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


Wednesday, February 18, 2026

AI Summary. In a randomized experiment on a realistic business analysis task, participants without an AI assistant showed an education gap, with high-education participants scoring 0.548 standard deviations higher overall. Access to the AI assistant raised scores by 1.242 standard deviations for low-education participants versus 0.834 for high-education participants.

Guillermo Cruces, Diego Fernández Meijide, Sebastian Galiani, Ramiro Gálvez, et al. National Bureau of Economic Research
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An experiment in which participants were evaluated on their performance of hypothetical business tasks found that while high-education participants performed better with or without AI, access to AI assistance closed two-thirds of the performance gap.

Does AI assistance narrow performance gaps between education groups?

Core argument: In a randomized experiment, access to an AI assistant raised overall task scores by 1.242 standard deviations for low-education participants versus 0.834 SD for high-education participants, a gap of 0.408 SD significant at the 1% level.

The experimental task presented a realistic hypothetical business scenario - an email from the participant’s boss describing a problem [requiring] analysis of information sources, including text, a figure, and a table. Participants were asked to answer three questions to diagnose the problem and propose a solution. We assess performance in the task on a 0–10 scale along two dimensions, content and writing. Figure 2 presents the results on the impact of having access to the AI assistant on this outcome for each education group. The task without access to the AI assistant is substantially more challenging for low-education participants: their high-education counterparts perform 0.548 standard deviations (SD) higher in the overall score. AI substantially increases task performance for participants of both education groups - overall score rises by 1.242 SD for those in the low education group, whereas the impact of the assistant for high-education subjects is 0.834SD. The treatment effect of access to the AI assistant is 0.408 SD higher for the low-education group [than for] the high-education group, with both results statistically significant at the 1% level.

Takeaways by Macro Roundup® AI

  1. In a randomized experiment, access to an AI assistant raised overall task scores by 1.242 standard deviations for low-education participants versus 0.834 SD for high-education participants, a gap of 0.408 SD significant at the 1% level.
  2. Without the AI assistant, high-education participants scored 0.548 standard deviations higher than low-education participants on the overall score, a task the study describes as substantially more challenging for the low-education group.
  3. The experimental task asked participants to diagnose a problem and propose a solution using text, a figure, and a table from a hypothetical email from their boss, scored 0–10 on content and writing.

Related Articles:

  • Centaurs and Cyborgs on the Jagged Frontier — In a pre-registered experiment at Boston Consulting Group covering 18 realistic consulting tasks, consultants using ChatGPT-4 completed 12.2% more tasks, worked 25.1% faster, and produced 40% higher quality results than those without it. The tool acted as a skill leveler: the lowest-scoring consultants improved 43%, while top performers gained less.
  • Generative AI at Work — A study of 5,179 customer support agents finds that access to a generative AI conversational assistant raised issues resolved per hour by 14% on average, with the largest gains for novice and low-skilled workers and minimal effect on experienced, highly skilled ones. The authors also find AI assistance improved customer sentiment, reduced requests for managerial intervention, and improved employee retention.
  • 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.

AI Summary. Forecasters expect US gross domestic product to have expanded 2.7% over the year while employment barely grew, a divergence drawing comparisons to the "jobless recovery" that followed the early-2000s technology stock collapse. Unlike that episode, which began with a recession, this "jobless boom" is occurring without one — a first in the postwar era.

Augusta Saraiva and Enda Curran Bloomberg
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2025’s “Jobless Boom” is the result of a divergence btw strong real GDP growth and slow growth in nonfarm payrolls, a dynamic that has “never happened” this far into an expansion.

Can the economy keep growing while employment barely increases?

Core argument: Forecasters expect Friday's GDP report to show the US economy expanded 2.7% in 2025, a solid pace for a developed country, while employment barely grew.

Forecasters expect Friday’s report on gross domestic product to show the economy expanded 2.7% in 2025, a solid pace by any standard for a developed country. But employment barely grew, and the combination is drawing comparisons to the infamous “jobless recovery” of the early 2000s that followed the tech bubble and collapse. There’s one major difference between then and now that makes the current divergence all the more unusual: The 2000s episode kicked off with a recession. This time, the “jobless boom” is happening without one. That marks a first in the postwar era.

Takeaways by Macro Roundup® AI

  1. Forecasters expect Friday's GDP report to show the US economy expanded 2.7% in 2025, a solid pace for a developed country, while employment barely grew.
  2. The divergence between US growth and hiring is drawing comparisons to the "jobless recovery" of the early 2000s that followed the tech bubble and its collapse.
  3. Unlike the early-2000s episode, which began with a recession, the current "jobless boom" is occurring without one, a first in the postwar era.

Related Articles:

  • What Sweeping Revisions and a Blowout Month Tell Us About the U.S. Job Market — Labor Department revisions lowered previously estimated job gains for the past two calendar years, cutting the combined net change in construction, manufacturing, and retail by 115,000 jobs. Healthcare added about 437,000 jobs and social assistance about 321,000 over 12 months, while all other private-sector jobs combined shrank.
  • Jobless Growth — Labor demand growth may be too weak to keep pace with even modest labor supply growth: the labor market is somewhat weaker than before the pandemic, job growth has turned negative outside healthcare, and firms are focused on using AI to cut labor costs. Economists estimate most employment losses in routine manual occupations since the 1970s occurred during recessions.
  • Our Favorite Charts of 2025 — Wage growth is slowing more for lower-paid workers than for higher earners, limiting those households' ability to keep spending, while hiring is concentrated in select industries such as healthcare and among larger firms as small private firms shed workers. Layoffs remain low, but the number of workers unemployed for 27 weeks or more has only rarely been higher.

AI Summary. The 1951 Federal Reserve–Treasury Accord reestablished central bank independence by granting the Federal Reserve the right to buy government bonds only when it judged prudent and to let long-term interest rates float upward. The author argues the Treasury should control the debt's maturity structure, with the Federal Reserve confining purchases to short-term bonds or lending against collateral.

John Cochrane The Grumpy Economist
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Noting that the 1951 Accord gave the Fed the right not to buy debt, Cochrane proposes a new Accord – which he believes is consonant with Warsh’s views – under which the Fed determines short rates, while the Treasury alone manages the maturity structure.

Should the Treasury, not the Fed, control debt maturity structure?

Core argument: The 1951 Fed-Treasury Accord reestablished Fed independence by giving the Fed the right to buy bonds only when it judged prudent and to let long-term interest rates float upward.

The first Fed-Treasury Accord in 1951 reestablished Fed independence. In the Accord, the Fed won the right to buy bonds only when it thought prudent, and to allow long-term interest rates to float upward. That background is important. A lot of commentary [predicts that] Warsh [will be] Treasury Secretary Bessent’s puppet at the Fed, setting the Fed up to finance deficits without complaint. I think this is exactly the opposite of what is likely to transpire. Warsh has spent over a decade saying that the Fed needs to buy less government bonds, shrink its footprint on markets, let long-term interest rates go where they want to go, and do less overall. The invocation of the Accord, in which the Fed won the right not to buy bonds tells you what’s up. Otherwise, it would be “repeal the accord.” Someone needs to be in charge of the overall maturity structure and its risk-reward consequences for the taxpayer. In my view, this is a job for the Treasury. If the Fed wants to buy lots of Treasury debt in order to provide lots of bank reserves, then the Fed should buy only short-term bonds, or issue reserves via collateralized lending as the ECB does, without buying Treasury debt. If the Fed needs to buy long term debt temporarily for “market function” reasons, then it needs to swap out the interest rate risk with the Treasury, or exchange that promptly for short-term debt.

Takeaways by Macro Roundup® AI

  1. The 1951 Fed-Treasury Accord reestablished Fed independence by giving the Fed the right to buy bonds only when it judged prudent and to let long-term interest rates float upward.
  2. Contrary to commentary predicting Kevin Warsh would act as Treasury Secretary Bessent's puppet and finance deficits without complaint, Warsh has spent over a decade arguing the Fed should buy fewer government bonds, shrink its market footprint, and do less overall.
  3. The Treasury, rather than the Fed, should manage the overall maturity structure and its risk-reward consequences for taxpayers, with the Fed buying only short-term bonds or issuing reserves via collateralized lending as the ECB does.

Related Articles:

  • Warsh Call for Fed-Treasury Accord Stirs Debate in $30 Trillion Bond Market — A nominee to lead the Federal Reserve has backed a new version of a 1951 Treasury-Federal Reserve agreement that would spell out the size of the central bank's balance sheet alongside the Treasury's debt-issuance plans. Analysts argue such a public pact could tie monetary operations to government deficits and resemble a framework for controlling bond yields.
  • Convenience Lost — The authors find that fiscal expansion and the resulting rise in Treasury supply pushed convenience yields to zero on short-term Treasurys and below zero on long-term ones, reducing the revenue the U.S. earns from issuing safe, liquid assets. They argue shortening the debt's maturity structure cannot fully offset this, and that international investors may turn to alternative long-term safe assets.
  • Fiscal Dominance and the Return of Zero-Interest Bank Reserve Requirements — Fiscal dominance requires governments to fund deficits at the margin with non-interest-bearing debt, and the revenue from inflation taxation—both expected and unexpected—is limited. The authors argue a US fiscal dominance episode could end the payment of interest on bank reserves and restore requirements that banks hold large zero-interest reserves against deposits.

AI Summary. Analysts estimate that each 1bp increase in gold's share of US financial portfolios, driven by incremental purchases, raises gold prices by 1.5%, and with gold exchange-traded fund allocations at only about 0.2% of US private sector financial portfolios, further diversification is the main upside risk to a $5,400 gold price forecast.

Daan Struyven, Alexandra Paulus, Lavinia Forcellese, Lina Thomas, et al. Goldman Sachs
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A GS analysis notes upside risk to their current gold price target of $5,400 per troy ounce due to retail buying, given that gold ETF allocations in US private sector financial portfolios are only ~0.2%.

Does further portfolio diversification into gold pose the main upside price risk?

Core argument: Every 1bp increase in gold's share of US financial portfolios, driven by incremental gold purchases, is estimated to raise gold prices by 1.5%.

Private sector diversification is also the key upside risk to our $5,400 December 26 forecast, which only assumes i) that central banks continue to buy at their elevated pace of the past 12 months and ii) a modest boost to ETF holdings from 50bp of Fed cuts. With gold ETF allocations in US private sector financial portfolios at only ~0.2%, there is room for additional diversification into gold. We estimate that every 1bp increase in the gold share of US financial portfolios--driven by incremental gold purchases--raises prices by 1.5%. (This diversification is increasingly expressed via call options, which has also boosted price volatility).

Takeaways by Macro Roundup® AI

  1. Every 1bp increase in gold's share of US financial portfolios, driven by incremental gold purchases, is estimated to raise gold prices by 1.5%.
  2. Gold ETF allocations in US private sector financial portfolios stand at about 0.2%, leaving room for additional diversification into gold, increasingly expressed via call options that have boosted price volatility.

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

AI Summary. The US constraint in copper is processing capacity rather than raw supply: domestic mine output and scrap are exported in large volumes, often to China, to be refined into the copper cathode used in manufacturing. Analysis by Benchmark Mineral Intelligence finds US raw copper sources could cover 146% of annual demand, versus 40% for China.

Camilla Hodgson Financial Times
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The consultancy Benchmark finds that, while the US is constrained in copper processing, it has more than enough copper from domestic and US-owned overseas mines plus scrap to meet demand. China has access to only 40% of its demand from analogous sources.

Is the US copper constraint processing capacity rather than supply?

Core argument: The US can meet 146% of its annual copper demand using raw copper from domestic and overseas mines plus scrap, compared with 40% for China, the world's largest consumer, according to Benchmark Mineral Intelligence.

The US has a sizeable domestic copper mining industry and produces significant quantities of scrap. But a lack of domestic processing means both are exported in substantial volumes, often to China, to be turned into the copper cathode used in manufacturing. Cathode is also imported into the US for use by semi-finished product manufacturers. The lack of domestic processing also means that copper from US-owned mines overseas often does not go to the US, whereas much of the material from Chinese-owned assets overseas does go to China. Even excluding US overseas investments, however, the nation should be self-reliant in copper due to its domestic mine and scrap production, Benchmark found. The [US] can meet 146% of annual demand using raw copper from overseas and domestic mines and from scrap, analysis by Benchmark Mineral Intelligence found. The figure for China — the world’s largest consumer — is 40%.

Takeaways by Macro Roundup® AI

  1. The US can meet 146% of its annual copper demand using raw copper from domestic and overseas mines plus scrap, compared with 40% for China, the world's largest consumer, according to Benchmark Mineral Intelligence.
  2. A lack of domestic processing capacity means US mined copper and scrap are exported in substantial volumes, often to China, to be turned into the copper cathode used in manufacturing, while the US imports cathode for its semi-finished product manufacturers.
  3. Copper from US-owned mines overseas often does not go to the US, whereas much of the material from Chinese-owned overseas assets does go to China, according to Benchmark Mineral Intelligence.

Related Articles:

  • Just-In-Case, The Possibility For Higher Commodity Prices — 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.
  • Amazon Is Buying America’s First New Copper Output in More Than a Decade — Amazon is buying copper from an Arizona project expected to yield 14,000 metric tons of copper cathode over four years, less than the tens of thousands of tons a single large data center requires for its electrical components. S&P Global estimates artificial intelligence will help lift copper demand 50% by 2040 while mining output dwindles, producing a 25% shortfall.
  • The World’s Copper Squeeze Is Set to Intensify on AI and Defense Spending, S&P Says — S&P Global projects copper demand will rise 50% to 42m tons by 2040 while production peaks near 33m tons in 2030 as ore quality declines at existing mines and new projects face permitting, financing and construction hurdles. The projected 10m-ton gap assumes recycled copper more than doubles to 10m tons.

AI Summary. Germany's population is projected to fall by more than 4mn to about 79mn by 2050, with the number of people aged 20 to 66 down about 12% and pensioners up more than 20%. Germany's pay-as-you-go pension system, which already absorbs about a quarter of the federal budget, is likely to come under increasing strain.

Olaf Storbeck Financial Times
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Ifo Institute for Economic Research revised its forecast of a 1% German population decline over the next 25 years to a 5% decline, due to lower birth rates and a drop in immigration. The former East Germany will be more impacted than the former West Germany.

How will a shrinking population strain Germany's pension system?

Core argument: Germany's population is projected to fall by more than 4mn to about 79mn by 2050, the lowest level since the early 1990s, with growth projected to hover around 0.4% in the long term.

Germany’s growth rate, projected to hover around just 0.4% in the long term, is likely to face further strain as the labour market comes under pressure from demographic decline. The number of people aged 20 to 66 is projected to fall by about 12%, while the number of pensioners is set to rise by more than 20%, Ifo said. Germany’s pay-as-you-go pension system is likely to come under increasing strain. The government already devotes about a quarter of its budget to supporting it, and the Federal Audit Office warned in 2024 that this share would rise further. By 2050, Germany’s population will fall by more than 4mn to about 79mn, the lowest level since the early 1990s. The inflow of migrants by 2030 is now expected to be significantly lower than previously forecast after the government tightened migration policy. Birth rates, too, were overestimated in earlier projections, with the new data pointing to 150,000 fewer births in 2030 than previously expected. According to Ifo, in 2025 Germany attracted only 225,000 net migrants compared with 454,000 in the previous estimate.

Takeaways by Macro Roundup® AI

  1. Germany's population is projected to fall by more than 4mn to about 79mn by 2050, the lowest level since the early 1990s, with growth projected to hover around 0.4% in the long term.
  2. Ifo projects the number of people in Germany aged 20 to 66 will fall about 12% while pensioners rise more than 20%, straining a pay-as-you-go pension system that already absorbs about a quarter of the government budget.
  3. Germany attracted only 225,000 net migrants in 2025 against a previous estimate of 454,000, according to Ifo, and new data point to 150,000 fewer births in 2030 than earlier projections assumed.

Related Articles:

  • 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 Fight to Revive Europe’s Shrinking Rural Areas — The estimated population of predominantly rural European Union regions fell by nearly 8mn, or 8.3%, over a decade while urban population rose by more than 10mn, or 6%. Regions covering about 40% of the EU's land area and holding almost one-third of its population are seeing sustained resident declines.
  • Germany Joins EU’s ‘Ultra-Low’ Fertility Club — Germany's fertility rate fell to 1.35 children per woman, below the United Nations' "ultra-low" threshold of 1.4, a level at which falling birth rates become difficult to reverse. Estonia and Austria also dropped below 1.4, joining nine European Union countries including Spain, Greece, and Italy, while France's rate fell to a record-low 1.67 and Finland's to 1.26.

Thursday, February 19, 2026

AI Summary. The US goods and services trade deficit reached $901.5bn for the year, one of the largest in data going back to 1960. US companies increased imports of computers and accessories by nearly $145bn from the prior year, an acceleration in demand that reflects large-scale artificial intelligence investment.

Vince Golle and Mark Niquette Bloomberg
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The US trade deficit was $901.5B in 2025, effectively unchanged from 2024 despite the new tariff regime. The US bilateral deficit with China fell to $202B, the smallest in 20 years, while the gap with Taiwan widened to a record $146.8B.

Is artificial intelligence investment driving a larger US trade deficit?

Core argument: The US goods and services trade deficit totaled $901.5 billion for the full year, one of the largest in Commerce Department data going back to 1960.

The US trade deficit widened in December, capping a turbulent year of erratic tariff policy. The goods and services trade gap expanded from the prior month to $70.3 billion, Commerce Department data showed Thursday. The shortfall culminated in a full-year deficit of $901.5 billion, still one of the largest in data back to 1960. Last year, US companies imported nearly $145 billion worth of computers and accessories more than they did in 2024. The acceleration in demand reflected the massive investment underway in artificial intelligence.

Takeaways by Macro Roundup® AI

  1. The US goods and services trade deficit totaled $901.5 billion for the full year, one of the largest in Commerce Department data going back to 1960.
  2. The monthly US trade gap widened to $70.3 billion in December from the prior month, according to Commerce Department data, capping a year of erratic tariff policy.
  3. US companies imported nearly $145 billion more in computers and accessories than in 2024, an acceleration in demand that reflected the investment underway in artificial intelligence.

Related Articles:

  • The Dangerous Triumph Of Neo-Mercantilism — Neo-mercantilism is thriving in both China, which pairs infant-industry promotion with large trade surpluses, and in a United States focused on external deficits and protecting domestic markets. The author argues this will likely fracture the world economy, and that a new multilateral treaty could include a mechanism to combat large structural trade surpluses.
  • China Blames US For Trade Imbalances As Surplus Hits Record $1.2tn — China reported a record annual goods trade surplus of $1.2tn, with monthly exports growing 6.6% year over year in dollar terms, more than double analysts' average forecast of 3.1%. Chinese customs officials argue that other countries' restrictions on high-tech exports to China are holding down China's imports.
  • The Budget and Economic Outlook: 2026 to 2036 — The Congressional Budget Office projects the federal deficit will grow from $1.9tn (5.8% of GDP) to $3.1tn (6.7%) over a decade, above the 3.8% averaged over the past 50 years, with rising net interest costs driving much of the increase. Federal debt held by the public is projected to rise from 101% to 120% of GDP.

AI Summary. Average US weekly pay has risen 31% over six years, outpacing prices, but inflation erased most of those gains. Grocery prices are up about 30% since early 2020, a young married couple now needs 70% of annual household income for an average down payment versus 58% in 2019.

Mark Niquette, Jennah Haque and Jade Khatib Bloomberg
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The US price level has risen 26% since January 2020, leaving Americans’ average weekly real wages up only 3.7% over five years.

Why do Americans feel squeezed when wages outpaced prices?

Core argument: Average American weekly pay has risen 31% over the past six years, outpacing prices in the aggregate, but inflation wiped out most of those income gains, and low earners now lag after leading wage growth following the pandemic.

The average American’s weekly pay has risen 31% over the past six years. That’s faster than prices across that period, so Americans in the aggregate aren’t losing ground — but inflation wiped out most of their income gains. For low earners, who saw the fastest wage growth after the pandemic, the last year or so has been tougher and they’re now lagging behind. [Grocery] prices are up about 30% since January 2020, about in line with average wage growth. But Americans had gotten used to paying roughly the same at the supermarket each week in the pre-pandemic years. Lately, they’ve been forced to stomach a bigger bill with almost every visit. A double-punch has pushed homeownership out of reach for many Americans: First the pandemic-era surge in prices, and then a steep run-up in mortgage rates. A young married couple now needs 70% of their annual household income to afford the average down payment, according to Goldman Sachs economist Elsie Peng, up from 58% in 2019 and 45% in 2000. [Further], the average principal and interest payment has doubled since early 2020, according to the National Association of Realtors. Employee premiums for family health insurance have risen 23% in the past five years to almost $6,900 on average. And more than 20 million people who rely on Affordable Care Act plans face a hike in their premiums after Congress let Covid-era subsidies expire.

Takeaways by Macro Roundup® AI

  1. Average American weekly pay has risen 31% over the past six years, outpacing prices in the aggregate, but inflation wiped out most of those income gains, and low earners now lag after leading wage growth following the pandemic.
  2. A young married couple needs 70% of annual household income to afford the average down payment, up from 58% in 2019 and 45% in 2000, according to Goldman Sachs economist Elsie Peng, while the average principal and interest payment has doubled since early 2020, per the National Association of Realtors.
  3. Employee premiums for family health insurance have risen 23% in the past five years to almost $6,900 on average, and more than 20 million people on Affordable Care Act plans face premium increases after Congress let Covid-era subsidies expire.

Related Articles:

  • The Cost of Money is Part of the Cost of Living: New Evidence on the Consumer Sentiment Anomaly — Variation in the University of Michigan consumer sentiment index that inflation and unemployment cannot explain is strongly correlated with growth in consumer borrowing costs, such as mortgage and car loan rates. The authors estimate that including interest payments and homeownership costs in the consumer price index would raise measured inflation from 3% to 9%.
  • Why Do We Dislike Inflation? — Survey evidence finds 80% of respondents believe prices rise faster than wages, though real weekly earnings for the median worker grew 1.7% between 2019 and 2023. About 40% think their nominal income would be higher had inflation been lower, and half expect wages to take over a year to catch up if inflation doubled.
  • A Mystery in Fixed Income — Long-term interest rates have drifted higher than short-term rates and oil prices would predict, an unusual pattern during Federal Reserve rate-cutting cycles. Proposed explanations include investor concern about growing Treasury debt issuance or an effective increase in the Federal Reserve's 2% inflation target.

AI Summary. The share of the U.S. population aged 65 and over has risen from 13% to 18%, and federal spending on elderly programs has climbed from 6.9% of gross domestic product to 9.4%, which the Congressional Budget Office projects will reach 11.3% in a decade. Elderly programs plus interest are the primary driver of the budget deficit.

Greg Ip Wall Street Journal
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Since 1989, the share of US household wealth has fallen for all age cohorts except those 55 and above. Further, Greg Ip notes fiscal consolidation will require higher taxes and/or lower future benefits, “both of which will largely spare today’s elderly.”

Are spending on elderly programs and interest driving the federal deficit?

Core argument: Federal spending on elderly programs rose from 6.9% of GDP in 2007 to 9.4% last year and will reach 11.3% within a decade, according to Congressional Budget Office projections.

What makes the wealth of today’s retirees truly formidable is their numbers. Since the first baby boomers qualified for Social Security in 2008, the share of the U.S. population 65 and over has risen from 13% to 18%. Federal spending on elderly programs has risen from 6.9% of gross domestic product in 2007 to 9.4% last year and will reach 11.3% in a decade, the Congressional Budget Office projects. That is where the real threat to intergenerational harmony lies. Elderly programs, plus interest, are the primary driver of the gaping budget deficit. By 2032, Social Security will no longer be able to pay full benefits. Fixing the deficit and Social Security requires some combination of higher taxes or lower future benefits, both of which will largely spare today’s elderly. If you think the young are anxious now, just wait.

Takeaways by Macro Roundup® AI

  1. Federal spending on elderly programs rose from 6.9% of GDP in 2007 to 9.4% last year and will reach 11.3% within a decade, according to Congressional Budget Office projections.
  2. The share of the U.S. population aged 65 and over has risen from 13% in 2008, when the first baby boomers qualified for Social Security, to 18%.
  3. Social Security will no longer be able to pay full benefits by 2032, and fixing that shortfall and the deficit requires higher taxes or lower future benefits, both of which would largely spare today's elderly.

Related Articles:

  • The Budget and Economic Outlook: 2026 to 2036 — The Congressional Budget Office projects the federal deficit will grow from $1.9tn (5.8% of GDP) to $3.1tn (6.7%) over a decade, above the 3.8% averaged over the past 50 years, with rising net interest costs driving much of the increase. Federal debt held by the public is projected to rise from 101% to 120% of GDP.
  • Social Security and Trends in Wealth Inequality — The authors estimate that including Social Security in household wealth leaves top wealth shares little changed over three decades, with the top 10% and top 1% shares rising 1.1 and 1.6 percentage points versus roughly 9 and 6 points for marketable wealth alone. Social Security wealth grew from $7tn to $39tn.
  • Life Under Two: Debt, Deficits, and the AI Discontinuity — The United States averaged annual GDP growth above 3% for decades, but 2% or less is now more likely. Over ten years, the author estimates that gap amounts to a $3.36tn larger economy, $3.7tn more tax revenue, and 6m more jobs, shifting public psychology from abundance toward scarcity.

AI Summary. In the US, increased redistribution has offset rising pre-tax inequality: Congressional Budget Office data show inequality of taxable income near record highs while inequality after taxes and transfers was lower than in several earlier years and only slightly above 1986. The top 1% of earners paid 40% of income tax in 2022, up from 33% in 2001.

Economist Staff The Economist
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Advanced economies have become increasingly redistributive. “While the share of US taxable income going to the top 1% of earners soared, their share of post-tax income has risen only slightly; the 1% paid 40% of income tax in 2022, up from 33% in 2001.”

Has redistribution offset rising pre-tax inequality in America?

Core argument: America's top 1% of earners paid 40% of income tax in 2022, up from 33% in 2001, leaving governments dependent on the wealthiest for revenue as pre-tax inequality and top tax rates both rose.

The vigour of the Robin Hood state varies across countries. In America more redistribution has merely offset rising pre-tax inequality. According to the Congressional Budget Office, for example, 2022—the most recent year for which detailed data are available—was the fourth-most unequal year on record, as measured by the Gini coefficient of taxable income, behind only 2021, 2020 and 2012. But inequality after taxes and transfers was lower than in 2000, 2005-07, 2012, 2014, and 2017-18 and 2021. It was also only a shade higher than in 1986. Even as the share of America’s taxable income going to the top 1% of earners has soared, their share of post-tax income has risen only slightly. Today’s combination of higher pre-tax inequality and higher tax rates on top earners has left governments astonishingly dependent on the wealthiest for their revenue. In America, the 1% paid 40% of income tax in 2022, up from 33% in 2001.

Takeaways by Macro Roundup® AI

  1. America's top 1% of earners paid 40% of income tax in 2022, up from 33% in 2001, leaving governments dependent on the wealthiest for revenue as pre-tax inequality and top tax rates both rose.
  2. According to the Congressional Budget Office, 2022 was the fourth-most unequal year on record by the Gini coefficient of taxable income, behind only 2021, 2020 and 2012.
  3. American inequality after taxes and transfers was lower in 2022 than in 2000, 2005-07, 2012, 2014, 2017-18 and 2021, and only a shade higher than in 1986, as more redistribution offset rising pre-tax inequality.

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AI Summary. The authors find that prediction-market-implied distributions from Kalshi respond to news and match or statistically improve on federal funds futures and professional forecaster surveys in predicting the federal funds rate and consumer price inflation. They argue these markets supply continuously updated full distributions, including tail risks and asymmetries, unavailable from traditional forecasts.

Anthony Diercks, Jared Dean Katz, and Jonathan Wright Federal Reserve Board
Date Posted:
Is Database:
Database

The Kalshi prediction market extends the series for which it is possible to infer market beliefs to GDP and labor market variables, as well as “providing continuously updated full distributions rather than infrequent point estimates” for CPI and the FFR.

Do prediction markets forecast interest rates and inflation better than traditional benchmarks?

Core argument: The mode of the Kalshi-implied distribution has matched the realized federal funds rate by the day of each FOMC meeting since 2022, a record neither surveys nor fed funds futures achieved.

Kalshi-implied distributions are well-behaved, responsive to news, and comparable in forecasting accuracy to established benchmarks such as the Survey of Market Expectations and the Bloomberg consensus. [They provide] market distributions for variables like GDP growth, core inflation, unemployment, and payrolls, for which no others currently exist - and, we argue, the only credible measures of distributional beliefs about decisions at specific FOMC meetings. Our results highlight several key advantages. First, Kalshi’s forecasts for the federal funds rate and CPI provide statistically significant improvements over fed funds futures and professional forecasters, all while providing continuously updated full distributions rather than infrequent point estimates. The mode of the Kalshi distribution, for example, has perfectly matched the realized federal funds rate by the day of each meeting since 2022, a feat not achieved by either surveys or futures. Second, these markets capture rich distributional dynamics—such as tail risks and asymmetries in higher moments—that are unavailable from traditional sources. For instance, we find that monetary policy press conference shocks tend to significantly reduce skewness in the Federal Funds rate distribution.

Takeaways by Macro Roundup® AI

  1. The mode of the Kalshi-implied distribution has matched the realized federal funds rate by the day of each FOMC meeting since 2022, a record neither surveys nor fed funds futures achieved.
  2. Kalshi's forecasts for the federal funds rate and CPI deliver statistically significant improvements over fed funds futures and professional forecasters while providing continuously updated full distributions rather than infrequent point estimates.
  3. Kalshi markets supply distributions for GDP growth, core inflation, unemployment, and payrolls for which no others currently exist, and the authors find that monetary policy press conference shocks significantly reduce skewness in the federal funds rate distribution.

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