Edward Conard

Top Ten New York Times Bestselling Author

  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “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 comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, December 24, 2025

AI Summary. Most major equity markets have outperformed the US, with Europe, China and Asia generating almost double US total returns in dollar terms and gains of 54% in Italy, 73% in Spain and 71% in Korea. US returns have been driven by strong earnings, particularly in technology, while Europe's have come largely from rising valuations.

Peter Oppenheimer, Sharon Bell, Guillaume Jaisson and Giovanni Ferrannini Goldman Sachs
Date Posted:

In 2025 Europe and Asia ex-China generated almost double the total return generated by the US in dollar terms. For 2026, GS forecasts a total dollar return of 15% for the S&P 500 in 2026, just under Europe’s STOXX 600 index (16% in dollar terms).

Are global equity markets outperforming the US, and what is driving returns?

Core argument: Europe, China and Asia generated almost double the total dollar returns of the US in 2025, with Spain up 73%, Korea 71% and Italy 54%, as geographic diversification benefited investors for the first time in many years.

Our main theme for 2025 has been to diversify, given that we came into this year with record country, sector and stock concentration. Most major equity markets have outperformed the US in 2025 as geographic diversification has, for the first time in many years, benefited investors. Europe, China and Asia have generated almost double the total returns compared with the US in dollar terms. Specific markets within the broader regions, such as Italy (54%), Spain (73%) and Korea (71%), have been particularly strong. We have also seen many EM markets start to break out on the upside, supported by stronger earnings growth and a tailwind from lower US interest rates and the dollar. We expect this trend to continue. While most equity markets have made good progress in 2025, the drivers have varied. In the US, equity markets have been driven by strong earnings (particularly in the tech space), whereas in other markets there has been a more even balance between improving earnings and rising valuations, with Europe seeing the biggest contribution of returns coming from valuation re-rating..

Takeaways by Macro Roundup® AI

  1. Europe, China and Asia generated almost double the total dollar returns of the US in 2025, with Spain up 73%, Korea 71% and Italy 54%, as geographic diversification benefited investors for the first time in many years.
  2. US equity gains in 2025 were driven by strong earnings, particularly in technology, while other markets saw a more even balance of improving earnings and rising valuations, with Europe's returns coming largely from valuation re-rating.
  3. Many emerging markets have begun breaking out on the upside, supported by stronger earnings growth and a tailwind from lower US interest rates and the dollar, a trend expected to continue.

Related Articles:

  • Building Long-Term Returns: Our 10-Year Forecasts — Analysts forecast an average annual total return of 6.5% for the S&P 500 stock index over the next 10 years, within a range of 3% to 10%, which would rank in the 27th percentile of 10-year returns since 1900. The base case combines 6% annual earnings-per-share growth, a 1% annual decline in valuations, and a 1.4% average dividend yield.
  • American Unexceptionalism — The S&P 500 has outperformed other developed-market equities by a cumulative 150% over the past fifteen years, but the authors attribute about 80% of that gap to a strengthening dollar and expanding relative valuations rather than fundamentals such as dividends, buybacks, and organic growth. U.S. valuations sit around the 90th percentile on price-to-earnings measures.
  • 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.

AI Summary. The US economy grew at an annualised rate of 4.3% in the third quarter, exceeding economists' expectations of 3.2%. Growth was boosted by consumer spending on healthcare and computing, higher government defense spending, and exports, while business investment slowed and imports fell.

Myles McCormick and Kate Duguid Financial Times
Date Posted:
Is Database:
Database

The first official release of the BEA data for Q3 shows US GDP growth of 4.3% at an annualized rate, well above Bloomberg’s read of economists’ consensus prediction of 3.2%.

Is US economic growth outpacing economists' expectations?

Core argument: The US economy grew at an annualised 4.3% rate in the third quarter, according to the Bureau of Economic Analysis, exceeding the 3.2% expected by economists polled by Bloomberg and marking the strongest reading since the third quarter of 2023.

The US economy grew at an annualised rate of 4.3% in the third quarter, according to official data released on Tuesday that far surpassed economists’ expectations and was well ahead of previous quarters. The rise in GDP, which was boosted by consumer spending on healthcare and computing, compared with estimates of 3.2% among economists polled by Bloomberg and was the strongest reading since the third quarter of 2023. The figure from the Bureau of Economic Analysis was also helped by increases in government defence spending and exports. Business investment slowed, while imports fell.

Takeaways by Macro Roundup® AI

  1. The US economy grew at an annualised 4.3% rate in the third quarter, according to the Bureau of Economic Analysis, exceeding the 3.2% expected by economists polled by Bloomberg and marking the strongest reading since the third quarter of 2023.
  2. Consumer spending on healthcare and computing boosted third-quarter US GDP, alongside increases in government defence spending and exports.
  3. Business investment slowed and imports fell in the third quarter, according to Bureau of Economic Analysis data.

Related Articles:

  • OECD Economic Outlook, Volume 2025 Issue 2: Resilient Growth but with Increasing Fragilities — U.S. real GDP grew at a 1.1% annualized rate over the first half of 2025, but excluding booming AI-related investment output contracted 0.1%, with non-AI investment weakening. The OECD identifies a correction in equity markets lifted by expectations of high AI returns as a key downside risk to its projections.
  • 2026 Outlook: The Year Ahead In 14 Sparks — Slowing US growth — attributed to trade frictions, immigration restrictions and risks from a K-shaped economy — combined with inflation stuck near 3% amounts to a stagflation environment, even as the medium-term outlook looks strong. Real business investment growth is concentrated in information processing equipment such as computers, data centers and software, while non-AI capital spending growth is roughly zero.
  • SF FedViews: Solid Growth, but Small Cracks Have Emerged — Since the second half of 2023, four-quarter US productivity growth has averaged nearly 2.5%, well above the pre-pandemic trend of about 1% to 1.25%, supporting real GDP growth. It remains unclear whether this reflects a higher productivity regime fostered by rising AI use or a temporary post-pandemic reorganization surge.

AI Summary. China produced 99% of the world's lithium iron phosphate battery cells and over 90% of their main components, and also dominates refining of lithium and graphite and production of cathodes and anodes. A defense analytics firm estimates U.S. military forces rely on Chinese supply chains for roughly 6,000 battery components across weapons programs.

Hiroko Tabuchi, Brad Plumer and Harry Stevens New York Times
Date Posted:

In 2024 China manufactured 99% of the world’s LFP (Lithium Iron Phosphate) cells and more than 90% of the primary components. Quietly, the Trump administration is allowing many Biden-era grants for domestic battery manufacturing to proceed.

How dependent are U.S. defense and AI systems on Chinese batteries?

Core argument: China produced 99% of the world's lithium iron phosphate battery cells in 2024 and more than 90% of the main components, with its dominance extending to refining lithium and graphite and making cathodes and anodes.

In 2024, China made 99% of the world’s LFP cells and more than 90% of the main components. That dominance extends to the refining of raw materials like lithium and graphite, as well as to fundamental components like cathodes and anodes that drive the movement of electrons within batteries. Currently, U.S. military forces rely on Chinese supply chains for some 6,000 individual battery components across weapons programs, according to Govini, a defense analytics firm. When President Trump came to office, his administration initially froze billions of dollars in Biden-era federal grants for battery manufacturing, lumping batteries in with electric vehicles, solar farms, wind turbines and other clean energy technologies Mr. Trump had sought to de-emphasize. The Energy Department has quietly allowed many Biden-era grants for battery makers to proceed. It also recently announced up to $500 million for battery materials and recycling projects. The administration has started investing in companies that develop battery components or critical minerals, including Eos, a next-generation battery company. As part of a trade deal, officials prodded Japan to promise to invest billions of dollars in U.S. battery manufacturing.

Takeaways by Macro Roundup® AI

  1. China produced 99% of the world's lithium iron phosphate battery cells in 2024 and more than 90% of the main components, with its dominance extending to refining lithium and graphite and making cathodes and anodes.
  2. U.S. military forces rely on Chinese supply chains for some 6,000 individual battery components across weapons programs, according to the defense analytics firm Govini.
  3. After initially freezing billions of dollars in Biden-era battery manufacturing grants, the Trump administration has allowed many to proceed, announced up to $500 million for battery materials and recycling projects, and prodded Japan to promise billions in U.S. battery manufacturing investment.

Related Articles:

  • US Efforts to Contain Xi’s Push for Tech Supremacy Are Faltering — Research by Bloomberg Economics and Bloomberg Intelligence finds that of 13 key technologies tracked, China has reached global leadership in five and is catching up in seven others, with clear leads in electric vehicles, automotive software and lithium battery technology. China still struggles to develop manufacturing processes for advanced semiconductors, the main focus of US export controls.
  • 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.
  • The U.S. Is Forfeiting the Clean-Energy Race to China — China installed 277 gigawatts of wind and solar capacity in seven months, roughly four times the utility-scale additions U.S. federal analysts project for all power sources over a full year. Chinese firms' global market share in batteries and solar modules has reached 75% or higher, according to BloombergNEF.

AI Summary. The U.S. Navy is to build a new "Trump-class" battleship as the centerpiece of a planned "Golden Fleet," upgrading the Arleigh Burke-class destroyers that form the current fleet's workhorse. A new frigate based on the Coast Guard's Legend-class National Security Cutter will replace the canceled Constellation-class frigate.

Lara Seligman and Marcus Weisgerber Wall Street Journal
Date Posted:

The Navy’s planned “Golden Fleet” is falling into place, with a new Trump class of “battleships” that will replace the Navy’s Arleigh Burke-class destroyers, and a new class of frigates replacing the canceled Constellation class.

Is the Navy building a new class of battleship and frigate?

Core argument: President Trump said the Navy would build a new "Trump-class" battleship as the centerpiece of his vision for a "Golden Fleet," an upgrade to the Arleigh Burke-class destroyers that serve as the workhorse of the current fleet.

President Trump said the Navy would build a new “Trump-class” battleship, which will be the centerpiece of his vision for a new “Golden Fleet.” The new battleship will be an upgrade to the Navy’s Arleigh Burke-class destroyers, which are the workhorse of the current fleet and which Trump has compared unfavorably to rival navies, according to a U.S. official and another person familiar with the discussions. The new frigate will be based on the Coast Guard’s Legend-class National Security Cutter, which HII’s Ingalls Shipbuilding division builds in Pascagoula, Miss., and will replace the Constellation-class frigate that the Navy canceled last month after years of delays.

Takeaways by Macro Roundup® AI

  1. President Trump said the Navy would build a new "Trump-class" battleship as the centerpiece of his vision for a "Golden Fleet," an upgrade to the Arleigh Burke-class destroyers that serve as the workhorse of the current fleet.
  2. Trump has compared the Navy's Arleigh Burke-class destroyers unfavorably to rival navies, according to a U.S. official and another person familiar with the discussions.
  3. The Navy's new frigate will be based on the Coast Guard's Legend-class National Security Cutter, built by HII's Ingalls Shipbuilding division in Pascagoula, Miss., and will replace the Constellation-class frigate the Navy canceled last month after years of delays.

Related Articles:

  • Ukraine Claims Strike On Russian Submarine With Underwater Drones — Ukraine's Security Service says it used underwater drones alongside the Ukrainian Navy to strike a Russian Kilo-class submarine, vessels valued at about $400mn, and estimates sanctions and limited access to high-tech components could push replacement costs to $500mn.
  • Ship Wars — Shipyards tied to China's defense industrial base account for 15% of the country's active shipyards but 40% of commercial output by tonnage, with over 75% of their production built for firms outside China and Hong Kong. The authors argue these commercial revenues offset fixed costs and effectively subsidize China's naval expansion.
  • China’s Shipyards Are Ready for a Protracted War. America’s Aren’t — China produced more than half of the world's commercial shipbuilding output, while Europe accounts for about 5% and the US next to nothing, with most of the remainder built in South Korea and Japan. Analysts argue that in a protracted conflict China's wartime-scale yards could quickly accelerate production, replace lost ships, and repair damaged ones.

AI Summary. Pew Research Center polling finds that key measures of religiousness in the United States have held fairly steady, including the shares of adults identifying as Christian, with another religion, or with no religion, and those who pray daily, call religion very important, or attend services regularly. This stability follows a prolonged period of religious decline.

Gregory Smith Pew Research Center
Date Posted:

America’s religious composition remained stable between 2020 and 2025, with 62% of the population identifying with Christianity – down 2pp over that period – and 8% with other religions, up 1pp. Young adults today are less religious than their elders.

Has religious decline in America leveled off?

Core argument: Pew Research Center polling finds key measures of U.S. religiousness holding steady, with the shares of adults identifying with Christianity, with another religion, or with no religion all remaining fairly stable in the Center's latest polling.

Pew Research Center polling finds that key measures of religiousness are holding steady in the United States, continuing a period of relative stability that began about five years ago. The shares of U.S. adults who identify with Christianity, with another religion, or with no religion have all remained fairly stable in the Center’s latest polling. The percentages of Americans who say they pray every day, that religion is very important in their lives, and that they regularly attend religious services also have held fairly steady since 2020. The recent stability is striking because it comes after a prolonged period of religious decline.

Takeaways by Macro Roundup® AI

  1. Pew Research Center polling finds key measures of U.S. religiousness holding steady, with the shares of adults identifying with Christianity, with another religion, or with no religion all remaining fairly stable in the Center's latest polling.
  2. The percentages of Americans who say they pray every day, that religion is very important in their lives, and that they regularly attend religious services have held fairly steady since 2020, according to Pew Research Center.
  3. Pew Research Center notes that the stability in American religiousness follows a prolonged period of religious decline, with the current period of relative stability beginning about five years ago.

Related Articles:

  • Decline of Christianity in the U.S. Has Slowed, May Have Leveled Off — Survey data show 62% of U.S. adults identify as Christian, a 16-point decline from earlier readings, with Protestants at 40% and Catholics at 19%. Religiously unaffiliated adults — atheists, agnostics, and those saying "nothing in particular" — account for 29% of the population.
  • The Illusion of America’s Religious Revival — Secular identity has plateaued among young men while continuing to rise among young women, with 43% of young women now religiously unaffiliated versus 33% a decade earlier and almost no change among young men. The share of young women calling religion personally important fell from 82% to 57%, a steeper decline than among young men.
  • Religious ‘Nones’ in America: Who They Are and What They Believe — Pew survey data indicate about 28% of U.S. adults are religiously unaffiliated, identifying as atheist, agnostic, or "nothing in particular." Most of these adults believe in God or a higher power, rarely attend religious services, say religion does some harm while many also see some good, and reject the idea that science can explain everything.

AI Summary. A classic essay argues that the Roman world combined civil order and political stability with oppression, heavy taxation, persecution of dissenters, enslavement, and contempt for human life. It presents the teaching to render unto Caesar what is Caesar's and unto God what is God's as the assertion of a realm beyond the state's claim.

Vermont Royster Wall Street Journal
Date Posted:

Since 1949 the Wall Street Journal has run the late Vermont Royster’s “In Hoc Anno Domini” on Christmas Eve: “Stand fast therefore in the liberty wherewith Christ has made us free and be not entangled again with the yoke of bondage.”

Can civil order and stability coexist with oppression and contempt for life?

Core argument: The essay "In Hoc Anno Domini" describes a known world under a single state, Rome, ruled by one master, Tiberius Caesar, where Roman law enforced civil order and centurions maintained stability in government and society.

When Saul of Tarsus set out on his journey to Damascus the whole of the known world lay in bondage. There was one state, and it was Rome. There was one master for it all, and he was Tiberius Caesar. Everywhere there was civil order, for the arm of the Roman law was long. Everywhere there was stability, in government and in society, for the centurions saw that it was so. But everywhere there was something else, too. There was oppression -- for those who were not the friends of Tiberius Caesar. There was the tax gatherer to take the grain from the fields and the flax from the spindle to feed the legions or to fill the hungry treasury from which divine Caesar gave largess to the people. There was the impressor to find recruits for the circuses. There were executioners to quiet those whom the Emperor proscribed. What was a man for but to serve Caesar? There was the persecution of men who dared think differently, who heard strange voices or read strange manuscripts. There was enslavement of men whose tribes came not from Rome, disdain for those who did not have the familiar visage. And most of all, there was everywhere a contempt for human life. What, to the strong, was one man more or less in a crowded world? Then, of a sudden, there was a light in the world, and a man from Galilee saying, Render unto Caesar the things which are Caesar's and unto God the things that are God's.

Takeaways by Macro Roundup® AI

  1. The essay "In Hoc Anno Domini" describes a known world under a single state, Rome, ruled by one master, Tiberius Caesar, where Roman law enforced civil order and centurions maintained stability in government and society.
  2. Under Tiberius Caesar, the essay recounts, tax gatherers took grain from the fields and flax from the spindle to feed the legions and fill the treasury, impressors found recruits for the circuses, and executioners quieted those the Emperor proscribed.

Friday, December 26, 2025

AI Summary. The authors argue China's official growth figures are inconsistent with ten consecutive quarters of deflation, estimating that real GDP is around 11% below official levels, with most of the adjustment in investment. That would imply a drop of roughly 9 percentage points in China's share of global investment, helping explain its export surge.

Daniel Rosen, Logan Wright, Oliver Melton and Jeremy Smith Rhodium Group
Date Posted:

Rhodium estimates that China’s GDP grew 2.5–3% in 2025, with growth increasingly dependent on its $1T trade surplus, which accounted for 57 to 68% of China’s growth in 2025. Rhodium’s numbers show a sharp drop in China’s share of world consumption.

Is China's real growth far below official figures?

Core argument: Adjustments to China's official data for 2022–25 put the level of real GDP this year roughly 11% below official figures, with most of the adjustment falling on the investment component of GDP.

History offers no examples of economies that have recorded 5% real GDP growth while facing years of persistent deflation, as China has for ten consecutive quarters. We doubt China is the first. The gap between China’s official narrative and economic reality has been widening for some years. Our adjustments to China’s official data from 2022-25 suggest that the level of real GDP this year is around 11% lower than official numbers claim, with most of the adjustment in the investment (or gross capital formation) component of GDP. This would imply a decline of roughly 9pp of global investment share from 2021 to 2025, which would go a long way to explaining the surge in Chinese exports and growing concerns about China’s external imbalances.

Takeaways by Macro Roundup® AI

  1. Adjustments to China's official data for 2022–25 put the level of real GDP this year roughly 11% below official figures, with most of the adjustment falling on the investment component of GDP.
  2. China has faced persistent deflation for ten consecutive quarters while reporting 5% real GDP growth, a combination with no precedent in economic history.
  3. The adjusted figures would imply a decline of roughly 9pp in China's share of global investment from 2021 to 2025, which would help explain the surge in Chinese exports and growing concerns about China's external imbalances.

Related Articles:

  • Macro Outlook 2026: Sturdy Growth, Stagnant Jobs, Stable Prices — China's growth is forecast at 4.8%, above the 4.5% consensus, with robust manufacturing offset by a housing drag on output estimated at about 1.5 percentage points as property sales run 60% below peak. Strong manufacturing and weak domestic demand are projected to lift China's current account surplus toward 1% of global output.
  • 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.
  • Can China Continue to Export its Way Out of its Property Slump? — 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.

AI Summary. High inflation, more cautious consumers, and tariffs are weighing on small-business earnings and prompting cutbacks, as smaller firms are less able than larger ones to withstand economic headwinds. Private firms with fewer than 50 workers have steadily shed jobs over the past six months.

Harriet Torry and Justin Lahart Wall Street Journal
Date Posted:
Is Database:
Database

According to ADP data, American firms with 1–49 employees have reduced their workforce by almost 200,000 workers since the start of the year, whereas firms with more than 50 workers have increased their workforce by ~700,000.

Are small businesses faring worse than large ones?

Core argument: Private firms with fewer than 50 workers have steadily shed jobs over the past six months.

At small businesses, which are unable to withstand economic headwinds as easily as their larger counterparts, years of high inflation, increasingly cautious consumers and tariffs are weighing on earnings and prompting cutbacks. Over the past six months, private firms with fewer than 50 workers have steadily shed jobs,

Takeaways by Macro Roundup® AI

  1. Private firms with fewer than 50 workers have steadily shed jobs over the past six months.
  2. Years of high inflation, increasingly cautious consumers and tariffs are weighing on small-business earnings and prompting cutbacks, as small firms cannot withstand economic headwinds as easily as larger counterparts.
  3. The economic divide between big and small companies is growing, with small businesses absorbing the strain of inflation, cautious consumers and tariffs.

Related Articles:

  • Affordability, Part IV — US incomes at the 60th percentile of the distribution, currently $106,000, have fallen from 43% of incomes at the 95th percentile, currently $336,000, to 31% over roughly half a century. The author argues this widening gap may make an affluent lifestyle seem unattainable to most Americans.
  • U.S. Wages Still Rising Briskly, Employment Holding Up, and Inflation Still Sticky (Probably) — 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.
  • 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 six largest US banks by assets — JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley — added $600bn in combined market value to reach $2.37tn, spurred by a deregulation push and a revival in investment banking. Europe's six most valuable banks are worth about $1tn combined.

Joshua Franklin Financial Times
Date Posted:

The market cap of the six largest American banks rose $600B in 2025 to $2.37T – more than double that of their European peers – as investors bet on deregulation, such as allowing higher leverage and less onerous Basel III Endgame rules.

Has deregulation boosted the market value of large US banks?

Core argument: The six largest US banks by assets added $600bn in market value in 2025, with combined market capitalisation rising to $2.37tn from $1.77tn at the end of last year, according to S&P Global data.

America’s six largest banks added $600bn in market value in 2025, spurred on by the Trump administration’s push to deregulate the industry and a revival in investment banking. The collective market capitalisation of the six biggest US banks by assets — JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley — rose to $2.37tn at the close of business on Tuesday, up from $1.77tn at the end of last year, according to data from S&P Global. The six most valuable European banks have a market capitalisation of just $1tn combined, highlighting the gap that has opened since the financial crisis between US banks and their European rivals. The US banks are on track to outperform the broader S&P 500 for the second year in a row.

Takeaways by Macro Roundup® AI

  1. The six largest US banks by assets added $600bn in market value in 2025, with combined market capitalisation rising to $2.37tn from $1.77tn at the end of last year, according to S&P Global data.
  2. Gains at JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley were spurred on by the Trump administration's push to deregulate the industry and a revival in investment banking.
  3. The six most valuable European banks have a combined market capitalisation of $1tn, while the six biggest US banks are on track to outperform the broader S&P 500 for the second year in a row.

Related Articles:

  • Goosing Credit Supply — Faster loan growth at lightly regulated smaller banks, credit unions, and private credit compared with large banks suggests post-2008 rules that raised capital and liquid-asset requirements with bank size have constrained large-bank lending. With loan growth currently limited more by demand than supply, easing large-bank requirements may mainly shift existing loans toward large banks.
  • The Secular Decline of Bank Balance Sheet Lending — Traditional bank balance sheet lending has declined as a share of credit intermediation, with credit increasingly channeled through arms-length transactions such as securitization. A structural model attributes falling lending shares to lower securitization costs, savers' behavior driving bank balance sheet size, and implicit bank costs and subsidies shaping balance sheet composition.
  • Europe’s Financial Sector is a Drag — Europe's fragmented financial sector struggles to supply enough capital and liquidity to support European companies and economic growth, with the gap between US and European financial sectors widening since the 2008-2009 crisis. The total market value of European banks fell from $2.7tn to $1.4tn, while US bank market value rose from $1.6tn to $2.6tn.

AI Summary. Using ancestral origins for millions of U.S.-born working-age individuals, the authors estimate that inequality within 186 ancestral groups accounts for 96% of U.S. income inequality, and inequality within six broad ethnic categories accounts for 97%, leaving only 3–4% attributable to differences between groups.

Oded Galor and Daniel Wainstock National Bureau of Economic Research
Date Posted:
Is Database:
Database
Is Important:
Important

Inequality within 186 distinct US ethnic groups accounts for 96% of total income variation, while between-group inequality contributes only 4%, largely constant across time and regions. For 6 broad ethnic categories, within variation is 97% of the total.

How much of US income inequality occurs within ethnic groups?

Core argument: Inequality within 186 distinct ancestral groups accounts for 96% of the variation in overall U.S. income inequality, while between-group inequality accounts for 4%, based on a representative sample of millions of U.S.-born, working-age individuals.

This paper examines inequality within the U.S. population, exploring variations between and within ethnic groups. Leveraging the ancestral origins of a representative sample of the U.S. population, consisting of millions of U.S.-born, working-age individuals, the study decomposes income inequality into within-group and between-group components, distinguishing disparities among those sharing a common ancestry from inequality between groups. As indicated in Figure 1, inequality within the 186 distinct ancestral groups accounts for 96% of the variation in overall income inequality in the U.S., while between-group inequality accounts for only 4%. Similarly, inequality within six broad ethnic categories (Asian, Black, Hispanic, Native American, Pacific Islander, and White) accounts for 97% of the variation, while between-group inequality accounts for just 3%. When restricting the sample to individuals with the same educational attainment and demographic characteristics, within-ethnic-group inequality still accounts for the principal share of income dispersion. Spatial decomposition reveals that the predominance of within-group inequality holds across local micro-areas throughout the U.S. The South exhibits a modestly smaller share of within-group inequality—a pattern consistent with the region’s greater ethnic fragmentation and enduring legacy of discrimination.

Takeaways by Macro Roundup® AI

  1. Inequality within 186 distinct ancestral groups accounts for 96% of the variation in overall U.S. income inequality, while between-group inequality accounts for 4%, based on a representative sample of millions of U.S.-born, working-age individuals.
  2. Within six broad ethnic categories — Asian, Black, Hispanic, Native American, Pacific Islander, and White — within-group inequality accounts for 97% of the variation in income inequality, versus 3% between groups.
  3. Among individuals with the same educational attainment and demographic characteristics, within-ethnic-group inequality still accounts for the principal share of income dispersion, and its predominance holds across local micro-areas, with the South showing a modestly smaller within-group share.

Related Articles:

  • Changing Opportunity: Sociological Mechanisms Underlying Growing Class Gaps and Shrinking Race Gaps in Economic Mobility — Across the 1978 to 1992 birth cohorts, adult household incomes fell for white children raised in low-income families and rose for those raised in high-income families, increasing the intergenerational persistence of income ranks among white children by 28%. Over the same cohorts, adult incomes rose for Black children at all parental income levels.
  • How Immigration is Changing the Black-White Earnings Gap — A study of earnings among non-Hispanic White and three generations of Black workers finds that while the overall Black-White earnings gap widened, first- and second-generation Black immigrants made earnings advances, with second-generation Black women earning at or above White women. The authors attribute second-generation gains largely to educational attainment, with residential patterns playing a protective role.
  • Income Mobility of the Top One Percent — 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%.

AI Summary. The author argues that Bank of Japan bond buying holds Japanese long-term government bond yields artificially below levels justified by the country's gross government debt, pushing risk premia into the currency instead and driving the yen lower. On this view, yen depreciation will continue until yields are allowed to rise far more, forcing fiscal consolidation.

Robin Brooks Robin Brooks Substack
Date Posted:

While Japan’s long-term yields have risen, they have not risen enough to stabilize the Yen. Brooks argues that this implies “markets think risk of a debt crisis is rising sharply.”

Does central bank bond buying push risk premia into the currency?

Core argument: The author argues that Japan's 30-year government bond yields remain far too low relative to its gross government debt as a share of GDP because the Bank of Japan continues to buy government debt on a massive scale.

The vertical axis in the chart shows the 30-year government bond yields that go into the rate differential. The horizontal axis plots gross government debt in percent of GDP. While it’s true that the interest differential has moved a lot in favor of the Yen, it’s also true that - given Japan’s monstrous level of government debt - longer-term yields are still much too low relative to where they would be if the BoJ weren’t still a massive buyer of government debt. This bond buying is keeping yields artificially low, which should really be much higher due to risk premia. Because these risk premia aren’t allowed to show up in the bond market, they show up in the Yen instead, which is the reason it keeps falling. Here’s the uncomfortable truth: Japan’s longer-term yields have been rising, but - on a risk-adjusted basis - that rise isn’t nearly enough to stabilize the Yen. Another way to say this: markets think risk of a debt crisis is rising sharply. Yen depreciation won’t stop until yields are allowed to rise far more, forcing the government to pursue fiscal consolidation and bring down debt. Japan needs to stop being in denial.

Takeaways by Macro Roundup® AI

  1. The author argues that Japan's 30-year government bond yields remain far too low relative to its gross government debt as a share of GDP because the Bank of Japan continues to buy government debt on a massive scale.
  2. Because risk premia are suppressed in Japan's bond market by central bank buying, the author contends those premia show up in the Yen instead, driving its continued depreciation.
  3. The author argues Yen depreciation will not stop until Japanese yields are allowed to rise far more, forcing the government into fiscal consolidation and debt reduction, and that markets see the risk of a debt crisis rising sharply.

Related Articles:

  • Japan Raises Interest Rates To Highest Level In 30 Years — 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.
  • 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.
  • 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.