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, October 14, 2025

AI Summary. The analysis finds post-pandemic headline and core inflation closely tracking the pattern of the early 1970s, with the spike in each case taking about three years to be brought under control and followed by roughly 18 months of relative stability. If the parallel holds, a renewed inflation flare-up would be expected.

Jesper Rangvid Rangvid's Blog
Date Posted:

Updating his chart showing a striking correlation between the Covid inflation and that of the mid-1970s, albeit at a lower level, Rangvid suggests that current upside risks to inflation might leave us with a second peak resembling that of 1978–1982.

Does today's inflation path point to a renewed surge?

Core argument: In both the early-1970s and post-pandemic episodes, it took about three years from the onset of the inflation shock for price growth to be brought more or less under control, according to the analysis.

The starting point of this analysis is the striking correlation between the inflation surge of the early 1970s and the post-pandemic episode. The unsettling part is that we now find ourselves at almost exactly the same stage as when prices began to rise again in the late 1970s. If inflation continues to follow the path of inflation in the 1970s, as the post-pandemic inflation experience has done until now, a renewed inflation flare-up is to be expected. Figure 3 shows that the correlation between the early-1970s and early-2020s patterns of core inflation is equally strong as for headline inflation. We can now conclude that the inflation spike lasted for roughly the same duration in both periods. In each case, it took about three years from the onset of the inflation shock for price growth to be brought more or less under control. This was followed by a year and a half of relative stability — albeit with a brief uptick in early 1977 — before inflation flattened again. In the 1970s that calm persisted until early 1978, when inflation began to surge once more. The interesting point here is that we are now at the same stage in the inflation process as when prices reignited in the late 1970s

Takeaways by Macro Roundup® AI

  1. In both the early-1970s and post-pandemic episodes, it took about three years from the onset of the inflation shock for price growth to be brought more or less under control, according to the analysis.
  2. The analysis finds the correlation between early-1970s and early-2020s core inflation patterns is as strong as for headline inflation, with both spikes lasting roughly the same duration.
  3. The analysis places the present stage of the inflation process at the same point as the late 1970s, when, after about a year and a half of relative stability, inflation began to surge again in early 1978, implying a renewed flare-up if the pattern holds.

Related Articles:

  • Mid-Year Outlook: At the Crossroads of Stagflation—What’s Next? — Foreign investors hold roughly $18.5tn in US equities (about 20% of the market), $7tn in Treasuries and $5tn in credit (about 30% of each), and foreign participation in 30-year Treasury auctions has trended down in recent months. Combined with US fiscal challenges, the authors argue this reliance on foreign demand is a vulnerability.
  • A Big, Not-So-Beautiful Inflation Picture — Wage growth for the lowest-paid quartile of US workers has slowed to just above the headline inflation rate, consistent with the view that companies are holding onto staff while showing little interest in bidding up pay for lower-skilled workers. With inflation not tamed and tariffs yet to feed through to employment and production decisions, the risk ahead is stagflation.
  • Inflation is Persistent and Consumers are Flush. Falling Rates Could be Dangerous — U.S. household and nonprofit net worth equals roughly 8.5 years of personal consumption spending, down from a peak of 9 years but above the 7.7-year average of 2018-2019. The author argues that cutting interest rates with inflation persistent risks unleashing this untapped financial firepower as additional consumer spending that would largely show up in higher prices rather than higher output.

AI Summary. Global current account imbalances are projected to widen before narrowing, with trade ahead of prospective tariffs temporarily widening the US deficit and China's surplus. Narrowing is expected to work through trade policy shifts, a weaker US dollar that aids export competitiveness, and fiscal expansion in China and Germany that reduces their surpluses.

IMF Staff International Monetary Fund
Date Posted:
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According to an IMF analysis, global imbalances grew in 2025 but are poised to narrow as the unwinding of pull-forward behavior associated with the implementation of tariffs dissipates.

How will global current account imbalances widen and then narrow?

Core argument: Global current account imbalances in 2025 are expected to exceed those projected in October 2024 before narrowing thereafter, as preemptive trade ahead of prospective tariffs widens the US deficit and China's surplus until pull-forward behavior dissipates.

Global current account imbalances in 2025 are expected to exceed those [of October 2024] and to narrow thereafter. Among the three largest contributors to the overall balance (China, Germany, United States), preemptive trade ahead of prospective tariffs widens the US deficit and the surplus for China, before unwinding as pull-forward behavior dissipates. The narrowing of global imbalances works through three main channels. The first is trade policy shifts. Overall, the impact on the current account of this channel is likely to be limited. Second, exchange rate movements are an additional channel of external adjustment. Higher unilateral tariffs would normally be associated with a stronger currency for the tariffing country, helping with the absorption of the tariff shock. The recent depreciation of the US dollar, instead, enhances export price competitiveness and restrains import-intensive consumption—possibly helping to narrow US external deficits. Last but not least, fiscal changes have accompanied trade developments. China and Germany have recently announced and expanded spending measures to boost domestic demand, which will lower net savings and reduce external surpluses. In the United States, the OBBBA is expected to widen the fiscal deficit over the medium term relative to projections. This weighs on public saving and so tends to widen the current account deficit—or at least temper any narrowing from other channels.

Takeaways by Macro Roundup® AI

  1. Global current account imbalances in 2025 are expected to exceed those projected in October 2024 before narrowing thereafter, as preemptive trade ahead of prospective tariffs widens the US deficit and China's surplus until pull-forward behavior dissipates.
  2. The narrowing of global imbalances works through three channels: trade policy shifts, whose current account impact is likely to be limited, exchange rate movements, and fiscal changes.
  3. Spending measures announced and expanded by China and Germany to boost domestic demand will lower net savings and reduce external surpluses, while the US OBBBA is expected to widen the fiscal deficit over the medium term, weighing on public saving.

Related Articles:

  • Global Imbalances In A Shifting World — Current accounts of major economies diverged, with the US deficit widening by $228bn to $1.13tn (1% of world GDP) while China's surplus rose by $161bn to $424bn and the euro area's by $198bn to $461bn. Changes in investment rates drove the widening saving-investment gaps, with private saving offsetting only 10–50% of the investment change.
  • Better Late Than Never: The IMF Starts to Recognize Balance of Payments Reality — The International Monetary Fund's latest report recognizes that global current account imbalances began widening, but its forecast that the surpluses of China, Japan, and Korea will fall is questioned. China's customs goods surplus rose $150bn in the first half of the year, pointing to a current account surplus above $600bn versus the Fund's $365bn projection.
  • The US Trade Deficit and Foreign Borrowing — The authors argue US trade deficits persist because foreign investors find US financial assets attractive, but the current deficit level is not sustainable. They estimate that stabilizing the US net foreign liability position requires improving the trade balance by about 2% of GDP, or over 3% if low-cost borrowing privileges are lost.

AI Summary. China's overall exports have remained stable under US tariffs because a sharp drop in shipments to the US has been offset by higher exports elsewhere, likely reflecting both trade diversion to new markets and transshipment through third countries. Either way, the author argues Chinese exporters' margins are squeezed, through lower prices or higher transport costs.

Robin Brooks Robin Brooks Substack
Date Posted:
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Robin Brooks argues China’s record good surplus overstates the strength of its export sector. Brooks suggests that the effect of tariffs has been to suppress Chinese margins, as exporters cut prices to sell to the non-US market.

Do tariffs squeeze Chinese exporters' margins even as total exports hold steady?

Core argument: China's overall exports have remained stable because a sharp drop in exports to the US has been offset by a rise in exports to all other destinations.

The charts illustrate the key stylized facts about China’s exports in the face of US tariffs. Overall exports have remained stable (left chart), but that’s because a sharp drop in exports to the US (right chart, red line) has been offset by a rise in exports to everywhere else (right chart, blue line). There’s two possible explanations for the rise in exports to non-US countries: (i) trade diversion, whereby China exports goods that otherwise would have gone to the US to new markets; and (ii) transshipment, whereby goods are shipped to the US via third countries. Both things are likely happening, but the former probably dominates to a substantial degree. The bottom line is that US tariffs are an adverse hit to the profitability of China’s exporters, who have to accept lower prices to offload goods that otherwise would have gone to the US. If instead goods are being transshipped to the US in substantial numbers, that means higher transportation costs, which also adversely hits margins of Chinese exporters.

Takeaways by Macro Roundup® AI

  1. China's overall exports have remained stable because a sharp drop in exports to the US has been offset by a rise in exports to all other destinations.
  2. The rise in China's non-US exports likely reflects both trade diversion, redirecting US-bound goods to new markets, and transshipment through third countries, with trade diversion probably dominating to a substantial degree.
  3. US tariffs hit the profitability of Chinese exporters, who accept lower prices to offload goods that would have gone to the US, while transshipment would raise transportation costs and also compress margins.

Related Articles:

  • China Emerges From Trade Chaos With Record Exports, Surplus — China posted a record half-year trade surplus of about $586bn, with exports up 5.8% year-over-year to $325bn and imports up 1.1%. Shipments to the US fell 16.1% from a year earlier, while exports to the 10 Southeast Asian nations in the Asean group rose 17%.
  • China’s “Anti-Involution” Campaign: Global Implications — China's economy has slowed as domestic investment stagnates and consumer spending stays weak, with the shortfall partly offset by rising net exports. The author argues these internal problems are being passed to the rest of the world, since export values are rising about 6% a year while import values are down 2.2%.
  • Trade With China Is Becoming a One-Way Street — China's import volumes have shown no growth since the end of 2022 while its export volumes rose 33%, according to data from the Netherlands Bureau of Economic Policy Analysis. In dollar terms, Chinese imports fell 11% from the US, 17% from Japan, and 18% from Germany, as Chinese companies replace overseas suppliers with domestic ones.

AI Summary. Global battery storage capacity is projected to rise 67% to 617GWh and grow tenfold by 2035, with the US and China accounting for about 70% of projects by power capacity. In California, batteries have supplied more than a quarter of electricity during spring and summer peaks, while gas generation fell 37% over two years.

Nassos Stylianou, Sam Learner, Irene de la Torre Arenas and Sam Joiner Financial Times
Date Posted:

California now has 13GW of battery storage capacity and plans to add another 8.6GW by 2027; the batteries consistently supplied 25% of the state’s electricity during the spring and summer peaks.

Are large-scale batteries reshaping how electricity is supplied at peak demand?

Core argument: BNEF expects global battery storage capacity to rise 67% to 617GWh this year and to grow tenfold by 2035, with the US and China accounting for about 70% of projects by power capacity.

California has become ground zero for the battery storage revolution, but the example is being followed all over the world. Global capacity is expected to rise by 67% to 617GWh this year and to grow tenfold by 2035, according to energy research firm BNEF. The US and China dominate the market, accounting for about 70% of projects by power capacity. In California, batteries consistently supplied more than a quarter of electricity during this year’s spring and summer peaks, data from energy analytics platform Grid Status shows. In the first eight months of 2025, gas generation was down 37% from 2023, according to Mark Jacobson of Stanford University.

Takeaways by Macro Roundup® AI

  1. BNEF expects global battery storage capacity to rise 67% to 617GWh this year and to grow tenfold by 2035, with the US and China accounting for about 70% of projects by power capacity.
  2. Batteries consistently supplied more than a quarter of California's electricity during this year's spring and summer peaks, according to data from energy analytics platform Grid Status.
  3. California gas generation in the first eight months of 2025 was down 37% from 2023, according to Mark Jacobson of Stanford University.

Related Articles:

  • Heliocentrism — An energy use must be electrified before green grid electricity can decarbonize it, and while US grid decarbonization continues at a steady pace, the electricity share of final US energy consumption has grown little. Transmission line growth runs well below Department of Energy targets for 2030 and 2035, and transformer delivery times have stretched from 4–6 weeks to 2–3 years.
  • What’s Happening to Wholesale Electricity Prices? — Average US retail electricity prices have risen about 35% since 2020, while average wholesale electricity costs have nearly doubled, with wholesale prices far more volatile. Wholesale location marginal prices consist of energy generation costs (typically 80–90% of the total), transmission congestion, and transmission losses, with a price spike partly driven by a large rise in natural gas prices.
  • U.S. Developers Report Half Of New Electric Generating Capacity Will Come From Solar — U.S. developers plan to bring 64 GW of new electric generating capacity online in a single year, with utility-scale solar accounting for more than half and battery storage, wind, and natural gas making up virtually all the rest. That would exceed the prior record of 58 GW, of which 57 GW was natural gas.

AI Summary. A study of earnings among non-Hispanic White and three generations of Black workers finds that while the overall Black-White earnings gap widened, first- and second-generation Black immigrants made earnings advances, with second-generation Black women earning at or above White women. The authors attribute second-generation gains largely to educational attainment, with residential patterns playing a protective role.

Rong Fu, Neeraj Kaushal, and Felix Muchomba National Bureau of Economic Research
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Over 2019–2024, 2nd-generation immigrant black female workers had earnings as high, or higher, than (non-hispanic) white women; 2nd-generation black male workers earned 10% < these white workers at the median, but this gap disappears at the top decile.

How does immigration reshape the Black-White earnings gap across generations?

Core argument: Among 2nd-generation Black workers in 2019–2024, women had earnings equal to or higher than White women, while men earned 10% less than White men at the median, a gap that disappeared at the top decile.

Our investigation of the earnings gap between non-Hispanic White and three generations of Black workers, during 1995-2024, a period during which the share of 1st- and 2nd-generation immigrants in the Black workforce quadrupled, reveals patterns previously obscured in research that treated the Black population as a monolithic race. In contrast to the well-documented widening in the overall Black White earnings gap, our findings demonstrate remarkable earnings advances among 1st- and 2nd-generation Black immigrants. [In the most recent period, 2019-2024], among women, 2nd-generation Black workers have earnings equal to or higher than those of White women; among men, 2nd-generation Black workers earn 10% less than White workers at the median, but this gap disappears at the top decile. We find the earnings gap between 1st generation Black and White men shrinking at the median, and halving at the top decile, over the study period. Educational attainment largely drives 2nd-generation success, while residential patterns [compared to those of native blacks] play a protective role for the 1st and 2nd generations.

Takeaways by Macro Roundup® AI

  1. Among 2nd-generation Black workers in 2019–2024, women had earnings equal to or higher than White women, while men earned 10% less than White men at the median, a gap that disappeared at the top decile.
  2. The earnings gap between 1st-generation Black and White men shrank at the median and halved at the top decile over 1995–2024, a period in which the share of 1st- and 2nd-generation immigrants in the Black workforce quadrupled.
  3. The authors attribute 2nd-generation earnings success largely to educational attainment, and find residential patterns play a protective role for the 1st and 2nd generations relative to native-born Black workers.

Related Articles:

  • Income in the United States: 2024 — U.S. median household income was $83,730, not statistically different from the prior year's $82,690, according to Census Bureau estimates. Across most demographic subgroups, median household income was higher or not statistically different from the prior year, with the exception of Black households, which saw a decline.
  • Changing Opportunity: Sociological Mechanisms Underlying Growing Class Gaps and Shrinking Race Gaps in Economic Mobility — Across the 1978 to 1992 birth cohorts, adult household incomes fell for white children raised in low-income families and rose for those raised in high-income families, increasing the intergenerational persistence of income ranks among white children by 28%. Over the same cohorts, adult incomes rose for Black children at all parental income levels.
  • The Long-Run Impacts of Banning Affirmative Action in US Higher Education — State-level bans on affirmative action in US higher education are estimated to reduce under-represented minority women's college degree completion, earnings, and employment relative to non-Hispanic White women, driven largely by effects on Hispanic women, widening racial and ethnic gaps among women. Effects on under-represented minority men are more ambiguous and vary across states.

AI Summary. The US Defense Logistics Agency has signaled plans to buy up to $500m of cobalt, $245m of antimony, $100m of tantalum and a combined $45m of scandium for its critical minerals stockpile, valued at $1.3bn. Stockpiled materials can be released only by the president in declared war or when deemed necessary for national defense.

Camilla Hodgson, Steff Chávez and Aime Williams Financial Times
Date Posted:

The US’s Defense Logistics Agency has launched an effort to expand the US stockpile of critical minerals. The Pentagon is seeking another $1B for the effort above the $2B allocated earlier this year.

Is the Pentagon expanding its critical minerals stockpile?

Core argument: The Defense Logistics Agency has issued expressions of interest to buy up to $500mn of cobalt, up to $245mn of antimony from US Antimony Corporation, up to $100mn of tantalum from an undisclosed US company, and up to a combined $45mn of scandium from Rio Tinto and APL Engineered Materials.

Recent expressions of interest from the DLA include plans to buy up to $500mn of cobalt, up to $245mn of antimony from the domestic US Antimony Corporation, up to $100mn of tantalum from an undisclosed US company and up to a combined $45mn of scandium from Rio Tinto and APL Engineered Materials, a chemical manufacturing company based in Illinois that has offices in Japan and China. The DLA stockpiles dozens of alloys, metals, rare earths, ores and precious metals, which are stored in depots throughout the country. Its assets were valued at $1.3bn as of 2023. The materials can only be released by the president in times of declared war, or if deemed necessary for national defence by the under-secretary of defence for acquisition and sustainment.

Takeaways by Macro Roundup® AI

  1. The Defense Logistics Agency has issued expressions of interest to buy up to $500mn of cobalt, up to $245mn of antimony from US Antimony Corporation, up to $100mn of tantalum from an undisclosed US company, and up to a combined $45mn of scandium from Rio Tinto and APL Engineered Materials.
  2. The Defense Logistics Agency's stockpile of alloys, metals, rare earths, ores and precious metals, stored in depots across the US, was valued at $1.3bn as of 2023.
  3. Stockpiled materials can be released only by the president in times of declared war, or when the under-secretary of defence for acquisition and sustainment deems release necessary for national defence.

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.
  • China Is Choking Supply of Critical Minerals to Western Defense Companies — China detained a US defense supplier's 55-metric-ton shipment of Australian-mined antimony for three months while it was transiting the Chinese port of Ningbo, releasing it only on the condition that it be returned to Australia rather than sent to the US. The episode signals that Beijing is enforcing its critical mineral export bans against Western defense companies.
  • China Cracks Down On Foreign Companies Stockpiling Rare Earths — China is warning foreign buyers of rare earths and derived products such as magnets that building large inventories will bring supply restrictions, and is limiting approved export volumes to prevent stockpiling, according to people familiar with the matter.

Wednesday, October 15, 2025

AI Summary. Gold prices have risen in a near-straight line even as the dollar held stable and the Federal Reserve turned more hawkish than expected, indicating the rally is not a flight out of the dollar specifically. The author argues it instead reflects a broader flight out of all major developed-market currencies, a "global debasement trade.

Robin Brooks Robin Brooks Substack
Date Posted:
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Gold’s spot price has risen ~59% since the start of the year. Since Powell’s Jackson speech, gold has risen ~25% while the dollar has remained stable against G10 currencies in a broad debasement of advanced economies’ currencies relative to gold.

Is the gold rally a flight from all major currencies?

Core argument: Gold prices have risen in an almost straight line since August 22, a move described as very unusual given that the September 17 Fed meeting was more hawkish than expected and should have caused a material pull-back.

The rise in gold prices since Jackson Hole is very unusual: as the chart shows, gold prices (black line) are up in an almost straight line since August 22. That’s remarkable given that the Sep. 17 Fed meeting was more hawkish than expected - something that should have caused a material pull-back in gold - and given all the back and forth over rare earths with China. Furthermore, the latest rise in gold prices has coincided with a stable Dollar (blue line). Whatever is going on now, it’s not about a flight out of the Dollar as in April. The current rally must therefore be about a broader flight out of all G10 currencies, which makes me sympathetic to what people are calling “the global debasement trade.”

Takeaways by Macro Roundup® AI

  1. Gold prices have risen in an almost straight line since August 22, a move described as very unusual given that the September 17 Fed meeting was more hawkish than expected and should have caused a material pull-back.
  2. The latest gold rally has coincided with a stable Dollar, which suggests it is not a flight out of the Dollar of the kind seen in April.
  3. The rally is attributed to a broader flight out of all G10 currencies, lending sympathy to what people are calling "the global debasement trade.".

Related Articles:

  • Gold’s Spectacular Three-Year Rally Is Breaking All the Records — 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.
  • 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.
  • Taking Stock: Dollar Assets, Gold, and Official Foreign Exchange Reserves — Gold accounts for about 10% of aggregate official foreign exchange reserves, roughly its level in the early 2000s. International Monetary Fund country data indicate most added official gold holdings came from a few central banks, with over half of reported accumulation from China and Russia and about a quarter from several emerging markets.

AI Summary. France's prime minister said he would suspend the plan to raise the retirement age to 64 until the next presidential election, while asking parties to agree on other savings. He outlined a €30bn package of spending cuts and tax rises to cut the deficit to 4.7% of national output from 5.4%.

Sarah White and Ian Johnston Financial Times
Date Posted:

Newly reappointed Sébastien Lecornu has proposed suspending plans to raise the retirement age to 64 until 2027. In exchange, he wants other spending cuts and tax increases that would stabilize the deficit at <5% of GDP.

Will France suspend its pension reform to secure deficit reduction?

Core argument: French Prime Minister Sébastien Lecornu said he would suspend Emmanuel Macron's plan to raise the retirement age to 64 until 2027, when presidential elections are due, reversing Macron's flagship economic policy in a breakthrough for the left.

In a major breakthrough for the left and a U-turn on Macron’s flagship economic policy, Sébastien Lecornu said he would suspend plans to raise the retirement age to 64 until 2027, when presidential elections are due. But parties would have to agree on other savings to keep next year’s deficit at under 5% of national output, he added. The premier outlined a €30bn fiscal package of spending cuts and tax rises, designed to take the deficit to 4.7% of national output in 2026 from 5.4% this year. The prime minister said everything was up for debate, however, and the target could be eased, although he urged parties to agree to keep the deficit under 5%.

Takeaways by Macro Roundup® AI

  1. French Prime Minister Sébastien Lecornu said he would suspend Emmanuel Macron's plan to raise the retirement age to 64 until 2027, when presidential elections are due, reversing Macron's flagship economic policy in a breakthrough for the left.
  2. Lecornu outlined a €30bn package of spending cuts and tax rises designed to cut France's deficit to 4.7% of national output in 2026 from 5.4% this year.
  3. Lecornu said parties would have to agree on other savings to keep next year's deficit under 5% of national output, adding that everything was up for debate and the target could be eased.

Related Articles:

  • 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.
  • Europe’s Right-Wing Populists Swerve Left on the Economy — 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.
  • France and Britain Are In Thrall To Pensioners — French pensioners receive larger government payments than in any other western country and begin receiving them several years earlier, leaving over-65s with higher average incomes than the working-age population — a situation without precedent internationally or in France's own history. Proposals to raise the retirement age or delay pension increases have triggered nationwide protests and government collapses.

AI Summary. The performance gap between the top American and Chinese AI models narrowed from 9.3% to 1.7%, with Chinese firms relying on cheaper open-source models—DeepSeek prices usage 20-40x below OpenAI's ChatGPT. This price advantage could win adoption in developing countries and build dependency on Chinese AI ecosystems.

Derek Chollet, Terah Lyons, Lisa Sawyer and Kip Wainscott J.P. Morgan
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China’s DeepSeek costs 20–40x less per million “input tokens” than OpenAI’s ChatGPT.

Can cheaper Chinese AI models win adoption in developing countries?

Core argument: The performance gap between America's top AI model and its Chinese counterpart narrowed from 9.3% in January 2024 to 1.7% in February 2025.

Chinese AI models are rapidly catching up in quality compared to their American competitors. In January 2024, the performance gap between America’s top AI model and that of its Chinese counterpart was 9.3%. By February 2025, that gap had narrowed to 1.7%. Chinese AI companies, which tend to rely on less expensive and open-source models, could be able to strategically price their software licenses at lower costs than American AI companies running on closed models. This price differential may lead to in-roads on the part of Chinese AI companies with developing countries, building ecosystem dependency on Chinese AI models and software that need to be just “good enough” to deliver more basic automation of services in sectors like education, healthcare, and public administration. Chinese company DeepSeek has priced usage of their models 20-40 times less expensive than OpenAI’s ChatGPT.

Takeaways by Macro Roundup® AI

  1. The performance gap between America's top AI model and its Chinese counterpart narrowed from 9.3% in January 2024 to 1.7% in February 2025.
  2. Chinese firm DeepSeek prices usage of its models 20-40 times less expensively than OpenAI's ChatGPT, and Chinese AI companies tend to rely on less expensive, open-source models rather than closed ones.
  3. Lower-cost Chinese AI licensing may create in-roads with developing countries and build ecosystem dependency on Chinese models that need only be "good enough" to deliver basic automation in education, healthcare, and public administration.

Related Articles:

  • DeepSeek Debates: Chinese Leadership On Cost, True Training Cost, Closed Model Margin Impacts — Estimates put algorithmic progress in artificial intelligence at roughly 4x per year, meaning the compute needed for a given capability level falls 4x annually, with some industry leaders arguing improvements run closer to 10x. The Bank of China announced a $140bn (1tn yuan) five-year subsidy for the AI industry chain aimed at making China self-reliant in science and technology.
  • 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.
  • 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.

AI Summary. Nearly 200 US factory completions and a $590bn construction pipeline led by megaprojects of $5bn or more point to advanced manufacturing as a durable growth engine, with spillovers to industrial real estate, private credit, and employment.

Torsten Sløk Apollo
Date Posted:

Almost 200 new American factories have come online since mid-2023, and Torsten Sløk estimates there is a $590B pipeline of new domestic advanced manufacturing projects.

Is advanced manufacturing becoming a durable US growth engine?

Core argument: Nearly 200 US factory completions since mid-2023, alongside a $590 billion construction pipeline led by megaprojects of $5 billion or more, indicate a US manufacturing cycle gaining traction.

The US manufacturing cycle is gaining traction. With nearly 200 factory completions since mid-2023 and a $590 billion pipeline led by $5 billion-plus megaprojects, advanced manufacturing is set to be a durable growth engine for the US economy with positive spillovers to industrial real estate, private credit and nationwide employment.

Takeaways by Macro Roundup® AI

  1. Nearly 200 US factory completions since mid-2023, alongside a $590 billion construction pipeline led by megaprojects of $5 billion or more, indicate a US manufacturing cycle gaining traction.
  2. Advanced manufacturing is positioned as a durable growth engine for the US economy, with positive spillovers to industrial real estate, private credit and nationwide employment.

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  • What Would It Take to Bring Back US Manufacturing? Part 1: America’s Structural Headwinds — The US imports roughly 40% of the goods it consumes, directly and through imported inputs, with labor-intensive goods like apparel almost entirely imported. The authors argue America's main comparative disadvantage is its cost of production, driven mainly by labor costs, with real estate costs and a strong dollar also contributing.
  • 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.
  • Capital Is Making a Comeback — Tangible investment in property, factories and equipment fell from 12.5% to 8.5% of private gross domestic product, while intangible investment in intellectual property, software and process knowledge rose from about 11.5% to 16.75%. The author argues demand for tangible capital investment will now have to rise.

AI Summary. China placed five US subsidiaries of South Korean shipbuilder Hanwha Ocean on its sanctions list under its anti-foreign sanctions law, alleging they cooperated with American efforts to impose punitive fees on Chinese vessels. China's commerce ministry described the move as part of a broader probe into entities assisting US actions against Chinese shipbuilding dominance.

Joe Leahy and Christian Davies Financial Times
Date Posted:

China has sanctioned South Korean shipbuilder Hanwha for allegedly cooperating with new American fees on Chinese vessels sailing to US ports. Hanwha recently purchased the Philadelphia Shipyard and has secured work on American naval vessels in Korea.

Is China sanctioning foreign shipbuilders that assist US actions against its shipyards?

Core argument: China sanctioned five US subsidiaries of South Korean shipbuilder Hanwha Ocean under its anti-foreign sanctions law, sending Hanwha's shares down as much as 8%.

China has added five US subsidiaries of South Korean shipbuilder Hanwha Ocean to its sanctions list for allegedly co-operating with American efforts to impose punitive fees on Chinese vessels that took effect on [October 14th]. Beijing said the measures against the South Korean companies were part of a wider probe into entities that have allegedly assisted US actions against China’s dominance of global shipbuilding. China’s ministry of commerce said on [October 14th] it had enacted its anti-foreign sanctions law against Hanwha’s US units, sending the Korean group’s shares down as much as 8%. Hanwha last year acquired the Philly Shipyard in Philadelphia as part of its plan to enter the US shipbuilding market. It was also the first Korean shipbuilder to secure contracts for maintenance, repair and overhaul work on American naval vessels in South Korea.

Takeaways by Macro Roundup® AI

  1. China sanctioned five US subsidiaries of South Korean shipbuilder Hanwha Ocean under its anti-foreign sanctions law, sending Hanwha's shares down as much as 8%.
  2. China's ministry of commerce alleged the Hanwha units co-operated with US efforts to impose punitive fees on Chinese vessels, part of a wider probe into entities said to have assisted US actions against China's shipbuilding dominance.
  3. Hanwha acquired the Philly Shipyard in Philadelphia as part of its plan to enter the US shipbuilding market and was the first Korean shipbuilder to win maintenance, repair and overhaul contracts for American naval vessels in South Korea.

Related Articles:

  • How South Korea’s Shipyards Could Save the US Navy — US shipyards had just five commercial ships under construction compared with 1,749 in China, and China's naval fleet is projected to grow from 370 to 475 vessels in a decade versus 297 to between 305 and 317 for the US Navy, whose major shipbuilding programs are behind schedule.
  • How China Became the World’s Biggest Shipbuilder — China is the world's largest shipbuilder, building 50.8m of the 89m deadweight tons of commercial ships produced in 2024 (57%) and holding 59% of new ship orders, aided by an estimated $90bn in government subsidies covering 15-20% of each new ship's cost. China still lags in the most complex ships, shipyard productivity, and marine components such as engines.
  • Ship Wars — Shipyards tied to China's defense industrial base account for 15% of the country's active shipyards but 40% of commercial output by tonnage, with over 75% of their production built for firms outside China and Hong Kong. The authors argue these commercial revenues offset fixed costs and effectively subsidize China's naval expansion.

AI Summary. China's internet regulator has launched a campaign to remove online content that incites "excessively pessimistic sentiment," panic, or defeatist ideas such as "hard work is useless." Authorities have punished bloggers who advocated working less, an influencer who said forgoing marriage and children made financial sense, and a commentator who said China's quality of life lags Western countries.

Lily Kuo New York Times
Date Posted:

China has launched a crackdown on content that incites “excessively pessimistic sentiment,” such as “defeatist” ideas like “hard work is useless” in the Chinese system or questioning the value of marriage.

Is China censoring online expressions of pessimism about work and life?

Core argument: The Cyberspace Administration of China launched a campaign to purge online content inciting "excessively pessimistic sentiment" and panic or promoting defeatist ideas such as "hard work is useless," according to an agency notice.

[In late September, the] Cyberspace Administration of China [launched a campaign] aimed at purging content that incites “excessively pessimistic sentiment” and panic or promotes defeatist ideas such as “hard work is useless,” according to a notice from the agency. “In reality, we all experience fatigue and anxiety as a result of work and life, but these real emotions deserve respect and should not be deliberately amplified for traffic. The internet is not a dumping ground for negativity,” China’s state broadcaster CCTV said in an editorial about the campaign. The authorities have punished two bloggers who advocated for a life of less work and less pressure; an influencer who said that it made financial sense not to marry and have children; and a commentator known for bluntly observing that China still lags behind Western countries in terms of quality of life.

Takeaways by Macro Roundup® AI

  1. The Cyberspace Administration of China launched a campaign to purge online content inciting "excessively pessimistic sentiment" and panic or promoting defeatist ideas such as "hard work is useless," according to an agency notice.
  2. Chinese authorities punished two bloggers who advocated less work and less pressure, an influencer who said forgoing marriage and children made financial sense, and a commentator who observed that China lags Western countries in quality of life.
  3. State broadcaster CCTV wrote in an editorial on the campaign that fatigue and anxiety from work and life deserve respect but should not be deliberately amplified for traffic, adding that "the internet is not a dumping ground for negativity.".

Related Articles:

  • China’s Youth Unemployment Soars To 2-Year High As Job Crunch Deepens — China's urban unemployment rate for 16- to 24-year-olds excluding students rose to 18.9% from 17.8%, the highest since the National Bureau of Statistics revised its calculation method for the series. A record 12.2m university students graduated into a job market strained by deflationary pressures and external uncertainties, with many struggling to find roles matching their education and skills.
  • The Sinister Disppearances Of China’s Bosses — China's liuzhi detention system operates alongside normal policing, requiring no court approval and denying detainees lawyers, with windowless cells, constant lighting and round-the-clock supervision. Stock-exchange filings show 39 executives at listed companies disappearing into the system by the end of September, exceeding the prior year's record.
  • China’s Age Of Malaise — More than 300,000 Chinese people emigrated in a single year, more than double the pace of a decade earlier, with some traveling overland through a half-dozen countries to reach the US. US authorities at the southern border recorded 17,894 encounters with Chinese migrants over ten months, a thirteenfold increase from the prior year.