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
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  • “…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


Thursday, February 5, 2026

AI Summary. Decomposition analysis attributes Latin America's fertility decline largely to women aged 20–29 and those with lower education, and finds successive cohorts are having fewer children rather than postponing motherhood. Falling birth counts among mothers drive the decline in completed fertility, with rising childlessness accounting for under 10% on average.

Milagros Onofri, Inés Berniell, Raquel Fernández, and Azul Menduiña National Bureau of Economic Research
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The crude birth rate in Latin America and the Caribbean (LAC) fell by two-thirds between 1950 and 2023. A cohort analysis shows that the declines in completed fertility are due primarily to fewer children per mother rather than by rising childlessness.

Are women having fewer children rather than delaying motherhood?

Core argument: Rising childlessness accounts for less than 10% on average of the decline in completed fertility across Latin American cohorts, with the decline driven primarily by reductions in fertility among mothers.

Decompositions by age, education, and age-education groups reveal that the largest contributors to the decline in period fertility were younger women, particularly those of age 20–29, and especially from women with lower levels of education. A cohort perspective based on completed fertility allows us to examine whether these changes arise from women postponing motherhood or ultimately having fewer children. Our analysis shows that successive cohorts of Latin American women are not merely delaying births but rather are having fewer children on average. Furthermore, the decomposition analysis shows that declines in completed fertility are driven primarily by reductions in fertility among mothers rather than by rising childlessness. In this respect, Latin American patterns differ markedly from those observed in the United States: while changes in cohort childlessness play the main role in explaining the modest increase in completed fertility in the US between the mid-1950s and mid-1970s cohorts, rising childlessness accounts for less than 10% on average of the decline in completed [LAC] fertility.

Takeaways by Macro Roundup® AI

  1. Rising childlessness accounts for less than 10% on average of the decline in completed fertility across Latin American cohorts, with the decline driven primarily by reductions in fertility among mothers.
  2. Decompositions by age and education attribute the largest contributions to Latin America's period fertility decline to women aged 20–29, especially those with lower levels of education.
  3. Successive cohorts of Latin American women are having fewer children on average rather than merely postponing motherhood, unlike in the United States, where cohort childlessness mainly explains the modest increase in completed fertility between the mid-1950s and mid-1970s cohorts.

Related Articles:

  • Latin America’s Perpetual Growth Crisis — Per capita GDP in the US grew a cumulative 20% over a decade, about 2% a year, outpacing Latin American economies; Colombia, Peru and Chile fared best in the region but still fell well short, while Mexico and Brazil underperformed. The author argues Ecuador's and Argentina's dollar pegs preclude growth.
  • 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 Demographic Future of Humanity: Facts and Consequences — The authors estimate the world total fertility rate is around 2.17, below the global replacement rate of roughly 2.21, meaning humanity is already below replacement, with fertility and births falling faster than anticipated. They project middle-income countries' fertility may fall below that of rich countries outside East Asia, with emigration compounding population decline.

AI Summary. Modeling of a rise in the total fertility rate from one to two finds it takes 41 years before the ratio of labor income to consumption needs across age groups exceeds its starting level. The authors argue this delay makes pro-natalist policies economically unappealing to older voters and short-horizon politicians.

David Weil Journal of Economic Perspectives
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David Weil finds that it takes 41 years after a rise in the fertility rate for the “support ratio” to rise above its initial value, allowing for increased consumption – an “unfortunate implication for pro-natalist policies” at the political level.

How long does a fertility increase take to raise living standards?

Core argument: A rise in the total fertility rate from one to two takes 41 years from its onset before the adjusted support ratio rises above its initial value.

A rising working-age share acts like a tailwind allowing consumption per capita. This has an unfortunate implication for pro-natalist policies. This is shown in the dashed line in Figure 3, which traces out the dynamics following a rise in the total fertility rate from one to two. It takes 41 years from the onset of the fertility increase for the adjusted support ratio (the weighted sum of population by age group, where the weights are average labor income by age, divided by a similar sum where the weights are average consumption by age) to rise above its initial value. Conceptually, the adjusted support ratio functions just as the working-age share of the population in the simple calculations above: The larger its value, the higher consumption will be relative to the earnings of working-age adults. The existence of this demographic debit suggests that policies designed to raise fertility would not be appealing (at least on economic grounds) to elderly or near elderly voters, and would similarly be an unappetizing choice for politicians whose planning horizon rarely extends so far into the future.

Takeaways by Macro Roundup® AI

  1. A rise in the total fertility rate from one to two takes 41 years from its onset before the adjusted support ratio rises above its initial value.
  2. The adjusted support ratio — population by age weighted by average labor income, divided by a similar sum weighted by average consumption by age — functions like the working-age share, with higher values permitting higher consumption relative to working-age earnings.
  3. This demographic debit suggests policies designed to raise fertility would not appeal, at least on economic grounds, to elderly or near-elderly voters, nor to politicians whose planning horizons rarely extend so far into the future.

Related Articles:

  • The Demographic Outlook: 2026 to 2056 — 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.
  • 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.
  • The US Has One of the Highest Fertility Rates Among Peer Countries — 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.

AI Summary. Eli Lilly launched lower-priced vials of its obesity drug Zepbound to extend supply beyond injector pens, later cutting vial prices by 50%, and resolved its shortage while rival Novo Nordisk's persisted. Ending the shortage required compounding pharmacies to stop selling copies of Lilly's medicine.

Madison Muller Bloomberg
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Despite revolutionizing health care with GLP-1 drugs, Novo Nordisk has been outcompeted by Eli Lilly, in part through better management. Both firms were confronted with production bottlenecks in 2024; Lilly’s have been resolved while Novo’s are ongoing.

How did one obesity drugmaker end its shortage before its rival?

Core argument: Eli Lilly launched vials of Zepbound in April 2024 and later cut vial prices by 50%, easing manufacturing bottlenecks tied to injector pens and offering patients a price closer to that of copycat drugs.

At first, the companies were telling similar stories. Both were racing to meet demand while their stocks surged on the hype. Novo became Europe’s most valuable company at one point. Lilly became the first pharmaceutical company to surpass a $500 billion valuation and kept growing from there. And while shortages were ongoing and both drugmakers worked to resolve production bottlenecks, Lilly took a critical step that its competitor did not. In April 2024, the company launched vials of Zepbound that allowed it to extend its supplies. This helped ease the drugmaker’s manufacturing woes, which stemmed from the injector pens. Months later, it cut prices for the vials by 50% — giving patients a more affordable option that was closer in price to what copycat drugs were selling for. By late 2024, Lilly’s supply shortage was over — meaning compounding drugmakers had to stop selling Lilly’s medicine — while Novo’s continued to drag on.

Takeaways by Macro Roundup® AI

  1. Eli Lilly launched vials of Zepbound in April 2024 and later cut vial prices by 50%, easing manufacturing bottlenecks tied to injector pens and offering patients a price closer to that of copycat drugs.
  2. Lilly's supply shortage ended by late 2024, requiring compounding drugmakers to stop selling copies of its medicine, while Novo Nordisk's shortage continued.
  3. Novo Nordisk became Europe's most valuable company at one point, and Lilly became the first pharmaceutical company to surpass a $500 billion valuation.

Related Articles:

  • The Plan To Rescue Novo Nordisk — Novo Nordisk's Wegovy dominated the weight-loss drug market until Eli Lilly launched Zepbound, which brought in $4.9bn in sales in 2024, three-quarters as much as Wegovy. Bloomberg forecasts that by 2030 Lilly will control more than half of the global obesity drug market, versus a third for Novo.
  • Today’s Most Important Technology — The share of patients taking semaglutide for weight control rather than type 2 diabetes rose from under 10% in 2019 to 41.7%. Obesity and overweight, affecting 1 in 8 people worldwide, cost the global economy $2tn — nearly 70 cents on the dollar from premature mortality and lost productivity — an impact projected to double by 2035 absent intervention.
  • How Would Authorizing Medicare to Cover Anti-Obesity Medications Affect the Federal Budget? — The Congressional Budget Office projects that authorizing Medicare coverage of anti-obesity medications would raise federal spending by about $35bn on net over 2026–2034, with direct costs rising from $1.6bn to $7.1bn a year. Offsetting savings from improved beneficiary health would be small, under $50m initially and reaching $1.0bn.

AI Summary. Google plans to roughly double its capital spending to a range of $175bn–$185bn, far above analyst expectations of about $120bn, funding its bet on artificial intelligence. Growth in its advertising and cloud businesses supports the outlay, following capital spending of $91.4bn in the prior year.

Stephen Morris Financial Times
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Google is planning on doubling its capital expenditure in 2026 to ~$175–185B. Google spent $91.4B on capex in 2025.

Are strong advertising and cloud earnings funding a doubling of AI spending?

Core argument: Google raised its 2026 capital expenditure forecast to $175bn–$185bn, roughly double its 2025 spending and far above analysts' expectations of about $120bn.

Google said it plans to double its capital expenditure this year to as much as $185B as strong growth in its advertising and cloud businesses added to the search giant’s financial firepower for its huge bet on AI. The Mountain View, California-based group increased its forecast for capex in 2026 to a range of $175B to $185B, far exceeding analysts’ expectations of about $120B. Fourth-quarter capital investment almost doubled to $27.9B compared with the year before, pushing spending in 2025 to $91.4B.

Takeaways by Macro Roundup® AI

  1. Google raised its 2026 capital expenditure forecast to $175bn–$185bn, roughly double its 2025 spending and far above analysts' expectations of about $120bn.
  2. Google's fourth-quarter capital investment almost doubled from a year earlier to $27.9bn, bringing 2025 capital spending to $91.4bn.
  3. Google attributed added financial firepower for its AI bet to growth in its advertising and cloud businesses.

Related Articles:

  • The Macro Implications of the AI Capex Boom — 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.
  • Four Takeaways from Microsoft’s Satya Nadella at WEF Today — 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.
  • 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. The U.S., Japan and the European Union announced they will conclude a memorandum of understanding on jointly supporting mining, refining, processing and recycling projects, with the U.S. and Mexico implementing a similar action plan. U.S. officials said the group of nations would set a price floor for critical minerals.

Gavin Bade Wall Street Journal
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The US, Japan, Mexico and the EU have proposed an effort to create a non-Chinese rare earths supply chain via a “preferential trade zone” that would impose tariffs on rare earths that originate outside of it and establish a price floor within.

Are allied nations coordinating to set a price floor for critical minerals?

Core argument: The U.S., Japan and the EU said in a joint statement they will conclude a memorandum of understanding within 30 days on jointly supporting projects in mining, refining, processing and recycling.

The U.S., Japan and the EU will conclude a memorandum of understanding within 30 days on how they can jointly support projects in mining, refining, processing and recycling, the governments said in a joint statement. The U.S. and Mexico will implement a similar action plan over the next 60 days, the U.S. Trade Representative’s office said in a separate statement. “If you have someone who is dominant, who can flood a market with a particular material, they have the ability to essentially destroy the economic value of a company or a country’s production,” Interior Secretary Doug Burgum said Tuesday at the Center for Strategic and International Studies, previewing the policies, “And so that’s why, within this club of nations, there would be a price floor.”

Takeaways by Macro Roundup® AI

  1. The U.S., Japan and the EU said in a joint statement they will conclude a memorandum of understanding within 30 days on jointly supporting projects in mining, refining, processing and recycling.
  2. The U.S. and Mexico will implement a similar action plan over the next 60 days, according to the U.S. Trade Representative's office.
  3. Interior Secretary Doug Burgum said that within this club of nations there would be a price floor, arguing a dominant producer that can flood a market with a material is able to destroy the economic value of a company's or country's production.

Related Articles:

  • Underestimating China — China's productive capacity is three times that of the United States and exceeds the next nine countries combined, with its share of global manufacturing quintupling to 30% while the U.S. share halved to about 15%. The authors argue Washington must convert its alliances into a platform for pooled capacity building.
  • 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.
  • Mad Libs: Just Fill In The Blanks — China expanded its rare earth export controls to require licenses for any product containing more than 0.1% by value of Chinese rare earths or made with equipment containing them, with a presumption of denial for military uses and scrutiny of advanced semiconductor uses. Aggressive enforcement would affect industries from chips and autos to aerospace, defense and medical equipment.

AI Summary. New York City has the highest combined city-state personal tax rate in the US and the highest all-in corporate income tax rate at 17.4%, and the highest industrial, retail and multifamily property taxes per square foot among ten major cities. New York State ranks first in tax collections per capita.

Michael Cembalest J.P. Morgan
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At ~15%, NYC has the highest combined city-state personal tax rate in the US, and the top marginal corporate income tax rate at 17.4%. The city also has the highest industrial, retail and multifamily property taxes per square foot of 10 major cities.

Does New York City impose the highest taxes among major US cities?

Core argument: New York City carries the highest all-in corporate income tax rate in the US at 17.4%, combining state and city taxes plus the MTA surcharge, along with the highest combined city-state personal tax rate.

NYC has the highest combined city-state personal tax rate in the US and the highest all-in corporate income tax rate at 17.4% (state plus city plus MTA surcharge). According to the [Citizens Budget Commission], New York State is the highest tax jurisdiction in the US based on tax collections per capita and #2 on tax collections per $1,000 of personal income. NYC has the highest industrial, retail and multifamily property taxes per square foot of ten major cities.

Takeaways by Macro Roundup® AI

  1. New York City carries the highest all-in corporate income tax rate in the US at 17.4%, combining state and city taxes plus the MTA surcharge, along with the highest combined city-state personal tax rate.
  2. The Citizens Budget Commission ranks New York State as the highest tax jurisdiction in the US by tax collections per capita and #2 by tax collections per $1,000 of personal income.
  3. New York City has the highest industrial, retail, and multifamily property taxes per square foot among ten major cities.

Related Articles:

  • As New Jobs In Finance Dry Up, New York City’s Fiscal Model Is Wilting — New York state's share of US taxpayers reporting over $1m in income fell from 12.7% in 2010 to 8.7% in 2022, and the Citizens Budget Commission estimates state and city income tax receipts from that group would have been $13bn higher had the share held. Job growth has concentrated in lower-paid health care and social assistance.
  • The Stationary Bandits of New York City — New York City's construction costs exceed international benchmarks: Paris installs metro platform edge doors for about €3.7m per station while the Metropolitan Transportation Authority says it needs $55m per station. The author argues stringent crane operator licensing and sidewalk shed regulations protect a small number of unionized contractors from competition.
  • 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.

Friday, February 6, 2026

AI Summary. Claude Code authors 4% of public GitHub commits, and the authors project it will reach 20%+ of daily commits by the end of 2026 and drive revenue growth that lets Anthropic outgrow OpenAI. They argue falling costs and rising quality of AI tokens have inverted the coder-tool relationship.

Doug O'Laughlin, Jeremie Eliahou Ontiveros, Jordan Nanos, Dylan Patel, et al. Semianalysis
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The Semianalysis team argues that Claude Code is an inflection point for AI agents; 4% of GitHub public commits are being authored by Claude Code today, and the team projects that will rise to 20% by the end of the year.

Are AI coding agents reversing the relationship between coders and their tools?

Core argument: Claude Code authors 4% of public GitHub commits, and the author projects it will reach 20%+ of all daily commits by the end of 2026, driving revenue growth that lets Anthropic outgrow OpenAI.

4% of GitHub public commits are being authored by Claude Code right now. At the current trajectory, we believe that Claude Code will be 20%+ of all daily commits by the end of 2026. We believe that Claude Code is the inflection point for AI “Agents” and is a glimpse into the future of how AI will function. It is set to drive exceptional revenue growth for Anthropic in 2026, enabling the lab to dramatically outgrow OpenAI. Now software engineering has and always will be the gold standard information work. But as the quality has finally crossed over a critical threshold, the relationship between coders and their tools have flipped. Coders are effectively just harnessing a black box tool to achieve outcomes, and that was all possible because not only the quality but the cost of the intelligence of tokens has fallen an amazing amount. One developer with Claude Code can now do what took a team a month. The cost of Claude Pro or ChatGPT is $20 dollars a month, while a Max subscription is $200 dollars respectively. The median US knowledge worker costs ~350-500 dollars a day fully loaded. An agent that handles even a fraction of their workflow a day at ~6-7 dollars is a 10-30x ROI not including improvement in intelligence. Accenture just signed a deal to train 30,000 professionals on Claude, the largest Claude Code deployment to date.

Takeaways by Macro Roundup® AI

  1. Claude Code authors 4% of public GitHub commits, and the author projects it will reach 20%+ of all daily commits by the end of 2026, driving revenue growth that lets Anthropic outgrow OpenAI.
  2. The author argues an agent costing ~$6–7 a day against a median US knowledge worker's fully loaded ~$350–500 a day delivers a 10–30x return, with Claude Pro at $20 a month and Max at $200.
  3. Accenture signed a deal to train 30,000 professionals on Claude, described as the largest Claude Code deployment to date.

Related Articles:

  • Concentrated Growth: The Role Of The IT Sector — Since 1988, total factor productivity in the information technology sector has risen about 178%, versus about 12% across all non-IT sectors combined, while aggregate productivity rose about 40%. The IT sector accounts for roughly 45% of cumulative aggregate productivity growth, once sectoral linkages to downstream industries are weighted in.
  • Chart of the Day: The SaaSpocalypse Started Years Ago — Investors' willingness to pay for enterprise software earnings has been declining for years, a re-rating that predates recent headlines about artificial intelligence displacing software and has continued even as the broader equity market advanced. Price-to-earnings multiples in the sector remain high despite this sustained revaluation.
  • Society’s Technical Debt and Software’s Gutenberg Moment — Every wave of technological innovation has been unleashed by something costly becoming cheap enough to waste, and large language models are collapsing the cost and complexity of producing software. The authors argue that decades of underproduced software have left society with immense technical debt that is poised to contract, releasing a wave of innovation.

AI Summary. Big Tech stocks sold off after companies disclosed plans to spend $660bn in a year on artificial intelligence, with investors concerned the capital spending outpaces the technology's earnings potential. Amazon, Google and Microsoft are set to lose a combined $900bn in market value despite a 14% rise in their combined annual revenue to $1.6tn.

Stephen Morris, Michael Acton and Rafe Rosner-Uddin Financial Times
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Amazon, Google, Meta and Microsoft plan to spend ~$660B on capex in 2026. All four experienced sell-offs “as investors fret that the ‘breathtaking’ capital expenditures are outpacing the earnings potential of the new technology.”

Is Big Tech's AI spending outpacing the technology's earnings potential?

Core argument: Amazon, Google and Microsoft are set to lose a combined $900bn in market value since reporting quarterly earnings, after Big Tech unveiled plans to spend $660bn this year on AI.

Big Tech stocks have sold off heavily after the companies unveiled plans to spend $660bn this year on AI, as investors fret that the “breathtaking” capital expenditures are outpacing the earnings potential of the new technology. Amazon, Google and Microsoft are set to lose a combined $900bn in market value since filing their quarterly earnings over the past week. Even a 14% boost to their combined annual revenue to $1.6tn was not enough to overcome the pessimism. Apple, which has sat out the AI capex arms race, was the only Silicon Valley behemoth to emerge unscathed, with shares up 7.5% since it reported record sales.

Takeaways by Macro Roundup® AI

  1. Amazon, Google and Microsoft are set to lose a combined $900bn in market value since reporting quarterly earnings, after Big Tech unveiled plans to spend $660bn this year on AI.
  2. A 14% increase in combined annual revenue to $1.6tn was not enough to offset investor concern that AI capital expenditures are outpacing the technology's earnings potential.
  3. Apple, which has sat out the AI capital expenditure arms race, saw its shares rise 7.5% since reporting record sales, the only Silicon Valley giant to emerge unscathed.

Related Articles:

  • The Macro Implications of the AI Capex Boom — 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.
  • 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. A histogram of costs of capital across all publicly traded firms shows what typical, high, and low hurdle rates look like, with the cost of capital best understood as an opportunity cost—the return available elsewhere on equally risky investments. US dollar risk-free rates have remained near 4% for a fourth year.

Aswath Damodaran Musings on Markets
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The median cost of capital for a US firm is 7.79%, Damodaran finds. He notes we are now “in our fourth year with US dollar risk-free rates around 4%, and companies and investors seem to have become acclimatized to the resulting costs of capital.”

How high are hurdle rates for publicly traded firms today?

Core argument: Damodaran computes a histogram of costs of capital for all publicly traded firms at the start of 2026, arguing that perspective on typical, high, and low values is an undervalued skill in corporate finance and valuation.

In corporate finance and valuation, an undervalued skill is having perspective, a sense of what comprises typical, and what is a high or a low value. It is for that reason that I compute a histogram of costs of capital of all publicly traded firms at the start of 2026. To run a business or invest in one, you need hurdle rates, and that is what costs of equity and debt measure. While models and equations may be how you get these numbers, it is always worth going back to first principles, whenever you face questions on what to do. Thus, recognizing that the cost of capital is an opportunity cost, i.e., the rate of return you can earn elsewhere in the market, on investments of equivalent risk, should be a prompt to use betas that reflect the risk in investments, rather than the entities making the investment, and updated costs of borrowing for the cost of debt. As we enter 2026, we are now in our fourth year with US dollar riskfree rates around 4%, and companies and investors seem to have become acclimatized to the resulting costs of capital, and the shock of seeing dollar riskfree rates surge in 2022, pushing up costs of capital across the board seem to have faded.

Takeaways by Macro Roundup® AI

  1. Damodaran computes a histogram of costs of capital for all publicly traded firms at the start of 2026, arguing that perspective on typical, high, and low values is an undervalued skill in corporate finance and valuation.
  2. US dollar riskfree rates have stayed around 4% for a fourth year, and Damodaran argues companies and investors have acclimatized, with the shock of the 2022 surge that pushed up costs of capital having faded.
  3. Damodaran argues the cost of capital is an opportunity cost—the return available elsewhere in the market on investments of equivalent risk—implying betas should reflect the risk of the investments rather than the entities making them, alongside updated borrowing costs.

Related Articles:

  • Cost of Capital and Capital Allocation: Investment in the Era of “Easy Money” — The authors estimate that the weighted average cost of capital for Russell 3000 companies averaged 6.9% during the 2009-21 era of easy money versus 7.5% in the prior period, while the aggregate return on invested capital averaged 9.5% versus 9.2%. The resulting spread between returns and the cost of capital averaged 2.6 percentage points versus 1.7 points earlier.
  • 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.
  • Data Update 6 for 2025: From Macro to Micro – The Hurdle Rate Question — Valuation errors stem mainly from mistaken forecasts of growth, profitability, or reinvestment rather than from the discount rate, and no great company achieved greatness by finessing its cost of capital. The author suggests valuing a mature US company using the 8.35% median cost of capital and focusing analysis on growth and profit prospects.

AI Summary. Survey-based estimates find 52.7% of immigrant-headed U.S. households used at least one major welfare program versus 37.3% of U.S.-born-headed households, with non-citizen-headed households at 58.6%. The authors attribute this to low wages rather than not working, since 86% of immigrant households have a worker versus 74% of U.S.-born.

Steven Camarota and Karen Zeigler Center For Immigration Studies
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In 2024, 59% of households headed by an immigrant used at least one major welfare program, compared to 37% of native-headed households; 86% of immigrant households and 74% of U.S. born households have at least one worker.

Do immigrant households use welfare at higher rates than U.S.-born households?

Core argument: Based on the 2024 SIPP, 52.7% of immigrant-headed households used at least one major welfare program versus 37.3% of U.S.-born-headed households, a statistically significant gap of 15.4 percentage points.

Figure 1 and Table 1 report our estimates of welfare use from the SIPP based on the nativity of the household head. The figure shows that welfare use is common for both immigrant and native households. Based on the 2024 SIPP, 52.7% of all immigrant-headed households and 37.3% of households headed by the U.S.-born used at least one major program. The 15.4 percentage points higher rate for all immigrants relative to the U.S.-born is statistically significant. If we excluded naturalized American citizens and look only at households headed by a non-citizen, it shows a welfare use rate of 58.6% — more than 21 percentage points higher than the U.S.-born. This is also a statistically significant difference. The high welfare use of immigrant households is not explained by an unwillingness to work. In fact, 86% of all immigrant households have at least one worker, compared to just 74% of U.S.-born households. Income determines welfare eligibility, so many low-wage workers access welfare. Our best estimate is that 51% of households headed by legal immigrants use at least one major welfare program. Among illegal immigrants we estimate the rate is 61%.

Takeaways by Macro Roundup® AI

  1. Based on the 2024 SIPP, 52.7% of immigrant-headed households used at least one major welfare program versus 37.3% of U.S.-born-headed households, a statistically significant gap of 15.4 percentage points.
  2. Households headed by non-citizens show a welfare use rate of 58.6%, more than 21 percentage points above the U.S.-born rate, a statistically significant difference.
  3. The authors estimate that 51% of households headed by legal immigrants and 61% of those headed by illegal immigrants use at least one major welfare program, while 86% of immigrant households have at least one worker compared with 74% of U.S.-born households.

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