Edward Conard

Top Ten New York Times Bestselling Author

  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “Unintended Consequences 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 must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…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
  • “…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 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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, January 21, 2026

AI Summary. Artificial intelligence capital spending is estimated to add roughly 1.4 percentage points to US growth in one year and about 1.5 points the next, comparable to business investment's contribution during the tech bubble. A material part of that estimate reflects profits at Nvidia and a few other chipmakers that are unlikely to be recycled back into the economy.

Greg Jensen, Danny DeBois and Adam Zimbler Bridgewater Associates
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Bridgewater forecasts real US GDP growth of 2.8% in 2026, with AI capex contributing 1.4pp (50%) this year and 1.5pp in 2027.

How much is AI capital spending adding to US growth?

Core argument: The authors estimate AI capex will boost US GDP growth by roughly 140 basis points in 2026 and 150 basis points in 2027, sums on par with business investment's contribution to growth during the tech bubble.

The impact on US GDP is very large—we estimate AI capex as providing a ~140bp boost to US growth in 2026 and a ~150bp boost in 2027. These are massive sums, on par with the contribution of business investment to growth in the tech bubble. That said, a material part of the estimate comes from Nvidia and a couple other chipmakers’ profits, which are unlikely to be recycled back into the economy (including profits they receive from selling chips to data centers being constructed in the rest of the world). It’s very rare—even unprecedented—to have such high GDP growth driven in large part by profits that are captured and saved by a narrow set of companies. AI is not yet delivering significant productivity gains outside of a few specific segments of the labor market, but it is getting closer to being able to deliver more widespread impact.

Takeaways by Macro Roundup® AI

  1. The authors estimate AI capex will boost US GDP growth by roughly 140 basis points in 2026 and 150 basis points in 2027, sums on par with business investment's contribution to growth during the tech bubble.
  2. A material part of that AI capex estimate comes from the profits of Nvidia and a couple of other chipmakers, including profits on chips sold to data centers built outside the US, which are unlikely to be recycled back into the economy.
  3. AI is not yet delivering significant productivity gains outside a few specific segments of the labor market, though the authors judge it to be getting closer to more widespread impact.

Related Articles:

  • 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.
  • Tracking AI’s Contribution to GDP Growth — 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.
  • 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. Microsoft's chief executive says the price of AI model usage ("tokens") falls by roughly half every three months. Commentary argues that such rapid deflation pulls demand forward, encourages overbuilding, and commoditizes models, shifting competitive advantage to orchestration and context rather than the model layer.

Paul Kedrosky Applied Complexity
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Citing Microsoft’s Nadella’s comments on the state of frontier LLMs “at this point it’s a multi-model world” and “token pricing basically drops by a half every three months,” Kedrosky forecasts a “brutally competitive transition where models commoditize.”

How does rapidly falling AI pricing shift competitive advantage away from models?

Core argument: Microsoft CEO Satya Nadella said at the World Economic Forum that AI token pricing drops by roughly half every three months.

[Satya Nadella] "And by the way, look at the token pricing, right? Token pricing basically drops by, you know, a half every three months." [Kedrosky] The claim that token prices are dropping by roughly half on a very short cycle should be startling. Extreme deflation changes behavior. It pulls demand forward, encourages overbuilding, and shortens the useful life of capital. It also means today’s impressive revenue numbers can coexist with tomorrow’s margin compression. If tokens are collapsing in price this fast, then any business model that depends on sustained scarcity at the model layer is fragile. Models are inputs. Orchestration and context are the product. Taken together, this is a description of a deflationary, brutally competitive transition where models commoditize, infrastructure races ahead of outcomes, and advantage shifts to whoever can actually reorganize work. If that diffusion stalls, the bubble argument gets stronger. If it succeeds, the winners will look very different from today’s narrative.

Takeaways by Macro Roundup® AI

  1. Microsoft CEO Satya Nadella said at the World Economic Forum that AI token pricing drops by roughly half every three months.
  2. Kedrosky argues that token price deflation this fast pulls demand forward, encourages overbuilding, and shortens the useful life of capital, allowing impressive revenue today to coexist with margin compression later.
  3. Kedrosky argues that models commoditize while orchestration and context become the product, leaving any business model dependent on sustained scarcity at the model layer fragile.

Related Articles:

  • The Geopolitics of AI: Decoding the New Global Operating System — The performance gap between the top American and Chinese AI models narrowed from 9.3% to 1.7%, with Chinese firms relying on cheaper open-source models—DeepSeek prices usage 20-40x below OpenAI's ChatGPT. This price advantage could win adoption in developing countries and build dependency on Chinese AI ecosystems.
  • 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.
  • Is It a Bubble? — Transformational technologies have historically generated excessive enthusiasm and investment, producing more infrastructure than needed, asset prices that prove too high, and losses for those funding them, while also accelerating adoption. AI enthusiasm is argued to fit this pattern, with debt financing having the potential to magnify the effects.

AI Summary. Futures prices imply essentially no chance the Federal Reserve raises rates over two years and over 90% odds of a cut within 12 months. The author argues this understates hike risk, citing prime-age employment near its multi-decade high and stable pay growth, and warns lower rates could unlock inflationary spending.

Matt Klein The Overshoot
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Markets’ near-certainty that the FFR will not rise between now and the end of 2027 clashes with data on jobs, retail spending, inflation, and household balance sheets showing high employment and upside risks to inflation, Klein argues.

Are markets underestimating the chance of interest rate increases?

Core argument: Futures prices on the CME's FedWatch tool as of January 16 implied no chance the Federal Reserve raises its 3.5%–3.75% target band during 2026, only a 2% chance of an increase by end-2027, and over 90% odds of at least a 0.25pp cut within 12 months.

According to the CME’s FedWatch tool, futures prices as of January 16 implied that there was no chance that the Federal Reserve will raise its short-term interest rate target band from 3.5%-3.75% over the course of 2026. Market prices implied that there was only a 2% chance that the short rate target could rise by the end of 2027, [and] the implied probability that the Fed will lower rates by at least 0.25pp over the next 12 months is over 90%. There are good reasons to think that the implied probability of rate increases over the next two years is too low. The most important feature of the current labor market is that 80.7% of Americans aged 25-54 had a job as of mid-December, which is essentially unchanged from the multi-decade high reached in mid-2023. Just as the “prime age” employment rate has been stable for years, so too have most measures of growth in the typical worker’s pay. [A “bizarre” drop in Dec. will likely be revised away]. Debt issuance remains low in absolute terms, relative to consumer spending, and, especially, relative to asset price increases. The danger, as I have warned before, is that lower interest rates could unlock so much spending that it would be extremely inflationary.

Takeaways by Macro Roundup® AI

  1. Futures prices on the CME's FedWatch tool as of January 16 implied no chance the Federal Reserve raises its 3.5%–3.75% target band during 2026, only a 2% chance of an increase by end-2027, and over 90% odds of at least a 0.25pp cut within 12 months.
  2. The employment rate for Americans aged 25–54 stood at 80.7% in mid-December, essentially unchanged from the multi-decade high reached in mid-2023, with most measures of typical worker pay growth similarly stable.
  3. Debt issuance remains low in absolute terms, relative to consumer spending, and especially relative to asset price increases, posing the danger that lower interest rates could unlock so much spending that it would be extremely inflationary.

Related Articles:

  • More on the “Neutral” Interest Rate (R*) — Private economists and Federal Reserve officials disagree about the level of the "neutral" interest rate—the inflation-adjusted short-term rate expected to prevail with the economy at full strength and stable inflation. Averaging model-based and market-based estimates puts the neutral real rate near 1.5%, and with expected inflation above the Federal Reserve's 2% target, the neutral nominal rate is correspondingly higher.
  • 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.
  • Trump Wants to Run the Economy Hot. There’s a Good Chance He’ll Succeed — A US tax law expanded deductions for state and local taxes, overtime, tips and seniors retroactively, but withholding tables adjusted only later, so workers get both higher take-home pay and refunds. One analyst estimates this injects nearly $200bn, lifting first-half annualized growth by up to half a percentage point.

AI Summary. Japan's debt overhang remains unaddressed, and the argument is that the yen is only in the early stages of debasement, with further depreciation ahead. On this view, the decoupling between interest rate differentials and the yen has much further to run, and policy will change only once yen devaluation forces it.

Robin Brooks Robin Brooks Substack
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Robin Brooks warns that despite the ~30% fall in the trade-weighted Yen versus the G10 since 2020 and the 200bps rise in Japan’s relative 30-year yield since 2024, Japan’s debt overhang means the yen will continue to depreciate until yields climb further.

Is the yen only in the early stages of depreciation?

Core argument: The author argues the Yen is only in the early stages of debasement and advises against buying the dip despite its prolonged depreciation.

When currencies have been depreciating for some time, there’s a natural tendency to want to buy the dip. Don’t do that for the Yen. Japan is in total denial on its debt overhang. That will only change once Yen devaluation gets the government to change course. We’re nowhere near that. As crazy as it sounds, we’re in my opinion only in the early stages of Yen debasement. The decoupling between rate differentials and the Yen has a lot further to go.

Takeaways by Macro Roundup® AI

  1. The author argues the Yen is only in the early stages of debasement and advises against buying the dip despite its prolonged depreciation.
  2. Japan's government remains in denial about its debt overhang, according to the author, and will change course only once Yen devaluation forces the issue.
  3. The decoupling between interest rate differentials and the Yen has much further to run, in the author's assessment.

Related Articles:

  • Different Dollar Downside — The authors estimate the US dollar remains roughly 15% overvalued and argue a sharper depreciation could follow if US labor-market weakness forces deeper Federal Reserve rate cuts, particularly against a highly undervalued yen. They also flag a derating of US tech exceptionalism as a risk, since demand for US equities has helped fund the current account deficit.
  • 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.
  • Is Japan “Normal” Again? — 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.

AI Summary. Bloomberg's precious metals index, covering silver, platinum and palladium, stands at a level last seen in 1980, when repeated rounds of stagflation drove a crisis of confidence in government-issued currencies. Such a rally amid growth and moderate inflation signals something serious is amiss.

John Authers Bloomberg
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John Authers warns that the largest rally in precious metals since the stagflationary 1970s and early 1980s “is a clear sign that something serious is amiss.”

Does a precious metals rally amid growth signal something is amiss?

Core argument: Bloomberg's precious metals index, covering silver, platinum and palladium, stands at a level last seen in 1980, when repeated rounds of stagflation drove a crisis of confidence in fiat currencies.

Bloomberg’s index of [precious metals], including silver, platinum and palladium, is now at a level unseen since the chaotic conditions of 1980, when repeated rounds of stagflation drove a crisis of confidence in fiat currencies. To stage such a rally at a time of growth and moderate inflation is a clear sign that something serious is amiss.

Takeaways by Macro Roundup® AI

  1. Bloomberg's precious metals index, covering silver, platinum and palladium, stands at a level last seen in 1980, when repeated rounds of stagflation drove a crisis of confidence in fiat currencies.
  2. A precious metals rally of this magnitude occurring alongside growth and moderate inflation is a sign that something serious is amiss.

Related Articles:

  • Sudden Japan Bond Crash Unleashes Turmoil on Trading Floors — A selloff in Japanese government bonds sent yields on some maturities to record highs, prompting hedge funds to unwind trades, life insurers to sell bonds, and at least one corporate bond investor to withdraw from a deal. Traders attributed the rout to doubts about Japan's fiscal health amid planned tax cuts and higher spending.
  • 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.
  • Across The Rich World, Fiscal Crises Loom — An analysis estimates most rich countries could keep debt stable as a share of their economies with only small primary surpluses—Britain's required surplus is 0.3% of GDP—even if all debt were refinanced immediately at current rates, but the tightening needed to stabilize debt ratios exceeds 2% of GDP in Britain and America and 3% in France.

AI Summary. Insurance broker Aon reports global insured losses from natural disasters exceeded $127bn, with more than $100bn in the US, led by the Los Angeles wildfires, while total global economic losses from disasters reached about $260bn. More than half of those economic losses were uninsured, reflecting persistent coverage gaps in emerging markets.

Eva Xiao and Lee Harris Financial Times
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$100B of the $127B total global insured losses due to natural disasters in 2025 were in the US, according to an Aon report, ~$58B of which were caused by the Los Angeles fires. Overall global economic losses from disasters in 2025 totaled $260B.

How large were global insured and uninsured natural disaster losses?

Core argument: Global insured losses from natural disasters exceeded $127bn in 2025, with more than $100bn occurring in the US after the Los Angeles fires, according to insurance broker Aon.

Global insured losses of more than $127bn from natural disasters were dominated by more than $100bn occurring in the US in 2025 after the Los Angeles fires, according to a new industry report on climate and other extreme events. Overall global economic losses stemming from disasters, including thunderstorms and earthquakes, totalled about $260bn, according to the review by insurance broker Aon. But more than half of those losses remain not covered by insurance, highlighting the persistence of inadequate coverage in emerging markets, it said. “Extreme weather events are becoming more frequent and unpredictable, affecting new geographies and sectors, and challenging long-held assumptions about resilience,” wrote Greg Case, Aon chief executive. “Weather exposures are rising,” he noted. Insured losses from climate disasters were 27% higher than the long-term average since 2000.

Takeaways by Macro Roundup® AI

  1. Global insured losses from natural disasters exceeded $127bn in 2025, with more than $100bn occurring in the US after the Los Angeles fires, according to insurance broker Aon.
  2. Aon puts total global economic losses from disasters, including thunderstorms and earthquakes, at about $260bn, with more than half uninsured, highlighting the persistence of inadequate coverage in emerging markets.
  3. Insured losses from climate disasters ran 27% above the long-term average since 2000, and Aon chief executive Greg Case wrote that extreme weather events are becoming more frequent and unpredictable, affecting new geographies and sectors.

Related Articles:

  • The World Is Getting Riskier. Americans Don’t Want to Pay for It — Americans' resistance to paying to insure against risks from illness, old age, and natural and financial disasters is growing alongside those risks; JPMorgan estimated wildfires around Los Angeles caused $50bn in losses, of which only $20bn were insured. Socializing risk removes the price signal that encourages the insured to mitigate their own exposure.
  • Runaway Insurance Costs Bring Back Talk of Price Caps — State regulators have approved home insurance rate increases averaging 50% and auto increases averaging 42%, outpacing a 26% rise in consumer prices over the same period, according to S&P Global Market Intelligence and Labor Department data.
  • Insurance: Climbing Costs Cut Into Consumer Budgets — Bank of America internal data show median household property insurance payments (auto and home) rose 6% year-over-year and more than 40% over five years, lifting such payments to 5% of income. Younger generations saw the largest increases, though Gen X payments also rose 45%.

Thursday, January 22, 2026

AI Summary. The tempo-adjusted fertility rate, which accounts for shifts in the timing of births, shows the US rate falling since roughly 2009-10 and dropping below the 2.1 births-per-woman replacement level around 2017, reaching 1.82 in 2022. The US decline is less severe than in many peer countries.

Jeremy Horpedahl Economist Writing Every Day
Date Posted:

As of 2022, the US had a “tempo fertility rate,” which is adjusted for life-cycle effects, of 1.82 – among the highest of advanced economies, and ~ on par with Denmark, Sweden, and Iceland. All 4 countries are below the replacement rate of 2.1.

Is the US fertility decline smaller than in peer countries?

Core argument: The US tempo-adjusted fertility rate stood at 1.82 births per woman in 2022, the most recent year available, below the replacement rate of 2.1.

There is one measure which attempts to adjust the total fertility rate for changes in the timing of births. It is not a perfect prediction, but it is better to look at than the TFR in real time: the tempo-adjusted fertility rate. This measure does indeed show that the US fertility rate has been falling since about 2009-10, and that around 2017 it dipped below the replacement rate of 2.1 births per woman. In the most recent year available for the US (2022), it stands at 1.82 births, below the magic number of 2.1 births. Even so, the decline in the US of the adjusted TFR is not as dire as other countries. Using data for 2021, we can get a fairly large number of countries.

Takeaways by Macro Roundup® AI

  1. The US tempo-adjusted fertility rate stood at 1.82 births per woman in 2022, the most recent year available, below the replacement rate of 2.1.
  2. The US tempo-adjusted fertility rate has been falling since about 2009–10 and dipped below the 2.1 replacement rate around 2017.
  3. The decline in the US tempo-adjusted fertility rate is less severe than in other countries, based on 2021 data covering a fairly large number of countries.

Related Articles:

  • The Eldest Millennials Had the Same Fertility as the Youngest Baby Boomers — Completed fertility for US women aged 41–44 has been stable for more than two decades, with the large decline having occurred earlier; among those with at least one native-born parent it averaged 1.88 children versus 1.87. What changed is timing: 30-year-old women averaged 1.34 children versus 0.98.
  • Depopulation Globally and in the Asia-Pacific: The Shape of Things to Come — Population aging and fertility below replacement levels are connected to a revolution in family structure in which families grow smaller, fewer people marry, and voluntary childlessness becomes common across countries. As a result, families become less able to bear the demands that may be placed on them.
  • The Downside of Fertility — In developed countries that modernized very rapidly, men do considerably less housework and care for others at home relative to women than in countries with more continuous growth. Larger gender gaps in household and caring hours are strongly correlated with lower fertility rates across these countries.

AI Summary. Students admitted to elite high schools just above the admissions cutoff are estimated to be 3.2pp less likely to have ever held a formal private-sector job five years later — a 16% decline versus those just missing the cutoff — and to earn 5.3% lower wages. These gaps shrink over time and are statistically insignificant after 15 years.

Francisco Cabrera-Hernández, Andrew Dustan, Daniel Osuna Gomez and María Padilla-Romo National Bureau of Economic Research
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In data from the Mexico City metro area over 2003–2009, students who just missed the exam score cutoff for admission to an elite high school have 5.3% higher wages after five years (2.5% after 10 years) than marginally admitted students.

Does barely getting into an elite high school lower early earnings?

Core argument: Marginal assignment to an elite high school causes a 3.2pp decline in the probability of ever having held a formal job five years later at ages 19–20, a 16% drop from the 20% base rate for students just below the cutoff.

[We] trace out the [harmful] causal impact of [marginal] assignment to an elite school [as opposed to just missing the admissions cutoff] on formal private labor market outcomes over time. Five years after the assignment process (at ages 19-20, beyond high school age), elite assignment [based on a test score marginally above the cutoff] causes a 3.2pp decline in the probability of ever having held a formal job. This is a 16% decline relative to the base rate of 20% for students missing the elite cutoff by one point. Over time, this elite disadvantage declines: after 10 years (at ages 24-25, after the typical age of college graduation), the effect is -2.1pp, while after 15 years (at ages 29-30) the estimated -0.2pp impact is statistically insignificant. While the negative effect on formal employment eventually fades, it leaves elite students with a deficit in formal labor market experience. After 5 years, elite assignment reduces the cumulative number of months with a formal job by 14%. Conditional on formal employment, marginal elite assignment causes a reduction in wages that fades out over time. Five years after assignment, elite assignment reduces wages by 5.3%. This reduction declines to 2.6% after 10 years, and [essentially vanishes] after 15 years.

Takeaways by Macro Roundup® AI

  1. Marginal assignment to an elite high school causes a 3.2pp decline in the probability of ever having held a formal job five years later at ages 19–20, a 16% drop from the 20% base rate for students just below the cutoff.
  2. The elite-assignment employment disadvantage fades over time, falling to -2.1pp after 10 years (ages 24–25) and a statistically insignificant -0.2pp after 15 years (ages 29–30).
  3. Conditional on formal employment, marginal elite assignment reduces wages by 5.3% after five years and 2.6% after 10 years, and cuts cumulative months of formal work by 14% after five years.

Related Articles:

  • Marginal Returns to Public Universities — Using admission-score cutoffs across all 35 Texas public universities, the author estimates that marginally admitted students complete an additional year of four-year education, are 12 percentage points more likely to earn a bachelor's degree, and earn 5–10% more than marginally rejected peers, with gains driven by students who otherwise would not attend a four-year school.
  • Diversifying Society’s Leaders? The Determinants and Causal Effects of Admission to Highly Selective Private Colleges — Children from top-1% families are more than 2x as likely as middle-class students with comparable SAT/ACT scores to attend an Ivy-Plus college, with two-thirds of the gap attributable to higher admissions rates. The authors attribute this advantage to legacy preferences, weight on non-academic credentials, and athlete recruitment.
  • Are China’s Students Really Number One? A Statistical Riddle — China's reported 65-point jump in mean international student test scores between testing rounds coincided with a change in which provinces represented the country, swapping the most populous province for a richer, much smaller one. The author argues such swings, including a fall in low performers from 43% to 19% in reading, are unmatched elsewhere.

AI Summary. The authors argue that a major disruption in the illicit fentanyl trade, possibly tied to Chinese enforcement actions against precursor chemical manufacture and export, coincided with sharp declines in overdose deaths in both the US and Canada. China reported removing 140,000 advertisements and 14 online platforms tied to synthetic drug and precursor suppliers.

Kasey Vangelov, Keith Humphreys, Jonathan Caulkins, Harold Pollack, et al. Science
Date Posted:

US fentanyl overdose deaths (ODD) peaked in May 2023, and the ODD rate fell ~50% by the end of 2024. US and Canadian government data and Reddit forums suggest a supply crunch, likely due to a reduced flow of precursor chemicals from China.

Did a crackdown on precursor chemicals drive down overdose deaths?

Core argument: Synthesizing US and Canadian government data with Reddit discussions, the authors suggest a major disruption in the illicit fentanyl trade, possibly tied to Chinese government actions, translated into sharp reductions in overdose mortality beginning in mid- or late-2023 and continuing into 2024 in both countries.

Synthesizing data from the US and Canadian governments and from discussions on the social media platform Reddit, we suggest there was a major disruption in the illicit fentanyl trade, possibly tied to Chinese government actions, that translated into sharp reductions in overdose mortality beginning in mid- or late-2023 and continued into 2024 across both the US and Canada. Though the government of China only episodically reports its enforcement and regulatory activities, there is considerable evidence of actions against fentanyl precursor manufacture and export in late 2023. For example, in November 2023, China’s Office of the National Narcotics Control Commission published a notice reminding caution in the selling of substances that can be used to make drugs. At the same time, the government of China began more aggressive law enforcement action against synthetic drug and chemical precursor suppliers. By June 2024, the government claimed to have taken down 140,000 advertisements and 14 online platforms.

Takeaways by Macro Roundup® AI

  1. Synthesizing US and Canadian government data with Reddit discussions, the authors suggest a major disruption in the illicit fentanyl trade, possibly tied to Chinese government actions, translated into sharp reductions in overdose mortality beginning in mid- or late-2023 and continuing into 2024 in both countries.
  2. By June 2024, the government of China claimed to have taken down 140,000 advertisements and 14 online platforms, alongside more aggressive law enforcement action against synthetic drug and chemical precursor suppliers.
  3. China's Office of the National Narcotics Control Commission published a notice in November 2023 reminding sellers to exercise caution with substances that can be used to make drugs, part of the evidence of late-2023 actions against fentanyl precursor manufacture and export.

Related Articles:

  • Drug Overdoses Are On the Decline, in Charts — Preliminary estimates from the Centers for Disease Control and Prevention show US overdose deaths fell 25% over a 12-month period to about 82,000, led by a falling number of fatalities involving synthetic opioids such as bootleg fentanyl.
  • The Rise in American Pain: The Importance of the Great Recession — The authors find that the rise in reported pain among Americans was almost entirely concentrated in the 2007–2010 recession period rather than following a smooth upward trend, with the disproportionate increase among the less educated also occurring primarily then. The authors state they find this jump difficult to explain.
  • Importing the Opioid Crisis? International Trade and Fentanyl Overdoses — A study using U.S. mortality and import data finds a positive state-level association between imports per resident and drug overdose death rates, driven by fentanyl and accounting for an estimated 15,000–20,000 deaths per year. The authors estimate that 10% higher imports per resident is associated with an 8.1% higher fentanyl death rate.

AI Summary. Analysts forecast a 17% rise in gold prices by end-2026, with emerging-market central bank buying averaging 60 tonnes contributing 14 percentage points and Western exchange-traded fund inflows on 50 basis points of Federal Reserve rate cuts adding 3. Risks are seen as skewed to the upside.

Daan Struyven and Lina Thomas Goldman Sachs
Date Posted:

Goldman raised their December 2026 gold price forecast from $4,900 to $5,400 per troy ounce, citing an increased private sector diversification into gold and continued central bank buying, and noting risks to the upside. Gold is currently ~$4,900 per troy ounce.

What is driving the forecast rise in gold prices?

Core argument: Gold prices are forecast to rise 17% from the January month-to-date average (13% from spot) by end-2026, with central bank buying contributing 14 percentage points of that increase.

Our forecasted 17% price increase from the January month-to-date average (or 13% from spot) by end-2026 reflects: [1] Central bank buying to average 60 tonnes in 2026 as EM central banks are likely to continue the structural diversification of their reserves into gold (contributing 14pp to the 17% price increase we expect by Dec. 26). [2] Western ETF holdings to rise as the Fed cuts the funds rate by 50bp in 2026 (contributing 3pp by Dec. 26). [3] Our assumption that hedges of global macro policy risks remain stable as these perceived risks (e.g. fiscal sustainability) may not fully resolve in 2026, implying that the high early 2026 gold price forecast is a sustainable starting point for our forecast. We see the risks to our upgraded gold price forecast as two-sided but still significantly skewed to the upside because private sector investors may diversify further on lingering global policy uncertainty.

Takeaways by Macro Roundup® AI

  1. Gold prices are forecast to rise 17% from the January month-to-date average (13% from spot) by end-2026, with central bank buying contributing 14 percentage points of that increase.
  2. Central bank gold buying is projected to average 60 tonnes in 2026 as emerging market central banks continue the structural diversification of their reserves into gold.
  3. Western ETF holdings are expected to rise as the Fed cuts the funds rate by 50bp in 2026, contributing 3 percentage points to the forecast price increase.

Related Articles:

  • Return of the Three-Headed Bond Monster Over Tokyo — Bloomberg's precious metals index, covering silver, platinum and palladium, stands at a level last seen in 1980, when repeated rounds of stagflation drove a crisis of confidence in government-issued currencies. Such a rally amid growth and moderate inflation signals something serious is amiss.
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AI Summary. Canada agreed to accept 49,000 Chinese electric vehicles at a 6.1% tariff, down from 100%, while China will cut its levy on Canadian canola seed to 15% from an effective rate of about 85%. Canada's canola exports to China were valued at nearly C$5bn (US$3.6bn), and Canada's original 100% electric vehicle tariff was adopted at Washington's urging.

Ilya Gridneff and Joe Leahy Financial Times
Date Posted:

As part of Canada and China’s new trade agreement, Canada will drop its 100% tariff on EVs – which matched the US level – to 6.1%, with a limit of 49,000 cars. In return, China eased tariffs on Canadian raw materials.

Will Canada cut electric vehicle tariffs in exchange for canola access?

Core argument: Canada agreed to accept 49,000 Chinese electric cars at a 6.1% tariff, down from 100%, breaking with the US, which has in effect blocked Chinese EV imports through high tariffs and restrictions.

In an important break with the US, which has in effect blocked imports of Chinese EVs using high tariffs and restrictions, Canada agreed to accept imports of 49,000 Chinese electric cars with a 6.1% tariff, down from 100%. In exchange for Canada lowering EV tariffs, China will slash its levies on Canadian canola seed imports to 15% from March 1, down from an effective rate of about 85%. Total Canadian canola exports to China were valued at almost C$5bn (US$3.6bn) in 2024. Ottawa announced its 100% tariffs on Chinese EVs in 2024 on Washington’s urging. Ottawa expected that within three years there would be “new Chinese joint-venture investment in Canada with trusted partners” to “create new auto manufacturing careers for Canadian workers,” the prime minister’s office said.

Takeaways by Macro Roundup® AI

  1. Canada agreed to accept 49,000 Chinese electric cars at a 6.1% tariff, down from 100%, breaking with the US, which has in effect blocked Chinese EV imports through high tariffs and restrictions.
  2. China will cut its levies on Canadian canola seed imports to 15% from March 1, down from an effective rate of about 85%, in exchange for Canada lowering its EV tariffs.
  3. Canadian canola exports to China were valued at almost C$5bn (US$3.6bn) in 2024, and Ottawa announced its 100% tariffs on Chinese EVs in 2024 at Washington's urging.

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