Edward Conard

Top Ten New York Times Bestselling Author

  • “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
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “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
  • “…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
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…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
  • “…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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, December 18, 2025

AI Summary. Using tax-return income, the authors estimate that a third of people in the top 1% drop out within a year and two-thirds within a decade, with three-quarters of the top 0.1% exiting over a decade. Measuring income over two decades rather than one year lowers top 1% income shares by an average of 15%, and top 0.001% shares by 40%.

David Splinter and Jeff Larrimore Working Paper
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One third of top 1% US income earners as indicated by tax returns fall out a year later and ⅔ are absent a decade later. Over two decades, income variability reduces the top .01% income share by 30% (20% using retained earnings in place of volatile capital gains).

How much does income mobility reduce measured top income shares?

Core argument: On average, one-third of those in the top 1% of fiscal income fall out of that group by the following year, two-thirds are out after a decade, and three-quarters of the top 0.1% are no longer in that group after a decade.

Using income from tax returns (“fiscal income”), [we find that] on average, one-third of those who are in the top 1% fall out of the top by the following year. Two-thirds are no longer in the top 1% a decade later. Exit rates are even higher at the very top of the distribution: three-quarters of those in the top 0.1% are no longer in that top group after a decade. This mobility is higher than in other countries and affects income inequality levels. Relative to single-year measures of income, multi-year measures that account for long-run income variability over two decades decrease top 1% income shares by an average of 15%. Two-decade mobility decreases top 0.1% shares by over 20%, top 0.01% shares by 30%, and top 0.001% shares by 40%. Adding important sources missing from fiscal income reduces the effect of variability on top income shares - [mostly by] replacing volatile capital gains realizations with more stable corporate retained earnings. Variability lowers top 1% broad income shares: an average of 0.7pp over five years, 1.3pp over one decade, and 2.1pp over two decades. This is about two-thirds the variability of fiscal income, which has average variabilities of 1, 2, and 2.7pp. Top 0.1% variabilities for broad income are also about two-thirds those of fiscal income.

Takeaways by Macro Roundup® AI

  1. On average, one-third of those in the top 1% of fiscal income fall out of that group by the following year, two-thirds are out after a decade, and three-quarters of the top 0.1% are no longer in that group after a decade.
  2. Multi-year income measures accounting for long-run variability over two decades reduce top 1% income shares by an average of 15%, top 0.1% shares by over 20%, top 0.01% by 30%, and top 0.001% by 40%.
  3. Adding sources missing from fiscal income, mostly replacing volatile capital gains realizations with more stable corporate retained earnings, cuts variability's effect to about two-thirds, lowering top 1% broad income shares by 0.7pp over five years, 1.3pp over a decade, and 2.1pp over two decades.

Related Articles:

AI Summary. Because government benefits aren't counted as income, a single parent with two children earning $11,000 is officially in poverty yet can receive $53,128 in benefits—tax credits, food stamps, housing and utility aid, Medicaid, school meals, and cash assistance—for a total of $64,128, or 254% of the poverty level.

Phil Gramm and John Early Wall Street Journal
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Counting non-cash benefits as income would reduce the 19.8mm US households defined as poor by 90%. If the $1.4T in annual Federal poverty spending, including non-cash benefits, were distributed in cash to those households, each would receive $70,000.

Does excluding government benefits from income overstate poverty?

Core argument: A single parent with two school-age children earning $11,000 from part-time work is counted as in poverty because household income falls below $25,273, yet would qualify for $53,128 in benefits, bringing total income to $64,128, or 254% of the poverty level.

The government’s failure to count its largess as recipients’ income allows welfare households to blow past the income level above which a working family no longer qualifies for government help. Take a single parent with two school-age children who earns $11,000 annually from part-time work. The government considers this household in poverty because its income is below $25,273. But this family would qualify for benefits worth $53,128. It would receive Treasury checks of $3,400 in refundable child tax credits and $4,400 in refundable earned-income tax credits. The family would also receive Food Stamp debit cards worth $9,216 a year, $9,476 in housing subsidies, $877 of government payments for utility bills, $16,033 to fund Medicaid, $3,102 in free meals at school and $6,624 in Temporary Assistance for Needy Families. All this puts the family’s income at $64,128, or 254% of the poverty level. A hardworking family earning anything like $64,128 in salary wouldn’t be eligible for any of these welfare benefits in four-fifths of the states. Meanwhile, the welfare family would be eligible for another 90 small federal benefits and sundry state and local welfare programs.

Takeaways by Macro Roundup® AI

  1. A single parent with two school-age children earning $11,000 from part-time work is counted as in poverty because household income falls below $25,273, yet would qualify for $53,128 in benefits, bringing total income to $64,128, or 254% of the poverty level.
  2. The $53,128 benefit package includes $16,033 for Medicaid, $9,476 in housing subsidies, $9,216 in Food Stamps, $6,624 in Temporary Assistance for Needy Families, $4,400 in refundable earned-income tax credits, $3,400 in refundable child tax credits, $3,102 in school meals and $877 for utilities.
  3. A family earning about $64,128 in salary would be ineligible for any of these welfare benefits in four-fifths of the states, while the welfare household would remain eligible for another 90 small federal benefits plus state and local programs.

Related Articles:

  • Stranded by the Safety Net: How to Fix the Benefit Cliff Problem — A simulation of safety-net benefits for a single mother with two children in North Carolina shows net income rising faster than earnings below $30,000 a year, then dropping abruptly as benefits phase out. She would need to earn $70,000 to exceed the net income available at $30,000.
  • Mitigating Benefits Cliffs for Low-Income Families: District of Columbia Career Mobility Action Plan as a Case Study — The authors estimate that a hypothetical low-income family with children receives $68,686 in government support at an income of $11,000 but only $22,709 at $65,000, while its tax liability rises from $842 to $12,835. The lost assistance plus higher taxes fully offsets the $54,000 income gain.
  • Welfare Is What’s Eating the Budget — The U.S. redistributes 29.4% of its gross domestic product through transfers and taxes, a larger share than any developed country except France at 30.1%. Counting transfers as income and taxes as income lost and adjusting for household size, average households in the bottom, second, and middle income fifths have roughly equal incomes despite large differences in work effort.

AI Summary. Weakness in the Japanese Yen is masking dollar declines against other major currencies such as the Swedish Krona and Swiss Franc, so a trade-weighted dollar index excluding the Yen sits below the standard measure. The author argues this reflects a broader "debasement trade," with investors seeking safe havens including precious metals and other currencies.

Robin Brooks Robin Brooks Substack
Date Posted:

The dollar’s recent stability against G10 currencies trade weighted has been driven by the Yen’s depreciation; absent the yen, the dollar has slightly weakened against advanced economies’ currencies. Brooks expects further dollar weakness.

Is one weak currency obscuring the dollar's broader decline?

Core argument: The DXY index and a version stripped of the Japanese Yen differ by only one percent, a gap the author expects to widen as the Yen depreciates, leaving the Dollar weaker than it looks.

The Japanese Yen has been tanking against the Dollar, offsetting strength in all kinds of other currencies like the Swedish Krona or Swiss Franc. This means that the exodus from the Dollar into precious metals is in fact accompanied by a similar exodus into safe haven currencies. This is just being obscured by the fact that the Japanese Yen is in even more trouble than the Dollar. All this is a symptom of the “debasement trade,” of which the precious metals rally is just one manifestation. Markets are looking for any and all safe havens from debt monetization. The chart shows what all this boils down to. The black line is the DXY index, which measures the trade-weighted Dollar against the G10. The blue line is the DXY index when I strip out the Japanese Yen. At this point, the difference between these two lines is only one percent, but the gap is growing as the Yen keeps depreciating. I expect this gap to keep widening as Japan’s debt overhang keeps dragging the Yen lower. This also means that the Dollar is weaker than it looks, a problem that will keep getting worse.

Takeaways by Macro Roundup® AI

  1. The DXY index and a version stripped of the Japanese Yen differ by only one percent, a gap the author expects to widen as the Yen depreciates, leaving the Dollar weaker than it looks.
  2. The Yen's decline against the Dollar has offset strength in currencies such as the Swedish Krona and Swiss Franc, obscuring an exodus from the Dollar into safe-haven currencies alongside precious metals.
  3. The author attributes the moves to a "debasement trade," in which markets seek safe havens from debt monetization and the precious metals rally is one manifestation, and expects Japan's debt overhang to drag the Yen lower.

Related Articles:

  • Dollar Dominance and Dollar Depreciation — Moving On Different Tracks — The dollar is projected to depreciate as less exceptional US economic and market performance makes it harder to attract unhedged capital flows to fund a large current account and fiscal deficit, leaving a high currency valuation to correct further. A softening US labor market supports that view.
  • Global Debt Report 2025 — About 60% of fixed-rate government debt in advanced economies maturing by 2027 — roughly $9tn — was issued before the recent interest-rate tightening, with weighted average yields below 2% versus projected 10-year rates near 3.6%, implying refinancing at nearly double the original cost. France, Spain, the UK, and the US face heightened vulnerability, with maturing debt exceeding 15% of GDP.
  • Across The Rich World, Fiscal Crises Loom — An analysis estimates most rich countries could keep debt stable as a share of their economies with only small primary surpluses—Britain's required surplus is 0.3% of GDP—even if all debt were refinanced immediately at current rates, but the tightening needed to stabilize debt ratios exceeds 2% of GDP in Britain and America and 3% in France.

AI Summary. Amazon, Alphabet, Microsoft, Meta, and Oracle have shifted from asset-light business models to a capital-intensive approach, while investors continue to value them as though nothing material has changed. Valuing their property, plant, and equipment at cost and applying a 10x price-to-book multiple to the rest would put their market values at roughly half current levels.

Jason Thomas Carlyle
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Jason Thomas notes that returns on physical assets “rarely” exhibit scale-free growth. Valuing hyperscalers’ PP&E at cost and assigning a 10x price to book multiple to the rest implies a reduction in their market caps by ~ 50%.

Are big tech valuations ignoring the shift to capital-intensive business models?

Core argument: Valuing the property, plant, and equipment of Amazon, Alphabet, Microsoft, Meta, and Oracle at cost and applying a 10x price-to-book multiple to the remainder would put their market caps at roughly half current levels.

Since the end of 2023, five companies at the center of the “asset-light” revolution—Amazon, Alphabet (GOOG), Microsoft, Meta, and Oracle—have effectively abandoned their old business models in favor of a new capital-intensive approach. Investors continue to value these businesses as though nothing material has changed. If we assume that the PP&E on [their] balance sheet should be valued at cost and assign a 10x P/B multiple to the rest, these companies’ market caps would be roughly half of what they are today. Returns on physical assets rarely exhibit the sort of scale-free growth common to software and digital platforms. There’s nothing inconsistent about bullishness on AI and skepticism about the valuations of companies operating at the technology’s frontier.

Takeaways by Macro Roundup® AI

  1. Valuing the property, plant, and equipment of Amazon, Alphabet, Microsoft, Meta, and Oracle at cost and applying a 10x price-to-book multiple to the remainder would put their market caps at roughly half current levels.
  2. Since the end of 2023, Amazon, Alphabet, Microsoft, Meta, and Oracle have effectively abandoned their asset-light business models for a capital-intensive approach, while investors continue to value them as though nothing material has changed.
  3. Returns on physical assets rarely exhibit the scale-free growth common to software and digital platforms, so bullishness on AI is consistent with skepticism about the valuations of companies operating at the technology's frontier.

Related Articles:

  • 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.
  • 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.
  • 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. Some rent-stabilized New York City apartments sit vacant and in disrepair because renovation costs far exceed what the regulated rents can recoup; a unit needing a $100,000 remodel may qualify for a maximum rent increase of only $347 a month.

Adam Lehodey City Journal
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There are ~50,000 apartments in New York City that are not in the market either because “their operating costs exceed legal rents or because they require considerable renovations” that could not be recouped due to rent control.

Do rent caps leave apartments vacant when renovation costs exceed allowed rents?

Core argument: Two rent-stabilized one-bedrooms in an East 6th Street building rent below $900 per month while one-bedrooms in the same building average $3,500, and both stabilized units have fallen into disrepair because restoration costs exceed the rent they would generate.

Take a building on East 6th Street as an example. One-bedroom units in the building average $3,500— except two of them, subject to the city’s rent-stabilization laws, which hold rents below $900 per month. As a result, both units have been allowed to fall into disrepair, because the cost of restoring them to habitability is greater than what they’d generate in rent. “We’re talking a minimum of $100,000 for [the studio we first visited], which requires a complete remodeling,” Michael Johnson, a vice president at the New York Apartment Association, explained. In order to afford to renovate the two units at the building on East 6th Street, the owner could request a rent increase from New York’s Division of Housing and Community Renewal. But the maximum rent increase allowed would be $347, bringing rents to $955 and $1,211, respectively. Any bank could see that the $100,000 investment would never be paid back.

Takeaways by Macro Roundup® AI

  1. Two rent-stabilized one-bedrooms in an East 6th Street building rent below $900 per month while one-bedrooms in the same building average $3,500, and both stabilized units have fallen into disrepair because restoration costs exceed the rent they would generate.
  2. Restoring the studio would cost a minimum of $100,000 for a complete remodeling, according to Michael Johnson, a vice president at the New York Apartment Association.
  3. A rent increase requested from New York's Division of Housing and Community Renewal would be capped at $347, lifting the two East 6th Street units to $955 and $1,211, leaving a $100,000 investment unrecoverable.

Related Articles:

  • Why Do People Leave New York City? — 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.
  • 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.
  • 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.

Friday, December 19, 2025

AI Summary. Polling across the US, UK, France and Germany finds that zero-sum beliefs on the left and right are expressions of a shared worldview holding that gains for some must come at others' expense. Per capita growth across the West has averaged under 1% a year since the financial crisis.

John Burn-Murdoch Financial Times
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More than half of young voters in the US, UK, France and Germany now back “zero sum” parties fueled by the beliefs such as “people only get rich by making others poor” on the left and “immigrants succeed at the expense of the native-born” on the right.

Do zero-sum beliefs on the left and right share one worldview?

Core argument: Per capita economic growth across the West has averaged less than 1% a year since the financial crisis, down from more than double that in the prior three decades and triple that before.

My analysis of polling by More in Common finds that in the US, UK, France and Germany zero-sum beliefs on the left (e.g. people only get rich by making others poor) and the right (e.g. immigrants succeed at the expense of the native-born) are related expressions of the same underlying worldview. Namely that there is only so much to go around and we must therefore use restrictions, exactions and preferential treatment to redress the balance between winners and losers. The emergence of these beliefs in different countries and political systems points to their being grounded in a shared reality. When economic growth is weak, upward mobility becomes limited, meaning gains really are more likely to come at another’s expense. This describes the past two decades almost perfectly. Per capita economic growth across the west has averaged less than 1% a year since the financial crisis, down from more than double that in the previous three decades and triple before that. The conveyor belt of generation-on-generation economic progress has slowed to a crawl and everyone is looking accusingly at the person a few steps ahead or the one joining the line half way along. More than half of young voters now back zero-sum parties of the right or left in the US, UK, France and Germany.

Takeaways by Macro Roundup® AI

  1. Per capita economic growth across the West has averaged less than 1% a year since the financial crisis, down from more than double that in the prior three decades and triple that before.
  2. Analysis of More in Common polling in the US, UK, France and Germany finds zero-sum beliefs on the left (people get rich only by making others poor) and right (immigrants succeed at the expense of the native-born) are expressions of the same underlying worldview.
  3. More than half of young voters in the US, UK, France and Germany back zero-sum parties of the right or left, and the emergence of these beliefs across different countries and political systems points to their being grounded in a shared reality.

Related Articles:

  • Zero-Sum Thinking and the Roots of U.S. Political Divides — Zero-sum thinking — viewing gains for one group as losses for another — is associated with greater support for liberal economic policies, stronger alignment with the Democratic Party, and weaker alignment with the Republican Party. The authors also find it linked to believing the QAnon conspiracy theory holds some truth and to sympathy for the attack on the U.S. Capitol.
  • Life Under Two: Debt, Deficits, and the AI Discontinuity — The United States averaged annual GDP growth above 3% for decades, but 2% or less is now more likely. Over ten years, the author estimates that gap amounts to a $3.36tn larger economy, $3.7tn more tax revenue, and 6m more jobs, shifting public psychology from abundance toward scarcity.
  • To Understand America Today, Study the Zero-Sum Mindset — Younger generations in the United States and other rich countries hold more zero-sum views than older ones, a pattern researchers link to growing up amid slower economic growth and lower mobility. People who have surpassed their parents, or whose families rose over generations, are less likely to think in zero-sum terms.

AI Summary. The U.S. job market looks no less healthy than a few months earlier: the rise in unemployment to 4.56% has coincided with more people actively looking for work, while the share of Americans aged 25-54 with a job held near 80.6%. Wages rising about 4% a year can explain inflation running about 1 percentage point above pre-pandemic rates.

Matt Klein The Overshoot
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Klein argues that the US labor market has not really deteriorated. The rise in the unemployment rate since March is due to increased participation. Wages are growing at 4% per year; 1pp above the pre-pandemic rate.

Does brisk wage growth explain why inflation remains above pre-pandemic rates?

Core argument: The prime-age (25–54) employment-population ratio was 80.6% in November, up slightly from 80.4% in March 2025, and has been stable since reaching a multi-decade high of just under 81% in early 2023.

Lowering interest rates could make sense if the job market were clearly in danger of rolling over. As of this writing, however, the job market still looks relatively healthy, or at least no less healthy than it did a few months ago. The headline unemployment rate (U-3) rose from 4.44% of the labor force in September to 4.56% in November. [However], the rise in unemployment since March 2025 has coincided with a rise in the share of people saying that they are actively looking for a job, rather than a decline in the proportion of people who are gainfully employed. The share of Americans aged 25-54 with a job was 80.6% in November, up slightly from March 2025, when the “prime age” employment-population ratio was 80.4%. In fact, the share of Americans aged 25-54 with a job has been remarkably stable since hitting its multi-decade high of just under 81% in early 2023. The typical American worker’s wages have consistently been rising about 4% a year since early 2023, compared to about 3% a year in 2018-2019 - large enough to explain why inflation is still running about 1pp faster than before the pandemic. The data imply that the burden for loosening policy should be high, especially given the latent risk [of] inflationary policy shocks.

Takeaways by Macro Roundup® AI

  1. The prime-age (25–54) employment-population ratio was 80.6% in November, up slightly from 80.4% in March 2025, and has been stable since reaching a multi-decade high of just under 81% in early 2023.
  2. The U-3 unemployment rate rose from 4.44% of the labor force in September to 4.56% in November, a rise that since March 2025 has coincided with more people saying they are actively looking for work rather than fewer people employed.
  3. Typical American workers' wages have risen about 4% a year since early 2023, against about 3% a year in 2018-2019, large enough to explain inflation running about 1pp faster than before the pandemic, implying a high burden for loosening policy.

Related Articles:

  • A New Era of Higher Inflation Risks — The authors argue inflation's baseline is now higher than pre-pandemic, with 2% acting more as a floor than a ceiling, noting disinflation has largely stalled and core inflation has run above target on a six-month annualized basis for five years. They expect a structurally wider range of inflation outcomes, skewed to the upside and centered higher than in the 2010s.
  • Jobless Growth — Labor demand growth may be too weak to keep pace with even modest labor supply growth: the labor market is somewhat weaker than before the pandemic, job growth has turned negative outside healthcare, and firms are focused on using AI to cut labor costs. Economists estimate most employment losses in routine manual occupations since the 1970s occurred during recessions.
  • The Jobs Chart That Really Has Us Worried — The recent jobs trajectory sits in the upper tail of historical month-to-month variation and closer to the range typically seen around past recessions, based on a comparison with paths beginning at the onset of prior recessions.

AI Summary. The Bank of Japan raised its policy rate by 0.25 percentage points to around 0.75%, a three-decade high, and signalled readiness to continue tightening if conditions allow. The 10-year Japanese government bond yield rose 0.05 percentage points, passing 2% to its highest level since 1999, while the yen weakened to ¥156.77 per dollar.

Leo Lewis Financial Times
Date Posted:

The yield on 10-year Japanese government debt climbed 5bp, breaching 2% and reaching its highest level since 1999, after the BOJ raised its policy rate 25bps to .75%.

Is Japan continuing to raise interest rates toward multi-decade highs?

Core argument: The Bank of Japan raised its policy rate by 0.25 percentage points to "around 0.75%", a three-decade high, and signalled readiness to continue tightening if conditions are right.

The Bank of Japan raised its policy rate by 0.25 percentage points to “around 0.75%”, a three-decade high, and signalled its readiness to continue monetary tightening if conditions are right. The yield on the benchmark 10-year Japanese government bond climbed 0.05 percentage points, breaking through 2% and reaching the highest level since 1999. The yen weakened to ¥156.77 against the dollar.

Takeaways by Macro Roundup® AI

  1. The Bank of Japan raised its policy rate by 0.25 percentage points to "around 0.75%", a three-decade high, and signalled readiness to continue tightening if conditions are right.
  2. The yield on Japan's benchmark 10-year government bond rose 0.05 percentage points, breaking through 2% to reach its highest level since 1999.
  3. The yen weakened to ¥156.77 against the dollar.

Related Articles:

  • The Global Debt Crisis Builds — Long-dated forward yields such as 10-year and 20-year forwards are near their highs even as the Federal Reserve cuts rates, with the gap between those forwards and 10-year yields widening, which the author reads as a worsening buyers' strike for longer-dated government debt. Italy, France, the UK, Japan and Germany all show elevated long-term forward yields.
  • Japan’s Debt Puzzle: Sovereign Wealth Fund from Borrowed Money — Japan's public sector operates as a highly leveraged sovereign wealth fund, funding risky assets by borrowing from banks and depositors at below-market rates, with returns sustaining its debt-to-GDP ratio above 200% without primary surpluses. The authors argue the resulting duration and currency mismatches expose Japan to mark-to-market losses that could trigger a fiscal crisis or a run on the yen.
  • The Race Between Asset Supply and Asset Demand — The authors estimate that demand for assets has outpaced supply by roughly 400% of GDP versus 100%, making rising asset demand the leading contributor to falling interest rates. They project that debt sustainability requires fiscal consolidation exceeding 10% of GDP, though debt could reach 250% of GDP without raising interest rates.

AI Summary. Novo Nordisk's Wegovy dominated the weight-loss drug market until Eli Lilly launched Zepbound, which brought in $4.9bn in sales in 2024, three-quarters as much as Wegovy. Bloomberg forecasts that by 2030 Lilly will control more than half of the global obesity drug market, versus a third for Novo.

Economist Staff The Economist
Date Posted:
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Despite revolutionizing health care with GLP-1 drugs like Wegovy, Novo Nordisk’s market cap has fallen two-thirds from its peak, and is currently only 23% that of Eli Lilly, which has now pulled ahead in sales of weight-loss injections.

Is a rival overtaking the early leader in weight-loss drugs?

Core argument: Bloomberg forecasts Eli Lilly will control more than half of the global obesity-drug market by 2030, versus a third for Novo Nordisk.

For more than two years, Novo Nordisk had the market for weight-loss drugs to itself. By 2023, sales of Wegovy had reached $4.3bn in America. That year, however, Eli Lilly, a rival that had closely watched Novo’s missteps, launched its own weight-loss injection, called Zepbound. In 2024, it brought in sales of $4.9bn, three-quarters as much as Wegovy. This year it will pull ahead. By 2030, Lilly will control more than half of the global market for obesity drugs, compared with just a third for Novo, according to forecasts from Bloomberg.

Takeaways by Macro Roundup® AI

  1. Bloomberg forecasts Eli Lilly will control more than half of the global obesity-drug market by 2030, versus a third for Novo Nordisk.
  2. Eli Lilly's Zepbound, launched in 2023, brought in $4.9bn of sales in 2024, three-quarters as much as Novo Nordisk's Wegovy, and is set to pull ahead this year.
  3. Novo Nordisk had the weight-loss drug market to itself for more than two years, with Wegovy sales reaching $4.3bn in America by 2023, before Eli Lilly entered after watching Novo's missteps.

Related Articles:

  • 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.
  • Long-Term Shareholder Returns: Evidence From 64,000 Global Stocks — A study of about 64,000 global stocks estimates net global stock market wealth creation of $75.7tn, with returns highly concentrated: the top 159 firms (0.25%) account for half of net wealth creation and the top 1,526 (2.39%) account for all of it. Fewer than half of stocks beat one-month US Treasury bills, 42.6% of non-US and 44.8% of US stocks.
  • The Economics of Inequality in High-Wage Economies — Information technology created investment opportunities exceeding the supply of properly trained talent, while trade with low-wage economies, low-skilled immigration, trade deficits, and aging demographics eased constraints on low-skilled labor and risk-averse savings. The author argues this framework, rather than rising cronyism, explains high returns to success, slowing productivity growth, and low interest rates.