Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…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
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Monday, January 12, 2026

AI Summary. US blue-collar employment shrank by more than 145k over the past year, with warehouse jobs down over 50k and construction job growth flat, while tech employment fell more than 19k. Unemployment rose 2.9 percentage points for teenagers and 1.6 points for young college graduates, versus 0.2 points for workers over 25.

Joseph Politano Apricitas Economics
Date Posted:

Job growth slowed to a mean of 44k a month in 2025, with blue-collar and young workers most impacted. Unemployment rose .7pp for those <25 and 1.6pp for new college grads alongside, “the largest gap in wage growth favoring high earners since the early 2010s.”

Who is bearing the brunt of weak hiring across sectors?

Core argument: Blue-collar employment shrank by more than 145k over the past year, with construction job growth functionally zeroed out and warehouses cutting over 50k jobs, leaving that sector 150k below its early-2022 peak.

The contraction in blue-collar jobs continues to intensify, with employment levels shrinking by more than 145k over the last year. Job growth in construction has functionally zeroed out, while manufacturing and logistics are each losing tens of thousands of jobs. Warehouses shrunk their workforce by > 50k over the last year, putting the sector 150k jobs below its early-2022 peak. The tech sector labor market remains extremely weak, with employment shrinking by more than 19k over the last year and down roughly 100k since late 2023, Over the last year, the unemployment rate for teenagers is up by 2.9pp, the unemployment rate for people in their early 20s is up by 0.7pp, but the unemployment rate for those above 25 is up by only 0.2pp. Unemployment for young college-educated workers is up by a full 1.6pp over the last year; unemployment for new labor market entrants and labor market reentrants are both near their highest levels since 2016. The distribution of wage growth has also radically changed amidst the “no-hire” economy. From 2021-2022, wage growth for the lowest-paid workers accelerated to the fastest pace in a generation. Wage growth for these lowest-paid workers has ground to a halt over the last two years, and they are now seeing much lower raises than their higher paid counterparts. This is now the largest gap in wage growth favoring high earners since the early 2010s.

Takeaways by Macro Roundup® AI

  1. Blue-collar employment shrank by more than 145k over the past year, with construction job growth functionally zeroed out and warehouses cutting over 50k jobs, leaving that sector 150k below its early-2022 peak.
  2. Teenage unemployment rose 2.9pp over the past year and unemployment for young college-educated workers rose 1.6pp, versus 0.2pp for workers above 25, with new entrants and reentrants near their highest levels since 2016.
  3. Wage growth for the lowest-paid workers, which accelerated to its fastest pace in a generation in 2021–2022, has ground to a halt over the last two years, producing the largest gap favoring high earners since the early 2010s.

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.
  • 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.
  • 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. A U.S. plan for federally controlled mortgage agencies Fannie Mae and Freddie Mac to buy $200bn of mortgage-backed bonds amounts to quantitative easing aimed at cutting mortgage costs, and reflects that the Federal Reserve cannot control the long-term yields driving mortgage rates through its overnight rate target. The announcement pushed the 30-year benchmark mortgage bond yield below 5%.

John Authers Bloomberg
Date Posted:

As the Fed cut the FFR from 5.5% to 3.75%, the 30-year benchmark mortgage bond yield rose from 4.76% to ~5.07% as of last Thursday, when Trump’s exhortation to Fannie/Freddie to buy $200B in MB debt drove the 30 year fixed to 4.9%, ~ on par with its September 2024 level.

Can mortgage agencies lower mortgage rates where the Fed cannot?

Core argument: The president's announcement that Fannie Mae and Freddie Mac should buy $200 billion in mortgage-backed bonds brought the 30-year benchmark mortgage bond yield below 5%, its lowest since September 2024.

The president announced Thursday that he wanted Fannie Mae and Freddie Mac, the mortgage finance agencies still under federal control, to buy $200 billion in mortgage-backed bonds. That is basically quantitative easing, previously the purview of the Fed, aimed directly at making mortgages cheaper. It’s also a recognition that the Fed can’t control the long-term yields that drive mortgage rates using its target overnight rates. That move brought the 30-year benchmark mortgage bond yield down below 5% to its lowest since September 2024. The Fed had cut six times since then, while mortgage yields wavered higher. This administration wants lower interest rates and more affordable housing. It’s worked out that it can’t force the Fed to play along with this, and that the central bank can’t make this happen if it wants to. Now, the government has shown how willing it is to take destiny into its own hands.

Takeaways by Macro Roundup® AI

  1. The president's announcement that Fannie Mae and Freddie Mac should buy $200 billion in mortgage-backed bonds brought the 30-year benchmark mortgage bond yield below 5%, its lowest since September 2024.
  2. The Fannie Mae and Freddie Mac purchase plan amounts to quantitative easing, previously the purview of the Fed, aimed at making mortgages cheaper.
  3. The Fed cut rates six times since September 2024 while mortgage yields wavered higher, reflecting that its target overnight rates cannot control the long-term yields that drive mortgage rates.

Related Articles:

  • A Mystery in Fixed Income — Long-term interest rates have drifted higher than short-term rates and oil prices would predict, an unusual pattern during Federal Reserve rate-cutting cycles. Proposed explanations include investor concern about growing Treasury debt issuance or an effective increase in the Federal Reserve's 2% inflation target.
  • Trump Calls on Fannie and Freddie to Buy $200 Billion in Mortgage Bonds — 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.
  • Data Update 4 for 2025: Interest Rates, Inflation and Central Banks! — Interest rates are ultimately driven by macroeconomic fundamentals, with an "intrinsic risk-free rate" defined as the sum of the inflation rate and real GDP growth tracking the observed 10-year Treasury bond yield closely. On this view, central banks' influence comes from preferential access to data on those fundamentals, their capacity to alter them, and their credibility.

AI Summary. Gold rose as much as 2.7% to above $4,600 a troy ounce and silver jumped as much as 7.8% to a record above $86 an ounce, while the dollar weakened 0.3% against a basket of major currencies amid concerns about Federal Reserve independence. US stocks were marginally higher and the 10-year Treasury yield traded near 4.18%.

William Sandlund, Ian Smith and Rachel Rees Financial Times
Date Posted:

Gold hit a record high after Federal prosecutors launched a criminal investigation into Jay Powell, climbing 2.7% above $4,600 a troy ounce, and the dollar weakened 30bps against a basket of major currencies.

Are worries about central bank independence lifting gold and weakening the dollar?

Core argument: Gold climbed as much as 2.7% to a record above $4,600 a troy ounce amid worries over Federal Reserve independence, while the dollar weakened 0.3% against a basket of major currencies including the pound and the euro.

The precious metal climbed as much as 2.7% to above $4,600 a troy ounce, while the dollar weakened 0.3% against a basket of major currencies including the pound and the euro. Silver jumped as much as 7.8% to a fresh record of more than $86 a troy ounce. US stocks were marginally higher, recovering from earlier falls. The yield on the 10-year Treasury, which moves inversely to the price, climbed 0.02 percentage points to 4.21% before falling back to 4.18%.

Takeaways by Macro Roundup® AI

  1. Gold climbed as much as 2.7% to a record above $4,600 a troy ounce amid worries over Federal Reserve independence, while the dollar weakened 0.3% against a basket of major currencies including the pound and the euro.
  2. Silver jumped as much as 7.8% to a fresh record of more than $86 a troy ounce.
  3. The yield on the 10-year Treasury climbed 0.02 percentage points to 4.21% before falling back to 4.18%, and US stocks were marginally higher after recovering from earlier falls.

Related Articles:

  • Political Pressure on the Fed — Using data on President–Federal Reserve interactions, the author estimates that political pressure to ease monetary policy raises the price level strongly and persistently without boosting real activity, working through inflation expectations more than a typical easing. Such pressure occurred mainly in the 1970s and contributed to inflationary episodes.
  • 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%.
  • 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.

AI Summary. US equities, with 5,994 firms and $69.8tn in market value, hold the largest share of global market capitalization at 46.8%, down from 48.7% a year earlier despite a 16.8% gain. Global equities added $26.3tn (+21.46%), with China best performing (+32.5% in dollar terms) and India worst (+3.31%).

Aswath Damodaran Musings On Markets
Date Posted:

The US share of global market capitalisation fell slightly from 48.7% at the end of 2024 to 46.8% at the end of 2025, despite public firms’ 16.8% gains. China returned 32.5% in dollar terms, and the greater EU returned 28.6%.

Does the US still dominate global equity market capitalization?

Core argument: Global equities added $26.3 trillion in market capitalization in 2025, a gain of 21.46% for the year.

The United States, with 5,994 firms and a total market capitalization of $69.8 trillion, continues to have a dominant share of the global market. While US stocks had a good year, up almost 16.8% in the aggregate, the US share of the global market dipped slightly from 48.7% at the end of 2024 to 46.8% at the end of 2025. The best performing sub-region in 2025 was China, up almost 32.5% in US dollar terms, and the worst, again in US dollar terms, was India, up only 3.31%. Global equities added $26.3 trillion in market capitalization in 2025, up 21.46% for the year.

Takeaways by Macro Roundup® AI

  1. Global equities added $26.3 trillion in market capitalization in 2025, a gain of 21.46% for the year.
  2. US stocks rose almost 16.8% in aggregate, yet the US share of global market capitalization slipped from 48.7% at the end of 2024 to 46.8% at the end of 2025, with 5,994 firms worth $69.8 trillion.
  3. China was the best-performing sub-region in 2025, up almost 32.5% in US dollar terms, while India was the worst, up 3.31%.

Related Articles:

  • 2026 Outlook: Tech Tonic — A Broadening Bull Market — Most major equity markets have outperformed the US, with Europe, China and Asia generating almost double US total returns in dollar terms and gains of 54% in Italy, 73% in Spain and 71% in Korea. US returns have been driven by strong earnings, particularly in technology, while Europe's have come largely from rising valuations.
  • American Unexceptionalism — The S&P 500 has outperformed other developed-market equities by a cumulative 150% over the past fifteen years, but the authors attribute about 80% of that gap to a strengthening dollar and expanding relative valuations rather than fundamentals such as dividends, buybacks, and organic growth. U.S. valuations sit around the 90th percentile on price-to-earnings measures.
  • Long-Term Shareholder Returns: Evidence From 64,000 Global Stocks — A study of about 64,000 global stocks estimates net global stock market wealth creation of $75.7tn, with returns highly concentrated: the top 159 firms (0.25%) account for half of net wealth creation and the top 1,526 (2.39%) account for all of it. Fewer than half of stocks beat one-month US Treasury bills, 42.6% of non-US and 44.8% of US stocks.

AI Summary. China's yuan faces appreciation pressure while Beijing maintains its commitment to currency stability, testing trading partners' willingness to absorb China's growing export surplus. If nominal appreciation is limited to a few percentage points, the real effective exchange rate stays at its depreciated level and China is likely to keep gaining global market share.

Brad Setser Council On Foreign Relations
Date Posted:

In real terms, the yuan is close to a 15-year low. Setser argues China’s “immovable” commitment to the basic stability of the yuan is at odds with “China’s trading partners’ willingness to absorb China’s ever-increasing export surplus.”

Will limited currency appreciation let China keep gaining global market share?

Core argument: China's yuan faces substantial appreciation pressure as Beijing's commitment to basic currency stability meets trading partners' limited willingness to absorb China's ever-increasing export surplus.

An immovable object—China’s commitment to the basic stability of yuan—is meeting a potentially unstoppable political force, and testing limits of China’s trading partners’ willingness to absorb China’s ever-increasing export surplus. After all, if China limits nominal appreciation to a few percentage points (to match, say, the rate differential between the yuan and the dollar in an effort to limit speculative pressure) China’s real exchange rate won’t move, and if the real effective yuan stays at its current depreciated level, China is likely to continue to gain global market share. Pressure [for yuan appreciation] is coming in the context of China’s still largely closed financial account—and the closed financial account traps Chinese savings inside China. But China is not going to suddenly open the floodgates and allow unfettered inflows and outflows, so it makes sense to assess the pressure that is coming from within the existing system.

Takeaways by Macro Roundup® AI

  1. China's yuan faces substantial appreciation pressure as Beijing's commitment to basic currency stability meets trading partners' limited willingness to absorb China's ever-increasing export surplus.
  2. If China limits nominal yuan appreciation to a few percentage points to match the yuan-dollar rate differential and curb speculative pressure, China's real exchange rate would not move and China would likely continue gaining global market share.
  3. Appreciation pressure on the yuan is arising within China's still largely closed financial account, which traps Chinese savings inside China, and Beijing is not expected to suddenly permit unfettered inflows and outflows.

Related Articles:

  • China’s Trade Surplus, Part II — China's high saving and diminishing returns on investment leave consumption weak, and its currency's real trade-weighted value has fallen substantially, giving Chinese exporters a large competitive advantage. The author argues the government sets the yuan's value and now suppresses it largely through state banks buying dollars, purchases that do not appear in official reserves.
  • Markets Outlook 2026: Some Like It Hot — China's annual goods trade surplus surpassed $1tn for the first time, and analysts project its current account surplus as a share of global GDP will exceed levels last seen during the mid-2000s "China shock." The Chinese currency is estimated to be undervalued to a comparable degree, and the analysts expect gradual appreciation to continue.
  • The Case That China is Now Actively Resisting Pressure on the Yuan to Appreciate — The author argues China has been resisting pressure for the yuan to appreciate against the dollar, citing state bank foreign asset accumulation, balance of payments data, a yuan trading strong relative to its official fix, and positive foreign exchange settlement. Inflows from China's large trade surplus exceed private capital outflows.

AI Summary. Entities tied to Google's two cofounders have moved or deactivated dozens of California limited liability companies that hold some of their business interests and investments, with several converted into Nevada entities. A trust linked to one cofounder also purchased a $71.9m mansion in Miami.

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

In response to a union-sponsored proposal that would levy a wealth tax of 5% tax on individuals worth more than $1B, the founders of Google both cut ties with the state of California in December.

Are tech billionaires shifting their business entities out of California?

Core argument: An entity tied to Google co-founder Sergey Brin, 52, terminated or moved 15 California limited liability companies overseeing some of his business interests and investments out of the state in the 10 days before Christmas, according to documents seen by The New York Times.

In the 10 days before Christmas, an entity connected to Mr. Brin, 52, terminated or moved 15 California limited liability companies that oversee some of his business interests and investments out of the state, according to documents seen by The New York Times. Seven of the companies — including those that appear to manage one of Mr. Brin’s superyachts and his interest in a private air terminal at San Jose’s international airport — were converted into Nevada entities. Mr. Brin is joining Mr. Page, 52, in reducing his California presence. More than 45 California limited liability companies associated with Mr. Page filed documents last month to either become inactive or move out of the state, according to state records. A trust with ties to Mr. Page also purchased a $71.9 million mansion in Miami’s Coconut Grove neighborhood this week, according to a deed seen by The Times.

Takeaways by Macro Roundup® AI

  1. An entity tied to Google co-founder Sergey Brin, 52, terminated or moved 15 California limited liability companies overseeing some of his business interests and investments out of the state in the 10 days before Christmas, according to documents seen by The New York Times.
  2. Seven of the Brin-linked companies — including those that appear to manage one of his superyachts and his interest in a private air terminal at San Jose's international airport — were converted into Nevada entities.

Related Articles:

  • Ed Conard Debates Furman On “The Expected Value of Risk Taking” — A debate on U.S. fiscal policy argues that spending increases, rather than the tax increases needed to fund them, slow growth, and that higher taxes would reduce the expected value of America's innovative risk-taking. The argument holds that cutting debt below 100% of GDP is critical.
  • 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.
  • 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.

Tuesday, January 13, 2026

AI Summary. The Congressional Budget Office projects the US population rises from 349m to 364m between 2026 and 2056, with annual growth slowing from 0.3% over the next decade to 0.1% thereafter before reaching zero and then shrinking. Declining fertility is projected to push deaths above births starting in 2030, increasingly offsetting net immigration.

Daniel Crown and Katherine Keisler-Starkey Congressional Budget Office
Date Posted:

CBO forecasts US population growth over the next decade will be 0.3% annually. Starting in 2030, net immigration will be the sole driver of population growth; after that date, births will be overtaken by deaths. CBO estimates net immigration of 410,000 in 2025.

Will US population growth slow to zero within three decades?

Core argument: CBO projects the U.S. population rises from 349 million in 2026 to 364 million in 2056, with growth slowing from an average 0.3% a year over the next decade to 0.1% a year thereafter.

In CBO’s projections, the population increases from 349 million people in 2026 to 364 million in 2056. Population growth slows during that period—from an average rate of 0.3% a year over the next decade to 0.1% a year thereafter. Through 2029, the population grows because more people are projected to migrate to the United States than to leave it (positive net immigration) and because the annual number of births is projected to exceed the annual number of deaths. Starting in 2030, declining fertility rates are projected to cause births to fall short of deaths. Over time, the negative net contribution of births and deaths increasingly offsets the positive contribution of net immigration, until population growth slows to zero in 2056. The population is projected to shrink thereafter.

Takeaways by Macro Roundup® AI

  1. CBO projects the U.S. population rises from 349 million in 2026 to 364 million in 2056, with growth slowing from an average 0.3% a year over the next decade to 0.1% a year thereafter.
  2. CBO projects that starting in 2030, declining fertility rates cause annual births to fall short of annual deaths, after a period through 2029 in which births exceeded deaths and net immigration was positive.
  3. CBO projects U.S. population growth slows to zero in 2056 as the negative net contribution of births and deaths increasingly offsets the positive contribution of net immigration, with the population shrinking thereafter.

Related Articles:

  • The Case for Gradual Population Decline — South Korea's fertility rate fell below 1.7 in 1985 and its share of population aged 20-40 has fallen 20% since 2000, yet it ranked first in Bloomberg's Innovation Index and twelfth in a global soft power ranking. The author argues low fertility does not inevitably cause technological and cultural stagnation.
  • Foreign-Born Number and Share of U.S. Population at All-Time Highs in January 2025 — The U.S. foreign-born population reached 53.3m, or 15.8% of the population, the highest level in American history, exceeding the shares recorded in 1890 (14.8%) and 1910 (14.7%) during the "Great Wave" of immigration. A four-year increase of 8.3m is larger than that of any four-year period in American history and exceeds the 7.9m increase over the prior 12 years.
  • America’s Immigration Mess: An Illustrated Guide — Current Population Survey estimates indicate America's foreign-born population surpassed 50m for the first time and exceeded 15% of the national population, above the prior peak of 14.8% recorded in 1890. Mass immigration during that earlier wave was associated in contemporary opinion with widening income and wealth gaps and depressed wages for less-skilled native-born men, and sweeping national restrictions followed.

AI Summary. Investment in information processing equipment, software, research and development, and data centers contributed 0.97 percentage points to real GDP growth over the first three quarters of 2025, or 39% of total growth, compared with 0.81 percentage points and 28% during the dot-com investment boom of 2000.

Hannah Rubinton and Bontu Ankit Patro Federal Reserve Bank Of St. Louis
Date Posted:
Is Database:
Database

Investment spending on information processing equipment, software, data centers and R&D drove 39% of American GDP growth in the first 3Q of 2025. Those same categories were responsible for 28% of GDP growth in 2000, during the dot-com boom.

How much of real GDP growth does AI-related investment contribute?

Core argument: AI-related investment categories — information processing equipment, software, R&D and data centers — contributed 0.97 percentage points to real GDP growth over the first three quarters of 2025, above the 0.81 percentage points contributed in 2000.

The table provides the contributions of identical categories [Information Processing Equipment, Software, R&D and Data Centers] of investment to real GDP growth for the years 2000 and 2025. The tables are calculated by taking the average of data available over the first three quarters of 2025 and over the four quarters of 2000, during the height of the dot-com era’s investment boom. IPE’s contribution is similar across the two periods: 0.58 percentage points (20% of GDP growth) in 2000 versus 0.42 percentage points (17%) in the first nine months of 2025. However, the contribution of software is significantly higher in 2025 at 0.35 percentage points (14%) compared with 0.11 percentage points (3.7%) in 2000. Together, the AI categories contributed 0.97 percentage points to real GDP growth in the first three quarters of 2025 (0.90 percentage points, excluding data centers, for which data were not available in 2000), higher than the 0.81 percentage points in 2000. Through the third quarter of 2025, these categories made up 39% (36% excluding data centers) of total GDP growth versus 28% in 2000.

Takeaways by Macro Roundup® AI

  1. AI-related investment categories — information processing equipment, software, R&D and data centers — contributed 0.97 percentage points to real GDP growth over the first three quarters of 2025, above the 0.81 percentage points contributed in 2000.
  2. Software's contribution to real GDP growth reached 0.35 percentage points (14% of growth) in the first nine months of 2025 versus 0.11 percentage points (3.7%) in 2000, while information processing equipment contributed 0.42 percentage points (17%) versus 0.58 points (20%).
  3. Information processing equipment, software, R&D and data centers accounted for 39% of total GDP growth through the third quarter of 2025 — 36% excluding data centers, for which 2000 data were unavailable — compared with 28% in 2000.

Related Articles:

  • Financing The AI Boom: From Cash Flows To Debt — 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.
  • 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.
  • Honey, AI Capex is Eating the Economy — Capital spending on AI data centers is around 20% of railroads' peak spending as a share of GDP and is rising quickly, having already surpassed the dot-com era peak in telecom investment. Unlike long-lived rail infrastructure, data centers are short-lived assets requiring frequent hardware replacement, and the capital is being reallocated from other sectors.

AI Summary. In an experiment with over 500 professionals across management, data analysis, and consulting using 13 different large language models, each year of model progress cut task time by 8%, and a 10x increase in training compute is associated with a 6.3% time reduction. The authors project continued scaling could raise US productivity by about 20% over a decade.

Ali Merali Yale University
Date Posted:
Is Database:
Database

An experiment with over 500 professionals found that each year of model progress cut task time ~8%, with 56% of gains driven by increased compute and 44% by algorithmic progress, suggesting that US productivity could rise 20% over the next decade.

How much does AI model scaling raise professional productivity?

Core argument: In experiments with over 500 professionals across management, data analysis, and consulting using one of 13 LLMs, each year of model progress reduced task time by 8%, with 56% of gains from added compute and 44% from algorithmic progress.

This paper derives “Scaling Laws for Economic Impacts”—empirical relationships between the training compute of Large Language Models (LLMs) and professional productivity— [from] over 500 professionals across three high-skill domains: management, data analysis, and consulting [using] one of thirteen different LLMs. Each year of model progress reduced task time by 8%, with 56% of gains driven by increased compute and 44% by algorithmic progress; a tenfold (10x) increase in model training compute is associated with a 6.3% reduction in time taken. Access to any AI model increased base Earnings Per Minute (EPM) by 81.3% (p = 0.001) [and] resulted in a 146% increase in Total Earnings Per Minute (TEPM), with AI assistance delivering total earnings gains of $1.58 per minute on non-agentic, analytical tasks [versus] $0.34 per minute for “agentic” tasks requiring multi-step interactions with external tools. While the quality of autonomous model output scales linearly with compute, [for human-assisted work] the scaling law for quality completely disappears. Multiplying the share of tasks that can be automated (19.9%), multiplied by the average productivity effect derived from our scaling projections (175.1%), multiplied by the labor share of costs (57%) yields Total GDP Gain ≈ 19.9%, [meaning] continued model scaling could boost U.S. productivity by ~20% over the next decade.

Takeaways by Macro Roundup® AI

  1. In experiments with over 500 professionals across management, data analysis, and consulting using one of 13 LLMs, each year of model progress reduced task time by 8%, with 56% of gains from added compute and 44% from algorithmic progress.
  2. Access to any AI model raised base Earnings Per Minute by 81.3% (p = 0.001) and Total Earnings Per Minute by 146%, with gains of $1.58 per minute on non-agentic analytical tasks versus $0.34 per minute on agentic tasks requiring multi-step tool use.
  3. The authors multiply the automatable task share (19.9%) by the projected average productivity effect (175.1%) and the 57% labor share of costs to project that continued model scaling could boost U.S. productivity by roughly 20% over the next decade.

Related Articles:

  • US Productivity Accelerates to Fastest Pace in Two Years — 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.
  • 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.
  • Weekend Thinking: A Cul-de-Sac With a View — Leading AI developers are shipping smaller, more frequent model updates, creating an impression of momentum through release frequency rather than the magnitude of change. The author argues the bet that scaling data, compute, and model size would produce artificial general intelligence has not paid off, pushing labs back toward harder problems like continual learning and new architectures.

AI Summary. California now draws more than 60% of its revenue from personal income taxes, compared with about 11% in the early 1950s when sales and use taxes supplied nearly 60%. The state's top 1% of taxpayers — roughly 170,000 filers — paid about 40% of personal income tax revenue, payments that depend heavily on unpredictable capital gains.

Michael Moritz Financial Times
Date Posted:
Is Database:
Database

In 1950, sales taxes accounted for ~60% of California’s revenue, and personal income taxes accounted for 11%. In recent years, the personal income tax share has risen to ~60%, with the top 1% of California taxpayers responsible for ~40% of the revenue.

How dependent is state revenue on a small group of taxpayers?

Core argument: In 2022, California's top 1% of taxpayers — about 170,000 payers — paid roughly 40% of the state's personal income tax revenues, payments that are highly contingent on unpredictable capital gains.

In 1957, Fairchild Semiconductor, the company that spawned Silicon Valley, was formed by eight men — only one of whom was born in California. At the start of that decade the state’s population was about 10.5mn and only about 11% of its revenue of $1.1bn came from personal income taxes. The sales and use tax (levied on products not services) accounted for almost 60%. Today, California’s population is about 39.5mn while its budget is about $320bn (not including the $174bn the state receives from Washington for social welfare programmes). Since 1990, the budget has grown at an average rate of 6% a year. Compared to the 1950s, the source of the state’s revenue has entirely flipped. In recent years personal income taxes have contributed more than 60% of the total. This revenue rests on a foundation of jelly. In 2022, the top 1% of California taxpayers — just 170,000 payers — coughed up about 40% of all the state’s personal income tax revenues. Worse still, these payments are highly contingent on unpredictable capital gains.

Takeaways by Macro Roundup® AI

  1. In 2022, California's top 1% of taxpayers — about 170,000 payers — paid roughly 40% of the state's personal income tax revenues, payments that are highly contingent on unpredictable capital gains.
  2. California's revenue mix has flipped since the 1950s, when personal income taxes supplied about 11% of $1.1bn in revenue and sales and use taxes nearly 60%; in recent years personal income taxes contributed more than 60%.
  3. California's budget has grown at an average 6% a year since 1990 to about $320bn, excluding $174bn received from Washington for social welfare programmes, with population up from about 10.5mn in the early 1950s to about 39.5mn.

Related Articles:

  • Ed Conard Debates Furman On “The Expected Value of Risk Taking” — A debate on U.S. fiscal policy argues that spending increases, rather than the tax increases needed to fund them, slow growth, and that higher taxes would reduce the expected value of America's innovative risk-taking. The argument holds that cutting debt below 100% of GDP is critical.
  • California Keeps Losing Tech Jobs — California's share of US tech jobs has fallen from nearly 19% before the pandemic to nearly 16%, including a further 0.4% decline over the past year. The remaining jobs skew high-paying: California's share of information-sector compensation is slightly above its pre-pandemic peak, with nearly a third of all tech wages and benefits going to state residents.
  • 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.

AI Summary. Adjusted for poverty and student demographics, Mississippi ranks first nationally in fourth-grade reading and math and at or near the top in eighth grade, according to the Urban Institute. The state changed reading instruction and adopted accountability policies that credit schools for student progress, with double credit for the bottom 25%.

Sarah Mervosh New York Times
Date Posted:
Is Database:
Database

Controlling for poverty and demographics, Mississippi has the best outcomes for fourth-grade reading and math, and is near the top in eighth-grade scores. In absolute terms, “eighth graders still rank 41st on national tests for reading, and 35th for math.”

How did one state's reading instruction and accountability reforms raise test scores?

Core argument: Adjusted for poverty and other student demographics, Mississippi ranks No. 1 nationally in fourth grade reading and math and at or near the top in eighth grade, according to the Urban Institute.

Adjusted for poverty and other student demographics, Mississippi is No. 1 for fourth grade reading and math, and at or near the top in eighth grade, according to the Urban Institute. Mississippi’s gains have been confined mostly to the early years, where the state has focused its efforts. The system revolves around standardized testing, and the gains have not always persisted. By raw scores, Mississippi eighth graders still rank 41st on national tests for reading, and 35th for math. The state pushed through a vast list of other changes from the top down, including changing the way reading is taught, in an approach known as the science of reading, but also embracing contentious school accountability policies other states have backed away from. Unlike No Child Left Behind, the Bush-era federal law that set a goal of having every child in America be proficient in reading and math, Mississippi also measures how much students progress toward proficiency. Schools get credit if students show improvement — and double credit for the improvement of students in the bottom 25%.

Takeaways by Macro Roundup® AI

  1. Adjusted for poverty and other student demographics, Mississippi ranks No. 1 nationally in fourth grade reading and math and at or near the top in eighth grade, according to the Urban Institute.
  2. Mississippi's gains are concentrated in the early grades where the state focused its efforts, and by raw scores its eighth graders still rank 41st in reading and 35th in math on national tests.
  3. Mississippi's accountability system, unlike No Child Left Behind's proficiency goal, credits schools for student progress toward proficiency and gives double credit for improvement among students in the bottom 25%.

Related Articles:

  • Many Children Left Behind: The 2024 National Assessment of Educational Progress Results Indicate a Five-Alarm Fire — The share of US fourth-grade students meeting the National Assessment of Educational Progress reading proficiency standard fell from 35% in 2019 to 33% in 2022 and 30% in 2024. More fourth-graders now score below the basic level than score proficient.
  • Twelfth-Grade Math and Reading Scores in U.S. Hit New Low — U.S. twelfth-graders' average math and reading scores on the National Assessment of Educational Progress fell to their lowest levels on record, with math the worst since that test began in 2005 and reading below any point since 1992. The share rated proficient slid 2 percentage points to 35% in reading and 22% in math.
  • Do Adults Have the Skills They Need to Thrive in a Changing World? — An international assessment of adult skills describes numeracy proficiency levels ranging from counting objects and adding small whole numbers at the lowest level, to extracting information from tables and graphs and performing basic arithmetic with money and percentages at Level 1, up to analysing complex mathematical information and critically evaluating whether data support a claim at Level 5.

AI Summary. Yields on long-term Japanese government debt have risen to their highest since the 1990s while the yen remains cheap relative to its history. One benign reading is that Japan has exited post-bubble stagnation, with modest inflation and faster wage and income growth aligning with higher interest rates.

Matt Klein The Overshoot
Date Posted:

Klein notes the “relentless” rise in Japan’s long-term yields alongside continued yen weakness. Pessimists cite unsustainable debt requiring default or debasement, but a “more benign explanation” is that Japan has finally exited its deflationary slump.

Do rising long-term yields signal Japan's exit from post-bubble stagnation?

Core argument: Yields on long-term Japanese government debt have risen over the past few years, especially at longer maturities, and now stand higher than at any point since the 1990s.

Japanese bond yields have been rising relentlessly over the past few years, especially at the longer maturities. Yields on long-term Japanese government debts are now higher than at any point since the 1990s. Yet the yen has not only failed to appreciate against the currencies of its trading partners - it still looks cheap relative to its history. Those who believe that the debt is unsustainable believe that the government will eventually be forced to choose between outright default and “debasement” that would cheapen nominal yen claims relative to assets in other currencies. As of now, however, there is a more benign explanation: Japan may have finally exited its post-bubble stagnation. The return of modest inflation alongside persistently faster wage and income growth should align with higher interest rates than those that prevailed when the economy experienced essentially no growth in yen terms between 1997 and 2019. Moreover, if the recent growth in nominal incomes is sustained, Japanese government borrowing costs would still be lower, relative to expected revenue increases, than in much of the past few decades. (That helps explain why the yen has not appreciated recently despite the apparent convergence of nominal yields with the U.S. and other G10 economies.) Far from indicating trouble, Japanese bond prices are implying that Japan has converged, in at least one important way, with the rest of the rich world.

Takeaways by Macro Roundup® AI

  1. Yields on long-term Japanese government debt have risen over the past few years, especially at longer maturities, and now stand higher than at any point since the 1990s.
  2. The yen has failed to appreciate against trading partners' currencies and still looks cheap relative to its history, despite the apparent convergence of Japanese nominal yields with those of the U.S. and other G10 economies.
  3. Japan's return of modest inflation alongside persistently faster wage and income growth should align with higher interest rates than those prevailing when the economy saw essentially no growth in yen terms between 1997 and 2019.

Related Articles: