Edward Conard

Top Ten New York Times Bestselling Author

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

Macro Roundup


Monday, February 2, 2026

AI Summary. The authors argue that a decline in labor's share of US corporate value added, combined with weak corporate investment, mechanically raises valuation-to-earnings ratios even without changes in expected returns or growth. They find corporate enterprise value rose alongside an equal-sized increase in free cash flow's share of value added.

Andrew Atkeson, Jonathan Heathcote and Fabrizio Perri National Bureau of Economic Research
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US business valuations jumped post-2000 and remain elevated. The Gordon formula still works with free cash flow, but FCF has outpaced earnings as labor’s share fell and firms reinvest less. Intangible capital and/or higher markups likely play a role.

Do falling labor shares and weak investment explain higher valuation ratios?

Core argument: The authors argue that a declining labor share of corporate output combined with relatively weak corporate investment mechanically generates a persistent rise in corporate valuation relative to earnings, even absent changes in expected returns or growth rates.

We use macroeconomic data derived from the Integrated Macroeconomic Accounts (hereafter IMA) to argue that the observed decline in labor’s share of corporate output in conjunction with relatively weak corporate investment mechanically generates a persistent rise in the ratio of corporate valuation relative to corporate earnings, even absent any changes in expected returns or growth rates. We consider two broad measures of corporate income, which we label earnings and free cash flow, where the latter is defined as earnings minus net investment. These data offer the following insights regarding trends in the value of U.S. corporations. 1. The enterprise value of U.S. corporations has boomed in recent decades relative to corporate output. 2. The large increase in the enterprise value of U.S. corporations from 1980 until the middle of 2022 coincides with an equal-sized increase in the share of corporate value added flowing to corporate owners as free cash flow. Thus, the ratio of free cash flow to enterprise value was unchanged over that period. 3. The observed growth in free cash flow largely reflects a similar-sized decline in the share of corporate value-added paid to labor. 4. The boom in corporate valuations has not been accompanied by significant growth in measured investment and capital. As a result, measured investment and capital are now a much smaller portion of enterprise value than was the case historically.

Takeaways by Macro Roundup® AI

  1. The authors argue that a declining labor share of corporate output combined with relatively weak corporate investment mechanically generates a persistent rise in corporate valuation relative to earnings, even absent changes in expected returns or growth rates.
  2. Using the Integrated Macroeconomic Accounts, the authors find the increase in U.S. corporate enterprise value from 1980 to mid-2022 coincided with an equal-sized rise in the share of corporate value added flowing to owners as free cash flow, leaving the free-cash-flow-to-enterprise-value ratio unchanged.
  3. The boom in U.S. corporate valuations has not been accompanied by significant growth in measured investment and capital, which now constitute a much smaller portion of enterprise value than historically.

Related Articles:

  • Reconciling Macroeconomics and Finance for the U.S. Corporate Sector: 1929 to Present — Using integrated U.S. macroeconomic and financial accounts, the authors find that fluctuations in expected cash flows to corporate owners, rather than expected rates of return, have been the dominant driver of swings in U.S. corporate market valuations. They attribute most valuation fluctuations to changes in the share of corporate output flowing to owners as pure rent.
  • Stocks Near Highest Valuations Since 1880 — The cyclically adjusted price-earnings ratio, which divides stock prices by the average of the past 10 years of inflation-adjusted earnings to smooth business-cycle swings, stands near its highest level since 1880. Because it uses a decade of earnings rather than one year, it is a gauge of sustainable earnings power.
  • The Wage Compression That Persisted — Hourly wages at the 10th percentile have risen more since 2019 than wages at the median and 90th percentile, and this compression of wage inequality has largely persisted, strengthening when adjusted for worker age, education, and gender. Real wage growth at the bottom appears to have slowed more recently.

AI Summary. The authors estimate that the HOPE VI program, which revitalized high-poverty US public housing projects, raised adult household income by 2.77% per childhood year spent in a revitalized project, implying a 50% gain from birth, exceeding the program's up-front taxpayer costs. They attribute the gains largely to increased interaction with higher-income peers in surrounding neighborhoods.

Raj Chetty, Rebecca Diamond, Thomas Foster, Lawrence Katz, et al. Harvard University
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Btw 1993 and 2010, children who moved into revitalized public housing that mixed market-rate and subsidized units, stayed a mean 5 years, and earned ~17% higher income as of their late 20s/early 30s. One key channel was exposure to higher-income peers.

Does revitalizing high-poverty public housing raise children's adult incomes?

Core argument: Each year a child spent growing up in a HOPE VI revitalized public housing project raised adult household income by 2.77%, implying a 50% income gain for a child living there from birth.

This paper has shown that the largest effort to revitalize high-poverty public housing projects in the United States—the HOPE VI program—succeeded in increasing economic mobility. Each year a child spent growing up in a revitalized public housing project increased their household income in adulthood by 2.77%, implying that growing up from birth in a revitalized public housing project would increase income by 50%. These income gains are substantially larger than the program’s up-front costs to taxpayers, demonstrating that it is possible to create higher-opportunity neighborhoods in a cost-effective manner even without changing broader determinants of outcomes such as labor market conditions or schools. The potential for change in short time frames is particularly notable given the historical roots of differences in opportunity across neighborhoods. The gains from HOPE VI are largely explained by changes in social interaction: children in revitalized projects interact more with peers in surrounding neighborhoods and gain more when they have higher-income peers.

Takeaways by Macro Roundup® AI

  1. Each year a child spent growing up in a HOPE VI revitalized public housing project raised adult household income by 2.77%, implying a 50% income gain for a child living there from birth.
  2. The income gains from HOPE VI are substantially larger than the program's up-front costs to taxpayers, indicating that higher-opportunity neighborhoods can be created cost-effectively without changing labor market conditions or schools.
  3. The gains from HOPE VI are largely explained by changes in social interaction, as children in revitalized projects interact more with peers in surrounding neighborhoods and gain more when those peers have higher incomes.

Related Articles:

  • Changing Opportunity: Sociological Mechanisms Underlying Growing Class Gaps and Shrinking Race Gaps in Economic Mobility — Across the 1978 to 1992 birth cohorts, adult household incomes fell for white children raised in low-income families and rose for those raised in high-income families, increasing the intergenerational persistence of income ranks among white children by 28%. Over the same cohorts, adult incomes rose for Black children at all parental income levels.
  • ZIP Code Is Destiny? Turns Out That’s Bunk — The authors argue that research crediting neighborhoods with causing better child outcomes confuses causation with parental self-sorting, since more affluent, better-educated, and more stable families tend to move to good neighborhoods before their children are born. Their analysis of Danish population data found the same sorting pattern as in the United States.
  • The Economics of Income Mobility — In interviews with 1,000 adults in Memphis, Tulsa, and New Orleans who self-identified as having grown up poor, the authors found human capital was the strongest predictor of escaping poverty, followed by noncognitive skills such as resilience, self-esteem, and conscientiousness. Trusted adults in childhood, early police encounters, mental health, and adverse experiences also mattered.

AI Summary. Oracle plans to raise $45bn–$50bn through debt and equity sales to build additional cloud infrastructure capacity, including a US dollar bond offering expected to total roughly $20bn–$25bn. Spending on AI data centers has pushed Oracle's free cash flow negative, where it is expected to stay until 2030.

Brody Ford and Vincent Lee Bloomberg
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Oracle’s free cash flow is now negative; the firm is planning on raising ~ $45–50B this year through a combination of debt and equity sales to build additional cloud infrastructure capacity.

How much debt and equity does AI data center expansion require?

Core argument: Oracle plans to raise $45 billion to $50 billion this year through debt and equity sales to build additional cloud infrastructure capacity, reflecting the scale of financing needed to feed AI's growth.

Oracle plans to raise $45 billion to $50 billion this year through a combination of debt and equity sales to build additional cloud infrastructure capacity, reflecting the scale of financing needed to feed AI’s growth. On Monday, it kicked off a US dollar bond offering that is expected to be about $20 billion to $25 billion, according to people with knowledge of the matter, who asked not to be identified because they’re not authorized to speak publicly. Developing AI data centers has pushed Oracle’s free cash flow negative, where it is expected to stay until 2030, according to data compiled by Bloomberg. The company is on the hook for tens of billions of dollars in spending in the coming years, largely on semiconductors and leases.

Takeaways by Macro Roundup® AI

  1. Oracle plans to raise $45 billion to $50 billion this year through debt and equity sales to build additional cloud infrastructure capacity, reflecting the scale of financing needed to feed AI's growth.
  2. Oracle kicked off a US dollar bond offering expected to total about $20 billion to $25 billion, according to people with knowledge of the matter who asked not to be identified.
  3. Developing AI data centers has pushed Oracle's free cash flow negative, where it is expected to stay until 2030 according to data compiled by Bloomberg, with tens of billions of dollars in spending ahead, largely on semiconductors and leases.

Related Articles:

  • 2026 Credit Outlook: From Scarcity to Selection—The Return of a Buyer’s Market — Capital spending by Amazon, Meta, Oracle, Alphabet and Microsoft has tripled since 2023, and sell-side forecasts project more than $2.7tn of cumulative outlays through 2029, mostly tied to AI infrastructure. These programs, initially funded largely from internal cash flow, are shifting toward debt, with the companies pricing roughly $90bn of bond deals.
  • Oracle’s Value Is Cut In Half From 2025 Peak as AI Caution Rises — Oracle shares have fallen more than 50% from their record high, erasing about $463bn in market value, as investors grow cautious about artificial intelligence and the company's ties to OpenAI. The decline comes as major technology firms pledge billions for data centers, in some cases without a clear return on investment.
  • 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.

AI Summary. A decade of underinvestment alongside demand from artificial intelligence and electrification points to large copper deficits in coming years, though global inventories are not especially tight today. US tariff plans on copper drew metal into US warehouses, tightening London inventories while creating a US surplus, and copper's designation as a critical mineral gives policymakers reason to keep it there.

Jeff Currie and James Gutman Carlyle
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Jeff Currie argues that while “just-in-time” is more efficient than “just-in-case,” stockpiling due to geopolitical anxiety is likely to amplify “cyclicality that is inherent in commodity markets.” He cites rising US copper inventories as an example.

Will underinvestment and AI demand push copper prices higher?

Core argument: A decade of copper underinvestment combined with AI and electrification demand points to large deficits in coming years, yet global inventories are not especially tight, producing rising prices alongside a contango curve through much of 2024.

A decade of underinvestment and strong demand from AI and electrification are pointing to large copper deficits in the coming years, but global inventories today are not especially tight. Thus, we have had a rising price but a contango curve for much of 2024. When the United States announced plans for tariffs on copper and other metals, there was a rush to take metal out of London Metals Exchange warehouses around the world and ship it to the US for delivery into Comex warehouses. This tightened LME inventories dramatically but created a surplus in the United States. The result was a backwardation on the LME but a contango on Comex. The contango made it profitable to finance warehouse deals in the US that effectively make it unavailable to the market. Under normal circumstances, once prices equilibrated to account for tariffs, the forward curves would drive a rebalancing of metal from surplus/contango regions (e.g. the US) to deficit/backwardated regions (e.g. the rest of the world). But these aren’t normal circumstances. The United States has listed copper as a critical mineral, and it would come as no surprise if policy makers saw an advantage to keeping the metal in the US, one way or another.

Takeaways by Macro Roundup® AI

  1. A decade of copper underinvestment combined with AI and electrification demand points to large deficits in coming years, yet global inventories are not especially tight, producing rising prices alongside a contango curve through much of 2024.
  2. U.S. plans for tariffs on copper and other metals triggered a rush to pull metal from London Metals Exchange warehouses worldwide for delivery into Comex, sharply tightening LME inventories while creating a U.S. surplus.
  3. The split left the LME in backwardation and Comex in contango, making financed U.S. warehouse deals profitable and effectively removing that metal from the market, while the United States has listed copper as a critical mineral.

Related Articles:

  • 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.
  • The Transition to a Higher Cost of Capital — Bond yields near 4.5% sit below the 5.5% short-term interest rate, leaving little risk premium, and those yields have been enough to draw buyers back toward normal bond holdings. The author argues yields still need to rise to a sustainable cost of capital given structurally higher fiscal and inflationary spending.
  • The New Joule Order — Ample physical capacity keeps inflation low and stable and allows lower interest rates, but when demand catches up to capacity constraints, better returns in the physical economy pull capital back to fund expansion, making a commodity super-cycle a capital-expenditure cycle. In real terms, total energy investment is below its level 15 years ago.

AI Summary. The US is set to create a $12bn critical minerals stockpile, called Project Vault, combining $1.67bn in private capital with a $10bn loan from the US Export-Import Bank to buy and store minerals such as gallium and cobalt for automakers, technology firms and other manufacturers. The US already stockpiles critical minerals for defense but has no equivalent for civilian needs.

Jennifer Dlouhy and Joe Deaux Bloomberg
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The US is launching a $12B strategic critical-minerals stockpile in an effort to insulate civilian manufacturers from supply shocks. The US already operates a stockpile of critical minerals for defense firms.

Will a civilian critical minerals stockpile reduce US reliance on China?

Core argument: Project Vault would combine $1.67 billion in private capital with a $10 billion US Export-Import Bank loan to procure and store critical minerals for automakers, tech firms and other manufacturers.

The venture — dubbed Project Vault — is set to marry $1.67 billion in private capital with a $10 billion loan from the US Export-Import Bank to procure and store the minerals for automakers, tech firms and other manufacturers. The effort is akin to the nation’s existing emergency oil stockpile. But instead of crude, its focus would be minerals — such as gallium and cobalt — used in products such as iPhones, batteries and jet engines. The stockpile is expected to include both rare earths and critical minerals as well as other strategically important elements that are subject to volatile prices. The US already operates a national stockpile of critical minerals to serve the nation’s defense-industrial base but doesn’t have a stockpile for civilian needs.

Takeaways by Macro Roundup® AI

  1. Project Vault would combine $1.67 billion in private capital with a $10 billion US Export-Import Bank loan to procure and store critical minerals for automakers, tech firms and other manufacturers.
  2. The stockpile is expected to include rare earths, critical minerals such as gallium and cobalt, and other strategically important elements subject to volatile prices, used in products including iPhones, batteries and jet engines.
  3. The US operates a national critical minerals stockpile serving its defense-industrial base but has no stockpile for civilian needs, and Project Vault is likened to the nation's emergency oil reserve.

Related Articles:

  • Why China Keeps Winning The Trade War — Governments seeking supply-chain leverage face limited visibility into their own supply chains, and China's rare earth licensing requirements for multinationals may be partly intended to give Beijing that visibility and allow more precise targeting of future restrictions. Effective measures must impose asymmetric costs, and keeping foreign manufacturers dependent on drip-fed supply is central to Beijing's strategy.
  • China’s Secret Stockpiles Have Been A Great Success—So Far — A data firm estimates China's observable oil stocks reached a record 1.2bn barrels, triple the size of America's reserves, with storage capacity of 2bn barrels only 58% full and traders expecting stockpiling to continue. Analysts also note metal imports have soared even as China's metal-consuming industries have slumped.
  • How U.S. Defense Industry Dodged a Rare-Earth Shortage After China’s Curbs — A decades-old stockpile of samarium nitrate held at a chemical plant in France was refined into usable metal, allowing a U.S. maker of samarium-cobalt magnets to source the rare-earth material outside China. Samarium processed outside China costs 5–8x as much, and the French plant had stopped separating rare-earth elements as uneconomical.

AI Summary. Gold and silver prices fell as a reversal of a record-breaking rally in precious metals extended into a second week. Traders attribute the intensity of the sell-off to heavy retail investor participation, including leveraged products such as short-dated options, after demand for exchange traded funds and physical bullion had fueled the rally.

Ian Smith, Emily Herbert and William Sandlund Financial Times
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Gold has fallen ~15% since its recent peak last week. Gold remains up 9% this year. Market participants attributed the volatility in part to retail buying.

Is retail investor participation intensifying the precious metals sell-off?

Core argument: Gold and silver fell on Monday as the reversal of a record-breaking rally in precious metals extended into a second week.

Gold and silver fell on Monday as the reversal of a record-breaking rally in precious metals extended into a second week. Rising demand from private investors buying exchange traded funds and physical bullion had added to the rally. Investors have looked to gold as a hedge against mounting concerns over increased fiscal spending in developed economies as well as geopolitical uncertainty. This heavy participation by retail investors, which included the use of leveraged products such as short-dated options, was exacerbating the sell-off on Monday, traders said.

Takeaways by Macro Roundup® AI

  1. Gold and silver fell on Monday as the reversal of a record-breaking rally in precious metals extended into a second week.
  2. Demand from private investors buying exchange traded funds and physical bullion had added to the precious metals rally, with investors treating gold as a hedge against concerns over increased fiscal spending in developed economies and geopolitical uncertainty.
  3. Traders said heavy retail participation, including the use of leveraged products such as short-dated options, was exacerbating Monday's sell-off in gold and silver.

Related Articles:

  • Precious Comment: Raising Our Gold Price Forecast on Sticky Hedges — 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.
  • Everything You Need To Know About Gold — The historical relationship in which gold prices fall as real 10-year Treasury yields rise has broken down, since gold pays no interest and would normally become less attractive as rates rise. The author argues this reflects a "debasement trade," with investors seeking safe havens on fears governments will inflate away unsustainable public debt.
  • Central Banks Rein In Gold Purchases As Investment Demand Soars — Central bank and other official-sector gold purchases fell to 863.3 tonnes, according to the World Gold Council, as high prices and the rising value of existing holdings damped further official buying. Investment demand for gold surged 84% to 2,175 tonnes, driven by exchange-traded fund inflows and demand for gold bars.

Tuesday, February 3, 2026

AI Summary. Extending a consistent poverty measure back to 1939, the authors estimate US absolute poverty fell from 48.5% to 19.5% between 1939 and 1963, driven by growth in market income rather than government transfers net of taxes. Poverty fell no faster in the 24 years after the War on Poverty than before.

Richard Burkhauser and Kevin Corinth National Bureau of Economic Research
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Btw 1939 and 1963, the % of Americans below LBJ’s absolute poverty line (3× the cost of a minimal meal plan), fell from 48.5 to 19.5, driven by rising market income. Post-1964, most (for non-blacks, all) drops were the result of transfers, not earnings.

Did market income or government transfers drive the largest poverty declines?

Core argument: Absolute poverty in the United States fell from 48.5% to 19.5% between 1939 and 1963, a 29 percentage point reduction that occurred before the major expansion of safety net programs such as SNAP, Medicaid, and refundable tax credits.

The major innovation of this paper is to extend a comprehensive and consistent measure of poverty back to 1939, exploiting a quarter century of data before the War on Poverty began. From 1939-1963, absolute poverty fell from 48.5% to 19.5%, a 29 percentage point reduction. This pre-war progress provides important context for previously documented success in reducing poverty afterwards, since it occurred before the major expansion of safety net programs like SNAP, Medicaid, and refundable tax credits. During that 1939–1963 period, it was the growth of market income rather than government transfers net of taxes that reduced poverty rates. In fact, poverty fell no faster in the 24 years after the War on Poverty was declared than in the 24 years before, even when applying the same initial poverty rate to both periods. Our results do not imply that poverty would have necessarily continued to fall at the same rate after 1963 in the absence of the War on Poverty. A pre versus post comparison is conflated by contemporaneous macroeconomic and social changes, such as slower economic growth in the post-1963 period. Conversely, any claim that the War on Poverty was necessary for poverty to decline should be accompanied by an attempt to understand why it had already been falling in the quarter century before it was declared.

Takeaways by Macro Roundup® AI

  1. Absolute poverty in the United States fell from 48.5% to 19.5% between 1939 and 1963, a 29 percentage point reduction that occurred before the major expansion of safety net programs such as SNAP, Medicaid, and refundable tax credits.
  2. From 1939 to 1963, growth of market income rather than government transfers net of taxes reduced poverty rates, according to a poverty measure extended consistently back to 1939.
  3. Poverty fell no faster in the 24 years after the War on Poverty was declared than in the 24 years before, even applying the same initial poverty rate to both periods, though the authors note the comparison is conflated by contemporaneous macroeconomic and social changes, including slower post-1963 growth.

Related Articles:

  • Evaluating the Success of the War on Poverty since 1963 Using an Absolute Full-Income Poverty Measure — The authors estimate that an absolute full-income poverty measure, which counts a fuller set of income sources and adjusts thresholds only for inflation, fell from 19.5% to 1.6%, versus an official decline to 10.5%. They also find relative poverty reductions modest and government dependence more than doubled among working-age adults.
  • The Great “Transfer”-mation — Government transfers rose from 8.2% of Americans' total personal income in 1970 to 17.6% in 2022, making them the third largest income source after work and investments. The share of U.S. counties drawing a quarter or more of personal income from transfers rose from under 1% in 1970 to 53% in 2022.
  • Government Benefit Programs Already Do A Lot To Help Low Income Families — For a two-adult, three-child family, existing taxes and government benefits bring take-home resources to about $58,000 with no earnings, $79,000 with $20,000 of earnings, and $90,000 with $80,000 of earnings plus $15,000 in employer health premiums. A $75,000 gap in earnings and work-related benefits narrows to $11,000 in take-home pay.

AI Summary. The authors estimate that tighter land use regulation accounts for 40% of the gap in productivity growth between US construction and the rest of the economy, with weak innovation and quality mismeasurement each accounting for 20%. Across major economies, regulation and mismeasurement explain most of US construction's underperformance.

Elsie Peng Goldman Sachs
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Post-1965, measured labor productivity in US construction averaged ~ -0.6% per year, compared to +1.6% economy-wide. GS attributes ~40% of the gap to tighter land-use rules, ~20% to weak innovation, and ~20% to mismeasurement of quality improvements.

Why has construction productivity growth lagged the rest of the economy?

Core argument: The authors estimate that tightening US land use regulations accounts for 40% of the productivity growth gap between construction and the rest of the US economy since 1965.

Our analysis shows that, within the US, the tightening of land use regulations has accounted for 40% of the gap in productivity growth between construction and the rest of the economy since 1965, and the lack of innovation and quality mismeasurement have each accounted for 20%. Looking across countries, we find that more severe tightening of land use regulations and greater quality mismeasurement account for most of the underperformance of the US construction industry since 1991, relative to other major G10 countries.

Takeaways by Macro Roundup® AI

  1. The authors estimate that tightening US land use regulations accounts for 40% of the productivity growth gap between construction and the rest of the US economy since 1965.
  2. Lack of innovation and quality mismeasurement each account for 20% of the US construction productivity growth gap relative to the rest of the economy since 1965, according to the authors' analysis.
  3. Across countries, the authors find that more severe tightening of land use regulations and greater quality mismeasurement account for most of the US construction industry's underperformance since 1991 relative to other major G10 countries.

Related Articles:

  • Stagnant Construction Productivity Is a Worldwide Problem — Construction labor productivity has been roughly flat or declining since the 1990s across most of Western Europe, Japan, and Korea, a pattern consistent with the flat US trend. Countries often held up as models — Sweden and Japan for prefabrication, China for infrastructure — show little or unremarkable construction productivity improvement.
  • Five Decades of Decline: U.S. Construction Sector Productivity — U.S. construction labor productivity in 2023 was essentially unchanged from 1948, with real output per worker in 2020 more than 30% below its 1970 level, even as aggregate U.S. labor productivity tripled between 1950 and 2020. Construction accounted for about 4.5% of U.S. GDP in 2024.
  • The Strange and Awful Path of Productivity in the U.S. Construction Sector — U.S. construction sector labor productivity and total factor productivity grew faster than the whole economy in the 1950s and 1960s, then fell, ending 2020 below their 1950 levels while economywide labor productivity and total factor productivity were 290% and 230% higher. Construction labor productivity fell about 1% a year from 1970 to 2020.

AI Summary. U.S. manufacturing employment has declined for eight straight months following the announcement of sweeping new tariffs, leaving fewer Americans working in manufacturing than at any point since the end of the pandemic. Federal figures show more than 200,000 manufacturing jobs have disappeared since 2023.

David Uberti Wall Street Journal
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After reaching a post-GFC peak of ~12.9mm in 2023, the number of US manufacturing jobs has fallen steadily to ~12.7mm, below their pre-pandemic level of ~ 12.8mm.

Are tariffs reversing the decline in manufacturing employment?

Core argument: U.S. manufacturing has shed more than 200,000 jobs since 2023, leaving fewer Americans employed in the sector than at any point since the pandemic ended, according to federal figures.

The manufacturing boom President Trump promised would usher in a golden age for America is going in reverse. After years of economic interventions by the Trump and Biden administrations, fewer Americans work in manufacturing than any point since the pandemic ended. Manufacturers shed workers in each of the eight months after Trump unveiled “Liberation Day” tariffs, according to federal figures, extending a contraction that has seen more than 200,000 roles disappear since 2023.

Takeaways by Macro Roundup® AI

  1. U.S. manufacturing has shed more than 200,000 jobs since 2023, leaving fewer Americans employed in the sector than at any point since the pandemic ended, according to federal figures.
  2. Manufacturers cut workers in each of the eight months following President Trump's "Liberation Day" tariff announcement, extending an ongoing contraction in factory employment.
  3. The manufacturing boom Trump promised would usher in a golden age for America has gone into reverse after years of economic interventions by the Trump and Biden administrations.

Related Articles:

  • AI Data Center Boom Threatens Trump’s Manufacturing Revival — Bloomberg Economics projects the largest participants could pour as much as $4tn into artificial intelligence infrastructure by the end of the decade, with capital spending by hyperscalers such as Alphabet, Amazon, Meta, and Microsoft rising from almost $400bn to as much as $600bn. It expects AI's contribution to GDP growth could reach as much as 1.5 percentage points.
  • What Would It Take to Bring Back US Manufacturing? Part 2: Making American Manufacturing More Productive — The authors argue the United States is a decade away from the scale of automated "lights-out" manufacturing needed to meet its own end-to-end demand at comparable cost. With 98% of US manufacturers being small or medium enterprises, low deployment of mature productivity technologies reflects limited commercial adoption and investment rather than technical readiness.
  • Does Manufacturing Matter? — Manufacturing capacity carries military and geopolitical importance, as shown by economic warfare over products like semiconductors and magnets. The policy-relevant question is not whether manufacturing is geopolitically useful but how much should be spent boosting it given resource constraints, and whether to target defense, dual-use, chokepoint, or broad civilian production.

AI Summary. Measured in dollar market capitalization terms, India was the worst-performing sub-region globally, rising only 3.31% as the Sensex gained 8.55% in local currency and the rupee depreciated against the dollar. US equities accounted for 47% of global market capitalization but only 38% of the year's change, with Europe and China contributing larger shares.

Aswath Damodaran Musings on Markets
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The US share of global market capitalisation in dollar terms was 47% at the start of 2026. China’s share was 14%, and the greater EU’s 13%.

How did global equity markets perform in dollar terms?

Core argument: India was the worst-performing sub-region globally in 2025, with dollar market capitalization up only 3.31%, reflecting a Sensex gain of 8.55% in local currency combined with rupee depreciation against the dollar.

I compute the dollar returns, in aggregate dollar market capitalization terms, in 2025. India was the worst performing sub-region of the world, up only 3.31% in 2025, and those returns reflect not just a relatively below-average year in local currency terms, with the Sensex up 8.55% for the year, but a weaker currency, with the rupee depreciating against the dollar. Zeroing in on the aggregate market capitalization across the world at the start of 2026, I first created a pie chart (on the left) breaking market capitalization by region, and as you can see, US equities, in spite of a weaker dollar, accounted for 47% of global market capitalization. Evaluating just the change in market capitalization during 2025, in the second pie (on the right), you can see the reason for the slippage in the US share, with the US punching in below its weight (38% of the change) and Europe and China weighing in with larger shares.

Takeaways by Macro Roundup® AI

  1. India was the worst-performing sub-region globally in 2025, with dollar market capitalization up only 3.31%, reflecting a Sensex gain of 8.55% in local currency combined with rupee depreciation against the dollar.
  2. US equities accounted for 47% of global aggregate market capitalization at the start of 2026, despite a weaker dollar.
  3. The US accounted for 38% of the 2025 change in global market capitalization, below its 47% share, with Europe and China weighing in with larger shares of the change.

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  • Data Update 1 for 2026: The Push and Pull of Data — 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%).
  • 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.
  • 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.

AI Summary. The Netherlands will fund defense through a "freedom contribution" levied via income tax, projected to raise more than €3bn a year, plus a company contribution projected to raise €1.7bn a year. An online newspaper poll found a majority think the money should come from the overall budget rather than an additional tax.

Barbara Moens Financial Times
Date Posted:

The Dutch government is increasing annual income taxes by €3B and corporate taxes by €1.7B to help fund its planned increase in defense spending to 3.5% of GDP from its current level of 2.49%.

Will a new income tax fund higher defense spending?

Core argument: The Netherlands' new government will levy a "freedom contribution" on citizens through income tax, eventually generating more than €3bn per year.

Dutch citizens will pay the so-called “freedom contribution” via income tax, which will eventually generate more than €3bn per year. Dutch companies will also have to pay such a contribution, which will eventually generate €1.7bn per year. According to an online poll by a Dutch newspaper, a majority believe the government should find the extra money from the overall budget rather than an additional tax.

Takeaways by Macro Roundup® AI

  1. The Netherlands' new government will levy a "freedom contribution" on citizens through income tax, eventually generating more than €3bn per year.
  2. Dutch companies will also pay a "freedom contribution," eventually generating €1.7bn per year.
  3. In an online poll by a Dutch newspaper, a majority said the government should find the extra money from the overall budget rather than through an additional tax.

Related Articles:

  • Waking the Sleeping European Giant — Europe, at roughly 500m people and a $26tn economy with world-class aerospace, shipbuilding, pharmaceutical, vehicle and weapons manufacturers, has the material basis to be a military superpower. National militaries' preference for home-country suppliers has left subscale defense firms, and common procurement could raise output and lower unit costs.
  • The Costly End of Europe’s ‘Peace Dividend’ — European leaders are debating raising defence spending to 3.5% of GDP or more, a level not seen in continental Europe since the late 1960s. Sustaining that share from 1995 to 2023 would have required an extra $387bn a year across EU member states and $35bn a year for the UK, according to Financial Times calculations.
  • 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.

AI Summary. Despite large increases in value-added, excise, income, and social insurance taxes, deficits financed roughly two-thirds of the rise in Russia's consolidated budget spending, including more than 80% of the federal spending increase. Russian government debt remains very low relative to national income, yet officials plan slower nominal spending growth and no additional military and national security spending in ruble terms.

Matt Klein The Overshoot
Date Posted:

Matt Klein argues that Russian government spending, inclusive of off-balance-sheet military expenditures, will be difficult to sustain with oil prices at their current level.

Has Russia reached the limit of its war spending growth?

Core argument: More than 80% of the increase in Russian federal spending over the past 12 months was financed by a larger deficit, despite large increases in value-added, excise, income, and social insurance taxes.

Even with massive increases in value-added taxes, excise taxes, income taxes, and social insurance taxes, more than 80% of the increase in Russian federal spending over the past 12 months was financed by an increase in the deficit and more than 70% of the increase in spending by the “pension and social insurance fund of the Russian fund” was financed by an increase in the deficit. Across the consolidated budget, incremental deficit increases financed about two-thirds of the overall spending increase (in rubles). Relative to the Russian economy, which is more than ₽‎200 trillion, these numbers are still relatively small, and Russian government debt is extraordinarily low relative to national income, especially when viewed in comparison to other countries. Nevertheless, Russian officials seem to believe that the additional rubles pumped into the economy via these budget deficits are unwelcome, which is why they are planning for slower nominal spending growth going forward, including no additional spending on the military and national security in 2026 compared to 2025 (in rubles).

Takeaways by Macro Roundup® AI

  1. More than 80% of the increase in Russian federal spending over the past 12 months was financed by a larger deficit, despite large increases in value-added, excise, income, and social insurance taxes.
  2. Across Russia's consolidated budget, incremental deficit increases financed about two-thirds of the overall ruble spending increase, and more than 70% of the increase in pension and social insurance fund spending.
  3. Russian officials appear to view the rubles pumped into the economy by these deficits as unwelcome and plan slower nominal spending growth, including no additional ruble spending on military and national security in 2026 compared with 2025.

Related Articles:

  • Russians Shun Putin’s Plea for More Babies as Population Shrinks — Russia's population decline has accelerated, with births falling 3.4% to 1.22m — the lowest level in roughly 25 years — while deaths rose 3.3% to 1.82m, according to Russia's Federal Statistics Service. The decline is attributed in part to Russia's war on Ukraine, though detailed mortality data has been classified and war deaths enter the statistics with long delays.
  • The Russian Paradox: So Much Education, So Little Human Capital — Russia is an exception to the global correspondence between educational attainment and human capital, combining an advanced educational profile with strikingly poor health outcomes and only weak contributions to knowledge production and skills-intensive service exports. World Health Organization estimates put male life expectancy at age 15 near that of the world's least developed countries.
  • Poland Races To Build Bomb Shelters — Poland will require real estate developers to include bomb shelter space in most new buildings, as it works to overhaul civilian defences against the threat of Russian aggression. Despite leading NATO in military spending at almost 5% of GDP, it has invested little in population protection, with most shelters dating to the communist era.