Edward Conard

Top Ten New York Times Bestselling Author

  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “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
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “…a 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
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Friday, December 12, 2025

AI Summary. An analysis of about 4.5m households in US public and government-subsidized housing estimates that a majority of tenant stays last longer than the 10-year average spell of welfare receipt. Because rent is capped at 30% of adjusted income, rising income raises rent in tandem, creating an effective 30% marginal tax rate that discourages work.

Howard Husock and Bruce Meyer National Affairs
Date Posted:
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HUD data on 4.5mm households show a median stay in public or subsidized housing of 10–15 years, often absent disability or old age. The rent cap equal to 30% of income acts as a 30% earnings tax, disincentivising work.

Does income-based rent in subsidized housing discourage work and lengthen stays?

Core argument: American Enterprise Institute analysis of HUD data covering roughly 4.5 million households estimates that a majority of tenant spells in public and government-subsidized housing extend beyond the 10-year average spell of welfare receipt.

Recent HUD data [provided to] the American Enterprise Institute enabled us to estimate the likely duration of a spell in public and government-subsidized housing for both new entrants and the existing tenant population. Our analysis, covering roughly 4.5 million households, found that a majority of tenant spells in public and government-subsidized housing extend beyond the 10-year average spells of welfare receipts. Tenants' rent payments are limited to 30% of adjusted monthly income. As their income rises, the share of rent tenants must pay increases in tandem, by virtue of an effective 30% marginal tax rate further discouraging work. Housing assistance is not an entitlement - eligibility does not guarantee access, and accessibility is constrained by the supply of housing units. Today, there are under 1 million public-housing units in the United States. The number of HCV vouchers (currently over 2.3 million) is determined annually through the federal-budget process. Due to the limited supply, many households remain on waiting lists for years. Successful households wait an average of 20 months to enter public housing and 26 months to receive a voucher. The lack of time limits thus affects not only tenants, but also those who qualify for assistance but don't receive it.

Takeaways by Macro Roundup® AI

  1. American Enterprise Institute analysis of HUD data covering roughly 4.5 million households estimates that a majority of tenant spells in public and government-subsidized housing extend beyond the 10-year average spell of welfare receipt.
  2. Tenants' rent payments are limited to 30% of adjusted monthly income, so rent rises as income rises, an effective 30% marginal tax rate that further discourages work.
  3. Housing assistance is not an entitlement: the United States has under 1 million public-housing units and over 2.3 million vouchers set annually through the federal budget, and successful households wait an average of 20 months for public housing and 26 months for a voucher.

Related Articles:

AI Summary. Most people leaving New York City move to nearby suburbs such as Long Island and Westchester, citing housing—more space, ownership, or a better home than they can afford—as their main motivation. Those leaving for other states tend to be younger, more educated, and childless, and move primarily for jobs.

Aziz Sunderji Home Economics
Date Posted:
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Database

82% of NYC emigrants are not moving to Texas or Florida; they are moving to Long Island and Westchester. Aziz Sunderji suggests that lowering housing costs could help the city retain these workers.

Why do most people leaving the city move to nearby suburbs?

Core argument: Four out of five people leaving New York City stay within the metro area, moving to places like Long Island and Westchester and citing housing as their primary motivation.

The vast majority of NYC emigrants aren’t fleeing to Texas or Florida—they’re moving to Long Island and Westchester, citing housing as their primary motivation. These are not people who have given up on the New York metro area; they’re people who want more space, want to own rather than rent, or simply want a better home than they can afford in the five boroughs. Interstate movers are a different story. They tend to be younger, more educated, and childless—and they leave primarily for jobs. This cohort is harder to retain through housing policy alone; their departures reflect the pull of opportunity elsewhere rather than the push of inadequate housing. The policy implication is straightforward: New York City cannot compete with booming job markets in other cities or Miami’s climate.  The four out of five emigrants from New York City who stay local are, in effect, still rooting for New York—they just need a place to live.

Takeaways by Macro Roundup® AI

  1. Four out of five people leaving New York City stay within the metro area, moving to places like Long Island and Westchester and citing housing as their primary motivation.
  2. Local movers from New York City are seeking more space, homeownership rather than renting, or a better home than they can afford in the five boroughs.
  3. Interstate movers from New York City tend to be younger, more educated, and childless, and they leave primarily for jobs, making them harder to retain through housing policy alone.

Related Articles:

  • Can New York Grow Again? — New York City's population has historically balanced natural growth and international inflows against domestic outflows, but outflows have come to dominate, leaving the city shrinking at its fastest pace since the 1970s. Its contraction of more than 3% is twice that of Philadelphia, the next-fastest-shrinking large US city.
  • 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.
  • 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. China's trade balance with Germany, Europe's largest economy, has flipped from a $25bn deficit to a $23bn surplus, driven by a collapse in imports. European leaders describe the imbalance as an existential threat to European industry and say the bloc's relationship with China has reached an inflection point.

Bloomberg Staff Bloomberg
Date Posted:

China’s 2025 trade surplus with Europe is approaching $300B. The value of China’s exports to the EU is now more than double its imports, as Chinese sellers divert goods facing levies in the US.

Is China's trade shift with Europe threatening European industry?

Core argument: China's $25 billion trade deficit with Europe's biggest economy in 2019 flipped to a $23 billion surplus in the first 11 months of this year, due to a collapse in imports.

In 2019, China ran a $25 billion deficit with Europe’s biggest economy. In the first 11 months of this year, that’s flipped to a $23 billion surplus due to the collapse in imports. French President Emmanuel Macron has branded the trade imbalance with China “unbearable,” saying what’s at stake now is “a question of life or death for European industry.” European Commission President Ursula von der Leyen believes the bloc’s ties with China “have reached an inflection point.”

Takeaways by Macro Roundup® AI

  1. China's $25 billion trade deficit with Europe's biggest economy in 2019 flipped to a $23 billion surplus in the first 11 months of this year, due to a collapse in imports.
  2. French President Emmanuel Macron called the trade imbalance with China "unbearable," saying what is at stake is "a question of life or death for European industry.".
  3. European Commission President Ursula von der Leyen says the bloc's ties with China "have reached an inflection point.".

Related Articles:

  • Europe’s Green Energy Rush Slashed Emissions—and Crippled the Economy — Europe has cut carbon emissions 30% from 2005 levels versus 17% in the US, while the shift to renewables has helped push electricity prices higher across much of the continent. Average electricity prices for heavy industry in the European Union are roughly 2x those in the US and 50% above China.
  • Sticking with What Works: Raising GDP Forecast on China’s Manufacturing Push — Stronger Chinese growth driven by export-oriented manufacturing may not produce net positive spillovers: for every 1pp export-driven boost to China's GDP, other economies may see a 0.1–0.3pp drag, with high-tech producers such as Europe and Japan facing greater pressure. Cheaper Chinese goods continue to exert a disinflationary impulse.
  • The Future of European Competitiveness – A Competitiveness Strategy for Europe — A European Union competitiveness report attributes the EU's labour productivity growth gap with the US largely to weaker activity in information and communications technology and large-scale digital services; excluding main ICT sectors, EU productivity was broadly at par with the US from 2000-2019. It estimates Europe's investment share must rise about 5 percentage points of GDP.

AI Summary. Mexico has approved tariffs of up to 50% on Chinese cars and other goods, from footwear to microwaves, more than double the previous 15%–20% rate and the highest allowed under World Trade Organization rules. Chinese imports account for a fifth of Mexican imports, and China's commerce ministry opposed the increase.

Jude Webber Financial Times
Date Posted:

Mexico is imposing tariffs of up to 50% on 1,400 Chinese goods, double the current 15–20% levies. Mexico was the world’s biggest buyer of Chinese-made cars in the first half of the year.

Is Mexico raising tariffs on Chinese goods to 50%?

Core argument: Mexico approved tariffs of up to 50% on Chinese cars and other goods, more than double the current 15–20% rate and the highest level allowed under World Trade Organization rules.

Mexico has approved tariffs of up to 50% on Chinese cars and other goods. While it will affect goods ranging from trainers to microwaves, Chinese cars will be hit the hardest. Mexico’s new 50% levy — more than double the current 15% to 20% tariff — was the highest allowed under World Trade Organization rules. Chinese imports make up a fifth of Mexican imports, official statistics show, and in November, 20% of cars sold in Mexico were imported from China, according to the Mexican Association of Automotive Distributors. Mexico was the world’s biggest buyer of Chinese-made cars in the first half of this year, according to Shanghai consultancy Automobility. China’s commerce ministry said it opposed “unilateral tariff increases” and had launched an investigation into trade and investment barriers in Mexico.

Takeaways by Macro Roundup® AI

  1. Mexico approved tariffs of up to 50% on Chinese cars and other goods, more than double the current 15–20% rate and the highest level allowed under World Trade Organization rules.
  2. Chinese imports account for a fifth of Mexican imports according to official statistics, and 20% of cars sold in Mexico in November were imported from China, according to the Mexican Association of Automotive Distributors.
  3. Mexico was the world's biggest buyer of Chinese-made cars in the first half of this year, according to Shanghai consultancy Automobility, and China's commerce ministry said it opposed "unilateral tariff increases" and had launched an investigation into Mexican trade and investment barriers.

Related Articles:

  • China’s Trade Surplus Tops $1 Trillion After Exports Rebound — China's trade surplus reached $1.1tn in 11 months, exceeding its previous full-year record, as strong export growth to the European Union and Africa more than offset a 29% drop in shipments to the US. France's president has warned the EU may impose tariffs if Beijing does not address the imbalance.
  • Sticking with What Works: Raising GDP Forecast on China’s Manufacturing Push — Stronger Chinese growth driven by export-oriented manufacturing may not produce net positive spillovers: for every 1pp export-driven boost to China's GDP, other economies may see a 0.1–0.3pp drag, with high-tech producers such as Europe and Japan facing greater pressure. Cheaper Chinese goods continue to exert a disinflationary impulse.
  • Mexico Is Not Just the Top Supplier to the U.S. Now It Is the Top Buyer — Mexico is now both the largest buyer of U.S. exports and the largest source of U.S. imports, with U.S. goods exports to Mexico at $226.4bn versus $225.6bn to Canada and imports from Mexico totaling $354.9bn. Mexico's growth, including its middle class, has increased demand for U.S. goods among its more than 130 million people.

AI Summary. Men's value as partners remains closely tied to their capacity to provide financial security: 74% of women without a college degree and 89% of college-educated women say a potential partner's unemployment would make them less interested in dating, compared with 47% of men without a college degree.

Daniel Cox American Storylines
Date Posted:
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Database

49% of men under the age of 40 without any college experience do not have a spouse or a short or long-term partner, compared to 27% of their female peers and 18% of college-educated women.

Do women still tie men's romantic appeal to financial security?

Core argument: 74% of non-college women say a partner's unemployment would make them less interested in dating, compared with 47% of non-college men who say the same.

There’s a more fundamental reason why so many non-college men struggle on the dating market. Men’s value is still tightly tethered to traditional expectations that they will be able to provide. Their value as partners is closely tied to their willingness and capacity to offer financial security. There’s a great deal of evidence for this. Less than half (47%) of non-college men said that they would be less likely to date someone who was unemployed. By contrast, roughly three-quarters (74%) of non-college women say that being unemployed would make them less interested. A remarkable 89% of college-educated women say that employment status has a bearing on their level of romantic interest.

Takeaways by Macro Roundup® AI

  1. 74% of non-college women say a partner's unemployment would make them less interested in dating, compared with 47% of non-college men who say the same.
  2. 89% of college-educated women say a potential partner's employment status bears on their level of romantic interest.
  3. The author argues non-college men struggle on the dating market because men's value as partners remains tied to traditional expectations that they provide financial security.

Related Articles:

  • Why Marriage Is Increasingly For The Affluent — US Census data show the first-marriage rate among 22- to 45-year-olds fell 9% between 2008 and 2023, to 60 marriages per 1,000 never-married Americans. Marriage rates declined far less for college graduates and top-third earners than for those with less education and lower incomes.
  • Bachelors Without Bachelor’s: Gender Gaps in Education and Declining Marriage Rates — Marriage rates for college-educated women have remained stable over the past fifty years even as the relative supply of college-educated men declined, with the overall decline in marriage driven almost entirely by fewer marriages between non-college women and non-college men. The education gap in women's marriage rates is larger in areas where non-college men face the highest joblessness and incarceration.
  • Changes in Milestones of Adulthood — Among US young adults aged 25–34, the share completing a high school or college degree rose 9 percentage points to 83%, while the share ever married fell 18 points to 44% and the share living with a child fell 16 points to 39%. Economic milestones became more common as family formation milestones became less common.

AI Summary. China completed the maiden flight of the "Jiutian," an unmanned aerial vehicle described as the world's largest drone mothership, capable of carrying multiple drones and missiles and launching weaponized drone swarms.

Josh Xiao Bloomberg
Date Posted:

China conducted the first test flight of its “Jiutian” drone mothership, which has eight hardpoints for guided bombs, air-to-air and anti-ship missiles, and kamikaze drones, as well as carrying more than 100 small drones designed to launch in swarms.

Has China flown the world's largest drone-carrying aircraft?

Core argument: China completed the maiden flight of the unmanned "Jiutian," considered the world's largest drone mothership, in the northwestern province of Shaanxi, according to the official Xinhua News Agency.

China conducted the maiden flight of what is considered to be the world’s largest drone mothership, underscoring its advances in unmanned aerial vehicles capable of unleashing weaponized swarms. The unmanned “Jiutian” completed its first mission in the northwestern province of Shaanxi, the official Xinhua News Agency reported Thursday without elaborating. The aerial vehicle has been likened to an aircraft carrier for its ability to host multiple drones and missiles. Jiutian means “nine heavens” — a Chinese term for extremely high skies.

Takeaways by Macro Roundup® AI

  1. China completed the maiden flight of the unmanned "Jiutian," considered the world's largest drone mothership, in the northwestern province of Shaanxi, according to the official Xinhua News Agency.
  2. The Jiutian has been likened to an aircraft carrier for its ability to host multiple drones and missiles.
  3. Jiutian means "nine heavens," a Chinese term for extremely high skies.

Related Articles:

  • Drones Are Key to Winning Wars Now. The U.S. Makes Hardly Any — China's DJI accounts for about 70% of commercial drones sold globally, and industry experts estimate its output far exceeds that of any other manufacturer, with capacity in the millions of drones a year. About 500 US companies manufacture drones, producing fewer than 100,000 annually, according to an industry association.
  • ‘We Do Fail … a Lot’: Defense Startup Anduril Hits Setbacks With Weapons Tech — Defense startup Anduril has hit setbacks across several weapons programs, including engine damage to its unmanned Fury jet fighter in a ground test, a 22-acre fire caused by a counterdrone system test, and software that struggled to command unmanned boats. Former employees report its systems in Ukraine proved vulnerable to jamming.
  • 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.

Monday, December 15, 2025

AI Summary. The International Monetary Fund estimates Chinese public sector debt near 125% of GDP and a combined on- and off-balance-sheet fiscal deficit possibly above 12% of GDP. Since the property bubble burst, net exports have added over a percentage point to annual growth on average, with the goods surplus approaching $1.2tn, or 6% of GDP.

Brad Setser Council on Foreign Relations
Date Posted:

Official data show an export contribution to Chinese growth of 1 to 2% of GDP since 2024. Customs surplus data, approaching $1.2T or 6% of GDP, suggest a higher number. “Net exports could have been the main driver of China’s recent growth,” Setser notes.

Can exports keep driving China's growth after its property bust?

Core argument: China's customs trade surplus reached $1 trillion after only 11 months of data, with the overall goods surplus, if accurately measured, approaching $1.2 trillion, or 6% of China's GDP and well over a percentage point of the GDP of all its trading partners.

The IMF estimates that Chinese public sector debt is around 125% of GDP, and the on and off balance sheet fiscal deficit may be over 12% of GDP. With a big stock of government debt, the easiest way out of trouble, it would seem, is a weaker currency and a strong boost from exports. That is in fact how China has been growing since its property bubble burst—or was pricked—in the middle of 2021. Net exports have contributed over a percentage point to annual growth on average—and much more than that in 2024 and the first three quarters of 2025. The underlying trade data actually points to a bigger contribution from net exports than in official "contributions" data, and there is skepticism that the reported domestic contributions are as large as reported—which would imply that net exports could have been the main driver of China’s recent growth. The result is a $1 trillion customs trade surplus after only 11 months of data, and overall goods surplus that should -- if accurately measured -- approach an astonishing $1.2 trillion dollars (6% of China's GDP, well over a percentage point of the GDP of all of China's trading partners).

Takeaways by Macro Roundup® AI

  1. China's customs trade surplus reached $1 trillion after only 11 months of data, with the overall goods surplus, if accurately measured, approaching $1.2 trillion, or 6% of China's GDP and well over a percentage point of the GDP of all its trading partners.
  2. Net exports have contributed over a percentage point to China's annual growth on average since its property bubble burst in mid-2021, and much more than that in 2024 and the first three quarters of 2025.
  3. The IMF estimates Chinese public sector debt at around 125% of GDP, with an on- and off-balance-sheet fiscal deficit possibly exceeding 12% of GDP.

Related Articles:

  • China’s Trade Surplus Tops $1 Trillion After Exports Rebound — China's trade surplus reached $1.1tn in 11 months, exceeding its previous full-year record, as strong export growth to the European Union and Africa more than offset a 29% drop in shipments to the US. France's president has warned the EU may impose tariffs if Beijing does not address the imbalance.
  • Sticking with What Works: Raising GDP Forecast on China’s Manufacturing Push — Stronger Chinese growth driven by export-oriented manufacturing may not produce net positive spillovers: for every 1pp export-driven boost to China's GDP, other economies may see a 0.1–0.3pp drag, with high-tech producers such as Europe and Japan facing greater pressure. Cheaper Chinese goods continue to exert a disinflationary impulse.
  • China Is Making Trade Impossible — Interviews with Chinese economists, technologists and business leaders yielded no clear answer to what products China would want to buy from the rest of the world in future, beyond commodities, luxury goods and higher education. The author argues China sees nothing it cannot eventually make better and cheaper itself, undermining trade as a two-way exchange.

AI Summary. China's fixed asset investment fell 2.6% year-on-year for the January–November period, a steeper decline than the 2.3% drop analysts surveyed by Bloomberg expected and the 1.7% fall through October, while retail sales also weakened. Chinese authorities blame redundant investment for excessive price competition and deflation.

Joe Leahy, Thomas Hale and Haohsiang Ko Financial Times
Date Posted:

Chinese property and fixed-asset investment have fallen 15.9% and 2.6% y/y, respectively, as the property bubble deflates and Xi’s anti-“involution” campaign gains steam. Industrial production increased 4.8% y/y.

Is China's investment decline deepening as officials target redundant spending?

Core argument: China's fixed asset investment fell 2.6% year on year for January–November, a steeper decline than the 2.3% drop expected in a Bloomberg analyst survey and the 1.7% fall recorded through October, according to the National Bureau of Statistics.

Chinese investment declined further last month while retail sales weakened sharply, as President Xi Jinping launched an unusually blunt attack on “reckless” government spending that Beijing believes is constraining growth in the world’s second-biggest economy. Fixed asset investment declined 2.6% for the January-November period on a year earlier, the National Bureau of Statistics reported on Monday, a steeper fall than the 2.3% decline forecast by a Bloomberg survey of analysts and the 1.7% fall for the year to October. Xi’s tough stance on redundant investment — which authorities blame for excessive price competition and deflation that they refer to as “involution” — came as regulators threatened last week to crack down on unfair pricing in the auto industry.

Takeaways by Macro Roundup® AI

  1. China's fixed asset investment fell 2.6% year on year for January–November, a steeper decline than the 2.3% drop expected in a Bloomberg analyst survey and the 1.7% fall recorded through October, according to the National Bureau of Statistics.
  2. Xi Jinping attacked "reckless" government spending on redundant investment, which Chinese authorities blame for excessive price competition and the deflation they call "involution.".
  3. Chinese retail sales weakened sharply alongside the deepening investment decline, and regulators threatened to crack down on unfair pricing in the auto industry.

Related Articles:

  • The True Cost of China’s Falling Prices — Prices fell for 51 of 67 consumer items tracked over a two-year period in China, while the broader GDP deflator, which includes upstream sectors, declined for 10 straight quarters, indicating deflation is more entrenched in industry. The share of "zombie" firms whose profits cannot cover debt interest rose from 19% to 34% over five years.
  • The Fracturing Of The World Economy — The US would gain relative to China from a fracturing world economy because its bloc of allies includes nearly all advanced countries, accounting for 68% of world GDP at market prices versus 26% for China's bloc. China's structural current account surplus also leaves it reliant on the US and its allies as safe places to invest those funds.
  • Peak China Housing — Real estate and related industries account for roughly 29% of China's GDP, a level of dependence the authors estimate exceeds that of Ireland and Spain before their financial crises. A 20% decline in housing activity could reduce economic output by 5-10%.

AI Summary. The authors estimate that trade has become more sensitive to geopolitical distance, with high-technology goods more sensitive than low-technology goods, suggesting fragmentation pressures are concentrated in high-tech sectors. China's continued broad commercial ties with geopolitically distant economies masked the wider shift toward trading with geopolitically closer partners.

Florencia Airaudo, François de Soyres, Ece Fisgin, Alexandre Gaillard, et al. Federal Reserve Board
Date Posted:

Geopolitical distance, as measured by divergence in General Assembly votes, reduces trade between two countries more sharply for high-tech goods than low-tech goods, likely due to national security concerns. This effect has increased steadily since 2012.

Is trade fragmentation concentrated in high-technology sectors?

Core argument: Using a gravity specification with rolling windows, the authors find that trade's sensitivity to geopolitical distance becomes stronger and statistically significant as early as the mid-2000s, when many countries were already realigning trade toward geopolitically closer partners.

The sensitivity of trade to geopolitical distance becomes stronger and statistically significant as early as the mid-2000s. [When] many countries were already realigning trade toward geopolitically closer trading partners, China maintained broad-based commercial ties even with geopolitically distant economies, thereby masking the broader trend toward geopolitical sorting. In Figure 4, examine how geopolitical distance affects trade flows separately for high- and low-technology goods. [Beginning with] a standard gravity specification [trade increases with country size and decreases with distance] and a rolling window, we find that trade in high-tech goods is more sensitive to geopolitical distance than trade in low-tech goods, with a more pronounced difference in sensitivity across the two groups in recent years. This result is robust across alternative specifications, including different sets of fixed effects and bilateral gravity variables. It suggests that fragmentation pressures have been concentrated in high-tech sectors, where trade relationships are increasingly shaped by strategic and security considerations.

Takeaways by Macro Roundup® AI

  1. Using a gravity specification with rolling windows, the authors find that trade's sensitivity to geopolitical distance becomes stronger and statistically significant as early as the mid-2000s, when many countries were already realigning trade toward geopolitically closer partners.
  2. Trade in high-technology goods is more sensitive to geopolitical distance than trade in low-technology goods, with the gap in sensitivity widening in recent years, a result robust to alternative fixed effects and bilateral gravity variables.
  3. China maintained broad-based commercial ties even with geopolitically distant economies, masking the broader trend toward geopolitical sorting in trade.

Related Articles:

  • An Anatomy of the Great Reallocation in US Supply Chain Trade — China's share of US direct imports fell from a peak of about 22% in 2017 to roughly 16% in 2022, 13% in 2024, and about 9% by mid-2025 — matching its share when it joined the World Trade Organization. Vietnam, Mexico, and more recently Taiwan have been the main gainers.
  • The Fracturing Of The World Economy — The US would gain relative to China from a fracturing world economy because its bloc of allies includes nearly all advanced countries, accounting for 68% of world GDP at market prices versus 26% for China's bloc. China's structural current account surplus also leaves it reliant on the US and its allies as safe places to invest those funds.
  • Mexico Is Not Just the Top Supplier to the U.S. Now It Is the Top Buyer — Mexico is now both the largest buyer of U.S. exports and the largest source of U.S. imports, with U.S. goods exports to Mexico at $226.4bn versus $225.6bn to Canada and imports from Mexico totaling $354.9bn. Mexico's growth, including its middle class, has increased demand for U.S. goods among its more than 130 million people.

AI Summary. Leading AI developers are shipping smaller, more frequent model updates, creating an impression of momentum through release frequency rather than the magnitude of change. The author argues the bet that scaling data, compute, and model size would produce artificial general intelligence has not paid off, pushing labs back toward harder problems like continual learning and new architectures.

Paul Kedrosky Applied Complexity
Date Posted:

Current AI models are “impressive but bounded.” After vastly underestimating the limits of scaling, Paul Kedrosky argues, “labs are returning to older, harder problems…a reminder that the next five years will be nothing like the last five.”

Has scaling data, compute, and model size failed to deliver general intelligence?

Core argument: Leading AI developers are shipping relatively trivial model updates at a faster pace, with Anthropic saying it is making "more incremental improvements rather than only shipping the really big upgrades" and OpenAI's GPT 5.2 drawing a mostly indifferent response.

[The] leading AI developers are pushing out relatively trivial updates to their models at a faster pace. Anthropic has said it's doing "more incremental improvements rather than only shipping the really big upgrades." OpenAI's GPT 5.2 came out this week to a mostly meh response. The pace of releases creates the impression of momentum through frequency rather than the magnitude of change. The AI industry spent years betting that scaling—more data, more compute, bigger models—would produce AGI. That bet has not paid off. The improvements are real, but increasingly incremental and slowing, while costs soar. The systems are impressive but bounded. Now the labs are returning to older, harder problems. Continual learning. New architectures. Different training methods. These are necessary research directions, but they are a reminder that the next five years will be nothing like the last five. They're the work of an industry recalibrating after hitting a wall.

Takeaways by Macro Roundup® AI

  1. Leading AI developers are shipping relatively trivial model updates at a faster pace, with Anthropic saying it is making "more incremental improvements rather than only shipping the really big upgrades" and OpenAI's GPT 5.2 drawing a mostly indifferent response.
  2. The AI industry's years-long bet that scaling data, compute, and model size would produce artificial general intelligence has not paid off, with improvements real but increasingly incremental and slowing while costs soar.
  3. AI labs are returning to older, harder problems—continual learning, new architectures, and different training methods—necessary research directions that suggest the next five years will be nothing like the last five.

Related Articles:

  • Does Gemini Show That Scaling Still Works? No. — The author argues that frontier model pre-training is becoming uneconomic, delivering only marginal capability gains for enormous spending on chips, power, and compute. Meaningful advances have shifted to post-training, inference-time compute, and tool-augmented reasoning rather than raw model size.
  • Google’s Gemini 3 Means AI’s “Resource Grab” Phase Is On — Google's Gemini 3, trained entirely on Google's own tensor processing unit chips, is the best-performing AI model across nearly all dimensions except possibly coding, leaving OpenAI without a leading model for the first time in three years. Google's vertically integrated stack from chips to data centers likely gives it the cheapest access to computing power among leading AI labs.
  • On Benchmark Games, Gemini, and Declining Returns to Scale — Composite benchmarks show Google's Gemini roughly in line with GPT-5-class models, with any gap small, and the author argues it does not lead on strict low-leakage reasoning exams. The pattern reflects growing training costs yielding modest gains concentrated in vision, video, and some coding rather than broad reasoning advances.

AI Summary. Trading volumes in credit default swaps — insurance-like contracts against debt defaults — tied to major US technology companies including Alphabet, Amazon, Broadcom, CoreWeave, Meta, Microsoft and Oracle have risen 90%, according to clearinghouse DTCC data. The increase is most pronounced for Oracle and CoreWeave, both raising billions in debt for data centre capacity.

George Steer, Kate Duguid, Eric Platt and Oliver Roeder Financial Times
Date Posted:

DTCC data show the market for CDS’s on debt tied to the AI buildout has grown 90% since September. The cost of buying the derivatives on Oracle’s debt has risen to its highest level since 2009.

Are investors buying more default insurance on tech companies' AI debt?

Core argument: Credit default swap volumes tied to seven US tech groups — Alphabet, Amazon, Broadcom, CoreWeave, Meta, Microsoft and Oracle — have risen 90% since early September, according to data from clearinghouse DTCC.

Volumes in credit default swaps tied to a handful of US tech groups [Alphabet, Amazon, Broadcom, CoreWeave, Meta, Microsoft and Oracle] have climbed 90% since early September, according to data from clearinghouse DTCC. The uptick in CDS trading has been particularly pronounced for Oracle and cloud computing company CoreWeave, both of which are raising billions of dollars in debt to secure data centre capacity. A new market for Meta CDS sprang up after the company sold $30bn of bonds to finance AI projects in October.

Takeaways by Macro Roundup® AI

  1. Credit default swap volumes tied to seven US tech groups — Alphabet, Amazon, Broadcom, CoreWeave, Meta, Microsoft and Oracle — have risen 90% since early September, according to data from clearinghouse DTCC.
  2. The rise in CDS trading has been particularly pronounced for Oracle and cloud computing company CoreWeave, both of which are raising billions of dollars in debt to secure data centre capacity.
  3. A market for Meta credit default swaps emerged after the company sold $30bn of bonds in October to finance AI projects.

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.
  • Flood of AI Bonds Adds to Pressure on Markets — Pressure on technology company bonds has been uneven: Alphabet, Amazon and Microsoft fund most AI spending from quarterly cash flow, while Meta had to offer yields well above its existing debt on a $30bn bond sale. Oracle, already burning cash as it shifts toward AI cloud computing, carries yields higher than almost any investment-grade technology peer.
  • AI Capex Risk as Predictable Engineering — The 2020 scaling-laws paper fostered a belief that mixing compute, data, and parameters yields better AI models in a deterministic way, which the author argues let unusually large capital spending plans pass without investor revolt. The author contends that curve was empirical rather than physical and is now breaking, returning AI capital spending to normal economics.

AI Summary. Registered disability rates among undergraduates have risen at elite US universities, reaching 38% at Stanford and 21% at Harvard, both up from 5% in 2009, with similar increases across 19 European countries. In the poorest US school districts, 1% of young people are on special-support plans, unchanged, while the share in the richest areas tripled from 2% to 6%.

John Burn-Murdoch Financial Times
Date Posted:
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In 2025, 38% of Stanford and 21% of Harvard undergrads were registered as having a disability — up from 5% in 2009; 6% of youth from the richest US school districts, and 1% from the poorest, are now in special support programs.

Are rising student disability rates concentrated among the wealthiest families?

Core argument: Research by Rose Horowitch for The Atlantic found 38% of Stanford undergraduates and 21% of Harvard undergraduates are registered as having a disability, both up from 5% in 2009.

In the US, research by Rose Horowitch for the Atlantic magazine found that 38% of undergraduates at Stanford this year are registered as having a disability, as are 21% at Harvard — both up from 5% in 2009. My analysis of data from 19 European countries finds similar trends, with health impairments among students doubling on average over the past decade. In 2010, 1% of American young people from the poorest school districts were on plans that provide special support, and today that figure is unchanged. But among those in the richest areas, it has tripled from 2 to 6%.

Takeaways by Macro Roundup® AI

  1. Research by Rose Horowitch for The Atlantic found 38% of Stanford undergraduates and 21% of Harvard undergraduates are registered as having a disability, both up from 5% in 2009.
  2. An analysis of data from 19 European countries finds health impairments among students doubled on average over the past decade.
  3. Among American young people in the richest school districts, the share on plans providing special support tripled from 2% to 6% since 2010, while the share in the poorest districts remained at 1%.

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  • Do Adults Have the Skills They Need to Thrive in a Changing World? — An international assessment of adult skills describes numeracy proficiency levels ranging from counting objects and adding small whole numbers at the lowest level, to extracting information from tables and graphs and performing basic arithmetic with money and percentages at Level 1, up to analysing complex mathematical information and critically evaluating whether data support a claim at Level 5.
  • Twelfth-Grade Math and Reading Scores in U.S. Hit New Low — U.S. twelfth-graders' average math and reading scores on the National Assessment of Educational Progress fell to their lowest levels on record, with math the worst since that test began in 2005 and reading below any point since 1992. The share rated proficient slid 2 percentage points to 35% in reading and 22% in math.