Edward Conard

Top Ten New York Times Bestselling Author

  • “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 very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “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 very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, January 6, 2026

AI Summary. US industrial employment has fallen by 65,000 over the past year and is down 123,000 from its early-2025 peak, with manufacturing and transportation accounting for most losses and construction job gains slowing to 52,000 from 191,000 the prior year. The author attributes the decline to tariffs raising input costs, immigration enforcement hitting construction, and cuts to industrial policy subsidies.

Joseph Politano Apricitas Economics
Date Posted:
Is Database:
Database

US blue-collar employment has fallen by 123k jobs, ½ of them in manufacturing, since early 2025 – likely an underestimate, as preliminary estimates of upcoming annual data revisions suggest 100k less jobs in manufacturing and 30k in construction.

Why is US industrial employment falling across blue-collar sectors?

Core argument: US industrial employment fell 65k over the last year, reversing 2024's addition of 250k jobs, with employment across trades and industry now down 123k from its early-2025 peak and declining nearly every month since February.

The US is down 65k industrial jobs over the last year, a dramatic reversal from 2024, when it added a lower-than-usual but still respectable 250k jobs. A major slowdown has hit all blue-collar sectors this year, though manufacturing and transportation are driving the vast majority of US job losses. Employment across trades and industry is now down 123k from the all-time peak reached in early 2025 and has been declining nearly every month since February - [likely an underestimate], as preliminary estimates for upcoming annual jobs data revisions suggest an additional loss of 100k manufacturing jobs and 30k construction jobs. Construction added 52k jobs over the last 12 months, compared to 191k the 12 months prior. Chipmaking jobs rose dramatically from 2021-2022 amidst rising prices, the global semiconductor shortage, and the passage of the CHIPS Act, but have already slid all the way back to early 2021 levels, [despite] the AI boom. Tariffs are hurting blue-collar employment by raising the costs of manufacturing inputs. Immigration raids are disproportionately hurting the construction sector. Cuts to industrial policy subsidies have helped push factory construction down more than 8% over the last year. The administration’s desired “blue-collar boom” is not happening; quite the opposite.

Takeaways by Macro Roundup® AI

  1. US industrial employment fell 65k over the last year, reversing 2024's addition of 250k jobs, with employment across trades and industry now down 123k from its early-2025 peak and declining nearly every month since February.
  2. Preliminary estimates for upcoming annual jobs data revisions suggest an additional loss of 100k manufacturing jobs and 30k construction jobs, while construction added 52k jobs over the last 12 months versus 191k the 12 months prior.
  3. Chipmaking employment, which rose sharply in 2021–2022 amid the global semiconductor shortage and the CHIPS Act, has slid back to early-2021 levels, and factory construction is down more than 8% over the last year amid cuts to industrial policy subsidies.

Related Articles:

  • 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.
  • 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.
  • Our Favorite Charts of 2025 — Wage growth is slowing more for lower-paid workers than for higher earners, limiting those households' ability to keep spending, while hiring is concentrated in select industries such as healthcare and among larger firms as small private firms shed workers. Layoffs remain low, but the number of workers unemployed for 27 weeks or more has only rarely been higher.

AI Summary. Analyses showing a shrinking middle class typically use relative income thresholds that rise with median income, so they can register decline even when living standards rise across the distribution. Using an absolute definition, the authors find the core middle class shrank because the upper-middle class grew from 10% of families to 31%, doubling its income share.

Stephen Rose and Scott Winship American Enterprise Institute
Date Posted:
Is Database:
Database
Is Important:
Important

An absolute measure (2.5 to 5x the poverty line) shows that the share of American families in the middle class fell from 35% to 31% btw 1979 and 2024, as middle-class families moved into the upper-middle class, whose share rose from 10% to 31%.

Is the middle class shrinking because families moved up?

Core argument: Under an absolute definition of the middle class, the upper-middle class grew from 10% of families in 1979 to 31% in 2024 and doubled its share of income, so the "core" middle class shrank because families moved up.

Analyses of the middle class that use “relative” entry and exit points that increase as median income rises can show that fewer people qualify as middle class or better. But such findings rely on a relative definition of the middle class, such that if income doubles for every family, the middle class does not grow, and are consistent with living standards rising significantly across the income distribution—just somewhat less so lower down. The “lower-income” group in Pew’s analyses expanded over time, but it ended up 55% richer nonetheless. The reason it expanded was because the middle-income group got 60% richer. Using an absolute definition of the middle class, we find that the “core” middle class has shrunk, but only because more families have become upper-middle class over time. The upper-middle class boomed from 10% of families in 1979 to 31% in 2024, and its share of income doubled. The share of families whose income left them short of the core middle class fell from 54% to 35%.

Takeaways by Macro Roundup® AI

  1. Under an absolute definition of the middle class, the upper-middle class grew from 10% of families in 1979 to 31% in 2024 and doubled its share of income, so the "core" middle class shrank because families moved up.
  2. The share of families whose income left them short of the core middle class fell from 54% to 35%, while Pew's "lower-income" group expanded yet ended up 55% richer.
  3. Relative definitions of the middle class, whose entry and exit points rise with median income, show no growth even if every family's income doubles; Pew's lower-income group expanded because the middle-income group got 60% richer.

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.
  • 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%.
  • The State of the American Middle Class — US households in every income tier had higher inflation-adjusted incomes in 2022 than in 1970, with median income rising 55% for lower-income households, 60% for middle-class households, and 78% for upper-income households. The gap widened: upper-income median income was 7.3x that of lower-income households, up from 6.3x.

AI Summary. Thirty US states have set minimum wages above the federal minimum of $7.25 an hour, with increases coming from inflation-pegged adjustments, new laws or ballot measures in both Democratic- and Republican-controlled states. More workers now live in states with minimums of $15 or higher than in states at $7.25.

Jared Mitovich Wall Street Journal
Date Posted:

8.3 million workers across 19 states will be impacted this year by minimum wage increases due to inflation adjustments, legislative increases, or ballot measures.

Are state minimum wages rising above the federal minimum nationwide?

Core argument: Thirty states have set minimum wages above the federal floor of $7.25 an hour, with increases this year in both Democratic- and Republican-controlled states.

Workers in a mix of Democratic- and Republican-controlled states will see higher hourly pay this year because of automatic inflation-pegged adjustments, new laws or ballot measures. Thirty states have now set a higher minimum wage than the federal minimum of $7.25 an hour. For the first time, more workers now live in states that pay $15 or higher per hour than those that have kept the $7.25 minimum.

Takeaways by Macro Roundup® AI

  1. Thirty states have set minimum wages above the federal floor of $7.25 an hour, with increases this year in both Democratic- and Republican-controlled states.
  2. For the first time, more workers live in states with minimum wages of $15 or higher than in states that have kept the $7.25 federal minimum.
  3. The higher hourly pay stems from automatic inflation-pegged adjustments, new laws and ballot measures.

Related Articles:

  • Did California’s Fast Food Minimum Wage Reduce Employment? — The authors estimate that California's $20 fast food minimum wage, up from $16, raised fast food sector wages roughly 8% relative to the rest of the country while employment fell about 2.7% relative to fast food employment elsewhere in the US. Their median estimate implies 18,000 fewer California fast food jobs than otherwise.
  • Do Minimum Wages Reduce Job Opportunities for Blacks? — The authors find evidence that higher minimum wages reduce employment among low-skill Black workers across every group examined — teens, high school dropouts, and young workers with at most a high school education — with larger effects for Black males, while such effects are not very detectable for whites.
  • “Compensate the Losers?” Economic Policy and Partisan Realignment in the US — The authors argue that partisan realignment by education reflects Democrats' declining supply of "predistribution" policies such as job guarantees, higher minimum wages, protectionism, and stronger unions, which less-educated Americans favor while more-educated Americans prefer taxes and transfers. They estimate changing views of the parties' economic policies explain roughly half the shift.

AI Summary. Petroleum supplies 90% of US transport energy consumption and about 33% of industrial production, mainly high-temperature heat and feedstocks, with passenger cars, SUVs and light trucks accounting for roughly 60% of transport energy use. The oil intensity of GDP is gradually declining in most of the world, though the US retains the highest oil intensity among major economies.

Michael Cembalest J.P. Morgan
Date Posted:
Is Database:
Database

The oil intensity of US GDP declined 52% btw 1990 and 2024, but remains almost twice that of Germany and France. As of 2023, 90% of energy consumption for American transport and 33% for industrial production was petroleum-based.

How reliant is the US economy on petroleum?

Core argument: Petroleum supplies 90% of US transport energy consumption and about 33% of industrial production, mostly high-temperature heat and industrial feedstocks, while accounting for less than 10% of residential and commercial heating totals.

The US is still highly reliant on petroleum for 90% of transport energy consumption with the remainder mostly made up of natural gas and biomass, and for ~33% of industrial production (mostly high temperature heat and industrial feedstocks). The amounts of oil used for residential and commercial heating is pretty negligible, less than 10% of the respective totals. Note: passenger cars, SUVs and light trucks represent around ~60% of transport energy consumption, with the remainder mostly split between heavy class 8 trucks, air travel and maritime. The oil intensity of GDP is gradually declining in most of the world. At some point, this ratio may drop low enough that disruptions in oil supplies will be less of an issue for growth and consumer spending. I just have no idea what that level would be. Also: the US still has the highest oil intensity of GDP of countries in the chart. The September 2025 expiration of US EV subsidies makes it unlikely that the US will converge further to the rest of the group; Ford throwing in the towel on the F150 Lightning is another sign of the times in the US regarding electrification of transport.

Takeaways by Macro Roundup® AI

  1. Petroleum supplies 90% of US transport energy consumption and about 33% of industrial production, mostly high-temperature heat and industrial feedstocks, while accounting for less than 10% of residential and commercial heating totals.
  2. Passenger cars, SUVs and light trucks account for roughly 60% of US transport energy consumption, with the remainder split mostly between heavy class 8 trucks, air travel and maritime.
  3. The US has the highest oil intensity of GDP among the countries charted, and the September 2025 expiration of US EV subsidies makes further convergence toward the rest of the group unlikely.

Related Articles:

  • Power Politics: Energy Self-Sufficiency in a Modern Mercantilist World — China leads in adding power to the grid, with more than 30,000 miles of ultra-high-voltage transmission lines versus zero in the US and lead times for large transformers of 48 weeks against a US average of 143 weeks. This positions China to accommodate new demand sources such as artificial intelligence.
  • Heliocentrism — An energy use must be electrified before green grid electricity can decarbonize it, and while US grid decarbonization continues at a steady pace, the electricity share of final US energy consumption has grown little. Transmission line growth runs well below Department of Energy targets for 2030 and 2035, and transformer delivery times have stretched from 4–6 weeks to 2–3 years.
  • Economic Growth Now Depends on Electricity, Not Oil — Average annual electricity load growth reached 3% and is projected to continue at that rate for five years, with utilities raising expected peak demand for 2029 by 12%, or 101 gigawatts, driven by data centers, new factories, electric vehicles, heat pumps, and hydrogen production.

AI Summary. Venezuela's self-reported crude oil reserves tripled from about 100bn barrels to 300bn barrels after heavy oil in the Orinoco Belt was reclassified as "proved," rather than through any large new discovery or production increase. Much of that oil is extra-heavy, with low recovery rates and high production costs.

Torsten Sløk Apollo
Date Posted:

The tripling of Venezuela’s self-reported crude oil reserves in the late 2000s was due not to new discoveries but to the reclassification of Orinoco Belt heavy oil as “proved.” Slok notes this oil is extra-heavy and has a low recovery rate.

Did reclassification, not discovery, triple Venezuela's reported oil reserves?

Core argument: Venezuela's self-reported crude oil reserves tripled from roughly 100 billion barrels in the early 2000s to 300 billion barrels in the late 2000s, driven by reclassifying Orinoco Belt heavy oil as "proved.".

Venezuela’s self-reported crude oil reserves tripled from around 100 billion barrels in the early 2000s to 300 billion barrels in the late 2000s due to the reclassification of Orinoco Belt heavy oil as “proved.” Much of the oil is extra-heavy, which has low recovery and a high cost to produce. There was no large new discovery or production increase to justify a tripling of reserves through exploration alone.

Takeaways by Macro Roundup® AI

  1. Venezuela's self-reported crude oil reserves tripled from roughly 100 billion barrels in the early 2000s to 300 billion barrels in the late 2000s, driven by reclassifying Orinoco Belt heavy oil as "proved.".
  2. Much of Venezuela's reported oil is extra-heavy crude, which carries low recovery and high production costs.
  3. No large new discovery or production increase accompanied the tripling of Venezuela's reported reserves, which exploration alone does not justify.

Related Articles:

  • Why Markets Can Sit Out the Drama in Venezuela — Venezuela accounts for barely 0.1% of world output and produces about 1m barrels of oil a day, roughly 1% of global supply and the 18th-largest producer, down from about 1% of global output and 8% of oil supply in the 1970s. Analysts argue even alarming scenarios there would have minimal global economic impact.
  • Latin America’s Perpetual Growth Crisis — Per capita GDP in the US grew a cumulative 20% over a decade, about 2% a year, outpacing Latin American economies; Colombia, Peru and Chile fared best in the region but still fell well short, while Mexico and Brazil underperformed. The author argues Ecuador's and Argentina's dollar pegs preclude growth.

AI Summary. A record 62m Americans used marijuana in a single year, 17m of them daily or near daily, while half of American men now hold sports-betting accounts, up from almost zero seven years earlier. The author argues vice and addiction undermine citizens' capacity for free action, justifying state regulation beyond individual-harm criteria.

Charles Fain Lehman National Affairs
Date Posted:
Is Database:
Database

Lehman makes the case for restricting sports gambling, marijuana, and pornography. The costs of vice and its regulation are not limited to individual harm. “Vice, and addiction per se, threatens our capacity to act as fully capable humans and citizens.”

Should the state regulate vice beyond individual harm?

Core argument: A record 62 million Americans smoked marijuana in 2023, with 17 million using it daily or near daily, while one in 12 young adults used a hallucinogen and one in 18 misused prescription stimulants such as Adderall.

In 2023, a record 62 million Americans smoked pot; 17 million now use it daily or near daily. One in 12 young adults used a hallucinogen; one in 18 misused prescription stimulants such as Adderall. Another 2.6 million Americans over 12 took meth. Overdoses still claim the lives of 70,000 Americans annually; the majority died using synthetic opioids like fentanyl. Half of American men have a sports-betting account, up from almost zero seven years ago. "iGaming" — gambling via casino apps on your phone — is now legal in seven states. By some estimates, pornography now generates more revenue than Hollywood, and OnlyFans creators collectively make more than players in the National Basketball Association. If both vice and its regulation can be evaluated only in terms of individual harm, our approach to the question of whether vice should be regulated becomes far too narrow and constricted. Vice, and addiction per se, threatens our capacity to act as fully capable humans and citizens. Vice, and those who peddle it, suppress our freedom — tyrannize us — in a way that the state has a legitimate interest in counteracting.

Takeaways by Macro Roundup® AI

  1. A record 62 million Americans smoked marijuana in 2023, with 17 million using it daily or near daily, while one in 12 young adults used a hallucinogen and one in 18 misused prescription stimulants such as Adderall.
  2. Overdoses claim 70,000 American lives annually, the majority from synthetic opioids like fentanyl, and 2.6 million Americans over 12 took methamphetamine.
  3. Half of American men hold a sports-betting account, up from almost zero seven years earlier, "iGaming" through casino phone apps is legal in seven states, and by some estimates pornography now generates more revenue than Hollywood.

Related Articles:

  • Disconnected: The Growing Class Divide in American Civic Life — 17% of Americans report having no close friends, and survey data show a wide educational gap: 24% of those with a high school education or less have no close friends versus 10% of college graduates. Three decades ago, Americans with less formal education reported social circles at least as large.
  • Americans Increasingly See Legal Sports Betting As A Bad Thing For Society and Sports — Survey data show 43% of U.S. adults say legalized sports betting is a bad thing for society, up from 34% three years earlier, and 40% say it is bad for sports, up from 33%. The largest shift came among men under 30, 47% of whom now call it bad for society versus 22% earlier.
  • As America’s Marijuana Use Grows, So Do the Harms — An analysis of federal survey data estimates that about 18m US adults — nearly a third of adult cannabis users — report symptoms of cannabis use disorder, with roughly 3m considered addicted. Among those aged 18 to 25, the cannabis use disorder rate of 16.6% matches the alcohol use disorder rate of 15.1%.

Wednesday, January 7, 2026

AI Summary. Euro area growth is forecast at 1.4% on a fourth-quarter-over-fourth-quarter basis, slightly above 1.3%, as German fiscal expansion and resilient consumer spending are offset by structural drags. The authors estimate China's export push will cut real GDP by 0.9% in Germany and 0.6% in Italy over four years.

Sven Jari Stehn, Filippo Taddei, Alexandre Stott, James Moberly, et al. Goldman Sachs
Date Posted:

GS forecasts overall Euro area real growth of 1.4% in 2026 Q4/Q4 as fiscal expansion in Germany is offset by the ongoing China Shock, which GS forecasts will drive a .9% hit to German GDP over the next four years.

Will fiscal expansion lift Euro area growth despite Chinese export competition?

Core argument: Euro area growth is forecast at 1.4% on a Q4/Q4 basis this year, up slightly from 1.3% the prior year and broadly in line with consensus.

We expect 2026 to be a better year for the Euro area economy than 2025 on the back of the German fiscal expansion, reduced global tariff tensions and resilient consumer spending. That said, we only look for a small growth improvement as Europe faces notable structural drags from Chinese export competition and weak potential growth. As a result, we forecast Euro area growth of 1.4% on a Q4/Q4 basis this year, up slightly from last year’s pace of 1.3%, but broadly similar to the consensus. Cyclical improvement is likely to be capped by significant structural headwinds. In particular, our analysis suggests that China’s renewed export push will weigh on European trade via rising imports and higher export competition. We estimate that these effects are likely to be most pronounced in Germany with a total 0.9% hit to real GDP over the next four years, followed by Italy (0.6%) with smaller effects in France and Spain (0.4% each).

Takeaways by Macro Roundup® AI

  1. Euro area growth is forecast at 1.4% on a Q4/Q4 basis this year, up slightly from 1.3% the prior year and broadly in line with consensus.
  2. The cyclical improvement is attributed to German fiscal expansion, reduced global tariff tensions and resilient consumer spending, while structural drags from Chinese export competition and weak potential growth cap the gain.
  3. China's renewed export push is estimated to weigh on European trade through rising imports and higher export competition, with a total hit to real GDP over the next four years of 0.9% in Germany, 0.6% in Italy and 0.4% each in France and Spain.

Related Articles:

  • 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.
  • Europe’s Green Energy Rush Slashed Emissions—and Crippled the Economy — Europe has cut carbon emissions 30% from 2005 levels versus 17% in the US, while the shift to renewables has helped push electricity prices higher across much of the continent. Average electricity prices for heavy industry in the European Union are roughly 2x those in the US and 50% above China.
  • The Future of European Competitiveness – A Competitiveness Strategy for Europe — A European Union competitiveness report attributes the EU's labour productivity growth gap with the US largely to weaker activity in information and communications technology and large-scale digital services; excluding main ICT sectors, EU productivity was broadly at par with the US from 2000-2019. It estimates Europe's investment share must rise about 5 percentage points of GDP.

AI Summary. Irregular migrant arrivals to the European Union recorded by its border agency have fallen about 25% over 11 months and have declined since a peak of 380,000, while new asylum applications dropped roughly 26% over nine months as fewer Syrians sought protection after the Assad regime's fall.

Laura Dubois Financial Times
Date Posted:

In 2015, over 1.75mm irregular migrants entered the EU seeking protection. An EU crackdown on irregular migration has brought that number to <250,000 in 2025, down from the recent peak of 380,000 in 2023.

Are irregular migrant arrivals and asylum applications in Europe declining?

Core argument: Irregular migrant arrivals to the EU recorded by Frontex fell 25% in the 11 months to November 2024 and have declined continuously since a peak of 380,000 arrivals in 2023.

After a major policy overhaul over the past two years [European Commission president Ursula von der Leyen said], "Europe is managing migration responsibly. The figures speak for themselves." Irregular arrivals of migrants to the EU recorded by its border agency Frontex dropped by 25% in the 11 months to November 2024, and have been continuously declining since a recent peak of 380,000 arrivals registered in 2023. New asylum applications have also decreased by around 26% in the first nine months of last year, according to Eurostat data, as fewer Syrians are applying for protection since the fall of the authoritarian regime of Bashar al-Assad in late 2024. The fall in the overall number of irregular arrivals recorded in 11 months of 2025 has been mostly driven by fewer people arriving through the eastern Mediterranean and western Africa.

Takeaways by Macro Roundup® AI

  1. Irregular migrant arrivals to the EU recorded by Frontex fell 25% in the 11 months to November 2024 and have declined continuously since a peak of 380,000 arrivals in 2023.
  2. New asylum applications in the EU dropped around 26% in the first nine months of last year, according to Eurostat data, as fewer Syrians sought protection after the fall of Bashar al-Assad's regime in late 2024.
  3. European Commission president Ursula von der Leyen said Europe is managing migration responsibly after a major policy overhaul, while the fall in irregular arrivals recorded over 11 months of 2025 was driven mostly by fewer people coming via the eastern Mediterranean and western Africa.

Related Articles:

  • Africa Needs 1 Billion Jobs by the End of the Century. Where Will It Find Them? — Africa's population, now about 1.5bn, is projected to reach 4bn by 2100, with sub-Saharan Africa approaching 3.5bn and Nigeria's working-age population forecast to exceed 320m. Between 2005 and 2020, Congo, Nigeria, Ethiopia and other large states averaged only one job created for every two entrants to the working-age population.
  • Germany Opened Its Doors to Migrants. Now It’s Struggling to Cope — Germany recorded 6.43m more arrivals than departures over a decade, the largest inflow of any country outside the US, with migrants at 18.8% of the population versus 15.3% in the US. Noncitizens, 15% of the population, accounted for 41% of crimes, up from 28.7%, according to police statistics.
  • Changing Sub-Saharan Africa’s Growth Trajectory — Sub-Saharan Africa's working-age population is growing nearly 3% a year, versus close to zero in much of the world, and is projected to exceed China's within about a decade and reach a quarter of the global total. With modest productivity growth near 2%, the region is likely among the world's fastest-growing.

AI Summary. Purchasing managers' surveys show the US manufacturing contraction has extended into a third year, with factory employment down 0.6% over the year to November. Surveys indicate manufacturing export orders and import volumes contracted strongly following the announcement of high tariffs, and factory managers report confusion and difficulty making long-term plans.

Economist Staff The Economist
Date Posted:
Is Database:
Database
Is Important:
Important

There is little evidence of reshoring as measured by the US manufacturing purchasing managers’ index, which shows that new export orders and imports have been contracting since 2022, and have downticked sharply since Liberation Day.

Have tariffs revived US manufacturing?

Core argument: U.S. manufacturing employment fell 0.6% in the year to November, and the manufacturing contraction indicated by purchasing managers' surveys is entering its third year after the two-year recession that preceded Trump's January inauguration.

By the time Mr. Trump took office in January, America had been in a two-year manufacturing recession, according to purchasing managers’ surveys. Nearly a year on, however, the Trumpian manufacturing renaissance is conspicuous by its absence. The two-year manufacturing contraction is now hitting its third year, and factories have continued to shed jobs; employment fell by 0.6% in the year to November. Surveys suggest that export orders and import volumes for manufacturing have registered a strong contraction since Mr. Trump announced high tariffs on “Liberation Day” in April, one that goes beyond the wider weakness in manufacturing. Factory bosses report confusion and difficulty making long-term plans.

Takeaways by Macro Roundup® AI

  1. U.S. manufacturing employment fell 0.6% in the year to November, and the manufacturing contraction indicated by purchasing managers' surveys is entering its third year after the two-year recession that preceded Trump's January inauguration.
  2. Surveys indicate manufacturing export orders and import volumes have contracted strongly since Trump announced high tariffs on "Liberation Day" in April, a decline beyond the broader weakness in manufacturing.
  3. Factory bosses report confusion and difficulty making long-term plans, and the Trumpian manufacturing renaissance is absent nearly a year into Trump's term.

Related Articles:

  • Does Manufacturing Matter? — Manufacturing capacity carries military and geopolitical importance, as shown by economic warfare over products like semiconductors and magnets. The policy-relevant question is not whether manufacturing is geopolitically useful but how much should be spent boosting it given resource constraints, and whether to target defense, dual-use, chokepoint, or broad civilian production.
  • The Incidence of Tariffs: Rates and Reality — The authors estimate that tariff pass-through into US import prices was 80% in 2018–2019 and 94% more recently, while exchange-rate pass-through was low in both periods. Because imported inputs matter for US manufacturing, they argue much of the tariff burden falls on US producers, roughly a 1–2 percentage-point tax on manufacturing.
  • America is Losing Blue Collar Jobs — US industrial employment has fallen by 65,000 over the past year and is down 123,000 from its early-2025 peak, with manufacturing and transportation accounting for most losses and construction job gains slowing to 52,000 from 191,000 the prior year. The author attributes the decline to tariffs raising input costs, immigration enforcement hitting construction, and cuts to industrial policy subsidies.

AI Summary. US tariffs as high as 35% on certain goods not compliant with the US-Mexico-Canada trade agreement have coincided with falling Canadian exports, weaker business confidence and investment, a softening labor market, and a contraction in Canadian output. Canada has responded by aiming to double non-US exports within 10 years, expanding fiscal spending and deregulation, and keeping monetary policy loose.

Ben Melkman, Adam Zimbler and Cengiz Cemaloglu Bridgewater Associates
Date Posted:

Before the new American tariff regime in 2025, exports drove ~⅓ of Canada’s national income, with ~75% of exports going to the US. In response, Ottawa is attempting to double their share of exports to countries other than the US by 2035.

How is Canada responding to US tariffs and falling exports?

Core argument: US tariffs as high as 35% on certain non-USMCA-compliant goods, alongside uncertainty over the USMCA's future, sent Canadian exports plummeting and pushed Canadian GDP growth into contraction in Q2 2025.

The shift in US policy created a significant domestic economic shock—with tariffs as high as 35% on certain non-USMCA-compliant goods and the future of the USMCA itself highly uncertain, Canadian exports have plummeted. Business confidence and investment fell accordingly, the labor market continued to soften, and Canadian GDP growth fell into contraction in Q2 2025. With little leverage to force US policy retracement, Canada has had to look inward and rapidly adapt. Canadian policy makers have responded with a three-pronged approach aimed at reducing dependence on the US and driving economic growth: [First], they are diversifying trade away from the US with an explicit goal of doubling non-US exports over the next 10 years. [Second], they are pursuing rapid fiscal expansion and deregulation, planning to spend billions of new dollars on infrastructure and defense projects, mandating the federal government to procure from domestic producers, fast-tracking projects of national importance, and decreasing business and personal income taxes to stimulate growth, among other policies. [Third], the Bank of Canada has continued to run loose and more proactive monetary policy despite an acceleration in underlying inflation measures.

Takeaways by Macro Roundup® AI

  1. US tariffs as high as 35% on certain non-USMCA-compliant goods, alongside uncertainty over the USMCA's future, sent Canadian exports plummeting and pushed Canadian GDP growth into contraction in Q2 2025.
  2. Canada is diversifying trade away from the US with an explicit goal of doubling non-US exports over the next 10 years, as business confidence, investment, and the labor market have weakened.
  3. Canadian policy makers are pursuing fiscal expansion and deregulation—billions in new infrastructure and defense spending, domestic procurement mandates, fast-tracked projects of national importance, and lower business and personal income taxes—while the Bank of Canada keeps monetary policy loose despite accelerating underlying inflation.

Related Articles:

  • ‘Just Being Ghosted’: Canada’s Youth Face Deepening Job Crisis — Canada's unemployment rate has risen to 6.9% from 6.6% at the start of the year, with youth unemployment at 15% and the share of young people employed at its lowest level since 1998, excluding the Covid-19 years. The share of job seekers unemployed longer than six months is also the largest since 1998.
  • Canada’s Growth Challenge: Why The Economy Is Stuck In Neutral — Canada's labor productivity is about 30% below the United States and roughly 10% below Australia's, and Canada has fallen from the 6th to the 18th most productive economy in the OECD. The authors attribute this to a shortfall in investment outside real estate, construction, and public services, plus negative multifactor productivity growth.
  • A “Heat Dome” of Immigration — Canada has adopted some of the most aggressive immigration policies in the OECD, adding 1.273m residents in a year to reach a population of 41m — proportionally equivalent to the US admitting more than 10m immigrants annually. Canadians are increasingly angry as housing prices soar, sprawl expands, and traffic worsens.

AI Summary. The authors estimate that erosion of the premium investors pay for long-term US Treasuries reflects a weakening of their hedging property, accounting for roughly a 12 basis point drop in that premium. Short-term Treasuries retained their safe-asset hedging role, consistent with a rotation toward shorter maturities and gold.

Viral Acharya and Toomas Laarits National Bureau of Economic Research
Date Posted:

A substantial fraction of the run-up in long maturity Treasury yields associated with the Tariff War can be attributed to a reduction in their value as a hedging asset, as the covariance between stock and bond returns turned positive.

Does weaker hedging explain the drop in long-term Treasury convenience yields?

Core argument: Applying estimates from a 2005–2024 sample, the authors calculate that the shift in the long-term bond's hedging property can account for approximately a 12 bps drop in Treasury convenience yields in April 2025.

[The convenience yield is proxied by] the yield differential between a synthetic nominal Treasury—constructed out of Treasury Inflation Protected Security (TIPS) and inflation swaps—and a traded nominal Treasury. We construct the TIPS-Treasury premium at the 2, 5, and 10-year horizons using the nominal and real fitted yield curves. Convenience yield erosion for long bonds is consistent with a reduction in the hedging property, reflected in a rising stock-bond covariance. The short end of the Treasury curve, however, continued to exhibit the safe-asset hedging property. April 2025 stands at odds with the historical data in that the covariance between convenience yield innovations and stock prices was positive. Applying estimates from the 2005-2024 sample, this shift in the hedging property of the long-term bond can account for an approximately 12 bps drop in convenience yields in April 2025. These effects are consistent with a withdrawal of safe-asset investors from long-term Treasuries and a rotation towards shorter-term Treasuries and gold. On days where Treasuries were a risk asset - comoving positively with equity returns – gold instead behaved as a hedge, showing negative correlations with equity returns.

Takeaways by Macro Roundup® AI

  1. Applying estimates from a 2005–2024 sample, the authors calculate that the shift in the long-term bond's hedging property can account for approximately a 12 bps drop in Treasury convenience yields in April 2025.
  2. April 2025 stands at odds with historical data in that the covariance between convenience yield innovations and stock prices was positive, while the short end of the Treasury curve continued to exhibit the safe-asset hedging property.
  3. On days when Treasuries comoved positively with equity returns, behaving as a risk asset, gold instead acted as a hedge with negative correlations to equity returns, consistent with safe-asset investors withdrawing from long-term Treasuries and rotating toward shorter-term Treasuries and gold.

Related Articles:

  • The Debasement Trade Roars Back — Currencies of low-public-debt countries such as Switzerland and Sweden are showing increasing correlation with daily moves in gold and silver prices. Sweden's krona has traditionally been highly volatile without safe-haven attributes, a pattern the article attributes to the "debasement trade.
  • 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.
  • Are U.S. Treasuries Still “Convenient”? — Measures of the extra value investors place on U.S. Treasuries for their liquidity and safety have declined, with the AAA-corporate-to-Treasury spread falling from 67 to 36 basis points and the 10-year swap spread moving from 2 to 26 basis points. Such declines are consistent with large fiscal deficits and higher government debt.