Edward Conard

Top Ten New York Times Bestselling Author

  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, March 10, 2026

AI Summary. US spending on old-age entitlement programs rose from about 6% of GDP in 2000 to almost 9% in 2023, and had it stayed at its 2000 share the 2023 primary deficit would have been roughly 0.8% of GDP rather than 3.3%. The authors attribute projected further growth to retiring cohort sizes, rising life expectancy, and rising health costs.

Lisa Dettling and Luke Pardue Aspen Economic Strategy Group
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The Baby Boom, greater life expectancy, and rising medical costs sharply increased federal deficits over the past 30 years. If elderly entitlements had stayed at their 2000 share of GDP, the 2023 primary deficit would be ~0.8%, rather than 3.3%, of GDP.

How much does old-age entitlement growth drive the federal deficit?

Core argument: US spending on old-age entitlement programs rose from 2.5% of GDP in the mid-1960s to about 6% in 2000 and almost 9% in 2023, and is projected to keep growing relative to GDP.

In the mid-1960s, spending on old-age entitlement programs was 2.5% of GDP. [It rose to] about 6% of GDP in 2000 to almost 9% in 2023, and is projected to continue to grow relative to GDP. If entitlements for the elderly had remained at their 2000 share of GDP, the 2023 primary deficit would be ~0.8% of GDP rather than 3.3%. The projected growth in these spending programs can be attributed to (1) the size of cohorts expected to enter into retirement (due to past fertility rates and immigration), (2) CBO’s expectation that life expectancy will continue to rise, and (3) rising health costs. Figure 4a shows that cohort sizes are the primary driver of the growth in old-age entitlement spending in the first ten years of CBO’s projections because the still relatively large cohorts born just after the baby boom in 1960–1970 are expected to enter retirement at that time (fertility rates were about 3, on average, from 1960–1970). After 2035, rising life expectancy is the main driver of growth, as the cohorts born in the 1970s and 1980s were much smaller than their predecessors (fertility rates were below 2 in that period). Second, figure 4a shows that if old-age dependency ratios were to remain at their 2024 level throughout the projection, old-age entitlement program spending would grow much more slowly, reaching only 9.8 percent of GDP in 2055 instead of 12.6 percent. Outlays continue to grow even without a rise in the dependency ratio because [per CBO] health costs for Medicare will continue to rise.

Takeaways by Macro Roundup® AI

  1. US spending on old-age entitlement programs rose from 2.5% of GDP in the mid-1960s to about 6% in 2000 and almost 9% in 2023, and is projected to keep growing relative to GDP.
  2. Had entitlements for the elderly stayed at their 2000 share of GDP, the 2023 US primary deficit would have been roughly 0.8% of GDP rather than 3.3%.
  3. If old-age dependency ratios held at their 2024 level, old-age entitlement spending would reach 9.8% of GDP in 2055 instead of 12.6%, with growth continuing because CBO expects Medicare health costs to keep rising.

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.
  • How Much Would Continued Low Fertility Affect the US Standard of Living? — 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.
  • Demographics, Wealth, and Global Imbalances in the Twenty-First Century — Because the elderly hold much more wealth than the young and on average do not draw it down much as they age, the authors' model projects no "great demographic reversal": population aging is estimated to push global rates of return down by about 1.07pp and raise global wealth from 456% to 498% of world GDP.

AI Summary. Local economic distress is associated with wider male-female gaps in educational attainment: men are 1–2% less likely than women to hold a high school diploma in the most prosperous places, versus 4–5% less likely in the most distressed places. In distressed counties, 53% of women but only 43% of men have at least some college education.

Sarah Eckhardt Agglomerations
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American men in distressed counties are 24% less likely to be employed than their peers in prosperous counties, while women are 19% less likely. This is likely downstream from a widening gender gap in high school graduation rates in distressed counties.

Does local economic distress widen male-female gaps in educational attainment?

Core argument: In distressed counties, 53% of women have at least some college education versus 43% of men, a 10 percentage point difference, according to the Distressed Communities Index.

In our latest release of the Distressed Communities Index, we highlighted the very strong relationship between local economic distress and the gap in educational outcomes between men and women. Men in the most prosperous places are 1–2% less likely to have attained a high school diploma than women; men in mid-tier places are 2–3% less likely; and men in the most distressed places are 4–5% less likely. Nationally, 90% of women and 89% of men over 25 have a high school diploma — close to parity. But this relatively small gap in educational attainment is significantly larger in distressed places. When men and women with only a high school diploma, versus those with any college education, are separated out, the attainment gaps widen further. On average, 53% of women in distressed counties have received at least some college education, while only 43% of men have — a 10 percentage point difference.

Takeaways by Macro Roundup® AI

  1. In distressed counties, 53% of women have at least some college education versus 43% of men, a 10 percentage point difference, according to the Distressed Communities Index.
  2. Men are 1–2% less likely than women to have attained a high school diploma in the most prosperous places, 2–3% less likely in mid-tier places, and 4–5% less likely in the most distressed places.
  3. Nationally, 90% of women and 89% of men over 25 hold a high school diploma, close to parity, but the gap is significantly larger in distressed places.

Related Articles:

  • The Geography of American Exceptionalism — The US population is split evenly among urban, suburban, and rural areas, but 64% of those living at suburban densities reside in prosperous or comfortable ZIP codes, versus 36% in rural and 38% in urban ones. County distress scores correlate strongly with life expectancy, with prosperous counties averaging 5.3 years longer.
  • The Great “Transfer”-mation — Government transfers rose from 8.2% of Americans' total personal income in 1970 to 17.6% in 2022, making them the third largest income source after work and investments. The share of U.S. counties drawing a quarter or more of personal income from transfers rose from under 1% in 1970 to 53% in 2022.
  • “Compensate the Losers?” Economic Policy and Partisan Realignment in the US — The authors argue that partisan realignment by education reflects Democrats' declining supply of "predistribution" policies such as job guarantees, higher minimum wages, protectionism, and stronger unions, which less-educated Americans favor while more-educated Americans prefer taxes and transfers. They estimate changing views of the parties' economic policies explain roughly half the shift.

AI Summary. Researchers at the American Enterprise Institute and the Brookings Institution estimate net migration into the US may have turned negative for the first time in at least 50 years. That decline coincided with rising joblessness among US-born workers, whose labor force participation has fallen in recent months to near its lowest level since 2021.

Jonnelle Marte Bloomberg
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While immigration may have been negative in 2025, the native-born unemployment rate is now 4.7%, up from 4.3% in January 2025. The labor force participation rate for native workers hasn’t risen since the start of the immigration crackdown.

Has falling immigration boosted employment for US-born workers?

Core argument: Net migration into the US may have been negative in 2025 for the first time in at least 50 years, according to estimates from researchers at the center-right American Enterprise Institute and the center-left Brookings Institution.

Net migration into the US may have been negative in 2025 for the first time in at least 50 years, according to estimates from researchers at the center-right American Enterprise Institute and center-left Brookings Institution. That squeeze coincided with a rise in joblessness among the native-born, even as some businesses say it’s becoming more challenging to fill positions. The labor participation for prime-age workers is near the highest since 2001, government data published last Friday show, but that of people over 16 who were born in the US has dropped in recent months, and is near the lowest level since 2021. The labor participation for prime-age workers is near the highest since 2001, government data published last Friday show, but that of people over 16 who were born in the US has dropped in recent months, and is near the lowest level since 2021.

Takeaways by Macro Roundup® AI

  1. Net migration into the US may have been negative in 2025 for the first time in at least 50 years, according to estimates from researchers at the center-right American Enterprise Institute and the center-left Brookings Institution.
  2. Labor force participation among US-born people over 16 has dropped in recent months to near its lowest level since 2021, while prime-age participation sits near its highest since 2001, according to government data.
  3. The migration squeeze coincided with rising joblessness among native-born workers, while some businesses say filling positions is becoming more challenging.

Related Articles:

  • Unprecedented ‘Jobless Boom’ Tests Limits of US Economic Expansion — 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.
  • Macroeconomic Implications Of Immigration Flows In 2025 And 2026: January 2026 Update — The authors estimate that job growth consistent with full employment was 20,000–50,000 a month in the second half of 2025, while reported nonfarm payroll growth averaged about 14,500 and unemployment rose 0.3 percentage points. They project immigration policy changes will keep potential employment growth low, reducing GDP growth by roughly 0.2 percentage points in 2025 and 0.1 in 2026.
  • 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.

AI Summary. A young K-12 teacher in New York City earns $62,000 versus $37,000 in Jackson, Mississippi, where teacher pay is the nation's lowest. After adjusting for housing, commuting, taxes, and other cost-of-living differences, the New York City teacher is worse off, suggesting salaries are not a source of savings.

Aziz Sunderji Home Economics
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A young teacher in NYC earns $62,000 dollars, compared to the $37,000 earned by a peer teacher in Jackson, Mississippi. Aziz Sunderji finds that “after housing, commute, taxes, and other cost-of-living differences, the NYC teacher is actually worse off.”

Do higher big-city teacher salaries leave teachers better off after costs?

Core argument: A young K-12 teacher in New York City, the country's most expensive school district, earns $62,000, versus $37,000 for a comparable teacher in Jackson, Mississippi, where teacher pay is the nation's lowest.

A young K-12 teacher in New York City—the most expensive school district in the country—earns $62,000. A comparable teacher in Jackson, Mississippi, where teacher pay is the nation’s lowest, earns $37,000. Could salaries be a source of savings, helping to bring school costs here closer to the national average? The chart suggests not: after housing, commute, taxes, and other cost-of-living differences, the NYC teacher is actually worse off.

Takeaways by Macro Roundup® AI

  1. A young K-12 teacher in New York City, the country's most expensive school district, earns $62,000, versus $37,000 for a comparable teacher in Jackson, Mississippi, where teacher pay is the nation's lowest.
  2. After housing, commute, taxes, and other cost-of-living differences, the New York City teacher is worse off than the Jackson, Mississippi teacher despite the $25,000 higher salary.
  3. Teacher salaries appear unlikely to be a source of savings for bringing New York City school costs closer to the national average.

Related Articles:

  • Where is Standard of Living the Highest? Local Prices and the Geography of Consumption — The authors estimate that geographical differences in cost of living are especially large for low-income US households, and that expensive cities offer college graduates a standard of living similar to affordable cities while offering less-educated households a lower one. A high school dropout household moving from the most affordable to the most expensive commuting zone would see consumption fall 18.5%.
  • Housing and the American Worker — Wages net of housing costs were once substantially higher in high-density areas than low-density areas for workers both with and without college education, but over the past half-century that urban wage premium has persisted only for college-educated workers, not for those with a high school degree or less.
  • The Determinants Of Declining Internal Migration — A 10% increase in wages where people live is associated with 3.5% less migration, while a 10% increase in destination wages is associated with 7.8% more migration; a 10% rise in destination home prices is associated with 2.6% less migration. The authors find wage responses alone would have raised migration rates, but housing-related factors more than offset them.

AI Summary. Chinese exports rose nearly 22% year-over-year in the first two months of 2026, exceeding expectations and producing a record trade surplus for the period. Growth is concentrated in less labor-intensive goods such as batteries, cars and chips, while an alternative wage measure sits near its lowest level outside the pandemic.

Bloomberg Staff Bloomberg
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In the first two months of the year, China’s exports were 22% above their level a year earlier. A Goldman analysis found that as of Q3 2025, wages had grown at close to their lowest y/y level on record, excluding the pandemic period.

Does surging export growth lift wages for China's factory workers?

Core argument: Chinese exports rose almost 22% from a year earlier in the first two months of 2026, exceeding expectations and producing a record trade surplus for the period, according to official data.

Official data on Tuesday showed Chinese exports surged almost 22% from a year earlier in the first two months of 2026, an increase that was more than expected and resulted in a record trade surplus for the period. Future technologies such as batteries, cars and chips — deemed essential for competing with the US — are taking a larger share of exports, but those products are less labor intensive. Perhaps more alarming for global trade, the trend only appears set to get worse in the short term as an explosion of AI and robotics spawns so-called dark factories that require no human workers. An alternative measure of China’s wage growth compiled by Goldman Sachs is hovering around the lowest level outside the pandemic in data going back to the beginning of the century. Further masking the pain is gig work, which now accounts for about 40% of urban employment.

Takeaways by Macro Roundup® AI

  1. Chinese exports rose almost 22% from a year earlier in the first two months of 2026, exceeding expectations and producing a record trade surplus for the period, according to official data.
  2. Batteries, cars and chips — technologies deemed essential for competing with the US — are taking a larger share of Chinese exports, but those products are less labor intensive, and AI and robotics are spawning dark factories requiring no human workers.
  3. An alternative measure of Chinese wage growth compiled by Goldman Sachs is hovering near its lowest level outside the pandemic in data going back to the beginning of the century, with gig work now about 40% of urban employment.

Related Articles:

  • The True Cost of China’s Falling Prices — Prices fell for 51 of 67 consumer items tracked over a two-year period in China, while the broader GDP deflator, which includes upstream sectors, declined for 10 straight quarters, indicating deflation is more entrenched in industry. The share of "zombie" firms whose profits cannot cover debt interest rose from 19% to 34% over five years.
  • China’s Trade Surplus, Part I — China's very high investment rates, combined with a shrinking workforce and slowing productivity, produce sharply diminishing returns, making its decades-old high-savings, high-investment growth model unsustainable. The author argues China's leaders resist a pivot toward consumption because of ideology and geopolitical ambition, with the leadership rejecting welfare spending as breeding dependency.
  • Sticking with What Works: Raising GDP Forecast on China’s Manufacturing Push — Stronger Chinese growth driven by export-oriented manufacturing may not produce net positive spillovers: for every 1pp export-driven boost to China's GDP, other economies may see a 0.1–0.3pp drag, with high-tech producers such as Europe and Japan facing greater pressure. Cheaper Chinese goods continue to exert a disinflationary impulse.

Wednesday, March 11, 2026

AI Summary. The International Energy Agency's member countries will release 400m barrels of oil from emergency stocks, the largest such release on record, to counter crude prices driven up by the war with Iran. Analysts estimate the release could fully offset lost supply only if the conflict ends soon.

Matthew Dalton, Bojan Pancevski and Laurence Norman Wall Street Journal
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The IEA is facilitating the release of 400mm barrels of oil from emergency stockpiles to offset the disruption from the “near total” closure of the Strait of Hormuz. A Capital Economics analysis finds the war has reduced oil supply by ~10mm bpd.

Can a record strategic reserve release offset war-driven oil supply losses?

Core argument: The International Energy Agency said member countries will release 400 million barrels from emergency stocks, the largest reserves distribution in history, in a bid to bring down crude prices that have soared during the war with Iran.

The International Energy Agency said its member countries would release 400 million barrels of oil from their emergency stocks, the largest reserves distribution in history, in a bid to bring down crude prices that have soared during the war with Iran. The release of strategic oil reserves could fully offset the lost supply due to the war, but only if the conflict ends soon, according to an analysis by Capital Economics. In the firm’s most “benign” scenario, if it takes a month for oil flows to normalize, roughly 350 million barrels of oil supply could be lost because the crisis is reducing supply by more than 10 million barrels a day. IEA members hold 1.2 billion barrels in public stocks, plus another 600 million in mandatory commercial inventories, IEA Executive Director Fatih Birol said Monday. By rough calculation, that is around 124 days’ worth of lost supply from the Gulf.

Takeaways by Macro Roundup® AI

  1. The International Energy Agency said member countries will release 400 million barrels from emergency stocks, the largest reserves distribution in history, in a bid to bring down crude prices that have soared during the war with Iran.
  2. Capital Economics estimates the strategic reserve release could fully offset lost supply only if the conflict ends soon, with roughly 350 million barrels lost in its most "benign" scenario of a month to normalize flows, as the crisis cuts supply by more than 10 million barrels a day.
  3. IEA members hold 1.2 billion barrels in public stocks plus 600 million barrels in mandatory commercial inventories, IEA Executive Director Fatih Birol said, around 124 days' worth of lost Gulf supply by rough calculation.

Related Articles:

  • The Long-Feared Persian Gulf Oil Squeeze Is Upon Us — With crude unable to reach world markets through the Strait of Hormuz, Iraq has cut output by more than two-thirds and producers in Kuwait and Abu Dhabi have slowed production as storage tanks fill. JPMorgan Chase analysts estimate regional daily output could fall by around 9m barrels, close to a tenth of global demand.
  • Global Economics Comment: Global Economic Impacts of the War in Iran — The main economic risk to major economies from the war in Iran is that higher energy prices lift inflation and slow growth, with oil near $80/bbl, up 14% since late February. Analysts project oil moderating to $76/bbl and then $65/bbl as the risk premium fades in a structurally oversupplied market.
  • The Oil Pipelines That Could Decide the Iran War — Saudi Arabia's 746-mile East-West pipeline to the Red Sea can bypass the Strait of Hormuz for up to 5m barrels a day, and a UAE pipeline to the Gulf of Oman for 1.5m, against roughly 20m barrels of daily crude and refined product flows through the strait.

AI Summary. About half of US counties lost population over a recent decade, a decline the authors attribute almost entirely to lower fertility rather than migration. In school district data, the per-student cost increases associated with 10% greater enrollment decline were 4x larger than the cost savings associated with 10% greater enrollment growth.

Jeffrey Clemens Aspen Economic Strategy Group
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The per-student cost increase from a 10% greater enrollment decline were 4 times larger than the cost decreases associated with a 10% greater enrollment increase, illustrating the fiscal concerns associated with retrenchment due to population decline.

Does population decline raise local government costs more than growth lowers them?

Core argument: Roughly half of US counties lost population from 2010 to 2020, a change explained almost entirely by declines in fertility rather than shifts in migration patterns.

Roughly half of US counties lost population from 2010 to 2020, explained almost entirely by declines in fertility rather than changes in migration patterns. Population decline confronts school districts, health systems, public-safety agencies, and transit authorities with the challenges of managing retrenchment. School districts, many of which have already faced substantial enrollment declines over the last quarter-century, provide leading indicators regarding the nature of these challenges. Both school districts and the subnational public sector as a whole exhibit evidence of economies of scale over the long run. In both settings, 10% more population growth has predicted just over 2% slower growth in per-capita expenditures historically. Because many school 15 districts have experienced population decline, their experience sheds light on the asymmetric effect of population contraction relative to growth; in the data presented above, the per-enrollee cost increases associated with 10% greater enrollment decline were four times larger than the cost decreases associated with 10% greater enrollment increase. Evidence points to the difficulty of closing underutilized facilities, frictions to retrenchment on labor costs, and the burdens of underfunded pension and retiree health liabilities as important challenges to jurisdictions undergoing population decline.

Takeaways by Macro Roundup® AI

  1. Roughly half of US counties lost population from 2010 to 2020, a change explained almost entirely by declines in fertility rather than shifts in migration patterns.
  2. For both school districts and the subnational public sector, 10% more population growth has historically predicted just over 2% slower growth in per-capita expenditures, evidence of long-run economies of scale.
  3. In school district data, per-enrollee cost increases associated with 10% greater enrollment decline were four times larger than the cost decreases associated with 10% greater enrollment increase.

Related Articles:

  • Plunging US Birth Rate Leaves Too Many Colleges With Too Few Kids — A falling US birth rate is projected to shrink the pool of college-age Americans, leaving schools with empty classrooms. Many smaller, lesser-known colleges are already firing professors, cutting liberal arts courses in favor of science and technology programs, or closing entirely.
  • Does School Spending Matter? The New Literature on an Old Question — Reviews of recent research find increased school spending is associated with improved student outcomes, with 92% of 13 multi-state studies reporting a statistically significant positive relationship. The studies span school finance reforms, tax limits, and recession-based analyses, and the authors interpret the consistent findings as evidence of a causal link.
  • Changes in the U.S. Economy and Rural-Urban Employment Disparities — Long-term shifts in the US economy — technological innovation and automation, declines in some energy extraction, greater globalization, and the move to a knowledge-based economy — have coincided with disproportionately negative employment outcomes in rural communities, especially for prime working-age men and those without a high school degree.

AI Summary. JPMorgan has marked down the value of certain loans in private credit funds' portfolios that serve as collateral for the funds' borrowing from the bank, limiting how much it will lend against them. Unlike most banks, which require triggers such as missed interest payments, JPMorgan reserves the right to revalue those assets at any time.

Jill Shah and Eric Platt Financial Times
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JPMorgan has marked down the value of loans made to software companies by private credit groups. These loans are collateral for JPM’s lending to private ventures more generally, reducing the bank’s loans to credit providers seen as increasingly risky.

Are banks tightening how much they lend against private credit collateral?

Core argument: JPMorgan has marked down certain loans held by private credit funds — specifically loans to software companies — which serve as collateral for those funds' borrowing from the bank, according to people familiar with the matter.

JPMorgan has clamped down on its lending to private credit groups, with bankers looking to cut risk as concerns mount over the credit quality of companies in their stables. JPMorgan is somewhat of an outlier in the private credit financing business as it reserves the right to revalue assets at any time. Most other banks require triggers such as missed interest payments. The bank informed private credit lenders that it had marked down the value of certain loans in their portfolios, which serve as the collateral the funds use to borrow from the bank, according to people familiar with the matter. The move will limit how much money JPMorgan lends to private credit groups against those loans going forward — a sign traditional Wall Street banks are growing cautious of an industry that has grown rapidly as non-bank lenders became top creditors to higher-risk borrowers. The loans that have been devalued are to software companies.

Takeaways by Macro Roundup® AI

  1. JPMorgan has marked down certain loans held by private credit funds — specifically loans to software companies — which serve as collateral for those funds' borrowing from the bank, according to people familiar with the matter.
  2. The markdowns will limit how much JPMorgan lends to private credit groups against those loans going forward, as its bankers seek to cut risk amid mounting concerns over the credit quality of companies in private credit portfolios.
  3. JPMorgan is somewhat of an outlier in private credit financing because it reserves the right to revalue assets at any time, while most other banks require triggers such as missed interest payments.

Related Articles:

  • Data Update 7 for 2026: Debt and Taxes — The author argues that companies are collectively over-investing in artificial intelligence and that markets will correct when that belief dissipates. Because debt, particularly private credit, now finances much of this investment, the author contends a correction would spread beyond equity holders and produce a banking-style crisis driven by non-bank lenders.
  • Has Private Credit Broken the High-Yield Spread Signal? — The high-yield bond market has stayed at about $1.4tn while private credit assets have grown to as much as $2tn, and the highest-rated BB portion of the high-yield index has risen from 41% to 51%. Private markets have shifted riskier borrowers out of high yield, making that index safer.
  • Private Credit: Characteristics and Risks — Private credit loans are negotiated bilaterally outside traditional regulatory requirements and are illiquid because no secondary market exists, leaving investors expected to hold them to maturity or face steep losses if they need to exit. Scarce data on this growing form of nonbank lending makes assessing its risks difficult.

AI Summary. The author estimates a 14.1% wage gap between H-1B visa workers and comparable U.S.-born workers after controlling for age, gender, education, geography, and occupation. Competing research finds a smaller gap, but the author argues it wrongly compares lottery winners' wages to native wages from before the visa recipients could begin earning.

George Borjas City Journal
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Responding to He and Ozimek’s claim that his paper overstates the wage gap, Borjas argues “H-1B workers should be compared to native workers in the year when they will be earning the bulk of the salary, not in the year when they were awarded the visa.”

How large is the wage gap between H-1B and native workers?

Core argument: The author estimates a 14.1% H-1B wage gap using H-1B wage data from the FY2021–FY2024 lotteries and the 2023 American Community Survey, controlling for age, gender, education, geography, and occupation, with figures inflation-adjusted.

The table summarizes the results of both my analysis and that of He-Ozimek. The first row reports a 14.1% wage gap estimated using H-1B wage data from the FY2021-FY2024 lotteries and the 2023 American Community Surveys (ACS), as I did in my original paper, [controlling for] age, gender, education, geography, and occupation. These numbers are inflation-adjusted, as the NBER paper notes. Row 2 presents the results implied by the He-Ozimek research design, which suggest a smaller wage gap, depending on the exact specification. There is, however, a fundamental error in that design. He-Ozimek calculate the H-1B wage gap by comparing the wage of the FY2024 lottery winners with the wage of natives in the 2023 ACS. H-1B workers should be compared to native workers in the year when they will be earning the bulk of the salary, not in the year when they were awarded the visa. The FY2024 H-1B lottery was conducted in March 2023. The actual employment of H-1B recipients begins after their H-1B status is approved and after the federal fiscal year begins on October 1, 2023; the earliest that FY2024 recipients could actually start earning was in the last quarter of 2023.

Takeaways by Macro Roundup® AI

  1. The author estimates a 14.1% H-1B wage gap using H-1B wage data from the FY2021–FY2024 lotteries and the 2023 American Community Survey, controlling for age, gender, education, geography, and occupation, with figures inflation-adjusted.
  2. The He-Ozimek research design implies a smaller H-1B wage gap depending on specification, but the author identifies a fundamental error in comparing FY2024 lottery winners' wages with native wages in the 2023 ACS.
  3. The FY2024 H-1B lottery was conducted in March 2023, and recipients could not begin earning until the last quarter of 2023 at the earliest, after H-1B approval and the October 1, 2023 start of the federal fiscal year.

Related Articles:

  • The H-1B Wage Gap, Visa Fees, and Employer Demand — An analysis merging Labor Department, Homeland Security, and American Community Survey data estimates the average H-1B visa worker earns about 16% less than a comparable US-born worker, implying payroll savings near $100,000 over a six-year visa term. Simulations suggest a $150,000–$200,000 visa fee would barely reduce hiring while raising $10bn–$20bn annually.
  • The Flawed Paper Behind Trump’s $100,000 H-1B Fee — Correcting for a mismatch in survey years and for comparing workers' place of work to natives' place of residence cuts the estimated H-1B wage gap to roughly one-third of the original claim. The remaining average masks that H-1B workers aged 21–22 earn about a 20% premium over comparable native-born workers, while a shortfall appears only after age 34.

AI Summary. Ukraine has produced drones built without Chinese components, though mass production remains unlikely because Chinese parts are much cheaper and China's manufacturing dominance makes any drone hard to classify as truly "China-free." Two Ukrainian companies making such drones were selected among 11 firms to compete for US Defense Department contracts for low-cost attack drones.

Maria Varenikova New York Times
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Two Ukrainian firms have built “China-free” supply chains for drone manufacturing. Overall, 38% of Ukrainian drones are manufactured with Chinese components, down from close to 100% at the start of 2024.

Can drones be built without Chinese components at scale?

Core argument: Two Ukrainian companies that have built "China-free" drones were selected to compete for contracts in a Pentagon "drone dominance program" under which the United States plans to buy thousands of low-cost attack drones.

Ukraine will not be mass-producing drones with no Chinese components anytime soon, because it’s still much cheaper to use them. Given China’s dominance of global manufacturing, it is hard to define any drone as truly “China-free.” Many components made outside China still contain Chinese parts or raw materials. But Ukrainian officials believe it is important to make drones with as few components from China as possible, and to be able to continue making drones if Chinese supplies should be cut off. Two companies in Ukraine that have built “China-free” drones were picked to compete for contracts in a Pentagon “drone dominance program” under which the United States plans to buy thousands of low-cost attack drones. One of the companies, Ukrainian Defense Drones Tech Corporation, where the men were soldering circuit boards in the basement workshop, was among 11 in all selected last week for possible American drone orders.

Takeaways by Macro Roundup® AI

  1. Two Ukrainian companies that have built "China-free" drones were selected to compete for contracts in a Pentagon "drone dominance program" under which the United States plans to buy thousands of low-cost attack drones.
  2. Ukraine will not mass-produce drones without Chinese components soon because using Chinese parts remains much cheaper, and Ukrainian officials aim instead to minimize Chinese content and sustain production if Chinese supplies are cut off.
  3. China's dominance of global manufacturing makes it hard to define any drone as truly "China-free," since many components made outside China still contain Chinese parts or raw materials.

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