Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “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
  • “…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
  • “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
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, October 9, 2025

AI Summary. Carlota Perez's framework of technological revolutions casts heavy artificial-intelligence infrastructure spending as a late-stage installation surge, in which financial capital overshoots and builds capacity ahead of demand, leaving both losses and infrastructure for later productivity. The author argues this model is descriptive rather than prescriptive, and that executives and policymakers invoking it rationalize losses in advance and erode market discipline.

Paul Kedrosky Applied Complexity
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Paul Kedrosky argues the AI buildout may be a bubble, as unlike the railroad and dot-com booms, “capital destruction isn’t merely tolerated; it is sanctified in advance…the line between necessary excess and outright mania disappears.”

Does framing AI spending as an installation surge weaken market discipline?

Core argument: Viewed through Carlota Perez's framework of technological revolutions, AI capital spending can look less like a financial bubble and more like a late-stage installation surge in which financial capital overshoots and infrastructure is installed well ahead of actual demand, with most of it going bust.

Technology bubbles aren't necessarily bad. Viewed through Carlota Perez's framework of technological revolutions, this moment can look less like a bubble in the narrow financial sense and more like a late-stage installation surge. That, in her framing, is the period when financial capital overshoots, infrastructure is bought and installed at great speed and well ahead of actual demand, and most of it goes bust. The wreckage left behind is real. But so is the scaffolding for later productivity. There are at least two problems with this view. Perez's model is descriptive, not prescriptive. This view of technology's collateral damage becomes a kind of secular theodicy. Losses are not treated as gratuitous accidents but as sacrifices, sanctified as the necessary price of advancement. The railway bust “paid for” railways. The dot-com crash “paid for” Netflix. Investors in railways did not knowingly pursue capital destruction in the name of national integration. Dot-com entrepreneurs did not consciously blow themselves up to create server farms and unlit fiber for the next generation. Once CEOs, VCs, and policymakers begin to invoke Perez explicitly—as Microsoft's Satya Nadella does in interviews, among many others—the model flips. It ceases to describe inadvertent overshoot and starts prescribing intentional frenzy. The discipline of markets erodes, because losses are rationalized in advance. The cycle becomes self-aware, even the cause of a super-bubble.

Takeaways by Macro Roundup® AI

  1. Viewed through Carlota Perez's framework of technological revolutions, AI capital spending can look less like a financial bubble and more like a late-stage installation surge in which financial capital overshoots and infrastructure is installed well ahead of actual demand, with most of it going bust.
  2. Perez's model is descriptive rather than prescriptive, and casting technology's collateral damage as the necessary price of advancement recasts losses as sacrifices: the railway bust "paid for" railways, the dot-com crash "paid for" Netflix.
  3. Once CEOs, venture capitalists, and policymakers invoke Perez explicitly, as Microsoft's Satya Nadella does in interviews, the model flips from describing inadvertent overshoot to prescribing intentional frenzy, eroding market discipline because losses are rationalized in advance.

Related Articles:

  • The Godfather and Oracle’s Crap GPU Rental Returns — Oracle generated about $900m from renting servers powered by Nvidia chips over a three-month period and recorded $125m in gross profit, a 14% gross margin that is below those of many nontech retail businesses. The author argues data centers are a capital-intensive business with unimpressive margins.
  • Why We Are Not In A Bubble….Yet — The 5 largest US technology companies are worth about 16% of the global public equity market, and the top 10 US stocks nearly 25%, almost $25tn. The author argues valuations are high but not bubble-level, with the "Magnificent 7" median forward price-to-earnings ratio at 27x, roughly half that of the late-1990s leaders.
  • 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.

AI Summary. After adjusting the International Monetary Fund's currency composition of official foreign exchange reserves for exchange-rate valuation changes, the US dollar's share is stable rather than declining, as is the euro's. A large dollar depreciation produces valuation effects that can make unadjusted reserve shares appear to shift.

Robin Brooks Robin Brooks Substack
Date Posted:

Robin Brooks amends his earlier analysis to note that the decline in the dollar’s share of Central Bank reserves in Q2 was due to dollar depreciation rather than reserve managers pulling out of the dollar around “Liberation Day.”

Is the dollar's reserve share stable after adjusting for exchange rates?

Core argument: Adjusting the IMF's COFER reserve data for FX valuation changes shows the US Dollar's allocation share was stable in Q2, since the large Dollar decline that quarter produced big valuation effects.

I made a bit of a dunderhead oversight in my earlier post, where I concluded that reserve managers in the IMF’s COFER survey pulled out of the US Dollar in Q2. That conclusion is not warranted because the large Dollar fall in Q2 means there were big valuation changes in that quarter. Once you adjust for those valuation changes, the share of the Dollar is stable in Q2. I’m taking the opportunity of this mea culpa post to put out FX-valuation adjusted COFER allocations to the Dollar (top left), the Euro (top right), the British Pound (bottom left) and the Japanese Yen (bottom right). My FX-valuation adjusted shares begin in Q1 2017, when they’re the same as the unadjusted ones (black lines). Once you make these adjustments, the FX-valuation adjusted allocation to the Dollar is stable in Q2 (blue line), as is that for the Euro.

Takeaways by Macro Roundup® AI

  1. Adjusting the IMF's COFER reserve data for FX valuation changes shows the US Dollar's allocation share was stable in Q2, since the large Dollar decline that quarter produced big valuation effects.
  2. The FX-valuation adjusted COFER allocation to the Euro was also stable in Q2, alongside the Dollar's adjusted share.
  3. The FX-valuation adjusted COFER series covering the Dollar, Euro, British Pound, and Japanese Yen begins in Q1 2017, where the adjusted shares match the unadjusted ones.

Related Articles:

  • Damage to US Reserve Currency Status — The International Monetary Fund's data on official foreign exchange reserves show the dollar's share falling from 58% to 56% in one quarter, a 2.5 standard deviation drop, with the euro rising from 20% to 21%. An updated analysis attributes the decline to dollar depreciation rather than reserve managers exiting dollars.
  • Dollar Dominance and Dollar Depreciation — Moving On Different Tracks — 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.
  • De-Dollarization? Diversification? Exploring Central Bank Gold Purchases and the Dollar’s Role in International Reserves — Central banks' gold accumulation is generally not associated with reducing the dollar's share of international reserves at the country level, apart from a few prominent cases, and is more consistent with modest overall diversification. Gold's role as an official-sector store of value has grown, but its use as a unit of account and medium of exchange remains limited.

AI Summary. Central banks have been a dominant force in gold's rally, buying bullion in volumes that pushed analysts to build new models to track the demand, motivated by a drive to diversify away from the dollar and shield assets from hostile nations. Gold has overtaken the euro as the second-largest asset in global central bank reserves.

Jack Ryan and Mark Burton Bloomberg
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The value of foreign central banks’ gold holdings, currently $3.83T, will likely soon eclipse the value of their Treasury holdings, now $3.92. Gold has already overtaken the euro as central banks’ second-largest asset.

Are central banks driving gold's rise in global reserves?

Core argument: Gold overtook the euro to become the second-largest asset in the reserves of the world's central banks, following a three-year rally.

Throughout [the Gold] rally, central bankers have been a dominant force in the market, buying up bullion in such huge volumes that it prompted analysts and traders to build new models to keep track of this resurgent source of demand. The buying has been motivated by a drive to diversify away from the dollar and shield their assets from hostile nations - and while gold may never return to being the bedrock of the global monetary system it once was, the value of bullion has already almost certainly well surpassed the amount of Treasuries held by non-US central banks in their foreign exchange reserves. It’s still well below the [value of] global foreign exchange reserves held in all dollar-denominated debt, but the rally also saw gold overtake the euro as the second-largest asset in the reserves of the world’s central banks earlier this year.

Takeaways by Macro Roundup® AI

  1. Gold overtook the euro to become the second-largest asset in the reserves of the world's central banks, following a three-year rally.
  2. The value of bullion has almost certainly surpassed the amount of Treasuries held by non-US central banks in their foreign exchange reserves, though it remains well below global reserves held in all dollar-denominated debt.
  3. Central bank gold purchases, motivated by a drive to diversify away from the dollar and shield assets from hostile nations, reached volumes that prompted analysts and traders to build new models to track the demand.

Related Articles:

  • Gold Prices Top $4,000 for First Time — Gold topped $4,000 a troy ounce for the first time, with futures rising more than 50% in a year — a bigger run-up than during the pandemic or the 2007-09 recession, and the largest since the inflationary shock of 1979. Central-bank buying has helped gold surpass the euro as the world's second-largest reserve asset.
  • De-Dollarization? Diversification? Exploring Central Bank Gold Purchases and the Dollar’s Role in International Reserves — Central banks' gold accumulation is generally not associated with reducing the dollar's share of international reserves at the country level, apart from a few prominent cases, and is more consistent with modest overall diversification. Gold's role as an official-sector store of value has grown, but its use as a unit of account and medium of exchange remains limited.
  • State of Chinese Gold Demand — Gold broke above its $3,200–$3,400 range to a record high above $3,600, with the near-term catalyst identified as threats to Federal Reserve independence driving US investor demand. Chinese total gold demand bottomed near $9bn and nearly doubled to $16bn before moderating to about $13bn as private-sector buying partially normalized.

AI Summary. Using the Global Flourishing Study, the authors construct a "not-flourishing" index from items on depression and loneliness and find it declines with age overall and in 15 of 22 countries, while conventional flourishing is U-shaped in age. Results are sensitive to survey mode: telephone interviews show the young as happier, web-based interviews the reverse.

David Blanchflower and Alex Bryson National Bureau of Economic Research
Date Posted:

Using 2022–2024 data from 22 countries in the Global Flourishing Study, the authors construct a “non-flourishing” index focusing on depression. “Non-flourishing” declines monotonically with age more reliably than “flourishing” increases with age.

Does measuring depression and loneliness change well-being's age pattern?

Core argument: The authors' "not-flourishing" index, built on 4 Global Flourishing Study items covering depression and loneliness, declines with age overall, in each of its four components, and in 15 of the 22 countries.

[In addition to a more conventional index of general satisfaction or ‘flourishing’] we construct a second index, which we term the ‘not-flourishing’ index, based on 4 items in the GFS [focusing on depression and loneliness], which have received much less attention from scholars. We know from the extant literature on the age-profile of mental ill-health, that the deterioration in the relative position of the young is much clearer with regards to negative affect than it is with respect to positive affect. This deterioration is reflected in behavioral outcomes which are concerning with regards to young people. We show that flourishing in the GFS is U-shaped in age in the pooled data, but it rises in age in 13 countries and declines in 7. By contrast, not-flourishing declines in age overall and in each of its four components, and it declines in age in 15 of the 22 countries. We then explore sensitivity of results to survey mode in those countries using both computer-assisted telephone interviews (CATI) and computer-assisted web-based interviews (CAWI). When CATI is used, the young are happier than other age groups, the opposite is the case when data are collected via CAWI. [However], response rates for interviewer-based surveys are also particularly low and falling. The young don't answer the phone or make phone calls.

Takeaways by Macro Roundup® AI

  1. The authors' "not-flourishing" index, built on 4 Global Flourishing Study items covering depression and loneliness, declines with age overall, in each of its four components, and in 15 of the 22 countries.
  2. Flourishing in the Global Flourishing Study is U-shaped in age in the pooled data, but rises with age in 13 countries and declines with age in 7, according to the authors.
  3. Survey mode shapes the finding: with computer-assisted telephone interviews the young are happier than other age groups, while with computer-assisted web-based interviews the opposite holds, and response rates for interviewer-based surveys are low and falling.

Related Articles:

  • Declining Life Satisfaction and Happiness Among Young Adults in Six English-Speaking Countries — Eleven studies find declines in life satisfaction and happiness among young adults in the US, Australia, Canada, Ireland, New Zealand, and the UK. In these countries life satisfaction now rises with age across the lifespan, as young people's life satisfaction dropped sharply while that of people 45 and over stayed flat.
  • 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.
  • Life Under Two: Debt, Deficits, and the AI Discontinuity — The United States averaged annual GDP growth above 3% for decades, but 2% or less is now more likely. Over ten years, the author estimates that gap amounts to a $3.36tn larger economy, $3.7tn more tax revenue, and 6m more jobs, shifting public psychology from abundance toward scarcity.

AI Summary. Border Patrol encounters with migrants at the US southern border have fallen to their lowest level in decades, with almost no one now crossing the Darién Gap jungle between Colombia and Panama, and at least 15,000 people, mostly Venezuelans, returning to South America. An asylum ban underpins the strategy, eliminating the pathway to a hearing date and work permit.

Economist Staff The Economist
Date Posted:
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“Encounters” by Border Patrol agents on the southwest land border are at the lowest level in decades and “almost no one is travelling north through the Darién Gap.”

Has an asylum ban driven border crossings to decades-low levels?

Core argument: Border Patrol encounters of migrants at the southern border began falling in Joe Biden's final year in office and plummeted after Donald Trump took office to their lowest level in decades.

“Encounters” of migrants by Border Patrol agents at the frontier began to fall during the final year of Joe Biden’s presidency. After Mr Trump took office they plummeted to the lowest level in decades. Almost no one is travelling north through the Darién Gap, a jungle on the Colombia-Panama border that became a thoroughfare for migrants from all over the world intending to claim asylum in America. A small reverse migration has even begun. At least 15,000 people, mostly Venezuelans, have returned to South America since January. Underpinning the whole border strategy is Mr Trump’s asylum ban. Migrants might dodge soldiers and risk prosecution if it meant that they could secure a hearing date and a work permit. That pathway no longer exists.

Takeaways by Macro Roundup® AI

  1. Border Patrol encounters of migrants at the southern border began falling in Joe Biden's final year in office and plummeted after Donald Trump took office to their lowest level in decades.
  2. Almost no migrants are travelling north through the Darién Gap, the jungle on the Colombia–Panama border that had become a thoroughfare for migrants from around the world intending to claim asylum in America.
  3. At least 15,000 people, mostly Venezuelans, have returned to South America since January, and Donald Trump's asylum ban, which underpins his border strategy, has closed the pathway to a hearing date and work permit.

Related Articles:

  • 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.
  • U.S. Immigrant Population in 2023 Saw Largest Increase In More Than 20 Years — The U.S. immigrant population rose by about 1.6m to a record 47.8m, the largest single-year increase since 2000, according to a Pew Research Center analysis of U.S. Census Bureau data. Immigrants made up 14.3% of the total U.S. population, up from 4.7% in 1970 but below the 1890 record of 14.8%.
  • Did The Political Establishment Pave The Way For Trump and Farage? — 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.

AI Summary. China has imposed export controls requiring its approval for foreign companies to export magnets containing as little as 0.1% Chinese-sourced rare earths or made using Chinese extraction, refining, or magnet-making technology. China controls roughly 70% of rare earth mining, 90% of separation and processing, and 93% of magnet manufacturing.

Ryan McMorrow Financial Times
Date Posted:

New Chinese export controls will allow it to manage exports of foreign-manufactured magnets that contain trace amounts (.1%) of Chinese-sourced rare earths, or were produced using Chinese IP. China controls 93% of magnet manufacturing.

How far does China extend its control over global rare-earth supply chains?

Core argument: China's commerce ministry will require Beijing's approval for foreign companies to export magnets containing even 0.1% Chinese-sourced rare earth materials, or made using Chinese extraction, refining, or magnet-making technology.

China has unveiled sweeping export controls on rare earths and related technologies, as it strengthens its leverage over critical minerals ahead of an expected meeting this month between US President Donald Trump and Xi Jinping. Under the new rules, foreign companies will need Beijing’s approval to export magnets that contain even trace amounts [.1%] of Chinese-sourced rare earth materials, or that were produced using the country’s extraction methods, refining or magnet-making technology. The restrictions announced on Thursday by the commerce ministry will for the first time create a Chinese version of the US foreign direct product rule, a measure Washington has used to block semiconductor-related exports to China from third countries. The rules give Beijing more leverage to exert control over the global rare-earth supply chain. Rare earth minerals and magnets are critical to technologies from smartphones to electric vehicles and fighter jets. China controls about 70% of rare earth mining, 90% of separation and processing, and 93% of magnet manufacturing, according to a Financial Times analysis.

Takeaways by Macro Roundup® AI

  1. China's commerce ministry will require Beijing's approval for foreign companies to export magnets containing even 0.1% Chinese-sourced rare earth materials, or made using Chinese extraction, refining, or magnet-making technology.
  2. China controls about 70% of rare earth mining, 90% of separation and processing, and 93% of magnet manufacturing, according to a Financial Times analysis, with rare earths and magnets critical to smartphones, electric vehicles, and fighter jets.
  3. China's export controls create for the first time a Chinese version of the US foreign direct product rule, a measure Washington has used to block semiconductor-related exports to China from third countries.

Related Articles:

  • Why Every Country Needs To Master The Electric Tech Stack — Drones are the foundation of hard power in the early 21st century, so a country unable to produce them domestically is at a disadvantage. As electric motors overtake combustion engines as the core technology that makes machines move, the same supply chains and production processes used for electronics can also produce cars, drones, robots, and appliances.
  • China’s Weaponisation of Rare Earths is a New Kind of Trade War — China's export controls on rare earth materials and magnets threatened to halt production across the auto industry, the largest manufacturing sector in most advanced economies, and forced Washington to negotiate on tariffs. Despite China's well-known dominance of rare earth production, Western governments and companies have not developed alternative suppliers.
  • Apple to Buy Rare Earths From Pentagon-Backed US Producer MP — Apple has agreed to a $500m deal to buy rare-earth minerals from US producer MP Materials, which has secured Pentagon backing, and the two firms will build a Texas factory with neodymium magnet lines tailored for Apple products. Western producers including MP Materials and Australia's Lynas have struggled to profit amid weak prices and oversupply.

Friday, October 10, 2025

AI Summary. The Congressional Budget Office estimates the federal budget deficit was $1.8tn in fiscal year 2025, $8bn below the prior year, as revenues rose an estimated $308bn (6%) and outlays rose $301bn (4%). Customs duties including tariffs rose $118bn (153%), and net interest on the public debt surpassed $1tn for the first time.

Kathleen Burke and Aldo Prosperi Congressional Budget Office
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The CBO estimates that the deficit in FY 2025 was (-)1,809B, ~unchanged from the previous year. Both receipts and outlays rose by ~$300B. Customs duties (including tariffs) rose by $118B (153%). Net interest on the debt surpassed $1T for the first time.

Did rising tariff revenue keep the federal deficit from growing?

Core argument: The Congressional Budget Office estimates the federal deficit was $1.8 trillion in fiscal year 2025, $8 billion less than in fiscal year 2024, with revenues up an estimated $308 billion (6%) and outlays up an estimated $301 billion (4%).

The federal budget deficit was $1.8 trillion in fiscal year 2025, the CBO estimates, $8 billion less than the shortfall recorded during fiscal year 2024. Revenues increased by an estimated $308 billion (or 6%); increases in collections of individual income taxes and customs duties were partially offset by a decline in corporate tax receipts. Receipts from customs duties (including tariffs) increased by $118 billion (or 153 percent) relative to fiscal year 2024. Outlays rose by an estimated $301 billion (or 4%). Outlays were higher in several areas, including the largest benefit programs and net interest on the public debt (which, for the first time, surpassed $1 trillion). Decreases in outlays recorded for federal student loan programs, deposit insurance, and by the Small Business Administration partly offset those increases. The change in the deficit was influenced by the timing of outlays in fiscal year 2024, which were reduced because payments that were due on October 1, 2023, a Sunday, were shifted into fiscal year 2023 (they were made in September 2023). If not for those shifts, the 2025 deficit would have been $80 billion (or 4%h) less than the shortfall in 2024.

Takeaways by Macro Roundup® AI

  1. The Congressional Budget Office estimates the federal deficit was $1.8 trillion in fiscal year 2025, $8 billion less than in fiscal year 2024, with revenues up an estimated $308 billion (6%) and outlays up an estimated $301 billion (4%).
  2. Receipts from customs duties, including tariffs, rose $118 billion (153%) relative to fiscal year 2024, while net interest on the public debt surpassed $1 trillion for the first time, according to the Congressional Budget Office.
  3. The Congressional Budget Office notes that absent the timing shift of payments due October 1, 2023, into fiscal year 2023, the 2025 deficit would have been $80 billion (4%) less than the 2024 shortfall.

Related Articles:

  • Fiscal Risk from Rising Bond Yields — US interest rates fell for roughly 40 years before the pandemic, allowing maturing high-coupon debt to be refinanced at lower rates and keeping federal interest expense manageable even as debt rose. Because Congressional Budget Office projections assume the 10-year Treasury yield drifts down to 3.8% from about 4.1%, the author argues its debt-service projections face upside risk.
  • Tariffs Are Generating Meaningful New Revenue — New U.S. tariffs are estimated to generate $1.3tn in net new revenue through the end of the current presidential term and $2.8tn through 2034 before economic effects, about $600bn more than previously enacted tariffs. If a court ruling striking down some tariffs is upheld, the remainder could raise as little as $800bn through 2034.
  • Our Thoughts on Large US Deficits and Their Impact on Bond Yields — Total borrowing in the US is about average despite high government deficits, as high public borrowing has contributed to the need for higher interest rates that have depressed private sector borrowing. Risk premiums on long-dated debt look about average, with no market signs that economic or debt limits are currently being hit.

AI Summary. The US president threatened a "massive increase" in tariffs on China and raised the possibility of cancelling a planned summit with China's leader, accusing China of becoming "very hostile" in reference to its export controls on critical minerals.

Demetri Sevastopulo and Peter Wells Financial Times
Date Posted:

Responding to the unveiling of new Chinese export controls, Donald Trump threatened to cancel his upcoming meeting with Xi and said he is considering a “massive increase” in US tariffs on China.

Will export controls on critical minerals trigger a tariff escalation?

Core argument: Donald Trump said he was considering a "massive increase" in US tariffs on China and threatened to cancel his planned summit with Xi Jinping, reigniting trade tensions between the two countries.

Donald Trump warned that he was considering a “massive increase” in US tariffs on China and threatened to cancel his planned summit with Xi Jinping, reigniting trade tensions between the countries. The US president on Friday accused China of becoming “very hostile” in a reference to its recent decision to impose export controls on critical minerals. Trump said in a Truth Social post that the US had been contacted by “other Countries who are extremely angry at this great Trade hostility, which came out of nowhere”.

Takeaways by Macro Roundup® AI

  1. Donald Trump said he was considering a "massive increase" in US tariffs on China and threatened to cancel his planned summit with Xi Jinping, reigniting trade tensions between the two countries.
  2. Trump accused China of becoming "very hostile," referring to its recent decision to impose export controls on critical minerals.
  3. Trump said in a Truth Social post that the US had been contacted by "other Countries who are extremely angry at this great Trade hostility, which came out of nowhere".

Related Articles:

  • China Unveils Sweeping Rare-Earth Export Controls To Protect ‘National Security’ — China has imposed export controls requiring its approval for foreign companies to export magnets containing as little as 0.1% Chinese-sourced rare earths or made using Chinese extraction, refining, or magnet-making technology. China controls roughly 70% of rare earth mining, 90% of separation and processing, and 93% of magnet manufacturing.
  • Pentagon to Take Stake in Rare-Earth Company, Challenging China’s Control — Under a deal with the largest U.S. rare earths miner, the Defense Department will take a 15% stake, commit billions of dollars to investment and output purchases, and guarantee a price floor for rare earth minerals and magnets. The agreement calls for a new magnet factory, expected online in 2028, at a scale far exceeding current U.S. magnet production.
  • Why Every Country Needs To Master The Electric Tech Stack — Drones are the foundation of hard power in the early 21st century, so a country unable to produce them domestically is at a disadvantage. As electric motors overtake combustion engines as the core technology that makes machines move, the same supply chains and production processes used for electronics can also produce cars, drones, robots, and appliances.

AI Summary. Valuation-adjusted data on the currency composition of official foreign exchange reserves show a steady medium-term shift out of the US dollar that predates recent trade disputes, with dollar allocations stable most recently. The euro's share has held steady, while the Australian dollar, Canadian dollar, Chinese yuan, Japanese yen and smaller currencies gained.

Robin Brooks Robin Brooks Substack
Date Posted:

Btw 2017 and Q2 2025 reserve managers have gradually pulled out of the Dollar and shifted into other currencies. The beneficiaries – which do not include the Euro – have been the Australian Dollar, the Canadian Dollar, and the Chinese Yuan.

Are central banks shifting reserves out of the dollar, and where to?

Core argument: Valuation-adjusted COFER data show a medium-term shift out of the Dollar that preceded Trump, with reserve manager Dollar allocations stable very recently despite reciprocal tariff chaos.

Each of the charts shows the raw COFER [Currency Composition of Official Foreign Exchange Reserves] allocation share (black) alongside my valuation-adjusted measure (blue). For the most part, the medium-term trends are the same across the two measures, but there can be differences, such as in Q2 2025, when the Dollar fell sharply. Adjusting for that drop and moves in other currencies, the key medium-term trends in COFER are 1) There’s a medium-term shift out of the Dollar. This shift has been a steady trend in recent years that’s preceded Trump. In fact, reserve manager allocations to the Dollar have been stable very recently (top left chart), even with all the reciprocal tariff chaos. 2) The Euro hasn’t managed to capitalize on this Dollar exodus. Its share in global reserves is stable, especially adjusting for the large appreciation of the Euro against the Dollar in Q2 2025. 3) Beneficiaries of the USD exodus are AUD, CAD, CNY and the “other” category. More established currencies in the COFER survey - like GBP and CHF - have not benefitted. The only established currency with large, valuation-adjusted gains is JPY, something you don’t see in the headline COFER share because of the steady depreciation of the Yen against the Dollar.

Takeaways by Macro Roundup® AI

  1. Valuation-adjusted COFER data show a medium-term shift out of the Dollar that preceded Trump, with reserve manager Dollar allocations stable very recently despite reciprocal tariff chaos.
  2. The Euro has not captured the Dollar exodus, its global reserve share stable once adjusted for the Euro's large appreciation against the Dollar in Q2 2025.
  3. AUD, CAD, CNY and the "other" category are the beneficiaries of the USD exodus, while GBP and CHF have not benefitted; JPY shows large valuation-adjusted gains masked in headline COFER shares by the Yen's steady depreciation.

Related Articles:

  • Dollar Dominance and Dollar Depreciation — Moving On Different Tracks — 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.
  • 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.
  • Top Dollar — Foreign holdings of U.S. financial assets exceed American holdings abroad, making the United States a net debtor whose liabilities are denominated in dollars while its foreign assets are largely in other currencies. U.S. foreign liabilities grew from $30tn to over $51tn while U.S. foreign assets grew from $24tn to $33tn, tripling the net debtor position from $6tn.

AI Summary. Comparing recent graduates with others newly entering the labor market, rather than with all non-graduates of similar age, shows those without a degree are faring worse: US unemployment among recent college graduates is up 1.3 percentage points from its low, versus 2.4 points for recent entrants without a degree.

John Burn-Murdoch Financial Times
Date Posted:
Is Database:
Database

Unemployment for recent American college graduates is up 1.3pp since 2022. Unemployment for the generally younger group of non-college workers, measured at labor market entrance rather than at ages 22-27, has seen a 2.4pp rise.

Are recent graduates really faring worse than new entrants without degrees?

Core argument: US unemployment among recent labour market entrants without a degree has risen 2.4 percentage points from its mid-2022 low, nearly double the 1.3 point rise among recent college graduates.

To determine whether recent graduates are having an especially tough time in 2025’s low-hiring environment, the comparison we should make is with others who recently entered the labour market for the first time, regardless of age. A newly job-seeking graduate might be in their mid-twenties, but someone entering the world of work straight from high school will be several years younger. Once we do this, it turns out that those without a degree are actually having a much harder time of it. In the US, unemployment among recent college graduates is up 1.3 percentage points from its mid-2022 low, but by almost double that among recent labour market entrants without a degree, who have seen a 2.4 point rise. This is very different to the point rise among the frequently - much more modest 0.7 but inappropriately - cited group of non-grads in their mid-twenties who are sheltered from today’s harsh hiring conditions.

Takeaways by Macro Roundup® AI

  1. US unemployment among recent labour market entrants without a degree has risen 2.4 percentage points from its mid-2022 low, nearly double the 1.3 point rise among recent college graduates.
  2. Non-graduates in their mid-twenties, a frequently cited comparison group, show a more modest 0.7 point rise in unemployment and are sheltered from today's harsh hiring conditions, making them an inappropriate benchmark.
  3. Judging whether recent graduates face an especially tough labour market requires comparing them with others who recently entered work for the first time regardless of age, since those entering straight from high school are several years younger.

Related Articles:

  • Evaluating the Impact of AI on the Labor Market: Current State of Affairs — 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.
  • 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.
  • Millions of Workers Are Left Out of the ‘Low-Hire, Low-Fire’ US Job Market — 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%.

AI Summary. Collaborative robots, or "cobots" — smaller, more flexible and less expensive than traditional industrial automation — are spreading to small US fabricators making everything from AI supercomputer parts to hulls for autonomous naval vessels. Their adoption is what makes the recovery in American goods production possible.

Christopher Mims Wall Street Journal
Date Posted:

Smaller, less expensive industrial robots dubbed collaborative robots or “Cobots” are helping to automate manufacturing in small US factories. Chris Mims argues “the slow, fragile recovery of goods production wouldn’t be possible without them.”

Are flexible, low-cost robots enabling US manufacturing's recovery?

Core argument: Collaborative robots, or "cobots," once a luxury reserved for big manufacturers, are now smaller, smarter, more flexible and less expensive, bringing automation to fabricators of every size across America.

In small factories across America, agile automatons are making everything from parts for AI supercomputers to the hulls of America’s future autonomous naval weapons. Once a luxury reserved for big manufacturers, smaller, smarter, more flexible and less expensive “cobots”—collaborative robots—are bringing automation to every fabricator, no matter the size. These robots aren’t just nice to have. The slow, fragile recovery of American goods production wouldn’t be possible without them.

Takeaways by Macro Roundup® AI

  1. Collaborative robots, or "cobots," once a luxury reserved for big manufacturers, are now smaller, smarter, more flexible and less expensive, bringing automation to fabricators of every size across America.
  2. Cobots in small American factories are producing parts for AI supercomputers and hulls for America's future autonomous naval weapons.
  3. The slow, fragile recovery of American goods production would not be possible without collaborative robots.

Related Articles:

  • Global Robot Density in Factories Doubled in Seven Years — Global factory robot density reached a record 162 robots per 10,000 manufacturing employees, more than double the level of seven years earlier. The European Union averages 219 units per 10,000 employees, North America 197, and Asia 182, with Korea, Singapore, mainland China and Japan among the ten most automated economies.
  • America Is Missing The New Labor Economy – Robotics Part 1 — Building an identical robotic arm in the US costs about 2.2x more than in China, and US-labeled components still depend heavily on Chinese parts and materials with no scalable alternative. The author argues China is the only country positioned to capture full-scale intelligent robotic automation, which would let it outcompete the US across production.
  • What Would It Take to Bring Back US Manufacturing? Part 2: Making American Manufacturing More Productive — The authors argue the United States is a decade away from the scale of automated "lights-out" manufacturing needed to meet its own end-to-end demand at comparable cost. With 98% of US manufacturers being small or medium enterprises, low deployment of mature productivity technologies reflects limited commercial adoption and investment rather than technical readiness.