Edward Conard

Top Ten New York Times Bestselling Author

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

Macro Roundup


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:
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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:
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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.

Monday, December 29, 2025

AI Summary. Mexican government data show manufacturing exports to the U.S. rose almost 9% over an 11-month period versus a year earlier, as a nearly 6% drop in auto-industry exports was offset by a 17% surge in other manufactured goods. U.S.–Mexico goods trade is on track to reach a record near $900bn.

Santiago Pérez and Anthony Harrup Wall Street Journal
Date Posted:
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~85% of Mexico’s exports remain tariff-free under the USMCA, allowing Mexican firms to capture ~25% of the drop in the US-China trade deficit, according to USTR. In the first 11 months of 2025, Mexican manufacturers’ exports to the US rose almost 9% y/y.

Are higher U.S. tariffs increasing Mexican manufacturing exports to America?

Core argument: Mexican manufacturing exports to the U.S. rose almost 9% from January to November versus the first 11 months of 2024, according to Mexican government data, despite steep U.S. tariffs on autos, steel and aluminum.

Even with steep tariffs on autos, steel and aluminum bound for America, Mexican manufacturing exports to the U.S. rose almost 9% from January to November, compared with the first 11 months of 2024, according to Mexican government data. Auto-industry exports to the U.S. fell close to 6% during the period, but exports of other manufactured goods surged 17%. Trade in goods between the U.S. and Mexico is on track to reach a record of nearly $900 billion this year. U.S. Trade Representative Jamieson Greer said Mexico has managed to capture about 25% of the reduction in the U.S. trade deficit with China. The shift demonstrates “the important role that Mexico plays in U.S. supply-chain resilience efforts,” Greer told U.S. lawmakers in mid-December.

Takeaways by Macro Roundup® AI

  1. Mexican manufacturing exports to the U.S. rose almost 9% from January to November versus the first 11 months of 2024, according to Mexican government data, despite steep U.S. tariffs on autos, steel and aluminum.
  2. Mexico's auto-industry exports to the U.S. fell close to 6% over the period while exports of other manufactured goods rose 17%, with U.S.-Mexico goods trade on track for a record of nearly $900 billion this year.
  3. U.S. Trade Representative Jamieson Greer told U.S. lawmakers that Mexico has captured about 25% of the reduction in the U.S. trade deficit with China, showing "the important role that Mexico plays in U.S. supply-chain resilience efforts.".

Related Articles:

  • Mexico Imposes Tariffs Of Up To 50% On Chinese Goods — 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.
  • 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.
  • 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. Mexico's growth has fallen to near zero as an investment boom from recent years faded into a drag on growth and private consumption returned to the weakness seen in the five years before the pandemic. Despite strong exports to the US, the gains from trade are not reaching enough of the population, making the stagnation a structural problem.

Robin Brooks Robin Brooks Substack
Date Posted:
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The temporary increase in GDP growth due to investment driven by the nearshoring boom has receded, while exports to the US rose. Private consumption in Mexico has completely stagnated, driving GDP growth close to zero.

Why has Mexico's growth stalled despite booming exports to the US?

Core argument: Mexico's GDP growth has fallen to near zero as the investment boom that lifted growth between 2022 and 2024 faded and turned into a drag on growth.

The chart shows what’s going on in terms of the different components of GDP. You can clearly see the investment boom (red bars), which lifted growth in the years between 2022 - 2024. But that investment boom has faded - it was never sustainable - and has turned into a drag on growth. The key reason why growth has fallen back to near zero is private consumption (blue bars), which is back to being as weak as it was in the five year period before the pandemic. The reasons for Mexico’s stagnation are complex, but what’s clear is that the lack of growth should at this point be regarded as a structural problem. For some reason, the gains from globalization - Mexico’s exports to the US are doing extremely well - are not benefitting the broader population, which is why private consumption stagnates. This is the basic problem. The gains from trade aren’t benefitting enough people.

Takeaways by Macro Roundup® AI

  1. Mexico's GDP growth has fallen to near zero as the investment boom that lifted growth between 2022 and 2024 faded and turned into a drag on growth.
  2. Private consumption in Mexico is as weak as it was in the five years before the pandemic, the key reason growth has fallen back to near zero.
  3. Mexico's exports to the United States are doing extremely well, yet the gains from trade are not benefiting enough people, and the lack of growth should be regarded as a structural problem.

Related Articles:

  • 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.
  • China Launches Sweeping Probe Into Mexican Tariffs As Trade War Widens — China has opened an investigation into Mexico's tariffs and trade restrictions on Chinese exports, including a proposed 50% tariff on Chinese cars and levies on about 1,400 products from countries lacking a trade deal with Mexico. China's commerce ministry says the measures would seriously damage Chinese companies' trade and investment interests.
  • China Delays Approval of BYD’s Mexico Plant Amid Fears Tech Could Leak to US — China's commerce ministry has withheld the approval that domestic automakers need to manufacture abroad, holding up BYD's planned Mexican car plant, which the company said would create 10,000 jobs and build 150,000 vehicles a year. Officials are concerned that Mexico's proximity to the US could give Mexico, and possibly the US, access to BYD's advanced technology and knowhow.

AI Summary. China's very high investment rates, combined with a shrinking workforce and slowing productivity, produce sharply diminishing returns, making its decades-old high-savings, high-investment growth model unsustainable. The author argues China's leaders resist a pivot toward consumption because of ideology and geopolitical ambition, with the leadership rejecting welfare spending as breeding dependency.

Paul Krugman Krugman Wonks Out
Date Posted:

With China’s high level of investment still not enough to absorb its massive annual saving, Krugram argues, China’s trade surplus “functions as a sort of safety valve, allowing China to escape the full consequences of its inadequate consumer demand.”

Why won't China's leaders shift growth toward consumption?

Core argument: China's high-savings, high-investment growth model of more than three decades is no longer sustainable, as very high investment rates colliding with a shrinking workforce and a productivity slowdown produce sharply diminishing returns on investment.

When very high rates of investment collide with a shrinking workforce and a productivity slowdown, the result is sharply diminishing returns on investment. Basically, Chinese businesses can’t profitably invest all the money Chinese consumers want to save. So the extremely-high-savings, extremely-high-investment model that has driven China’s economic strategy for more than three decades is no longer sustainable. A policy pivot [to boost consumption] that aimed to make economic growth sustainable while making families more financially secure would be a no-brainer — it would be popular as well as sensible. So why won’t China’s leaders do it? Much of the answer involves a combination of ideology and geopolitical ambition. Many people have quoted from a 2021 speech by Premier Xi Jinping, in which he declared, "To promote common prosperity, we must not engage in “welfare”. Some Latin American countries in the past have engaged in populism, and welfare in these countries has raised a group of “lazy people” with unearned incomes. As a result, the countries’ financial systems were overwhelmed and fell into the “middle-income trap”, that they were unable to extricate themselves from for a long time."

Takeaways by Macro Roundup® AI

  1. China's high-savings, high-investment growth model of more than three decades is no longer sustainable, as very high investment rates colliding with a shrinking workforce and a productivity slowdown produce sharply diminishing returns on investment.
  2. Chinese businesses cannot profitably invest all the money Chinese consumers want to save, and a policy pivot toward boosting consumption would make growth sustainable while making families more financially secure.
  3. Much of the explanation for China's leaders declining to pivot toward consumption involves ideology and geopolitical ambition, with Xi Jinping declaring in a 2021 speech that promoting common prosperity "must not engage in 'welfare,'" which he said raised "lazy people" in Latin America.

Related Articles:

  • China’s Economy: Rightsizing 2025, Looking Ahead to 2026 — 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.
  • 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. Demographers estimate Japanese births will fall below 670,000 for the year, short of official projections of 749,000 that had not expected that level until 2041. Annual marriages, which in Japan are closely tied to births, have fallen below 500,000, about half the 1972 peak.

Leo Lewis Financial Times
Date Posted:

Japan’s 670,000 births in 2025, reflecting a ~3% decline y/y, are well under the government’s most pessimistic forecast. The number of annual marriages in Japan has fallen to less than 500,000, ~ half the 1972 peak.

Are Japanese births falling far faster than official projections?

Core argument: Demographics experts, using preliminary data for the first 10 months of the year, expect Japanese births in 2025 to come in below 670,000, versus the 749,000 projected by the National Institute of Population and Social Security Research.

The number of Japanese births this year is on track to fall short of even the government’s most pessimistic forecasts, deepening the challenge for Prime Minister Sanae Takaichi as she seeks to balance economic growth and limits on immigration with a rapidly shrinking population. Demographics experts, basing their calculations on preliminary data for the first 10 months of the year, expect that the total number of births of Japanese babies for 2025 is likely to come in below 670,000. Those estimates, compiled by the National Institute of Population and Social Security Research and last updated in 2023, had pointed to 749,000 Japanese babies born in 2025. The same projections had suggested the number of births would not fall below 670,000 until 2041. The number of annual marriages in Japan — where births outside of marriage is rare — has fallen to less than 500,000, about half the peak in 1972. With annual deaths also rising, the Japanese population shrank by just over 900,000 people in 2024.

Takeaways by Macro Roundup® AI

  1. Demographics experts, using preliminary data for the first 10 months of the year, expect Japanese births in 2025 to come in below 670,000, versus the 749,000 projected by the National Institute of Population and Social Security Research.
  2. The National Institute of Population and Social Security Research's projections, last updated in 2023, had suggested Japanese births would not fall below 670,000 until 2041.
  3. Annual marriages in Japan, where births outside marriage are rare, have fallen below 500,000, about half the 1972 peak, and with deaths rising the population shrank by just over 900,000 in 2024.

Related Articles:

  • Japan’s Labor Market Under Demographic Decline: Evolving Dynamics and Macroeconomic Implications — Japan's fertility rate stood at 1.15 in 2024 and its working-age population peaked in 1995, with the total population peaking in 2008. Rising labor force participation among women and people 65 and over has more than offset the shrinking working-age population, but further gains are limited since both rates already rank among the highest internationally.
  • East Asia’s Coming Population Collapse — United Nations projections show China's population falling 8%, Japan's 18%, South Korea's 12%, and Taiwan's 8% between 2020 and 2050, while the US population rises 12%. Working-age people per person over 65 are projected to drop to about 1.8 in China and 1.2 in Japan and South Korea.
  • Why Is The Japanese Yen Falling? — 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.

AI Summary. A proposed California ballot measure would impose a one-time tax equivalent to 5% of assets on state residents worth more than $1bn, applying retroactively to anyone living in California on a set date, with five years to pay. Billionaires including tech investors and a Google co-founder are considering cutting their ties to the state as a result.

Ryan Mac, Theodore Schleifer and Heather Knight New York Times
Date Posted:

In response to a union-sponsored proposal for a wealth tax that would levy a 5% tax on individuals worth more than $1B, several high-profile businessmen are preparing to leave California. California Governor Gavin Newsom is opposed to the measure.

Does a proposed state wealth tax prompt billionaires to leave?

Core argument: A proposed California ballot measure from Service Employees International Union-United Healthcare Workers West would tax residents worth more than $1 billion the equivalent of 5% of their assets.

Billionaires including Peter Thiel, the tech venture capitalist, and Larry Page, a co-founder of Google, are considering cutting or reducing their ties to California by the end of the year because of a proposed ballot measure that could tax the state’s wealthiest residents. The moves are being driven by a potential California ballot measure from the health care union, Service Employees International Union-United Healthcare Workers West, the people said. The proposal calls for California residents worth more than $1 billion to be taxed the equivalent of 5% of their assets. If the measure gains enough signatures to reach the state ballot in November and wins approval, it will retroactively apply to anyone who lived in California as of Jan. 1, 2026. Those with $20 billion in assets who resided in the state on that date would face a one-time tax of $1 billion and have five years to pay it, according to the terms of the measure.

Takeaways by Macro Roundup® AI

  1. A proposed California ballot measure from Service Employees International Union-United Healthcare Workers West would tax residents worth more than $1 billion the equivalent of 5% of their assets.
  2. If the measure reaches the November state ballot and wins approval, it would apply retroactively to anyone residing in California as of Jan. 1, 2026, with a resident holding $20 billion facing a one-time $1 billion tax payable over five years.
  3. Billionaires including Peter Thiel and Google co-founder Larry Page are considering cutting or reducing their ties to California by the end of the year because of the proposed measure.

Related Articles:

  • Taxing Top Wealth: Migration Responses and Their Aggregate Economic Implications — Swedish data show that when a wealth-taxed entrepreneur emigrates, employment at their businesses falls 33%, value-added 34%, tax payments 50%, and investment 21%, but 60% of closed firms are absorbed by other domestic companies. The authors estimate aggregate effects on employment and investment are small.
  • Behavioral Responses to State Income Taxation of High Earners: Evidence from California — A California ballot measure raising top marginal income tax rates by up to 3 percentage points prompted an additional 0.8% of the affected tax base to leave the state, with an estimated income elasticity of 2.5–3.2 for high earners who stayed. The authors estimate these responses eroded 45.2% of windfall revenues within one year and 60.9% within two.
  • How to Tax Wealth — A wealth tax applies to net assets regardless of the return earned, making it equivalent to taxing an assumed rather than actual flow of capital income. As a result, effective tax rates on returns fall as returns rise and climb toward infinity as returns approach zero, with tax still owed on loss-making assets.

AI Summary. Poland will require real estate developers to include bomb shelter space in most new buildings, as it works to overhaul civilian defences against the threat of Russian aggression. Despite leading NATO in military spending at almost 5% of GDP, it has invested little in population protection, with most shelters dating to the communist era.

Raphael Minder Financial Times
Date Posted:

Poland will require bomb shelters to be built in most new buildings from 2026. The government is also allocating €3.8B for new bomb shelter construction, as the country prepares for a general war with Russia.

Is Poland requiring bomb shelters in new buildings to boost civilian defense?

Core argument: Poland will require real estate developers to allocate space for bomb shelters in most new buildings starting in 2026, as it overhauls civilian defences against the threat of Russian aggression.

Poland will force real estate developers to allocate space for bomb shelters in most new buildings from 2026, as the frontline state confronts the mammoth task of overhauling its lacklustre civilian defences against the threat of Russian aggression. Despite proportionally leading Nato in military spending, at almost 5% of GDP, the government has invested little in protecting its population. Most of its shelters were built in the communist era and are now in dire condition. It is a “gigantic problem”, said Sławomir Cenckiewicz, head of Poland’s national security bureau and a key adviser to President Karol Nawrocki. “We really have to increase our civilian resilience …Poland in recent years has focused on the modernisation of the armed forces and forgot about this.”

Takeaways by Macro Roundup® AI

  1. Poland will require real estate developers to allocate space for bomb shelters in most new buildings starting in 2026, as it overhauls civilian defences against the threat of Russian aggression.
  2. Poland leads NATO proportionally in military spending at almost 5% of GDP, but its government has invested little in protecting its population, with most shelters dating from the communist era and now in dire condition.
  3. Sławomir Cenckiewicz, head of Poland's national security bureau and a key adviser to President Karol Nawrocki, called the state of civilian defences a "gigantic problem," saying Poland focused on modernising its armed forces and forgot about civilian resilience.

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