Edward Conard

Top Ten New York Times Bestselling Author

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  • “…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
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  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, March 3, 2026

AI Summary. Estimates based on primary energy overstate how much electricity is needed to replace oil in passenger cars, since electric motors convert 80%-90% of electricity into motion versus about 18% for gasoline cars. Measuring useful final energy net of waste heat avoids this "primary energy fallacy": the US consumed 45 exajoules of useful final energy versus 95 exajoules of primary energy.

Michael Cembalest J.P. Morgan
Date Posted:
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As measured by useful final energy consumption in 2024, nuclear provided 6% of America’s 44.5 exajoules, renewables 9%, and fossil fuels 85%. The corresponding numbers for China’s 87.7 exajoules were nuclear 2%, renewables 13%, and fossil fuels 85%. Coal was 54% of China’s consumption and oil 18%, relative to 8% and 30%, respectively for the US.

Does measuring primary energy overstate the electricity needed to replace oil?

Core argument: The U.S. consumed 45 exajoules of useful final energy in 2024 compared with 95 exajoules of primary energy.

Energy is lost as waste heat in conversion of fuel energy to motion in internal combustion engines, and in conversion of heat to electricity. For example, if you use primary energy to estimate how much electric power is needed to replace oil in passenger cars, you would overestimate the power needed since electric motors are 80%-90% efficient at converting electricity to motion compared to 18% efficiency for gasoline cars. A better approach [is estimating] the energy net of waste heat that is actually consumed by end-users; this would help avoid overly high projections of fossil fuel demand in a more electrified world due to this “primary energy fallacy.” A few years ago I constructed a measure of useful final energy (UFE) that I use for my energy charts. With this approach, we can get closer to useful final energy actually consumed by end users. [For example the US consumed 45 exajoules (EJ) of useful final energy in 2024 compared to 95 EJ of primary energy.]

Takeaways by Macro Roundup® AI

  1. The U.S. consumed 45 exajoules of useful final energy in 2024 compared with 95 exajoules of primary energy.
  2. Electric motors convert electricity to motion at 80%–90% efficiency compared with 18% for gasoline cars, so using primary energy to size the electricity needed to replace oil in passenger cars overestimates the requirement.
  3. Measuring energy net of waste heat that end-users actually consume helps avoid the "primary energy fallacy" of overly high projections of fossil fuel demand in a more electrified world.

Related Articles:

  • New U.S. Electric Generating Capacity Expected To Reach A Record High in 2026 — U.S. power plant developers plan to add 86 gigawatts of new utility-scale generating capacity, which would be a record if realized, with solar at 51% of planned additions, battery storage at 28% and wind at 14%. The prior year saw 53 gigawatts added, the largest single-year installation since 2002.
  • Electricity 2026 — Global electricity demand is projected to grow faster than the world economy throughout the forecast period, driven by electricity-intensive industries, air conditioning, data centres and continued electrification. US electricity demand is forecast to rise about 2% a year over 2026-2030, more than twice the past decade's rate, with data centres accounting for almost half that growth.
  • Power Politics: Energy Self-Sufficiency in a Modern Mercantilist World — China leads in adding power to the grid, with more than 30,000 miles of ultra-high-voltage transmission lines versus zero in the US and lead times for large transformers of 48 weeks against a US average of 143 weeks. This positions China to accommodate new demand sources such as artificial intelligence.

AI Summary. Energy security concerns, not environmentalism, are argued to drive the buildout of solar, wind, and nuclear power, since domestic generation avoids chokepoints like Hormuz, the Red Sea, and the Panama Canal. China and India are expected to demand higher strategic stockpiles of energy and other critical commodities, repricing security above efficiency.

James Stavridis and Jeff Currie Carlyle
Date Posted:

While Iran-related disruption will fade, Stavridis and Currie argue that going forward, commodity prices will increasingly reflect a “security premium” as the world fragments into a US-bloc and a China-bloc that “increasingly requires two supply chains.”

Is energy security, not environmentalism, driving renewable and nuclear buildout?

Core argument: Global deployment of new solar and wind reached 700 gigawatts in 2024, five times faster than all other energy sources combined, and China surpassed one terawatt of installed solar by mid-2025.

We anticipate that China and India will demand higher strategic stock levels of energy and every other critical commodity. Energy security crises produce the same structural response: the search for sources that do not require crossing borders and global chokepoints. Solar, wind, and nuclear are children of the 1970s oil shocks — with growth driven by security, not environmentalism. In 2024, 700 gigawatts of new solar and wind were deployed globally, five times faster than all other sources combined. China surpassed one terawatt of installed solar by mid-2025. Nuclear generated a record 2,667 terawatt-hours with 70 reactors under construction across 15 countries. Every gigawatt of domestic capacity is a gigawatt that does not transit Hormuz, the Red Sea, or the Panama Canal. This is not a rupture, but an evolution of the deglobalization that began in 2022 — the shift from just-in-time to just-in-case, the repricing of security above efficiency.

Takeaways by Macro Roundup® AI

  1. Global deployment of new solar and wind reached 700 gigawatts in 2024, five times faster than all other energy sources combined, and China surpassed one terawatt of installed solar by mid-2025.
  2. Nuclear power generated a record 2,667 terawatt-hours, with 70 reactors under construction across 15 countries, reflecting a search for energy sources that do not transit Hormuz, the Red Sea, or the Panama Canal.
  3. China and India are expected to demand higher strategic stock levels of energy and every other critical commodity, extending the deglobalization that began in 2022 from just-in-time to just-in-case and repricing security above efficiency.

Related Articles:

  • The Old Economy Begins To Take Its Revenge — The author argues that capital rotates between the financial economy's asset-light booms and the physical economy, with commodity capacity constraints and the use of critical materials as geopolitical leverage now making returns on physical investment more attractive. In this view, higher interest rates reflect the better returns and capital spending needed to expand production capacity.
  • 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.
  • 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.

AI Summary. Demand for key rare earth elements is projected to grow about 7% annually through 2030, driven by electric-vehicle motors, consumer electronics and military uses. Output from non-Chinese producers is projected to more than quadruple with government funding support, and China's dominance of the industry is projected to slip by 2030.

Jacob Lorinc Bloomberg
Date Posted:

Bloomberg forecasts that rare earths demand will climb 7% annually through 2030, outpacing supply. Bloomberg projects that China’s dominance over the sector will “slip” by 2030 as new supply comes online.

Will new rare-earth supply keep pace with rising global demand?

Core argument: Bloomberg Intelligence expects demand for key rare earth elements to rise about 7% annually through 2030, driven by growth in electric-vehicle motors, consumer electronics and military uses.

[Bloomberg] expects demand for key rare earth elements to climb about 7% annually through 2030, fueled by growth in electric-vehicle motors, consumer electronics and military uses. Output from non-Chinese producers, meanwhile, is projected to more than quadruple. Those producers, such as MP Materials and Lynas Rare Earths are likely to ramp up output thanks to a raft of public funding from governments including the Trump administration. The report predicts that China’s dominance over the rare earths industry will slip by 2030.

Takeaways by Macro Roundup® AI

  1. Bloomberg Intelligence expects demand for key rare earth elements to rise about 7% annually through 2030, driven by growth in electric-vehicle motors, consumer electronics and military uses.
  2. Output from non-Chinese rare earth producers is projected to more than quadruple, with firms such as MP Materials and Lynas Rare Earths likely to ramp up on public funding from governments including the Trump administration.
  3. Bloomberg Intelligence predicts China's dominance over the rare earths industry will slip by 2030, though new supply falls short of rising global demand.

Related Articles:

  • How Japan Built a Rare-Earth Supply Chain Without China — Japan has reduced its reliance on Chinese rare earths, with industry estimates putting China's share of Japanese rare-earth imports at roughly 60% to 70%, down from 90% or more. Japan's alternative chain runs from an Australian open-pit mine through a separation plant in Malaysia to Japanese magnet makers supplying automakers.
  • China Slams Dozens of Japanese Companies With Export Curbs — China froze exports of "dual-use" materials with both civilian and military applications, including rare earth magnets, to 20 Japanese companies and placed 20 more on a new watch list. The move deepens a dispute with Tokyo and shows Beijing using its dominance in critical supply chains to exert diplomatic pressure.
  • U.S. Enlists Mexico, EU and Japan In Its Minerals Race With China — 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.

AI Summary. The US Department of War threatened to designate the artificial intelligence company Anthropic as a supply-chain risk after it refused to accept the government's terms on how its technology may be deployed. The author argues this treats a domestic company like a foreign adversary for expressing different views and making its own decisions about the use of its property.

Dean Ball Hyperdimensional
Date Posted:

Dean Ball argues the Pentagon’s designation of Anthropic as a supply chain risk is an effort to “commit corporate murder…do business on our terms, or we will end your business,” and poses a grave threat to property rights.

Should the government label a domestic AI firm a security risk?

Core argument: The author argues that Secretary Hegseth's threat against Anthropic has already done great damage even if it is narrowed to the most limited supply-chain risk designation.

Even if Secretary Hegseth backs down and narrows his extremely broad threat against Anthropic, great damage has been done. Even in the narrowest supply-chain risk designation, the government has still said that they will treat you like a foreign adversary—indeed, they will treat you in some ways worse than a foreign adversary—simply for refusing to capitulate to their terms of business. Simply for having different ideas, expressing those ideas in speech, and actualizing that speech in decisions about how to deploy and not deploy one’s property. Each of these things is fundamental to our republic, and each was assaulted—not anything like for the first time but nonetheless in novel ways—by the Department of War last week. Most corporations, political actors, and others will have to operate under the assumption that the logic of the tribe will now reign.

Takeaways by Macro Roundup® AI

  1. The author argues that Secretary Hegseth's threat against Anthropic has already done great damage even if it is narrowed to the most limited supply-chain risk designation.
  2. Under even the narrowest designation, the author contends, the government has said it will treat Anthropic like a foreign adversary—in some ways worse—for refusing to accept its terms of business.
  3. The author holds that Anthropic was targeted for holding different ideas, expressing them in speech, and acting on them in decisions about deploying its property, and that most corporations and political actors must now assume the logic of the tribe will reign.

Related Articles:

  • Anthropic and Alignment — Designating an AI company a supply-chain risk would be devastating because it depends on cloud hosting from Amazon, Microsoft, and Google, all of which hold US defense contracts, though such authority appears limited to work covered by US government contracts. The author argues governments have incentive to destroy any private firm that dictates terms to their military.
  • The Geopolitics of AI: Decoding the New Global Operating System — The performance gap between the top American and Chinese AI models narrowed from 9.3% to 1.7%, with Chinese firms relying on cheaper open-source models—DeepSeek prices usage 20-40x below OpenAI's ChatGPT. This price advantage could win adoption in developing countries and build dependency on Chinese AI ecosystems.

AI Summary. France has offered to temporarily station parts of its nuclear deterrent in allied European countries for the first time, alongside a pledge to expand its arsenal. France holds the world's fourth-largest nuclear arsenal, with about 300 warheads deliverable by four submarines or Rafale fighter jets, consuming roughly 13% of its defense budget.

Leila Abboud Financial Times
Date Posted:

The French government laid out a new doctrine of “forward deterrence” that would allow French nuclear-capable forces to be deployed outside the country. Macron also announced an expansion of the French nuclear arsenal, currently the fourth largest.

Will France station part of its nuclear deterrent in allied countries?

Core argument: Emmanuel Macron said France has offered for the first time to temporarily move parts of its nuclear deterrent to allied European countries, describing the shift as "forward deterrence" in a speech at the Île Longue naval base.

Emmanuel Macron has said France has offered to temporarily move parts of its nuclear deterrent to allied European countries for the first time, as he pledged to increase the size of the country’s arsenal. “Today, a new step of France’s deterrence can now be taken. We are entering the path of what I call forward deterrence,” the French president said in a speech at the Île Longue naval base in Brittany, which houses the country’s nuclear-armed submarines. France has the world’s fourth-largest nuclear arsenal, with about 300 warheads. They can be deployed from four submarines, at least one of which is constantly at sea, or delivered by Rafale fighter jets. Officials say France spends about 13% of its defence budget maintaining its nuclear deterrent. The US, Russia and China each possess thousands of warheads, but French doctrine holds that it needs only enough weapons to inflict “unacceptable damage” on an adversary, thereby deterring attacks on French soil.

Takeaways by Macro Roundup® AI

  1. Emmanuel Macron said France has offered for the first time to temporarily move parts of its nuclear deterrent to allied European countries, describing the shift as "forward deterrence" in a speech at the Île Longue naval base.
  2. France holds the world's fourth-largest nuclear arsenal with about 300 warheads deliverable by four submarines, at least one always at sea, or by Rafale fighter jets, and Macron pledged to increase the arsenal's size.
  3. French officials say about 13% of the country's defence budget goes to maintaining its nuclear deterrent, with doctrine holding that France needs only enough weapons to inflict "unacceptable damage" on an adversary.

Related Articles:

  • Military Youth Service, a Cold War Relic, Makes a Comeback in France — France is reviving voluntary military service as a rite of passage for young people, starting with a 10-month program aimed at recruiting 3,000 people, mostly age 18 or 19, to supplement 200,000 active troops, scaling to 50,000 a year by 2035. In a "major crisis," service would become mandatory for people with certain skills if Parliament authorizes a draft.
  • 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.
  • Will Higher Defence Spending Boost The European Economy? — Defense spending typically has a fiscal multiplier below one, meaning each euro spent raises GDP by less, so it is not a short-term growth strategy. One estimate holds that extra military spending worth 1% of GDP could lift output up to 2% long term if concentrated on research and development.

AI Summary. The U.S. Navy's intelligence office says China has accelerated nuclear submarine production from under one a year to significantly higher rates, and projects Chinese undersea forces may credibly challenge U.S. regional maritime dominance by 2040. Its next-generation Type 096 is expected to carry ballistic missiles able to target large portions of the U.S. from protected waters.

Chun Han Wong Wall Street Journal
Date Posted:

The Pentagon projects China’s submarine force will reach 80 ships by 2035, with about half nuclear-powered, up from 60 largely diesel-powered submarines today. PLAN’s new SSBNs will be able to target the US from within the first island chain.

Is China's submarine buildup set to challenge U.S. maritime dominance?

Core argument: Rear Adm. Mike Brookes, director of the U.S. Navy's intelligence office, said China's undersea forces "may credibly challenge U.S. regional maritime dominance" by 2040.

The U.S. Navy’s intelligence chief said the Chinese navy’s “undersea forces may credibly challenge U.S. regional maritime dominance” by 2040. China has already “dramatically increased its domestic submarine production capacity, accelerating production from less than one nuclear submarine a year to significantly higher rates,” said Rear Adm. Mike Brookes, director of the U.S. Navy’s intelligence office. One of China’s next-generation submarines is the Type 096, which is expected to carry ballistic missiles that can “target large portions of the U.S. from protected waters, fundamentally enhancing strategic deterrence credibility,” Brookes said, referring to waters China is able to defend.

Takeaways by Macro Roundup® AI

  1. Rear Adm. Mike Brookes, director of the U.S. Navy's intelligence office, said China's undersea forces "may credibly challenge U.S. regional maritime dominance" by 2040.
  2. Brookes said China has dramatically increased its domestic submarine production capacity, accelerating from less than one nuclear submarine a year to significantly higher rates.
  3. Brookes said China's next-generation Type 096 submarine is expected to carry ballistic missiles that could target large portions of the U.S. from protected waters China is able to defend.

Related Articles:

  • Pentagon Spends $12.6 Billion to Upgrade Surveillance of China’s Subs, Satellites — The US Department of Defense plans to spend an additional $12.6bn on surveillance of China's military maneuvers, submarines and satellites, part of nearly $152bn allocated separately from the $893bn fiscal 2026 defense spending measure. The plan includes $1bn for classified offensive cyber operations and $1bn for the Space Force's operation of Boeing's classified X-37B orbital vehicle.
  • The New Frontier for Drone Warfare Is Deep Underwater — New underwater drones can dive thousands of feet and operate for days with little human intervention, which advocates say suits them to intelligence gathering, protecting undersea infrastructure, and countering threats in the Pacific. Boeing is delivering five 85-foot Orca vehicles to the US Navy, and Australia is developing Ghost Shark with Anduril.
  • China’s Newest Nuclear Submarine Sank, Setting Back Its Military Modernization — U.S. officials say China's first Zhou-class nuclear-powered attack submarine, which features a distinctive X-shaped stern designed for greater maneuverability, sank at a shipyard near Wuhan, a setback for a priority weapons program that Chinese authorities sought to conceal.

Wednesday, March 4, 2026

AI Summary. The author argues that as incremental gains from larger AI training runs shrink, the return on additional computing power falls, weakening the case for the training spending that dominates data center demand. Survivors of model commoditization will be those owning the orchestration layer or the applications where outcomes are priced.

Paul Kedrosky Notes on Complexity
Date Posted:
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As incremental model gains shrink, the return on investment in massive training runs weakens. With most capex and data center load tied to training, Kedrosky asserts, “In a slowing intelligence regime, architecture beats raw capability.”

Does shrinking returns from larger AI training runs undermine data center spending?

Core argument: The author argues that capital expenditure tied to model training, which constitutes most AI spending and most data center load, looks increasingly misguided and even stranded as returns on additional compute decline.

Declining progress rate breaks capital dynamics. When incremental gains shrink, justification for massive training runs weakens. The return on additional compute declines unless it unlocks step-function capability, which is masked anyway by these new tools. Investors begin asking whether orchestration and product engineering yield higher ROI than another modest benchmark improvement. The vendors that survive model commoditization will not be those with the marginally highest benchmark score. They will be those who either (a) own the orchestration substrate that defines how models are used, or (b) own the applications where outcomes are priced and embedded. It is even possible, and perhaps likely, I've argued, [that] the winner will be the first frontier model company to abandon spending on models. Current capex related to model training—which is most of spending, and most of data center load—looks increasingly misguided and even stranded. It is pressured at one end by model distillation and open source, and at the other by commoditizing orchestration layers.

Takeaways by Macro Roundup® AI

  1. The author argues that capital expenditure tied to model training, which constitutes most AI spending and most data center load, looks increasingly misguided and even stranded as returns on additional compute decline.
  2. Survivors of model commoditization will be vendors that own the orchestration substrate defining how models are used or the applications where outcomes are priced and embedded, not those with marginally higher benchmark scores.
  3. Model training spending is pressured at one end by distillation and open source and at the other by commoditizing orchestration layers, and the author suggests the winner may be the first frontier model company to abandon spending on models.

Related Articles:

  • Chart of the Day: AI Capex, From Bonanza to Burden — Stock price reactions to large artificial intelligence capital spending announcements have shifted from rewarding to penalizing companies, with the valuation multiple markets assign to such spending collapsing and likely turning negative. Technology companies once valued for low debt and low capital intensity are now among the leaders in both.
  • 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.
  • The Geopolitics of AI: Decoding the New Global Operating System — The performance gap between the top American and Chinese AI models narrowed from 9.3% to 1.7%, with Chinese firms relying on cheaper open-source models—DeepSeek prices usage 20-40x below OpenAI's ChatGPT. This price advantage could win adoption in developing countries and build dependency on Chinese AI ecosystems.

AI Summary. Foreigners are accumulating more financial claims on Americans than Americans are on foreigners across direct investment, stocks, bonds, currency, deposits, and loans, and the U.S. net international investment position has moved from -20% of GDP in 2010 to -89%. Almost all of that swing reflects valuation gains on U.S. stocks rather than added borrowing.

Matt Klein The Overshoot
Date Posted:
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The worsening of the US net international investment position – from -20% of US GDP in 2010, to -53% pre-pandemic, and to -89% as of the end of 2025Q3 – reflects valuation gains on US stocks relative to stocks in the rest of the world.

Does the deteriorating U.S. investment position reflect borrowing or stock valuations?

Core argument: The U.S. net international investment position swung from -20% of GDP in 2010 to -53% just before the pandemic and -89% as of 2025Q3, almost all reflecting valuation gains on U.S. stocks relative to foreign stock markets.

Foreigners are accumulating more financial claims on Americans than Americans are accumulating on foreigners across every single category: FDI, stocks, bonds, physical currency, deposits, and loans. Foreign official investors supposedly have been mild sellers of U.S. assets over the past 12 months, but the standard measure does not include state-affiliated institutions that operate on behalf of foreign governments. Meanwhile, the U.S. net international investment position has swung massively over the past few years, from -20% of U.S. GDP in 2010, to -53% of U.S. GDP on the eve of the pandemic to -89% as of the end of 2025Q3. Almost all of that reflects massive valuation gains on U.S. stocks relative to stock markets in the rest of the world. The good news is that actual U.S. indebtedness has not meaningfully increased, and the methods used to assign market values to FDI in the U.S. and abroad make the situation look more extreme than it is. (U.S. FDI assets in Ireland are overwhelmingly big tech and big pharma, for example, but the market value of those assets is imputed based on the performance of the maker of Kerrygold.) The bad news is that, if the current level of the NIIP is unsustainable, the easiest way for it to revert is for U.S. stock prices to fall dramatically.

Takeaways by Macro Roundup® AI

  1. The U.S. net international investment position swung from -20% of GDP in 2010 to -53% just before the pandemic and -89% as of 2025Q3, almost all reflecting valuation gains on U.S. stocks relative to foreign stock markets.
  2. Foreigners are accumulating more financial claims on Americans than Americans are on foreigners in every category — FDI, stocks, bonds, physical currency, deposits, and loans — while actual U.S. indebtedness has not meaningfully increased.
  3. Methods for assigning market values to foreign direct investment make the imbalance look more extreme than it is, since U.S. FDI assets in Ireland are overwhelmingly big tech and big pharma yet are valued using the performance of the maker of Kerrygold.

Related Articles:

  • The US Trade Deficit and Foreign Borrowing — The authors argue US trade deficits persist because foreign investors find US financial assets attractive, but the current deficit level is not sustainable. They estimate that stabilizing the US net foreign liability position requires improving the trade balance by about 2% of GDP, or over 3% if low-cost borrowing privileges are lost.
  • The End of Privilege: A Reexamination of the Net Foreign Asset Position of the United States — The authors document that the U.S. net foreign asset position fell by 60 percentage points of U.S. gross domestic product between 2007 and 2021, even as U.S. current account deficits narrowed. They attribute this to a boom in the market valuation of U.S. corporations' non-financial assets, which mechanically raised the value of large foreign equity holdings in U.S. firms.
  • United States’ Changing Net IIP — The United States' net international investment position deficit—the gap between foreign-owned US assets and US-owned foreign assets—is the largest on record and has turned negative across all major asset categories. Because much of the liability is equity, the author argues rebalancing could come through a correction in US equity values rather than a weaker dollar.

AI Summary. Korea's external surplus was offset entirely by purchases of foreign equities rather than debt outflows, with the Bank of Korea selling foreign exchange to support the won instead of accumulating reserves. The author argues a large share of the roughly $1tn U.S. current account deficit is now funded by equity inflows rather than the bond buying that historically financed it.

Brad Setser Council On Foreign Relations
Date Posted:
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The capital account counterpart of South Korea’s record CA surplus is now purchases of foreign equities. “Historically, the US current account deficit has been funded almost exclusively by foreign purchases of bonds,” Setser notes.

Are foreign equity purchases now funding the U.S. current account deficit?

Core argument: A decent share of the flow funding the $1 trillion U.S. current account deficit in 2026 came from equity inflows, a break from the historical pattern in which the deficit was funded almost exclusively by foreign purchases of bonds.

Unsurprisingly, given the weakness in the won, the Bank of Korea didn’t need to recycle Korea’s external surplus—a marked change from ten years ago. In fact, the Bank of Korea sold a bit of foreign exchange over the course of 2025 in an effort to support the won. Korea’s surplus was also interesting for another reason: the entire outflow that offset the surplus came from Korean purchases of foreign equities (and a bit of foreign selling of Korean equities). There was no substantial debt outflow. Historically, the U.S. current account deficit has been funded almost exclusively by foreign purchases of bonds—whether by reserve managers, or life insurers and pension funds seeking higher coupons than they could find in their home markets (both on U.S. Treasuries and U.S. corporate credit). But in 2026, for the first time in a long time, a decent share of the new flow associated with the $1 trillion deficit came from equity inflows. Bottom line: it is a new world. The U.S. deficit isn’t being funded out of reserve growth (though with the recent surge in the foreign holdings of Chinese state banks, it could soon be funded out of shadow reserves) or even by life insurance flows. A big chunk actually came from momentum-driven flows into U.S. equities. Which only adds to my conviction that the dollar isn’t going to be a good hedge for U.S. equity exposure going forward.

Takeaways by Macro Roundup® AI

  1. A decent share of the flow funding the $1 trillion U.S. current account deficit in 2026 came from equity inflows, a break from the historical pattern in which the deficit was funded almost exclusively by foreign purchases of bonds.
  2. The Bank of Korea sold some foreign exchange over the course of 2025 to support the weak won rather than recycling Korea's external surplus, a marked change from ten years earlier.
  3. Korea's external surplus was offset entirely by Korean purchases of foreign equities and a bit of foreign selling of Korean equities, with no substantial debt outflow.

Related Articles:

  • The Coming Asian FX ‘Avalanche’ — Investment firm Eurizon SLJ argues that Asian exporters have hoarded much of their trade surpluses in dollar deposits rather than repatriating them, creating an overhang the firm roughly estimates at $2.5tn in China plus more from Taiwan, Malaysia, and Korea, growing about $500bn a year. It predicts this raises the risk of a non-linear dollar sell-off.
  • Setser On Kearney Reshoring Index — US imports from Southeast Asia have risen, but China's reported exports to the US exceed recorded US imports from China by about 10%, reflecting incentives to shift final assembly and to avoid tariffs. Trade data cannot show how much Chinese content is embedded in rising Southeast Asian imports.
  • Dollar Debasement Begins — The author argues that the dollar's value against emerging-market currencies is the most reliable leading indicator of the dollar's direction, and it has kept making new lows since the Federal Reserve's rate cut. The trade-weighted dollar against other advanced economies remains noisy and within its recent range.

AI Summary. About 18% of California property transfers, nearly 60,000 homes, were made through inheritance last year, up from 12% in 2019 and roughly double the national share of 8.8%, according to real-estate data firm Cotality. That is a record for the state in data going back to 1995.

Nicole Friedman and Veronica Dagher Wall Street Journal
Date Posted:

17.5% of property transfers in California last year were inheritances, up from 12% in 2019. Nationally, 8.8% of property transfers in 2025 were inheritances.

Is inheritance becoming the main path to homeownership in California?

Core argument: Inheritance accounted for about 18% of all California property transfers last year, nearly 60,000 homes, a record in Cotality's data going back to 1995 and up from 12% in 2019.

Inheritance is one of the last reliable ways for younger Californians to own their first home. About 18% of all property transfers in the state last year, representing nearly 60,000 homes, were made through inheritance, according to a recent analysis by real-estate data firm Cotality. That share is a record for California in data going back to 1995, up from 12% in 2019. It is also roughly double the national share of 8.8% last year.

Takeaways by Macro Roundup® AI

  1. Inheritance accounted for about 18% of all California property transfers last year, nearly 60,000 homes, a record in Cotality's data going back to 1995 and up from 12% in 2019.
  2. California's 18% inherited-transfer share was roughly double the national share of 8.8% last year, according to real-estate data firm Cotality.
  3. Inheritance is one of the last reliable paths to first-time homeownership for younger Californians.

Related Articles:

AI Summary. Periods of high immigration to America have tended to be followed by restrictions, including the 1882 ban on Chinese laborers and 1924 quotas that capped European arrivals and barred Asian immigration. Those quotas suppressed immigration for 40 years, and the foreign-born share of the population fell to about 5% by 1970.

Economist Staff Economist
Date Posted:
Is Database:
Database

At 15.8%, the foreign-born population of the US is above its ~15% previous peak in 1890. That prior peak gave way under immigration restrictions such as the Chinese Exclusion Act (1882) and the Immigration Act of 1924.

Do periods of high immigration tend to be followed by restrictions?

Core argument: America's foreign-born population share reached nearly 15% in 1890, a threshold not surpassed again until the mid-2020s, before falling to around 5% by 1970.

After periods of high immigration, restrictions have tended to follow. In 1890 the foreign-born share of America’s population reached nearly 15% (a threshold that would not be surpassed until the mid 2020s). The Chinese Exclusion Act of 1882 banned Chinese labourers from immigrating to America for ten years, the first federal law to restrict immigration explicitly based on race or nationality. In 1924 Congress capped annual arrivals from Europe to just 2% of each nationality’s population residing in America at the time of the 1890 census, and banned immigration from Asia outright. These quotas suppressed immigration for 40 years and prevented America from accepting thousands of Jewish refugees fleeing Nazi Europe. By 1970 America’s foreign-born population had fallen to around 5%.

Takeaways by Macro Roundup® AI

  1. America's foreign-born population share reached nearly 15% in 1890, a threshold not surpassed again until the mid-2020s, before falling to around 5% by 1970.
  2. Congress in 1924 capped annual European arrivals at 2% of each nationality's population residing in America at the 1890 census and banned Asian immigration outright, suppressing immigration for 40 years and preventing America from accepting thousands of Jewish refugees fleeing Nazi Europe.
  3. The Chinese Exclusion Act of 1882 barred Chinese labourers from immigrating to America for ten years, the first federal law to restrict immigration explicitly on the basis of race or nationality.

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  • 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.
  • U.S. Unauthorized Immigrant Population Reached a Record 14 Million in 2023 — Pew Research Center estimates the U.S. unauthorized immigrant population reached an all-time high of 14m in 2023, or 4.1% of the total population, after a record two-year increase of 3.5m. The overall immigrant population peaked above 53m before declining by more than 1m in the first half of 2025.
  • Switzerland To Vote On Plan To Cap Population At 10mn — Switzerland will vote on a proposal to cap its population at 10mn, a limit that could jeopardize agreements with the European Union and restrict companies' access to skilled foreign workers. The population stands at 9.1mn, foreign residents make up 27% of the total, and the population has grown about 25% since 2000.

AI Summary. The General Social Survey shows the share of Americans reporting they are "very happy" fell from 29% before the pandemic to 22%, the largest decline over any comparable span in the survey's 52-year history. The declines were largest among groups that had been happiest, while those who socialize frequently with friends and neighbors fell less.

Aziz Sunderji Home Economics
Date Posted:
Is Database:
Database

According to GSS data, there was a compression of the happiness distribution in America btw 2016–18 and 2022–24. Previously, for example, top earners were 24pp more likely than bottom earners to report being “very happy,” a gap that shrunk to 10pp.

Is American happiness falling most among those who were happiest?

Core argument: The share of Americans reporting they are "very happy" fell from 29% before the pandemic to 22% in the most recent General Social Survey reading, the largest decline over any comparable span in the survey's 52-year history.

American happiness has fallen off a cliff. The General Social Survey has tracked this since 1972. Their data shows the share of Americans reporting they are "very happy" dropped from 29% before the pandemic to 22% in the most recent reading—the largest decline over any comparable span in the survey's 52-year history. The chart shows the shift in the "very happy" distribution across the population, along with the ten demographic groups that experienced the biggest happiness declines. The groups that lost the most happiness are the ones that had the most to begin with. The bottom barely budged. The groups that held up best share one trait: social connection. People who see friends often dropped just 4 points, compared to a 9-point drop among those who see friends rarely. Happiness for those who socialize with neighbors dropped less than for those who rarely do.

Takeaways by Macro Roundup® AI

  1. The share of Americans reporting they are "very happy" fell from 29% before the pandemic to 22% in the most recent General Social Survey reading, the largest decline over any comparable span in the survey's 52-year history.
  2. The demographic groups with the largest happiness declines in the General Social Survey are those that started with the most happiness, while the bottom of the distribution barely moved.
  3. Americans who see friends often showed a 4-point drop in happiness versus a 9-point drop among those who see friends rarely, and those who socialize with neighbors declined less than those who rarely do.

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  • Rising Young Worker Despair in the United States — In the United States, mental despair once peaked in middle age but now declines steadily with age, a shift the authors attribute to rising despair among workers under 40. The hump-shaped age pattern persists among those unemployed or unable to work, while it remains flat for homemakers, students, and retirees.
  • US College Students’ Well-Being — A study of US college students finds moderate-to-severe depression reported by 26% of students at one elite institution, 22% reporting moderate-to-severe anxiety and 10% contemplating suicide. Poorer mental health is associated with being female, little exercise, low grades, and financial aid; financial stress is associated with higher suicidal thoughts.
  • Teens Used To Be Happier. What Changed? — The share of US high school seniors describing themselves as "very happy" peaked at 24.8% and remained around 24.4% before falling to 11.4% at its low, recovering only to 12.7%, well below the 17.9% recorded before the pandemic. The decline coincided with smartphones and social media becoming pervasive.