it had been trumpeting. It is years behind on a new upgrade for its 777. As Boeing struggled, rival Airbus didn’t sit still. The European aircraft manufacturer has grown to be the world’s biggest plane maker by total deliveries and order backlog. Despite starting production roughly 20 years after its rival, Airbus deliveries of A320 narrow-body jets have caught up to Boeing’s deliveries of its 737s.

Takeaways by Macro Roundup® AI

  1. Boeing has begun work on a replacement for the 737 MAX, which entered commercial service in May 2017 before two deadly crashes led to a global grounding of the fleet in 2019 and delayed two new variants.
  2. Airbus has become the world's biggest plane maker by total deliveries and order backlog, and its A320 narrow-body deliveries have caught up to Boeing's 737 deliveries despite starting production roughly 20 years later.
  3. Boeing dropped plans for a new midsize aircraft it had been trumpeting and is years behind on an upgrade to its 777.

Related Articles:

  • How Long Can Airbus Keep Its Edge Over Boeing? — Airbus's A320 family of single-aisle jets is poised to overtake Boeing's 737 as the most-delivered commercial aircraft in history, with 12,153 delivered since launch, according to aviation consultants Cirium. After years of a roughly even split, Airbus holds 61% of the single-aisle market by order backlog and 72% by deliveries, while Boeing leads in wide-body aircraft.
  • Boeing Battles Brain Drain As Engineers Chase the Allure of Space — The average tenure of a Boeing engineer has fallen from 16.4 years to 12.6 years, according to data from the union representing 12,000 Boeing engineers, with tenure shortening in almost every age bracket. Analysts, recruiters and union officials describe this "brain drain" as a drag on operations that could make launching a new plane harder.
  • Crises at Boeing and Intel Are a National Emergency — Intel and Boeing, once benchmarks for high-quality, demanding manufacturing, declined because of their own mistakes rather than cheap foreign competition. Because leading U.S. tech firms' software and devices depend on advanced semiconductors fabricated under contract, especially by Taiwan Semiconductor Manufacturing Co., Chinese subjugation of Taiwan could leave the U.S. tech sector at Beijing's mercy.

AI Summary. Illegal crossings into the European Union totalled 112,000 over an eight-month period, down 21% year on year and 52% from 231,000 two years earlier. The EU and its member states have struck agreements offering aid and investment to transit countries — including €7.4bn ($8.1bn) promised to Egypt and €1bn to Tunisia — to intercept migrants before they reach Europe.

Economist Staff Economist
Date Posted:

There has been a 21% drop y/y in illegal immigration into the EU so far this year. The EU’s border control strategy of paying countries like Tunisia and Egypt to control illegal immigration may be paying off.

Are aid deals with transit countries reducing illegal migration into Europe?

Core argument: Illegal crossings into Europe fell to 112,000 in the first eight months of this year, down 21% from a year earlier and 52% from the 231,000 recorded in the comparable period of 2023.

The EU is showing that harsh policies far from its beaches are keeping migrants out. In the first eight months of this year 112,000 people crossed illegally into Europe, down 21% from a year earlier. The drop is an even more impressive 52% from the comparable period in 2023, when 231,000 people landed on its shores or jumped its borders. The EU’s strategy has in effect been to build a big, invisible wall far from its own borders where migrants can be intercepted and turned back well before they have a chance to set foot on European soil and lodge a claim for asylum. This has been done through a complex patchwork of agreements signed by the EU and separately by its member states with countries through which migrants try to pass. In exchange for cutting migration, transit countries get large sums of aid and investment. Egypt was promised €7.4bn ($8.1bn); Tunisia €1bn. In addition, the EU or its members train and fund their coastguards, border officials and police forces.

Takeaways by Macro Roundup® AI

  1. Illegal crossings into Europe fell to 112,000 in the first eight months of this year, down 21% from a year earlier and 52% from the 231,000 recorded in the comparable period of 2023.
  2. The EU's strategy has in effect been to build a big, invisible wall far from its own borders, where migrants can be intercepted and turned back before setting foot on European soil and lodging asylum claims.
  3. The EU and its member states have signed a patchwork of agreements with transit countries that receive aid and investment for cutting migration, with Egypt promised €7.4bn ($8.1bn) and Tunisia €1bn, alongside training and funding for coastguards, border officials and police.

Related Articles:

  • 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 Hopes Barbed Wire Will Keep Migrants Out. It Won’t — The total length of border fences in the European Union grew from 315km to 2,163km over roughly a decade, yet unauthorised crossings made up just 0.13% of all external crossings into the EU. Most migrants arrive via the Mediterranean rather than the Balkans or the eastern land border.
  • Germany Opened Its Doors to Migrants. Now It’s Struggling to Cope — Germany recorded 6.43m more arrivals than departures over a decade, the largest inflow of any country outside the US, with migrants at 18.8% of the population versus 15.3% in the US. Noncitizens, 15% of the population, accounted for 41% of crimes, up from 28.7%, according to police statistics.

Wednesday, October 1, 2025

AI Summary. Gold prices rose 16% following a Federal Reserve speech signaling further interest-rate easing, after months of flat prices. The dollar remained stable against other major currencies during the rally, suggesting a flight out of major currencies generally amid fears of inflation and currency debasement rather than out of the dollar specifically.

Robin Brooks Robin Brooks Substack
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Since Powell’s Jackson speech, gold has risen 16% while the dollar has remained stable against G10 currencies in a broad debasement of advanced economies’ currencies relative to gold.

Is rising gold a flight out of all major currencies?

Core argument: Gold prices are up 16% since Chair Powell's dovish August 22 Jackson Hole speech, after treading water for months beforehand, with that speech giving the "all-clear" for further Fed easing playing a major role.

Let’s review what we know about the recent move in gold prices. First, there’s an obvious catalyst, which is Chair Powell’s dovish speech at Jackson Hole on August 22. Gold prices are up a stunning 16% since then, after treading water for months in the run-up to that event. Clearly, that speech - which gave the “all-clear” for further Fed easing - plays a major role in the recent gold rally. Second, as the orange line in the chart above shows, the Dollar against its G10 peers has been stable after Jackson Hole, even as gold rose sharply (white line), which means the latest rally in gold isn’t about a flight out of the Dollar. It looks more like it’s a flight out of all G10 currencies, as fears of inflation and currency debasement grow. That’s consistent with the recent rise in very long-term yields.

Takeaways by Macro Roundup® AI

  1. Gold prices are up 16% since Chair Powell's dovish August 22 Jackson Hole speech, after treading water for months beforehand, with that speech giving the "all-clear" for further Fed easing playing a major role.
  2. The Dollar has been stable against its G10 peers since Jackson Hole even as gold rose sharply, which means the gold rally is not a flight out of the Dollar.
  3. The gold rally looks more like a flight out of all G10 currencies as fears of inflation and currency debasement grow, consistent with the recent rise in very long-term yields.

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.
  • Gold Surpasses Inflation-Adjusted Record High Set in 1980 — Gold's spot price reached an all-time high of $3,674.27 an ounce, surpassing the inflation-adjusted peak set when gold topped out at $850 in January 1980. That earlier peak came amid a collapsing US currency, an inflation spike, and a recession.
  • How A Global Debt Crisis Starts — Far-forward government bond yields — what markets price for the 10-year yield 10 and 20 years ahead — have risen in Japan, the UK, France and Germany, with Japan's 10-year yield 20 years forward at 4.5%. The US 10y20y forward yield has fallen slightly, which the author attributes to safe-haven inflows.

AI Summary. The dissimilarity in occupational mix between recent college graduates aged 20-24 and older workers aged 25-34 has increased slightly faster than in an earlier period, a pattern the authors say could reflect generative AI's effect on early-career employment or simply a slowing labor market. The authors caution that small sample sizes limit the findings.

Martha Gimbel, Molly Kinder, Joshua Kendall, and Maddie Lee Yale University
Date Posted:
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The recent rise in a dissimilarity index of the occupational mix between college graduates aged 20 to 24 and those aged 25 to 34 suggests a possible impact of AI on early career workers.

Is AI shifting the jobs recent college graduates hold?

Core argument: The dissimilarity in occupational mix between recent college graduates aged 20–24 and older workers aged 25–34 has increased slightly faster in recent months than in a previous period, which the authors describe as a possible impact of AI on early-career employment.

Figure 9 compares the occupational mix for recent college graduates (ages 20-24) to that of their older counterparts (ages 25-34). If generative AI were in fact substantially changing the labor market for recent college graduates, we would expect to see a growing dissimilarity in the occupational mix between these two groups. The dissimilarity has increased slightly faster in recent months than it did in a previous time period, showing a possible impact of AI on employment of early career workers. It could also simply reflect a slowing labor market. However, our results should be interpreted with caution particularly given small sample sizes.

Takeaways by Macro Roundup® AI

  1. The dissimilarity in occupational mix between recent college graduates aged 20–24 and older workers aged 25–34 has increased slightly faster in recent months than in a previous period, which the authors describe as a possible impact of AI on early-career employment.
  2. The faster-rising dissimilarity in occupational mix could also simply reflect a slowing labor market, according to the authors.
  3. The authors caution that their results on the occupational mix of recent college graduates should be interpreted carefully given small sample sizes.

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.
  • 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. The correlation between changes in the goods share of production and the net export share is weak (-0.22), while net exports track the federal budget balance more closely (0.42). The author argues federal deficits support consumer spending on services and imported goods and are partly financed by foreign savings.

Mark Warshawsky American Enterprise Institute
Date Posted:
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Linking the decline in the share of US output devoted to goods rather than services to the twin budget and trade deficits, Warshawsky stresses the role of the budget deficit in financing the expansion of the low-productivity-growth healthcare sector.

Do federal budget deficits explain trade deficits better than declining goods production?

Core argument: The correlation coefficient between the change in the US goods share and the net export share is -0.22, a weak link whose timing of significant changes is mostly off.

One sees only a rough connection between the decline in goods production and net exports (the correlation coefficient between the change in the goods share and the net export share is -0.22)—the timing of the significant changes is mostly off, and correlation is weak. By contrast, one can see a stronger relationship between net exports and the federal budget balance, where the correlation coefficient is 0.42. Although correlation is not necessarily causation, the latter relationship can be explained as follows. The growing federal deficit supports consumer spending, including on expensive services and, increasingly, imported goods. In addition, the deficit is partially financed by foreign savings, which results from excess goods production and income relative to domestic demand in foreign countries- that is, positive net exports abroad and net imports here in the US. The deficit increases with the growing share of the health care sector, as relative prices for health care rise and the federal government takes on more and more of the responsibility for health spending through Medicare, Medicaid, veterans care, and the insurance exchanges. Indeed, the share of federal spending devoted to health care increased from 2% in 1950 to 25% in 2024.

Takeaways by Macro Roundup® AI

  1. The correlation coefficient between the change in the US goods share and the net export share is -0.22, a weak link whose timing of significant changes is mostly off.
  2. The correlation coefficient between US net exports and the federal budget balance is 0.42, a stronger relationship than the goods-production link, though correlation is not necessarily causation.
  3. The share of US federal spending devoted to health care rose from 2% in 1950 to 25% in 2024, as relative health care prices rise and the federal government assumes more health spending through Medicare, Medicaid, veterans care, and the insurance exchanges.

Related Articles:

  • Rapidly Growing Treasury Supply Crowding Out Other Types of Credit Growth — Roughly half of all fixed income issuance coming to market over the past year has been US Treasuries, meaning investors must allocate a growing share of dollars to financing the government. The argument is that lower government debt would free up more funds for consumer borrowing and business investment.
  • Larry Summers and Bob Rubin Join Our CIOs to Discuss the Surprising Economic Cycle — Adopting the Simpson-Bowles fiscal consolidation when interest rates were at zero would have risked excessive disinflation, since long rates had no room to fall to provide an offsetting expansionary impulse. After the large run-up in debt and rise in real interest rates, the developing fiscal situation risks inflationary pressure, Treasury market disruption, or crowding out of private investment.
  • 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. Borrowers aged 50 to 61 hold the highest average student-loan balance of any age group at $47,857, and borrowers 50 and older are more likely than other age groups to be seriously delinquent, according to Federal Student Aid and Federal Reserve Bank of New York data.

Oyin Adedoyin Wall Street Journal
Date Posted:

There is currently $1.66T of outstanding Federal student loan debt. The 6mm borrowers aged 50 to 61 who still have Federal student loans outstanding have a mean balance of $47,857, the highest of any age cohort.

Do older borrowers carry the largest student-loan balances and delinquency rates?

Core argument: Student-loan borrowers aged 50 to 61, numbering more than six million, carry the highest average balance of any age group at $47,857, according to Federal Student Aid data.

Gen X is barreling toward retirement with an excruciating student-loan burden. The six million-plus borrowers aged 50 to 61 have the highest average balance of any age group, at $47,857, according to Federal Student Aid data. Now, as parents and grandparents, they are passing along a skepticism toward higher education and its hefty price tag, part of the broader unraveling of America’s “college for all” ideology. About five million of the 44.7 million student-loan borrowers [all ages] are more than 90 days past due, according to Federal Student Aid data. Borrowers who are 50 and older are more likely than other age groups to be seriously delinquent on their loans, according to the New York Fed.

Takeaways by Macro Roundup® AI

  1. Student-loan borrowers aged 50 to 61, numbering more than six million, carry the highest average balance of any age group at $47,857, according to Federal Student Aid data.
  2. About five million of the 44.7 million student-loan borrowers of all ages are more than 90 days past due, according to Federal Student Aid data, and the New York Fed finds borrowers 50 and older are more likely than other age groups to be seriously delinquent.
  3. Gen X borrowers, now parents and grandparents, are passing along skepticism toward higher education and its price tag, part of the broader unraveling of America's "college for all" ideology.

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  • Learning with Their Feet — US undergraduate enrollment in degree- or certificate-seeking programs fell from 17.3m to 14.1m, a drop of nearly 20%, but the declines were concentrated in lower-quality institutions. Enrollment changes are strongly associated with measured student outcomes such as completion rates, loan repayment, and post-enrollment earnings, with the worst-performing quintile losing nearly half its enrollment.
  • What Went Wrong with Federal Student Loans? — Weakened regulations on institutions enrolling aid-dependent students led to rising enrollment of disadvantaged students, but primarily at low-value institutions where loan performance deteriorated. Institutions in the lowest loan-repayment quintile had a 23% completion rate, $27,760 average post-enrollment earnings, and 20% default rates, versus 73%, $48,375, and 3% at the highest.
  • Debt Payments and Spending: Evidence from the 2023 Student Loan Payment Restart — The authors estimate that resuming required student loan payments cut household spending by $630 a year for every $10,000 in student debt, implying annualized cutbacks of $1,590 for the median borrower and $2,980 for the mean. With about $1.25tn of eligible student debt, they estimate an aggregate spending reduction of $20bn, roughly 0.3% of GDP.

AI Summary. A U.S. military showcase of autonomous weapons acquired under the Pentagon's Replicator program revealed systems that were not ready for operational use. An unmanned boat suffered a rudder failure and drifted away, an aerial drone launch was delayed over a possible problem with its launch tubes, and onboard software misidentified or failed to identify objects.

Shelby Holliday, Heather Somerville, and Brenna Smith Wall Street Journal
Date Posted:

Management of DoD’s Replicator program, an effort to deploy low-cost autonomous weapons at scale in the western-Pacific, is being shifted to a new Defense Autonomous Warfare Group in an effort to accelerate the program.

Are the military's newly acquired autonomous weapons ready for operational use?

Core argument: At an August California showcase of Replicator-acquired systems, a BlackSea Technologies unmanned boat suffered a rudder failure and drifted away, while the launch of an Anduril Industries aerial drone was delayed over a potential launch-tube problem.

Replicator is now being overseen by the vice commander of Special Operations Command, Lt. Gen. Frank Donovan. In August, as he was taking over the program, Donovan attended part of an event in California that was supposed to showcase some of the whiz-bang technology Replicator had acquired—but also highlighted that the systems weren’t ready for prime time. An unmanned boat made by BlackSea Technologies experienced a rudder failure and drifted away. The launch of an aerial drone made by Anduril Industries was delayed due to a potential problem with the launch tubes. And the software running on several boats misidentified or failed to identify objects as expected. “There were very, very good things that happened from Replicator,” said Anduril’s founder Palmer Luckey. “Could it have been done better? Could it have been more clear about what exactly they were doing? Yes, of course. But big picture, I don’t think it was that bad.”

Takeaways by Macro Roundup® AI

  1. At an August California showcase of Replicator-acquired systems, a BlackSea Technologies unmanned boat suffered a rudder failure and drifted away, while the launch of an Anduril Industries aerial drone was delayed over a potential launch-tube problem.
  2. Software running on several boats at the Replicator showcase misidentified or failed to identify objects as expected.
  3. Replicator is overseen by Lt. Gen. Frank Donovan, vice commander of Special Operations Command, who attended part of the August showcase as he took over the program.

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