Edward Conard

Top Ten New York Times Bestselling Author

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

Macro Roundup


Wednesday, November 5, 2025

AI Summary. Americans hold about $42T, or 20% of total household wealth, in US stocks, up four percentage points since the dotcom era, while foreign investors hold $18T. A dotcom-scale drop would erase $16T of household wealth and, using an estimated $3.20 spending decline per $100 of lost stock wealth, cut consumption by roughly $890bn, or 2.9% of GDP.

Economist Staff The Economist
Date Posted:

A correction on the scale of the dotcom crash, when the S&P 500’s value relative to the size of the economy fell by 53pp, would reduce household wealth by 8% and have a larger impact on the economy today due to households’ increased exposure to stocks.

How much household wealth and consumer spending would a stock crash erase?

Core argument: About $42trn, or 20% of Americans' total wealth, sits in American stocks, up four percentage points since the dotcom era, while foreign investors hold $18trn of American shares.

A crash today would have a bigger effect on ordinary Americans than the dotcom bust. Investing has become much easier over the past two decades, and the share of household wealth in the stock market has climbed. About $42T, or 20% of Americans' total wealth is in American stocks - an increase of four percentage points since the dotcom era. By comparison, foreign investors hold $18T worth of American shares. A drop in nominal values on the same scale as the dotcom bust would wipe out $16T, or 8% of American household wealth. Foreign investors would lose $7T. These totals do not include indirect holdings-such as investments via pension funds and life-insurance companies-of which American households have some $20T. Economists usually expect falls in the stock market to lead to reduced spending elsewhere. A rule of thumb suggested by one study is that every $100 drop in stock market wealth leads, on average, to a $3.20 drop in consumer spending. Under such an assumption, a dotcom-style crash would cut American consumption by about $890bn, or 2.9% of GDP.

Takeaways by Macro Roundup® AI

  1. About $42trn, or 20% of Americans' total wealth, sits in American stocks, up four percentage points since the dotcom era, while foreign investors hold $18trn of American shares.
  2. A nominal decline on the scale of the dotcom bust would erase $16trn, or 8% of American household wealth, plus $7trn for foreign investors, excluding some $20trn of indirect household holdings via pension funds and life insurers.
  3. By a rule of thumb from one study that every $100 drop in stockmarket wealth cuts consumer spending by $3.20, a dotcom-style crash would reduce American consumption by about $890bn, or 2.9% of GDP.

Related Articles:

  • 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.
  • Minsky Moments and AI CapEx — Capital-spending forecasts for the four largest cloud providers rose nearly 50% over the year, and AI data centers are increasingly funded through leveraged and off-balance-sheet structures, including $3.2bn in senior secured notes and a roughly $30bn asset-backed financing. The author argues this marks a speculative-finance phase where borrowers must roll over principal.
  • Surviving the AI Capex Boom — Capital spending by the largest US technology companies has risen from 4% to 15% of revenue since 2012, approaching the capital intensity of utilities, with Meta, Microsoft, and Alphabet each set to spend 21–35% of revenue. The authors argue this shift toward asset-heavy models is associated with inferior returns.

AI Summary. New York City's share of the nation's millionaires has fallen 30% since 2010 and major banks have expanded in Dallas and Atlanta as finance's share of city employment shrank. The author argues a proposed city tax plan would leave remaining high earners paying 60% of taxes.

Reihan Salam City Journal
Date Posted:

Reihan Salam argues that NYC’s incoming mayor will take office with “the clock on his program already five minutes to midnight,” citing the erosion of the tax base relative to outlays and the fact that net job growth has been driven by Medicaid spending.

Is New York City's high-earner tax base already eroding?

Core argument: New York City's share of the nation's millionaires has fallen 30% since 2010, while Goldman Sachs and Morgan Stanley expand in Dallas and Atlanta and the financial industry's employment share shrinks.

What the Mamdani coalition has failed to reckon with is that Gotham’s slide towards socialism lite has not been without consequences. The financial industry’s employment share has slowly shrunk as firms like Goldman Sachs and Morgan Stanley hedge their bets by expanding their footprint in Dallas and Atlanta. New York’s share of the nation’s millionaires has declined by 30% since 2010. Mamdani’s tax plan, if enacted, would leave the remainder paying 60% of the city’s taxes. There are, to be sure, diehard affluent New Yorkers who will pay any price and bear any burden to live in the tonier precincts of the five boroughs. There are others who will join the ongoing outmigration of hundreds of thousands of working- and middle-class New Yorkers who’ve left in recent years. Then, of course, one needs to consider the ambitious young professionals who might have moved to New York City in the Bloomberg era, but who’d never dream of it now. Gotham has adapted to the erosion of its economic base through a combination of regulation and subsidy. Virtually all the net job growth in the city in 2023 can be traced to the hiring of home health aides - a “racket,” in the words of Governor Kathy Hochul, underwritten by tens of billions in federal Medicaid spending.

Takeaways by Macro Roundup® AI

  1. New York City's share of the nation's millionaires has fallen 30% since 2010, while Goldman Sachs and Morgan Stanley expand in Dallas and Atlanta and the financial industry's employment share shrinks.
  2. Zohran Mamdani's tax plan, if enacted, would leave the remaining affluent New Yorkers paying 60% of the city's taxes, even as hundreds of thousands of working- and middle-class residents have left.
  3. Virtually all of New York City's net job growth in 2023 traces to hiring of home health aides, underwritten by tens of billions in federal Medicaid spending and called a "racket" by Governor Kathy Hochul.

Related Articles:

  • As New Jobs In Finance Dry Up, New York City’s Fiscal Model Is Wilting — New York state's share of US taxpayers reporting over $1m in income fell from 12.7% in 2010 to 8.7% in 2022, and the Citizens Budget Commission estimates state and city income tax receipts from that group would have been $13bn higher had the share held. Job growth has concentrated in lower-paid health care and social assistance.
  • Behavioral Responses to State Income Taxation of High Earners: Evidence from California — A California ballot measure raising top marginal income tax rates by up to 3 percentage points prompted an additional 0.8% of the affected tax base to leave the state, with an estimated income elasticity of 2.5–3.2 for high earners who stayed. The authors estimate these responses eroded 45.2% of windfall revenues within one year and 60.9% within two.
  • The Stationary Bandits of New York City — New York City's construction costs exceed international benchmarks: Paris installs metro platform edge doors for about €3.7m per station while the Metropolitan Transportation Authority says it needs $55m per station. The author argues stringent crane operator licensing and sidewalk shed regulations protect a small number of unionized contractors from competition.

AI Summary. New York State faces a $4.2bn deficit, nearly 4x the prior year's gap, while New York City confronts a $5bn budget hole amplified by federal health care and food stamp cuts. Democratic lawmakers and strategists say the state's governor may have to accept some tax increases, though New York already ranks 50th on the Tax Foundation's State Tax Competitive Index.

Martin Braun and Raga Justin Bloomberg
Date Posted:

Federal cuts in health care spending and food stamps mean New York State is facing a $4.2B deficit and New York City has a $5B hole in next year’s budget.

Will state and city budget deficits force higher taxes in New York?

Core argument: New York Governor Kathy Hochul is contending with a $4.2 billion state budget deficit, almost four times last year's gap, while New York City Mayor Mamdani faces a $5 billion hole in next year's city budget.

Hochul is contending with a $4.2 billion deficit, almost four times last year’s gap. Federal cuts to health care and food stamps will fall hardest on New York City, where Mamdani faces a $5 billion hole in next year’s budget. With the fiscal pressures facing the state and city, Hochul may have to abide some tax increases, according to interviews with Democratic lawmakers and political strategists. The Democratic-controlled legislature routinely pitches tax hikes in its proposed budget, which serves as a launching point for a final fiscal plan ultimately approved by Hochul. New York already ranks 50th on the Tax Foundation’s State Tax Competitive Index.

Takeaways by Macro Roundup® AI

  1. New York Governor Kathy Hochul is contending with a $4.2 billion state budget deficit, almost four times last year's gap, while New York City Mayor Mamdani faces a $5 billion hole in next year's city budget.
  2. Federal cuts to health care and food stamps will fall hardest on New York City, adding to the fiscal pressures on the state and city budgets.
  3. Hochul may have to abide some tax increases, according to interviews with Democratic lawmakers and political strategists, even though New York already ranks 50th on the Tax Foundation's State Tax Competitive Index.

Related Articles:

AI Summary. Using new data linking firms, patents, and inventors, the author estimates that America's great merger wave substantially increased innovation, raising breakthrough patents by 13% overall and 30% in science-based fields. Among firms already patenting, consolidation added about 6 patents and 0.6 breakthroughs per year, with corporate research laboratories identified as the key mechanism.

Pier Paolo Creanza Princeton University
Date Posted:

Creanza presents evidence that the Great Merger Wave (GMW) of 1895–1904 had a large causal effect on innovation, driven by corporate R&D labs and increased “breakthroughs” (novel and impactful patents) in science-based fields by 30% btw 1905 and 1940.

Does business consolidation increase breakthrough innovation?

Core argument: Among U.S. firms already innovating before the Great Merger Wave, consolidation raised output by 6 patents and 0.6 breakthrough patents per year, roughly 4-fold and 6-fold increases, and firms with no prior patents were more likely to begin innovating.

Between 1880 and 1940, the U.S. experienced a golden age of breakthrough discoveries in chemistry, electronics, and telecommunications that established its technological leadership. Using newly constructed data linking firms, patents, and inventors, I show that consolidation during the GMW substantially increased innovation. I provide evidence that mergers were triggered primarily by price competition, financial pressure, and legal incentives, rather than expectations of future technological potential. Among firms already innovating before the GMW, consolidation led to an increase of 6 patents and 0.6 breakthroughs (patents that are both highly novel and highly influential) per year—roughly 4-fold and 6-fold increases, respectively. Firms with no prior patents were more likely to begin innovating. The establishment of corporate R&D laboratories served as a key mechanism driving these gains. Building a matched inventor–firm panel, I show that lab-owning firms enjoyed a productivity premium not due to inventor sorting. To assess whether firm-level effects translated into broader technological progress, I examine total patenting within technological domains. Overall, the GMW increased breakthroughs by 13% between 1905 and 1940, with the largest gains in science-based fields (30% increase).

Takeaways by Macro Roundup® AI

  1. Among U.S. firms already innovating before the Great Merger Wave, consolidation raised output by 6 patents and 0.6 breakthrough patents per year, roughly 4-fold and 6-fold increases, and firms with no prior patents were more likely to begin innovating.
  2. The Great Merger Wave increased breakthroughs by 13% between 1905 and 1940, with the largest gains, a 30% increase, in science-based fields.
  3. Corporate R&D laboratories emerge as a key mechanism behind the innovation gains, with a matched inventor–firm panel indicating that lab-owning firms enjoyed a productivity premium not attributable to inventor sorting.

Related Articles:

  • Mega Firms and New Technological Trajectories in the U.S. — The share of novel patents produced by the 50 largest US firms by sales followed a U-shaped path, falling from 1980 to the early 2000s before rising to its highest level by 2016. The authors find these firms' novel patents since 2001 generate more follow-on patents by other firms, suggesting knowledge diffusion.
  • Mega Firms and Recent Trends in the U.S. Innovation: Empirical Evidence from the U.S. Patent Data — Analysis of US patent data finds that the largest firms are more likely to file novel patents even after controlling for size, industry, and patent counts, and that firms produce more novel patents as they become mega firms. Venture-backed startups also account for a disproportionate share of novel patents.
  • The Long Goodbye? Incumbent Competitiveness in the 21st Century — Value creation among large American companies has become concentrated in a newer cohort of firms: businesses founded after World War II accounted for 8% of the top 50 companies' total market value in 1990 but 77% by 2024. The leading 20th-century incumbents are fading as this newer group takes over.

AI Summary. Amalgamated estimates from Goldman Sachs, the Yale Budget Lab and Allianz Trade indicate U.S. importers initially absorbed 64% of U.S. tariff costs, with 14% borne by foreign exporters and 22% passed to consumers. The estimates project the consumer share rising to about 67%, leaving the price level 1–1.5 percentage points higher than without the tariffs.

Benn Steil Council On Foreign Relations
Date Posted:

The incidence of tariffs has gradually shifted since April. Steil projects that by mid-2026, US consumers will be bearing 67% of tariffs, up from 55% today. This will leave the price level 1–1.5pp higher “than it would have been without Trump’s tariffs.”

How much of tariff costs do importers, exporters, and consumers bear?

Core argument: As of June, U.S. importers bore 64% of tariff costs, with 22% passed to U.S. consumers and 14% absorbed by foreign exporters through lower prices, according to amalgamated Goldman Sachs, Yale Budget Lab, and Allianz Trade estimates.

A range of studies have attempted to estimate the proportion of tariff costs borne by each of these three groups [exporters, importers, and consumers]. I take estimates from multiple Goldman Sachs reports, corroborated against others produced by Yale Budget Lab’s State of U.S. Tariffs and Allianz Trade’s U.S. Business Barometer, and amalgamate them. Going back to June, most of the tariff cost, 64%, was being borne by U.S. importers. Only 14% of the cost was being eaten by foreign exporters in the form of lower prices, and 22% was being passed on to U.S. consumers in the form of higher prices. Projecting forward to the middle of 2026, we can expect importers to bear only about 8% of the tariff costs. By this time, they will have had far greater opportunity to seek out lower-cost suppliers, giving them more negotiating leverage. We can therefore expect the exporter to rise to about 25% and the consumer share to 67%. In the end, then, U.S. consumers will bear the greatest part—roughly 2/3—of Trump’s tariffs. The inflation contribution of tariffs should therefore continue to rise heading into next year. Provided that inflation expectations do not become unanchored, inflation should then moderate by mid-year, with the price level 1-1.5 percentage points higher than it would have been without Trump’s tariffs.

Takeaways by Macro Roundup® AI

  1. As of June, U.S. importers bore 64% of tariff costs, with 22% passed to U.S. consumers and 14% absorbed by foreign exporters through lower prices, according to amalgamated Goldman Sachs, Yale Budget Lab, and Allianz Trade estimates.
  2. By mid-2026, the importer share of tariff costs is projected to fall to about 8% as importers gain negotiating leverage by seeking lower-cost suppliers, with the exporter share rising to about 25% and the consumer share to 67%.
  3. The inflation contribution of tariffs is expected to keep rising into next year and then moderate by mid-year, leaving the price level 1–1.5 percentage points higher than without the tariffs, provided inflation expectations stay anchored.

Related Articles:

  • Tracking the Short-Run Price Impact of U.S. Tariffs — The authors estimate that about 4–20% of tariff-induced cost increases passed into US retail prices within six months, so a 20% tariff raised affected goods' prices roughly 3–4% relative to untariffed goods in the same category. They estimate the tariffs added about 0.7 percentage points to consumer price inflation, with pass-through accumulating gradually.
  • A Note On Tariffs From The Real World — A large retailer reports that pre-tariff inventory is still being sold, so tariff costs will show up as margin hits later, and that prices must eventually rise roughly 10–15% to cover them. The retailer says its sector's tariff rate went from about 12% to about 33%, and that retailers are holding prices through the holiday season before raising them.
  • The U.S. Is Not “Winning the Trade War” — The U.S. is the world's largest single source of demand for manufactured goods but remains far smaller than the rest of the world combined, implying foreign producers will mostly avoid bearing the direct cost of tariffs. Consistent with this, the dollar has fallen about 7% against trading partners' currencies while pre-tariff import prices rose about 1%.

AI Summary. Defense spending typically has a fiscal multiplier below one, meaning each euro spent raises GDP by less, so it is not a short-term growth strategy. One estimate holds that extra military spending worth 1% of GDP could lift output up to 2% long term if concentrated on research and development.

Charles Clover, Delphine Strauss, Sylvia Pfeifer and Laura Pitel Financial Times
Date Posted:

As the short-run fiscal multiplier for defence spending is likely <1, the EU’s increased defense budget will have large effects on GDP only if focused on R&D. Defence R&D is just 0.04% of GDP across the EU and 0.12% in the UK, vs. 0.62% in the US.

Does higher defense spending boost economic growth?

Core argument: Paolo Surico of London Business School estimates extra military spending worth 1% of GDP could raise output by up to 2% in the long term and lift productivity, provided the money is concentrated on R&D.

Even if Europe does manage to spend most of its swelling defence budget at home, rather than on US-made hardware, the big question is whether the economy will benefit beyond the initial sugar rush of growth. Typically, defence spending has a “fiscal multiplier” below one, meaning that each pound or euro spent boosts GDP by a smaller amount. “This is definitely not something you would do for short-term economic gain,” says Ethan Ilzetzki, a professor at the London School of Economics. Paolo Surico, a professor at the London Business School suggests that extra military spending worth 1% of GDP could boost output by up to 2% in the long term and boost productivity — providing the money is concentrated on R&D. "US defence spending has been critical to an ecosystem that has made them head the innovation race for the last 50 years," he says, pointing to advances in nuclear energy and GPS that flowed from military research programmes. He estimates that defence R&D in Europe is just 0.04% of GDP across the EU and 0.12% in the UK — way below the 0.62% recorded in the US, and that US venture capital involvement in defence industry activity is far greater than in Europe.

Takeaways by Macro Roundup® AI

  1. Paolo Surico of London Business School estimates extra military spending worth 1% of GDP could raise output by up to 2% in the long term and lift productivity, provided the money is concentrated on R&D.
  2. Defence R&D is just 0.04% of GDP across the EU and 0.12% in the UK, far below the 0.62% recorded in the US, according to Surico's estimates.
  3. Defence spending typically carries a fiscal multiplier below one, so each pound or euro spent raises GDP by a smaller amount, and Ethan Ilzetzki of the London School of Economics says it is not something to do for short-term economic gain.

Related Articles:

  • Behind NATO’s 2 Percent: Measuring the True Scope of Alliance Defense Investments and the NATO Defense Deficit — NATO's collective defense spending averaged 1.72% of GDP over roughly two and a half decades, below the alliance's agreed 2% threshold, leaving a cumulative shortfall the authors estimate at over $2tn that was not invested in force structure, modernization, and readiness. The authors argue closing the gap requires years of sustained investment beyond current commitments.
  • The Intellectual Spoils of War? Defense RD, Productivity and International Spillovers — The authors estimate that a 10% increase in government-financed R&D, largely defense, is associated with a 4.3% rise in privately funded R&D across OECD countries, indicating "crowding in" rather than "crowding out." They also find international spillovers raise private R&D abroad, though the overall effect on US productivity growth is modest.
  • 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.

Thursday, November 6, 2025

AI Summary. Analysts estimate that Meta, Alphabet, Amazon, Microsoft and Oracle will invest about $390bn in capital spending this year, rising to $540bn and then $615bn in the following two years. That $1.55tn three-year total equals 17.2% of all capital spending by American companies in 2021, before the artificial intelligence boom.

Robin Wigglesworth Financial Times
Date Posted:

A Barclays analysis forecasts Meta, Alphabet, Amazon, Microsoft and Oracle will invest $390B in capex this year, $540B next year and $615B in 2027.

How large is hyperscaler capital spending relative to all US investment?

Core argument: Meta, Alphabet, Amazon, Microsoft and Oracle now indicate combined capital expenditure of about $390bn this year, which Barclays analysts reckon will rise to $540bn in 2026 and $615bn in 2027.

Barclays’ research analysts have totted up the latest capital expenditure numbers that the hyperscalers unveiled in their latest round of earnings. All told, Meta, Alphabet, Amazon, Microsoft and Oracle now indicate that they will invest about $390bn this year, and based on their guidance analysts reckon that this will grow to $540bn in 2026 and $615bn in 2027. For context, those three years of $1.55tn of capex from just these five companies is the equivalent of 17.2% of ALL capex by American companies across 2021, the last year before the AI boom really started.

Takeaways by Macro Roundup® AI

  1. Meta, Alphabet, Amazon, Microsoft and Oracle now indicate combined capital expenditure of about $390bn this year, which Barclays analysts reckon will rise to $540bn in 2026 and $615bn in 2027.
  2. The $1.55tn of three-year capex from those five companies equals 17.2% of all capital expenditure by American companies in 2021, the last year before the AI boom really started.

Related Articles:

  • Surviving the AI Capex Boom — Capital spending by the largest US technology companies has risen from 4% to 15% of revenue since 2012, approaching the capital intensity of utilities, with Meta, Microsoft, and Alphabet each set to spend 21–35% of revenue. The authors argue this shift toward asset-heavy models is associated with inferior returns.
  • An AI-ncredible All-Clear Signal to Rally Markets — Big Tech raised at least $75bn from investment-grade bonds in a single month to fund AI data centers, with banks syndicating another $38bn in loans, versus an average of $37bn issued per year before the pandemic. Because AI-related capital spending growth exceeded growth in total non-residential fixed investment, spending on everything else declined.
  • 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. OpenAI is seeking backing from banks, private equity, and potentially governments to help guarantee financing for AI chips, arguing such guarantees could lower borrowing costs and raise the amount of debt it can take on. The company expects to spend roughly $600bn on computing power from Oracle, Microsoft, and Amazon.

Berber Jin Wall Street Journal
Date Posted:

OpenAI’s CFO said the firm is hoping the federal government will “guarantee the financing for chips behind its deals,” citing the increase in the cost of debt finance due to the unknown depreciation rates of AI chips.

Should governments help guarantee financing for AI chip purchases?

Core argument: OpenAI expects to spend roughly $600 billion on computing power from Oracle, Microsoft, and Amazon in the next few years while on pace to generate $13 billion in revenue this year, requiring exponential sales growth to make the payments.

As OpenAI ramps up its spending on data center capacity to unheard of levels, the company is hoping the federal government will support its efforts by helping to guarantee the financing for chips behind its deals, [OpenAI Chief Financial Officer Sarah Friar] said. The depreciation rates of AI chips remain uncertain, making it more expensive for companies to raise the debt needed to buy them. “This is where we’re looking for an ecosystem of banks, private equity, maybe even governmental, the ways governments can come to bear,” she said. Any such guarantee “can really drop the cost of the financing but also increase the loan-to-value, so the amount of debt you can take on top of an equity portion.” OpenAI is losing money at a faster pace than almost any other startup in Silicon Valley history, thanks to the upside-down economics of building and selling generative AI. The company expects to spend roughly $600 billion on computing power from Oracle, Microsoft, and Amazon in the next few years, meaning that it will have to grow sales exponentially in order to make the payments. Friar said that the ChatGPT maker is on pace to generate $13 billion in revenue this year.

Takeaways by Macro Roundup® AI

  1. OpenAI expects to spend roughly $600 billion on computing power from Oracle, Microsoft, and Amazon in the next few years while on pace to generate $13 billion in revenue this year, requiring exponential sales growth to make the payments.
  2. OpenAI Chief Financial Officer Sarah Friar said the company is looking to an ecosystem of banks, private equity, and possibly governments to help guarantee chip financing, which she said can lower financing costs and increase the loan-to-value on debt.
  3. Uncertainty over the depreciation rates of AI chips makes it more expensive for companies to raise the debt needed to buy them, and OpenAI is losing money at a faster pace than almost any other startup in Silicon Valley history.

Related Articles:

  • Minsky Moments and AI CapEx — Capital-spending forecasts for the four largest cloud providers rose nearly 50% over the year, and AI data centers are increasingly funded through leveraged and off-balance-sheet structures, including $3.2bn in senior secured notes and a roughly $30bn asset-backed financing. The author argues this marks a speculative-finance phase where borrowers must roll over principal.
  • Meta, xAI Starting Trend for Billions in Off-Balance Sheet Debt — Off-balance-sheet structures such as special purpose vehicles and asset-tied joint ventures are becoming the standard financing route for AI data center deals. Morgan Stanley estimates tech firms will need as much as $800bn from private credit by 2028, with roughly $1.5tn of external financing required across the AI ecosystem.
  • 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. Nvidia's chief executive says China will win the artificial intelligence race with the US, citing energy subsidies that make it cheaper for Chinese technology companies to run domestic alternatives to Nvidia's AI chips. He contrasted that with US state-level AI rules that could produce 50 new regulations.

Madhumita Murgia and Cristina Criddle Financial Times
Date Posted:

Nvidia’s Jensen Huang told the FT, “China is going to win the AI race,” citing lower Chinese electrical costs and less regulation. His efforts to lobby the WH to allow Nvidia to sell its most advanced chips to Beijing have been unsuccessful to this point.

Will energy subsidies and state regulations let China win the AI race?

Core argument: Nvidia CEO Jensen Huang told the FT that "China is going to win the AI race," singling out new state-level AI rules in the US that could result in "50 new regulations.".

[Nvidia CEO Jensen Huang] told the FT: “China is going to win the AI race.” Huang’s remarks come after the Trump administration maintained a ban on California-based Nvidia selling its most advanced chips to Beijing following a meeting between US President Donald Trump and Chinese leader Xi Jinping last week. Huang singled out new rules on AI by US states that could result in “50 new regulations”. He contrasted that approach with Chinese energy subsidies that made it more affordable for local tech companies to run Chinese alternatives to Nvidia’s AI chips. “Power is free,” he said.

Takeaways by Macro Roundup® AI

  1. Nvidia CEO Jensen Huang told the FT that "China is going to win the AI race," singling out new state-level AI rules in the US that could result in "50 new regulations.".
  2. Huang contrasted the US approach with Chinese energy subsidies that make it more affordable for local tech companies to run Chinese alternatives to Nvidia's AI chips, saying "power is free.".
  3. Huang's remarks followed the Trump administration's maintaining of a ban on Nvidia selling its most advanced chips to Beijing, after a meeting between Donald Trump and Xi Jinping.

Related Articles:

  • The Geopolitics of AI: Decoding the New Global Operating System — 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.
  • 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.
  • How Xi Sparked China’s Electricity Revolution — Electricity has risen to 30% of China's final energy use while plateauing near 22% in Europe and the US, supported by a decades-long grid expansion and upgrade program projected to cost as much as $800bn by 2030. Chinese grid investment is forecast to grow about 5% annually through 2030, faster than projected economic growth.

AI Summary. The US administration's own budget office estimates the tariffs amount to $3.9tn over a decade, the largest tax increase since 1982. Though the Supreme Court tends to read presidential authority over foreign policy broadly, allowing any president to impose such a tax without input from Congress may exceed its limits.

Greg Ip Wall Street Journal
Date Posted:

Observers of the SCOTUS hearing on tariffs imposed under the 1977 IEEPA suggest that at least 6 of the 9 justices are likely to rule against the tariffs. Gorsuch argued Congress’s sole power to “reach into the pockets” of taxpayers is “just different.”

Can a president impose the largest tax increase in decades without Congress?

Core argument: Trump's own budget office estimates his tariffs amount to $3.9 trillion over a decade, the largest tax increase since 1982, imposed without input from Congress.

The conservative-dominated Supreme Court put limits on some of President Joe Biden’s actions, but it hasn’t done so yet for Trump. Philosophically, it tends to see the president’s authority over foreign policy or the executive branch quite broadly. But even for this court, allowing any president to impose the largest tax increase since 1982 ($3.9 trillion over a decade, Trump’s own budget office estimates) without any input from Congress may be a bridge too far. At one point, Justice Neil Gorsuch, illuminating his own thinking, said: “The really key part of the context here…is [that] the constitutional assignment of the taxing power to Congress, the power to reach into the pockets of the American people, is just different and it’s been different since the founding.”

Takeaways by Macro Roundup® AI

  1. Trump's own budget office estimates his tariffs amount to $3.9 trillion over a decade, the largest tax increase since 1982, imposed without input from Congress.
  2. Justice Neil Gorsuch said the constitutional assignment of the taxing power to Congress — the power to reach into the pockets of the American people — is different and has been since the founding.
  3. The conservative-dominated Supreme Court has limited some of Biden's actions but not yet Trump's, while tending philosophically to read presidential authority over foreign policy and the executive branch broadly.

Related Articles:

  • 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.
  • The U.S. Is Tiptoeing Away From Many of Trump’s Signature Tariffs — The US has exempted dozens of products from its reciprocal tariffs and offered to carve out hundreds more, from farm products to airplane parts, for countries that strike trade deals. The administration is simultaneously expanding tariffs grounded in Section 232 of the Trade Expansion Act, covering metals, autos, heavy trucks, pharmaceuticals and furniture.
  • A Note On Tariffs From The Real World — A large retailer reports that pre-tariff inventory is still being sold, so tariff costs will show up as margin hits later, and that prices must eventually rise roughly 10–15% to cover them. The retailer says its sector's tariff rate went from about 12% to about 33%, and that retailers are holding prices through the holiday season before raising them.

AI Summary. Federal data put New York State's home health and personal care aide workforce at an estimated 623,000, or 171 aides per 1,000 residents aged 65 or older — 153% above the national average and 24% ahead of second-ranked California. Largely financed by Medicaid, the category is the state's largest occupation, with a median wage of $18.26 an hour.

Bill Hammond Empire Center
Date Posted:

As of May 2024, “home health and personal care aides” with a median hourly wage of $18.26, financed mainly by Medicaid, was the largest job category in NY State by a factor of 2.7:1. This workforce was 21% larger than its pre-pandemic level.

How far does one state's home care workforce exceed the national average?

Core argument: New York State counted an estimated 623,000 home health and personal care aides as of May 2024, or 171 aides per 1,000 residents aged 65 or older, 153% above the national average and 24% ahead of second-place California, per BLS.

New York State’s workforce of home health and personal care aides had grown to an estimated 623,000 as of May 2024, according to BLS’s Occupational and Occupational Employment and Wage Statistics. That equated to 171 aides per 1,000 residents aged 65 or older, which was 153% higher than the national average and 24% ahead of the No. 2 state, California. Within New York, the category of “home health and personal care aides” – with a median hourly wage of $18.26 – represented 38% of all job growth. Predominantly financed by Medicaid, the state’s safety-net health plan, home health remained the largest job category in the state, outnumbering “retail sales persons” by a ratio of 2.7:1.The BLS data show that New York’s overall health-care workforce was 244,000 jobs or 21% larger than it was in May 2019, the last survey before the pandemic. Over those five years, health care went from 12% to 15% of all occupations. Most of that increase occurred in lower-paid “healthcare support occupations,” which grew by 8% or 62,000 jobs. [Editor's note: This research was released in April 2025]

Takeaways by Macro Roundup® AI

  1. New York State counted an estimated 623,000 home health and personal care aides as of May 2024, or 171 aides per 1,000 residents aged 65 or older, 153% above the national average and 24% ahead of second-place California, per BLS.
  2. Home health and personal care aides, with a median hourly wage of $18.26 and financed predominantly by Medicaid, accounted for 38% of all job growth in New York and outnumbered retail salespersons by 2.7:1.
  3. New York's overall health-care workforce was 244,000 jobs or 21% larger in May 2024 than in May 2019, rising from 12% to 15% of all occupations, with lower-paid healthcare support occupations up 62,000 jobs or 8%.

Related Articles:

  • The Clock Now Ticks on Zohran Mamdani — New York City's share of the nation's millionaires has fallen 30% since 2010 and major banks have expanded in Dallas and Atlanta as finance's share of city employment shrank. The author argues a proposed city tax plan would leave remaining high earners paying 60% of taxes.
  • Mamdani’s Promises Are on a Collision Course With Fiscal Reality — New York State faces a $4.2bn deficit, nearly 4x the prior year's gap, while New York City confronts a $5bn budget hole amplified by federal health care and food stamp cuts. Democratic lawmakers and strategists say the state's governor may have to accept some tax increases, though New York already ranks 50th on the Tax Foundation's State Tax Competitive Index.
  • As New Jobs In Finance Dry Up, New York City’s Fiscal Model Is Wilting — New York state's share of US taxpayers reporting over $1m in income fell from 12.7% in 2010 to 8.7% in 2022, and the Citizens Budget Commission estimates state and city income tax receipts from that group would have been $13bn higher had the share held. Job growth has concentrated in lower-paid health care and social assistance.

AI Summary. Digital video has overtaken traditional TV in the attention of the average US adult, with social video platforms YouTube, TikTok and Instagram estimated at 25% of US daily video screen time. New media venues tend to monetize each hour of content at lower rates, and AI text-to-video tools are lowering barriers for new entrants to create high-quality content.

Michael Cembalest J.P. Morgan
Date Posted:

American adults now spend 4 hours a day watching digital video and < 3 hours watching traditional TV. YouTube, TikTok and Instagram now represent ~25% of US video screen time. AI text-to-video tools are facilitating content creation by new entrants.

How is digital video reshaping the economics of television content?

Core argument: Social video on YouTube, TikTok and Instagram accounts for an estimated 25% of US daily video screen time, and digital video has overtaken traditional TV in the average US adult's attention span.

Digital video has overtaken the traditional TV attention span of the average US adult, and social video alone (YouTube, TikTok and Instagram) now represents an estimated 25% of US daily video screen time. The other challenges: (a) companies like Apple and Amazon appear to view video as a loss leader whose primary value lay in the ability to pull viewers into the company’s broader ecosystem (the original business plan for AppleTV+ called for losses of $15 to $20 billion in the first five years), and (b) new media venues tend to be deflationary [in the sense of lower monetization rates per hour of video, gaming and music]. AI text-to-video tools like Pika, Runway, Stable Diffusion and Sora are making it easier for new entrants to create high-quality content for both digital and TV platforms. In 2024, AI models were first able to match human capabilities on Visual Commonsense Reasoning tasks, and text-to-video models are building on that progress. Video content disruption could happen quickly: in 2023, Hollywood put out ~15,000 hours of TV and film while there were 300 million hours of content uploaded to YouTube. If viewers consider just 0.01% of that YouTube content to be just as interesting as Hollywood fare, that's twice Hollywood's annual content output.

Takeaways by Macro Roundup® AI

  1. Social video on YouTube, TikTok and Instagram accounts for an estimated 25% of US daily video screen time, and digital video has overtaken traditional TV in the average US adult's attention span.
  2. Hollywood released roughly 15,000 hours of TV and film in 2023 against 300 million hours uploaded to YouTube, so viewers finding just 0.01% of that YouTube content as interesting would double Hollywood's annual output.
  3. AI models first matched human capabilities on Visual Commonsense Reasoning tasks in 2024, and text-to-video tools including Pika, Runway, Stable Diffusion and Sora are making it easier for new entrants to create high-quality content for digital and TV platforms.

Related Articles:

  • Teens Used To Be Happier. What Changed? — The share of US high school seniors describing themselves as "very happy" peaked at 24.8% and remained around 24.4% before falling to 11.4% at its low, recovering only to 12.7%, well below the 17.9% recorded before the pandemic. The decline coincided with smartphones and social media becoming pervasive.
  • What Are TikTok’s New Owners Buying? — More than 116m Americans use TikTok each month, with 18-to-25-year-olds spending nearly an hour a day scrolling or posting videos. Teenagers spend more time on TikTok than on YouTube and Instagram combined.
  • Disconnected: The Growing Class Divide in American Civic Life — 17% of Americans report having no close friends, and survey data show a wide educational gap: 24% of those with a high school education or less have no close friends versus 10% of college graduates. Three decades ago, Americans with less formal education reported social circles at least as large.