Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “…a 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 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
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “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 fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, January 8, 2026

AI Summary. US nonfarm productivity, or employee output per hour, rose at a 4.9% annualized rate following an upwardly revised 4.1% gain the prior quarter, according to the Bureau of Labor Statistics. Unit labor costs fell 1.9% after a prior-quarter decline, the first back-to-back drop since 2019.

Vince Golle Bloomberg
Date Posted:
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Productivity, or nonfarm employee output per hour, soared to a 4.9% annualized rate in Q3 – its highest pace since 2023 – back-to-back with a strong Q2, revised upward to 4.1%. Unit labor costs declined by 1.9% as efficiency gains offset wage gains.

Is US productivity accelerating while labor costs fall?

Core argument: US nonfarm productivity rose at a 4.9% annualized rate, its fastest pace in two years, following an upwardly revised 4.1% gain in the second quarter, according to the Bureau of Labor Statistics.

Productivity, or nonfarm employee output per hour, soared at a 4.9% annualized rate after an upwardly revised 4.1% advance in the second quarter, data from the Bureau of Labor Statistics showed Thursday. US economic growth powered ahead in the third quarter at the fastest pace since 2023, despite a slowing labor market. Unit labor costs — what businesses pay employees to produce one unit of output — dropped 1.9%, following a decrease in the prior quarter. That marked the first back-to-back declines since 2019. In addition to helping contain labor costs, the resurgence in productivity in mid-2025 suggests companies are attempting to mitigate the impact of higher duties on imported goods. It also highlights how companies can use technology to get by with lean staffing. The latest figures may foreshadow future productivity gains, with the flood of investment in artificial intelligence and various incentives for capital spending in President Donald Trump’s One Big Beautiful Bill Act. The drop in employment costs illustrates a bifurcation in the economy, whereby the labor market has softened despite solid economic growth.

Takeaways by Macro Roundup® AI

  1. US nonfarm productivity rose at a 4.9% annualized rate, its fastest pace in two years, following an upwardly revised 4.1% gain in the second quarter, according to the Bureau of Labor Statistics.
  2. Unit labor costs fell 1.9% after declining in the prior quarter, the first back-to-back drops since 2019, illustrating a bifurcated economy in which the labor market has softened despite solid growth.
  3. The mid-2025 productivity resurgence suggests companies are attempting to mitigate the impact of higher duties on imported goods and using technology to get by with lean staffing, while AI investment and capital-spending incentives in the One Big Beautiful Bill Act may foreshadow further gains.

Related Articles:

  • 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.
  • Industry Growth Patterns: A Closer Look At Output, Productivity, And Hours Worked From 1990 To 2024 — Since 1990, U.S. output growth has come mostly from productivity gains rather than hours worked, with productivity growing faster than hours in every period; productivity grew roughly 2.5x as fast as hours from 2007 to 2019 and more than 4x as fast from 2019 to 2024. Output growth decelerated from 1990 to 2019 before a moderate resurgence after 2019.
  • 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.

AI Summary. Japan's government debt-to-GDP ratio has continued to decline despite an ongoing primary deficit, because the government's interest payment rate (0.8%) is far below nominal GDP growth (3.9%), a gap the authors call the widest since 1980 and worth roughly -7 percentage points a year.

Akira Otani, Tomohiro Ota, Yuriko Tanaka and Andrew Tilton Goldman Sachs
Date Posted:

Japan’s Debt-to-GDP is falling at about 7pp per year, despite primary deficits, and will continue to fall until at least 2040 in all 3 GS scenarios; Japan is in a “bonus phase” where the effective interest rate (2.5% in FY25) is greater than nominal growth (3.9% in FY25).

Can a debt-to-GDP ratio fall while deficits continue?

Core argument: Japan's gap between its government interest payment rate (FY2025: 0.8%) and nominal GDP growth (3.9%) has widened to its largest since 1980, producing a natural decline in the debt-to-GDP ratio averaging about -7 pp per year.

The government debt-to-GDP ratio, one of the major indicators of fiscal soundness, has continued to decline in Japan—in contrast to other developed countries—and is expected to continue falling even after accounting for this fiscal year's supplementary budget and next fiscal year's initial budget. The decline in the government debt-to-GDP ratio, despite the ongoing primary deficit, is due to the “r – g effect” - “natural decline” in the government debt-to GDP ratio that occurs when the government's interest payment rate (r) (interest payments ÷ outstanding government debt), which is the growth rate of the numerator, is lower than the nominal GDP growth rate (g), the growth rate of the denominator. In Japan, the gap between the interest payment rate (FY2025: 0.8%) and the GDP growth rate (same period: 3.9%) has widened to its largest level since 1980, and as a result, the natural decline in the government debt-to-GDP ratio has recently averaged about -7 pp per year. For this reason, it can be said that the current Japanese economy is in a "bonus stage," where fiscal soundness is not easily undermined even with fiscal deficits. [This will diminish over time], as we expect the BOJ to accelerate its pace of rate hikes from once a year to semi-annually, with the policy rate reaching 1% with a 25bp hike in July 2026. Our view on the terminal rate is 1.5%, equal to the neutral rate level.

Takeaways by Macro Roundup® AI

  1. Japan's gap between its government interest payment rate (FY2025: 0.8%) and nominal GDP growth (3.9%) has widened to its largest since 1980, producing a natural decline in the debt-to-GDP ratio averaging about -7 pp per year.
  2. Japan's government debt-to-GDP ratio continues to fall despite an ongoing primary deficit, in contrast to other developed countries, and is expected to keep declining even after this fiscal year's supplementary budget and next fiscal year's initial budget.
  3. The Bank of Japan is expected to accelerate rate hikes from once a year to semiannually, taking the policy rate to 1% with a 25bp hike in July 2026 and to a terminal rate of 1.5%, equal to the neutral rate.

Related Articles:

  • Japanese Births Set To Fall Below Lowest Official Forecasts In 2025 — 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.
  • 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.
  • 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. Japan's net government debt equals 120% of GDP, the lowest ratio since 2009, with gross debt at about 233% and projected to reach 195% by 2034. Analysts attribute the decline to nominal economic growth, which includes inflation rather than stripping it out.

Chris Anstey Bloomberg
Date Posted:

Japan’s gross outstanding debt has fallen to 233% of GDP, and is set to hit 195% in 2034, its lowest level since 2008. Its net debt, which subtracts debt held by the BOJ and illiquid assets held by the government, among other things, is now 120% of GDP.

Does nominal growth including inflation shrink a government debt burden?

Core argument: Japan's net debt, excluding government-held assets, equals 120% of GDP according to Morgan Stanley estimates, the lowest ratio since 2009 based on International Monetary Fund figures.

The fiscal austerians at Japan’s powerful Ministry of Finance would be the last ones to advertise it, but the nation long known as the world’s biggest debtor has been steadily shrinking its borrowing burden. The achievement reflects a key insight of the late Prime Minister Shinzo Abe’s so-called Abenomics program: The importance of nominal economic growth. Abe had even set a target for nominal GDP, which — unlike real GDP, the metric most often cited in economic coverage — doesn’t strip out inflation. That’s what’s taking down Japan’s debt burden. On a net basis (excluding assets held by the government), outstanding borrowing equals 120% of GDP, according to Morgan Stanley’s estimates. And that marks the lowest ratio since 2009, International Monetary Fund figures show. MOF doesn’t like net figures, warning that many government assets are illiquid and unlikely to be sold for cash. (Some future privatizing administration may have other ideas.) The ministry instead emphasizes gross debt [which. By that count, Japan’s ratio has come down to about 233%, on a trajectory to hit 195% by 2034, Bloomberg Economics estimates — a projection that would take it to the lowest since 2008.

Takeaways by Macro Roundup® AI

  1. Japan's net debt, excluding government-held assets, equals 120% of GDP according to Morgan Stanley estimates, the lowest ratio since 2009 based on International Monetary Fund figures.
  2. Japan's gross debt ratio, the measure emphasized by the Ministry of Finance, has fallen to about 233% and is projected by Bloomberg Economics to reach 195% by 2034, which would be the lowest since 2008.
  3. The decline in Japan's debt burden reflects nominal GDP growth, which unlike real GDP does not strip out inflation, a metric the late Prime Minister Shinzo Abe targeted under Abenomics.

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.
  • Japan’s Debt Puzzle: Sovereign Wealth Fund from Borrowed Money — Japan's public sector operates as a highly leveraged sovereign wealth fund, funding risky assets by borrowing from banks and depositors at below-market rates, with returns sustaining its debt-to-GDP ratio above 200% without primary surpluses. The authors argue the resulting duration and currency mismatches expose Japan to mark-to-market losses that could trigger a fiscal crisis or a run on the yen.

AI Summary. An executive order requires major defense contractors to end stock buybacks and dividends and cap executive pay at $5m a year until they invest more in factories and research, alongside a demand that Congress raise annual defense spending by over 50% to $1.5tn. Whether a president can mandate private capital allocation is unclear.

Anthony Capaccio and Siddharth Philip Bloomberg
Date Posted:

Trump called for a 50% increase in defense spending and issued an executive order requiring major defense contractors to stop buybacks, cease issuing dividends, and cap executive pay until they expand capex and R&D spending.

Can a president dictate how defense contractors deploy their capital?

Core argument: Trump demanded that Congress raise annual defense spending by more than 50% to $1.5 trillion for 2027.

[Trump] demanded that Congress heighten annual defense spending by more than 50% to $1.5 trillion for 2027. Trump signed an executive order [requiring] major defense contractors that work with the government end stock buybacks, stop issuing dividends and cap executive pay at $5 million a year until they invest more in factories and research to speed development. It remains unclear whether a president can mandate how private companies deploy their capital. Defense giants such as Lockheed, RTX, Northrop and General Dynamics spent nearly $50 billion cumulatively in 2023 and 2024 on dividends and share repurchases, Jefferies analysts said in a December research note. That compares to about $39 billion they spent on research and development and capital expenditures during the same period.

Takeaways by Macro Roundup® AI

  1. Trump demanded that Congress raise annual defense spending by more than 50% to $1.5 trillion for 2027.
  2. Trump signed an executive order requiring major defense contractors working with the government to end stock buybacks, stop issuing dividends and cap executive pay at $5 million a year until they invest more in factories and research to speed development.
  3. Lockheed, RTX, Northrop and General Dynamics spent nearly $50 billion cumulatively in 2023 and 2024 on dividends and share repurchases, against about $39 billion on research and development and capital expenditures over the same period, Jefferies analysts said.

Related Articles:

  • The Intellectual Spoils of War? Defense RD, Productivity and International Spillovers — The authors estimate that a 10% increase in government-financed R&D, largely defense, is associated with a 4.3% rise in privately funded R&D across OECD countries, indicating "crowding in" rather than "crowding out." They also find international spillovers raise private R&D abroad, though the overall effect on US productivity growth is modest.
  • ‘We Do Fail … a Lot’: Defense Startup Anduril Hits Setbacks With Weapons Tech — Defense startup Anduril has hit setbacks across several weapons programs, including engine damage to its unmanned Fury jet fighter in a ground test, a 22-acre fire caused by a counterdrone system test, and software that struggled to command unmanned boats. Former employees report its systems in Ukraine proved vulnerable to jamming.
  • Pentagon Pushes to Double Missile Production for Potential China Conflict — The Pentagon is pressing weapons makers to detail how they could raise output of 12 priority munitions for a potential conflict with China to 2.5x current volumes, and to describe how they might attract private capital or license technology to third-party manufacturers. Patriot interceptors are a particular priority, with the goal of roughly 2,000 per year.

AI Summary. South Korea's Hanwha Ocean, which bought the Philadelphia Shipyard, has pledged $5bn in upgrades and aims to produce up to 20 ships a year there, up from one or two recently, using automation and robotics from its South Korean operations. It is in talks with the Pentagon over potential vessel deals.

Timothy Martin Wall Street Journal
Date Posted:

Hanwha is investing at least $5B in the Philadelphia Shipyard in an effort to increase annual output from 1 or 2 ships to 20, and is seeking space to expand capacity beyond that.

Can foreign investment revive American commercial shipbuilding capacity?

Core argument: Hanwha Ocean aims to produce up to 20 ships a year at the Philadelphia Shipyard it bought just over a year ago, up from recent annual output of one or two vessels.

It was just over a year ago that Hanwha Ocean, one of the world’s largest shipbuilders, bought the Philadelphia Shipyard, a storied naval yard that has shriveled under competition from Asian competitors, particularly in China. Hanwha, which has deep pockets and extensive shipbuilding know-how, has vowed to plow $5 billion into upgrades and dramatically multiply the workforce. Hanwha is already in active conversations with the Trump administration, and primarily the Pentagon, for potential deals to make surface, subsurface and unmanned vessels, said Michael Coulter, who heads Hanwha Defense USA, the U.S. subsidiary of the South Korean conglomerate that makes ships, munitions and other military hardware. But first, “we simply need more space,” he said. The company aims to ultimately crank out up to 20 ships a year in Philadelphia, up from annual output of just one or two vessels recently. It plans to bring in modernized manufacturing methods—such as automation and robotics—from the firm’s world-class South Korean operations.

Takeaways by Macro Roundup® AI

  1. Hanwha Ocean aims to produce up to 20 ships a year at the Philadelphia Shipyard it bought just over a year ago, up from recent annual output of one or two vessels.
  2. Hanwha has pledged $5 billion for upgrades at the Philadelphia Shipyard and a greatly expanded workforce, importing modernized methods such as automation and robotics from its South Korean operations.

Related Articles:

  • 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.
  • How South Korea’s Shipyards Could Save the US Navy — US shipyards had just five commercial ships under construction compared with 1,749 in China, and China's naval fleet is projected to grow from 370 to 475 vessels in a decade versus 297 to between 305 and 317 for the US Navy, whose major shipbuilding programs are behind schedule.
  • 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. S&P Global projects copper demand will rise 50% to 42m tons by 2040 while production peaks near 33m tons in 2030 as ore quality declines at existing mines and new projects face permitting, financing and construction hurdles. The projected 10m-ton gap assumes recycled copper more than doubles to 10m tons.

James Attwood Bloomberg
Date Posted:
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S&P Global’s base case is that copper demand rises 50% from today’s level by 2040 due to growth from electrification, the AI buildout and global defense spending. That level of demand implies a 10mm ton gap over the period.

Will copper supply fall short of rising demand?

Core argument: S&P Global's base case has copper demand rising 50% to 42 million tons by 2040, while worldwide production peaks at about 33 million tons in 2030, leaving a 10-million-ton gap.

S&P Global’s base case is that copper demand rises 50% from today’s levels to 42 million tons by 2040. Worldwide production is expected to peak at about 33 million tons in 2030 as ore quality deteriorates at existing mines and new projects struggle with permitting, financing and construction hurdles. That would leave a 10-million-ton gap, the study finds, even after accounting for a sharp increase in recycled copper, which is expected to more than double to 10 million tons over the period. To be sure, such a supply deficit is largely hypothetical, with consumption limited to what’s available. As prices rise, copper could be engineered out of some products and supply expansion projects could become more profitable.

Takeaways by Macro Roundup® AI

  1. S&P Global's base case has copper demand rising 50% to 42 million tons by 2040, while worldwide production peaks at about 33 million tons in 2030, leaving a 10-million-ton gap.
  2. S&P Global attributes the expected production peak to deteriorating ore quality at existing mines and new projects struggling with permitting, financing and construction hurdles.
  3. S&P Global's projected deficit persists even after recycled copper more than doubles to 10 million tons, though the shortfall is largely hypothetical since consumption is limited to available supply and higher prices could engineer copper out of some products.

Related Articles:

  • The Hunt For Copper To Wire The AI Boom — Copper demand is being boosted by grid infrastructure for the green transition and by data centres for artificial intelligence, which miner Grupo México estimates require 27–33 tonnes of copper per megawatt, over twice the need of conventional data centres. BHP estimates copper used in data centres worldwide will grow sixfold by 2050.
  • Capital Is Making a Comeback — Tangible investment in property, factories and equipment fell from 12.5% to 8.5% of private gross domestic product, while intangible investment in intellectual property, software and process knowledge rose from about 11.5% to 16.75%. The author argues demand for tangible capital investment will now have to rise.
  • 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.

Friday, January 9, 2026

AI Summary. Spending on semiconductor plants and data centers, negligible before recent years, has averaged 0.4 percentage points of US GDP growth, and total IT-related investment has reached 5% of GDP, exceeding its dot-com-era peak. Unlike that earlier boom, which was driven by firms using IT products, the current one is driven by IT producers.

Iñaki Aldasoro, Sebastian Doerr and Daniel Rees Bank for International Settlements
Date Posted:

BIS finds US Capex on IT manufacturing facilities and datacenters was ~1% of GDP in 2025, on par with the scale of the 2010’s shale boom. Overall, AI-related investment was ~5% of GDP, and contributed half of US GDP growth, in 2025.

How large is AI-related investment relative to GDP and past booms?

Core argument: Spending on semiconductor manufacturing facilities and data centers contributed an average 0.4pp to GDP growth over the three years after 2022, up from a negligible contribution before then.

From a negligible contribution before 2022, expenditures on semiconductor manufacturing facilities and data centers contributed on average 0.4pp to GDP growth over the subsequent three years (See Graph 1.B). Total IT investment, which also includes spending by businesses on equipment and software to facilitate AI use, has accounted for almost half of GDP growth in recent quarters. By mid-2025, expenditures on IT manufacturing facilities and data centers (equipment and construction costs) were equivalent to 1% of GDP. Total IT-related investment, including investment in other IT equipment and software, [rose] to 5% of GDP, exceeding its previous peak at the height of the dot-com boom in 2000. Unlike that earlier episode, which was driven almost entirely by spending by firms using IT products, the current boom is driven by IT-producing firms. The rise in AI-related [data center and IT manufacturing facilities] investment is not particularly large by historical standards (See Graph 4.A). At ~ 1% of US GDP, it is similar in size to the US shale boom of the mid-2010s and half as large as the rise in IT investment during the dot-com boom of the 1990s. The commercial property and mining investment booms experienced in Japan and Australia during the 1980s and 2010s, respectively, were over five times as large relative to GDP.

Takeaways by Macro Roundup® AI

  1. Spending on semiconductor manufacturing facilities and data centers contributed an average 0.4pp to GDP growth over the three years after 2022, up from a negligible contribution before then.
  2. Total IT-related investment reached 5% of GDP by mid-2025, exceeding its previous peak at the height of the 2000 dot-com boom, and has accounted for almost half of GDP growth in recent quarters.
  3. At about 1% of US GDP, AI-related data center and IT manufacturing facility investment is similar in size to the mid-2010s US shale boom and half the dot-com-era rise in IT investment, while Japan's 1980s property and Australia's 2010s mining booms were over five times as large relative to GDP.

Related Articles:

  • The Kanye/Data Center Crossover — Data center capital spending differs from fiber and railroad investment because most of the cost sits in processors that are replaced every 3-4 years rather than in long-lived shells, power, and cooling connections. That short replacement cycle requires returns high enough to exceed a risk-adjusted cost of capital of 12-14% before the hardware must be replaced.
  • Smothering Heights — The four largest cloud computing firms are devoting rising shares of revenue to capital spending and research, with Meta's combined share reaching 70%. Unlike past investment booms, this one has been financed mostly from internal cash flow: 28 direct AI stocks make up 50% of S&P 500 market value but just 5% of its net debt.
  • 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.

AI Summary. County-level mapping of net domestic migration within the United States shows some counties gained net movers equal to 10% or more of their 2020 population while others lost an equivalent share, excluding international moves.

John Johnson Blue Book
Date Posted:

Btw 2020 and 2024, 3.7% of California’s 2020 population moved out of state. The population of the “Texas Triangle” – the Dallas, Houston, and San Antonio region – grew 3.5%. The Upper Rockies region grew 6% relative to 2020.

How large are county-level swings in domestic migration across America?

Core argument: A county-level map of cumulative net domestic migration from 2020 to 2024 marks in darkest green counties whose net in-migration equals 10% or more of their 2020 population, and in darkest purple those with net out-migration of 10%.

Patterns of domestic migration—where people who already live in America choose to move—reveals a lot about where people do or don’t want to live. Or, framed differently, where they can and can’t afford to. This map shows the cumulative domestic migration of each US county, from 2020 to 2024. The darkest green color shows places where the (net) number of people who’ve moved in since 2020 is equal to 10% or more of the population in 2020. The darkest purple color shows the reverse. In those counties the net number of people who’ve moved out is equal to 10% of the 2020 population. This only includes people who moved from one place in the United States to another, not people who moved into or out of the country. I was surprised by the extent to which certain ecological regions correspond to the patterns on this map.

Takeaways by Macro Roundup® AI

  1. A county-level map of cumulative net domestic migration from 2020 to 2024 marks in darkest green counties whose net in-migration equals 10% or more of their 2020 population, and in darkest purple those with net out-migration of 10%.
  2. The migration map counts only moves from one place in the United States to another, excluding moves into or out of the country.
  3. Certain ecological regions correspond to the county-level patterns of net domestic migration shown on the map.

Related Articles:

  • Young Families Have Stopped Leaving Big Cities, For Now — New data show the population of children under five in large U.S. urban counties fell 0.2%, matching the national rate of decline and ending a stretch in which big cities lost young children faster than the country as a whole. Every large urban county with under-five growth since 2020 is in Texas, North Carolina, or Florida.
  • How Big-City Expats Might Reshape the Politics Of Rural America — Rural population growth accelerated to 1.4% from 0.7%, a gain of nearly 1m residents, while large urban areas shifted from 1.5% growth to a 0.5% decline, losing more than 500,000 residents. About a third of new residents in rural counties that voted Republican came from Democratic-leaning counties, rising to 40% in rural counties within urban commuting zones.
  • The Economic Geography Of The 2024 Elections — Counties where government transfer programs such as Social Security, Medicare, Medicaid, and unemployment insurance make up at least a quarter of personal income gave Trump 63% of the vote, while counties where transfers account for less than 15% gave Harris 56%. Transfers supplied 18% of total US personal income.

AI Summary. Among young labor market entrants, the rate of finding jobs has held steady only in occupations with low exposure to artificial intelligence, declining by more than 3 percentage points for the most AI-exposed group from its recent peak. The decline reflects fewer people entering these jobs rather than exits, with small aggregate effects.

Tyler Atkinson and Shane Yamco Federal Reserve Bank of Dallas
Date Posted:

The job-finding rate for workers aged 20–24 in the occupations most exposed to AI has declined by more than 3pp since its peak in November 2023, while the separation rate has not risen.

Is AI reducing job finding rates for young workers?

Core argument: The job finding rate for young, most AI-exposed workers has declined by more than 3 percentage points since its November 2023 peak, while holding steady for jobs with low AI exposure.

Among young labor market entrants, the job finding rate has held steady only for jobs with low AI exposure, while it has declined for groups with higher AI exposure since November 2022. Since its recent peak in November 2023, the job finding rate of the young, most AI-exposed group has declined by more than 3 percentage points. Looking at past business cycles, the data confirm this isn’t a typical cyclical phenomenon. Thus far, lower employment in high AI exposure occupations for young workers is mainly driven by a lower inflow, particularly among those out of the labor force, rather than by an outflow. There appears to be lower employment for young workers in occupations with the most exposure to AI, but so far, the aggregate impacts are small and subtle. If all the decline in employment for the young, most AI-exposed workers translated into unemployment, it would be responsible for only a 0.1 percentage point rise in aggregate unemployment since November 2022.

Takeaways by Macro Roundup® AI

  1. The job finding rate for young, most AI-exposed workers has declined by more than 3 percentage points since its November 2023 peak, while holding steady for jobs with low AI exposure.
  2. Lower employment for young workers in high-AI-exposure occupations is driven mainly by lower inflow, particularly among those out of the labor force, rather than by outflow from employment.
  3. If the entire employment decline among young, most AI-exposed workers became unemployment, it would account for only a 0.1 percentage point rise in aggregate unemployment since November 2022.

Related Articles:

  • AI and Jobs: The Final Word (Until the Next One) — Unemployment has risen by 0.30 percentage points for the fifth of workers most exposed to artificial intelligence, compared with 0.94 percentage points for the least exposed fifth, leaving no visible AI effect on jobs. The share of workers leaving the labor force within a year is lowest among the most AI-exposed workers and roughly flat.
  • Canaries in the Coal Mine? Six Facts about the Recent Employment Effects of Artificial Intelligence — Using payroll records covering millions of US workers, the authors find employment for workers aged 22–25 in occupations most exposed to artificial intelligence, such as software developers and customer service representatives, declined 6%, while employment for older workers in those occupations rose 6–9%. Employment in less-exposed occupations grew comparably across age groups.
  • 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.

AI Summary. Government-sponsored mortgage buyers Fannie Mae and Freddie Mac have been urged to purchase $200bn in mortgage bonds, roughly the room they have left under caps allowing each to hold up to $225bn of mortgage-backed securities against a combined $247bn held. The National Housing Conference estimates resuming such purchases could lower mortgage rates by a quarter-percentage point or more.

Gina Heeb, Veronica Dagher and Rebecca Picciotto Wall Street Journal
Date Posted:

President Trump ordered Fannie Mae and Freddie Mac to purchase $200B in mortgage bonds, which could lower the mean 30-year fixed rate, which was ~6.2% Thursday, by ~25bps.

Can government-backed mortgage buyers lower mortgage rates by expanding bond holdings?

Core argument: Trump has called on Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds, roughly the headroom left under caps allowing each to hold up to $225 billion of mortgage-backed securities against a combined $247 billion held as of November.

One of the few things that united Obama-era Democrats and Tea Party Republicans after the financial crisis was agreement that Fannie and Freddie’s massive “retained portfolios”—quasi hedge funds grafted onto their core mortgage insurance business—had been a major problem. At their peak, each company held more than $900 billion in mortgage-related investments. Today, Fannie and Freddie are allowed to hold up to $225 billion of mortgage-backed securities, each. But they only hold a combined $247 billion, as of November, meaning they have roughly $200 billion in room to grow. “There is no question” that resuming this strategy would have downward pressure on mortgage rates, said David Dworkin, chief executive of the National Housing Conference. He estimated that the decrease could be a quarter-percentage point or more.

Takeaways by Macro Roundup® AI

  1. Trump has called on Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds, roughly the headroom left under caps allowing each to hold up to $225 billion of mortgage-backed securities against a combined $247 billion held as of November.
  2. Obama-era Democrats and Tea Party Republicans agreed after the financial crisis that Fannie and Freddie's retained portfolios—quasi hedge funds grafted onto their mortgage insurance business, peaking above $900 billion each—had been a major problem.
  3. David Dworkin, chief executive of the National Housing Conference, said there is "no question" that resuming the strategy would put downward pressure on mortgage rates, estimating a decrease of a quarter-percentage point or more.

Related Articles:

  • Fannie and Freddie May Foment Another Crisis — Fannie Mae and Freddie Mac back more than 60% of new mortgages, up from roughly 45% before the 2008 financial crisis, and hold a $7.5tn loan portfolio; including Federal Housing Administration and Veterans Affairs loans, the government backs nearly 85% of the mortgage market. The Federal Reserve owns $2.2tn in mortgage-backed securities.
  • NAR Says the Typical First-Time Homebuyer Age Was 40 This Year, Up from 33 in 2021—but Is This Accurate? — The National Association of Realtors' mail survey, with a 3.5% response rate, puts the typical first-time homebuyer at age 40, while New York Federal Reserve credit-report data for the same period show an average of 36.2 years and a median of 33. The survey underrepresents buyers under 35 by 17 percentage points.
  • The Cost of Money is Part of the Cost of Living: New Evidence on the Consumer Sentiment Anomaly — Variation in the University of Michigan consumer sentiment index that inflation and unemployment cannot explain is strongly correlated with growth in consumer borrowing costs, such as mortgage and car loan rates. The authors estimate that including interest payments and homeownership costs in the consumer price index would raise measured inflation from 3% to 9%.

AI Summary. Venezuela holds easily extractable, good-quality crude that allows quick production gains without the huge investments skeptics say are required, the author argues. After output fell to a 100-year low of 450,000 barrels a day it doubled within five years, and the author expects short-term upside surprises but long-run disappointment.

Javier Blas Bloomberg
Date Posted:

Blas argues that increased Venezuelan oil output of 300,000 to 500,000bpd can likely be brought online over 12 to 18 months without “eyewatering” capex. As evidence that output can be increased, he notes production has doubled since its 2020 trough.

Can Venezuela raise oil output quickly without huge new investment?

Core argument: Venezuelan oil production fell to a 100-year low of 450,000 barrels a day in 2020 and then doubled over the following five years, a rebound whose size few anticipated.

Conventional wisdom says the future of the Venezuelan oil industry is bleak. I disagree. The naysayers state that any output gains are far, far away and need huge investments. The reality is more nuanced. There are low-hanging barrels in the country, if you’ll forgive the mixed metaphor. This is good-quality crude that’s relatively easy to extract — and it opens the way to quick wins in reviving dilapidated petroleum infrastructure. I’ve seen this movie several times in nearly 30 years covering the industry, including Iraq in 2003, Libya in 2011 and Iran in 2021-2023. Venezuela itself is an example: After oil production plunged to a 100-year low of 450,000 barrels a day in 2020, few anticipated the size of its rebound. But it doubled in five years. Now, I expect the post-Maduro nation to surprise positively in the short term, and negatively in the long run.

Takeaways by Macro Roundup® AI

  1. Venezuelan oil production fell to a 100-year low of 450,000 barrels a day in 2020 and then doubled over the following five years, a rebound whose size few anticipated.
  2. The author argues Venezuela holds good-quality crude that is relatively easy to extract, opening the way to quick wins in reviving dilapidated petroleum infrastructure rather than requiring only huge investments.
  3. Citing Iraq in 2003, Libya in 2011 and Iran in 2021-2023, the author expects post-Maduro Venezuela to surprise positively in the short term and negatively in the long run.

Related Articles:

  • 12 Insights About Venezuela And The “Donroe Doctrine” — 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.
  • Venezuela’s Self-Reported Oil Reserves — 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.
  • 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.