Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…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 fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, April 8, 2026

AI Summary. Anthropic says its Claude Mythos Preview model can autonomously conduct security research, including finding and exploiting previously unknown software flaws, often prompted by amateurs. The company claims the model has identified thousands of bugs across major operating systems and browsers, including a 27-year-old flaw in the OpenBSD operating system.

Kevin Roose New York Times
Date Posted:

Anthropic’s latest model is capable of identifying previously unknown security vulnerabilities in software. The new model has been given to major technology companies to “find and patch security vulnerabilities in critical software programs.”

Can AI models autonomously uncover software vulnerabilities that existing tools miss?

Core argument: Anthropic claims Claude Mythos Preview has identified "thousands" of bugs and vulnerabilities in popular software, including every major operating system and browser.

[Anthropic] executives say Claude Mythos Preview is already capable of carrying out autonomous security research, including scanning for and exploiting so-called zero-day vulnerabilities in critical software programs, flaws that are unknown even to the software’s developer. These efforts can often be triggered by amateurs with simple prompts. The company claims that the new model has already identified “thousands” of bugs and vulnerabilities in popular software programs, including every major operating system and browser. One of the vulnerabilities Claude found, the company said, was a 27-year-old bug in OpenBSD, an open-source operating system that was designed to be difficult to hack. Many internet routers and secure firewalls incorporate OpenBSD’s technology. Another was a longstanding issue in a piece of popular video software that automated testing tools had scanned five million times, without finding any problems.

Takeaways by Macro Roundup® AI

  1. Anthropic claims Claude Mythos Preview has identified "thousands" of bugs and vulnerabilities in popular software, including every major operating system and browser.
  2. Anthropic executives say Claude Mythos Preview can autonomously scan for and exploit zero-day vulnerabilities — flaws unknown even to a software's developer — often triggered by amateurs using simple prompts.
  3. Among the flaws Anthropic says Claude found were a 27-year-old bug in OpenBSD, whose technology is used in many internet routers and secure firewalls, and a longstanding issue in video software that automated testing tools had scanned five million times without detecting.

Related Articles:

  • Claude Code is the Inflection Point — Claude Code authors 4% of public GitHub commits, and the authors project it will reach 20%+ of daily commits by the end of 2026 and drive revenue growth that lets Anthropic outgrow OpenAI. They argue falling costs and rising quality of AI tokens have inverted the coder-tool relationship.
  • Emerging Details of Chinese Hack Leave U.S. Officials Increasingly Concerned — U.S. intelligence and national security officials have told major telecommunications companies to find a permanent way to expel Chinese hackers from the deepest parts of the nation's communications networks. Critical parts of the system date to the late 1970s or early 1980s and are too old to upgrade with modern cybersecurity protections.
  • Society’s Technical Debt and Software’s Gutenberg Moment — Every wave of technological innovation has been unleashed by something costly becoming cheap enough to waste, and large language models are collapsing the cost and complexity of producing software. The authors argue that decades of underproduced software have left society with immense technical debt that is poised to contract, releasing a wave of innovation.

AI Summary. Annual default rates of 10% for private credit direct lending are within the historical range, and with recovery assumptions implying roughly 50% losses given default, realized losses could run near 5% a year, or 10%+ for weaker credits. Many private credit funds are slow to mark down loans while allowing redemptions at 100 cents on the dollar.

Greg Obenshain Verdad
Date Posted:

Obenshain argues the stress in direct lending isn’t a default story but a flow story, which rhymes with how the junk bond market behaved in the early 1990s. “First, we need the outflows. Then the markdowns. Then come the defaults and the surprises.”

Are private credit funds valuing risky loans above what history supports?

Core argument: Annual default rates of 10% for private credit direct lending fall within the historical range, and at 50% loss given default that would imply realized default losses of 5% per year for a few years, rising to 10% or more for CCC-quality loans.

We don’t know where the default rate will go for private credit direct lending, but spikes to annual default rates of 10% are well within the historical range. And the highly levered, unitranche loans we are concerned with are not the same kind of secured loans that are in the Moody’s historic loss dataset. A better estimate may be losses on unsecured bonds, which have averaged 68%. If we split the difference, that would imply 50% losses given default. If default rates spike to 10%, realized default losses could run at 5% for a few years. For loans that are closer to CCC quality, those losses could run at or above 10% per year. These kinds of default losses are not unprecedented. According to Moody’s, the realized loss rate on single B bonds in 1990 was 8.5%, and in 1991 it was 8.3%. Right now, many private credit funds are slow to mark down their loans yet offer investors the ability to redeem their investments at 100 cents on the dollar. On average, single B debt does not trade at 100 cents on the dollar, and in times of stress can trade much lower. The redemption pressure we are seeing is completely rational. Private credit funds are offering to pay 100 cents on the dollar for assets that historically do not maintain that mark.

Takeaways by Macro Roundup® AI

  1. Annual default rates of 10% for private credit direct lending fall within the historical range, and at 50% loss given default that would imply realized default losses of 5% per year for a few years, rising to 10% or more for CCC-quality loans.
  2. Losses on unsecured bonds have averaged 68%, which may be a better estimate than Moody's historic secured-loan loss dataset for highly levered unitranche loans, with 50% loss given default splitting the difference.
  3. Moody's puts the realized loss rate on single B bonds at 8.5% in 1990 and 8.3% in 1991, indicating such default losses are not unprecedented.

Related Articles:

  • JPMorgan Marking Down Loan Portfolios Of Private Credit Groups — 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.
  • 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.
  • 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.

AI Summary. The direct lending market is roughly $2tn, or about 3% of total US household and business debt outstanding, compared with mortgages accounting for about 60% of total household and corporate debt at the peak of the housing bubble.

Torsten Sløk Apollo
Date Posted:
Is Database:
Database

Torsten Sløk notes the direct lending market is ~$2T or 3% of household and non-financial debt outstanding. To provide context, he shows that in 2006, on the eve of the crisis, mortgages accounted for ~60% of such debt.

Is direct lending too small to threaten the financial system?

Core argument: The direct lending market totals roughly $2 trillion, about 3% of total debt outstanding for US households and businesses.

The direct lending market is roughly $2 trillion, or about 3% of total debt outstanding for US households and businesses. By comparison, mortgages accounted for about 60% of total household and corporate debt at the peak of the housing bubble in 2006.

Takeaways by Macro Roundup® AI

  1. The direct lending market totals roughly $2 trillion, about 3% of total debt outstanding for US households and businesses.
  2. Mortgages accounted for about 60% of total US household and corporate debt at the peak of the housing bubble in 2006, compared with direct lending's roughly 3% share.

Related Articles:

  • JPMorgan Marking Down Loan Portfolios Of Private Credit Groups — 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.
  • 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.

AI Summary. Among major economies, the UK has the highest 30-year government bond yield differential, which jumped during the 2022 liability-driven investment crisis and never normalized, leaving a gradually growing risk premium priced in. Japan's differential remains negative and far below other countries, which the author argues explains the weak yen and expects further declines.

Robin Brooks Robin Brooks Substack
Date Posted:

Brooks argues the 30-year trade-weighted differential of several advanced economies suggests, “Japan is in trouble, as is the UK and much of the Euro periphery…The US is the cleanest shirt in the hamper.”

How do long-term bond yield gaps reveal which countries lack fiscal space?

Core argument: The UK has the highest 30-year government bond yield differential of the countries compared, with the gap jumping during the 2022 LDI blow-up and never normalizing, leaving a permanent risk premium that is gradually growing.

The left chart shows monthly data for 30-year government bond yields. The right chart shows the corresponding 30-year yield differentials. A couple of points are worth making. First, the UK has the highest differential, so has the biggest problem. What’s interesting is that its differential jumped during the LDI blow-up in 2022 and never normalized. A permanent risk premium has been priced in and is gradually growing. Second, as much as Japan’s differential has risen, it remains negative and far below most other countries. This - in a nutshell - is why the Yen is so weak and in my opinion will keep falling. Japan’s long-term yields are still far below where they should be given the monstrous level of public debt. Third, without ECB yield caps with things like the Transmission Protection Instrument (TPI) and verbal as well as actual intervention, much of the Euro periphery plus France would have long-term yields in the double digits. I’m glossing over that here, but the reality is that - without the ECB - much of the Euro zone would be in severe crisis.

Takeaways by Macro Roundup® AI

  1. The UK has the highest 30-year government bond yield differential of the countries compared, with the gap jumping during the 2022 LDI blow-up and never normalizing, leaving a permanent risk premium that is gradually growing.
  2. Japan's 30-year yield differential remains negative and far below most other countries despite rising, which the author identifies as the reason the Yen is so weak and expects it to keep falling.
  3. Without ECB yield caps such as the Transmission Protection Instrument and both verbal and actual intervention, much of the Euro periphery plus France would have long-term yields in the double digits, the author argues.

Related Articles:

  • $14 Trillion in IG Supply Coming to the Market — About $14tn of investment-grade fixed income supply is coming to market, combining roughly $10tn of US government debt to be refinanced over the next 12 months, a budget deficit near $2tn, and about $2tn of gross corporate bond issuance boosted by data-center builders. The author argues this growing supply is putting upward pressure on interest rates and credit spreads.
  • Global Debt Report 2026 — Gross central government borrowing across OECD countries rose 7% to a record $17tn, about 23% of GDP, and is projected to reach roughly $18tn, or 24% of GDP. The United States and Japan account for close to 80% of the area's refinancing requirements, with the US share rising from 57% to 70%.
  • Are Government Bonds Safe in Times of War and Pandemic? — Government bonds severely underperform in wartime, in absolute terms and relative to equities, housing, and economic growth, unlike in financial crises when bonds tend to outperform stocks. The U.S. and U.K. reduced war-driven debt-to-GDP ratios without explicit default, using surprise inflation and financial repression that shifted fiscal burdens onto bondholders.

AI Summary. Peacetime defense spending booms—when the two-year average of defense outlays rises 1pp of GDP—are followed by sizable increases in real GDP, government consumption, investment, and the capital stock, with a short-lived rise in inflation. Imports accelerate while exports are broadly unchanged, widening current account and trade deficits.

Hippolyte Balima, Jared Bebee, Colombe Ladreit, Andresa Lagerborg, et al. International Monetary Fund
Date Posted:
Is Database:
Database

An IMF report notes defense spending booms are associated with an increase in TFP “over longer horizons, consistent with evidence showing that the R&D component of defense spending can boost innovation and crowd in private R&D spending.”

How do defense spending booms affect output, inflation, and productivity?

Core argument: Peacetime defense spending booms, defined as a 1pp of GDP rise in the two-year moving average of defense spending, are followed by a sizable increase in real GDP, a short-lived rise in inflation, and a roughly 9% increase in government consumption within three years.

Defense spending booms [periods when the two-year moving average of defense spending increases 1pp of GDP] in peacetime are followed by a sizable increase in real GDP and by a short-lived rise in inflation. Consistent with a large share of the stimulus being allocated to personnel and operating expenses, government consumption rises by about 9% within three years. Total investment shows a comparable positive response, reflecting both higher public investment in defense equipment and infrastructure and increased private investment, particularly in defense-related industries. Turning to the external sector, stimulus-driven demand leads to wider external imbalances, as both the current account and trade balance deteriorate. Imports accelerate—reflecting leakages from defense spending and stronger demand for foreign goods—while exports remain broadly unchanged. Defense spending booms are associated with a subsequent increase in the stock of capital, in line with the documented boost to investment, and an increase in total factor productivity, which may be explained by changes in capacity utilization and learning by necessity, as firms adapt to surging demand by improving productivity when facing capacity constraints. Total factor productivity [loses] its statistical significance once capacity utilization is controlled for. However, defense spending booms are followed by greater total factor productivity over longer horizons, consistent with evidence showing that the R&D component of defense spending can boost innovation and crowd in private R&D spending.

Takeaways by Macro Roundup® AI

  1. Peacetime defense spending booms, defined as a 1pp of GDP rise in the two-year moving average of defense spending, are followed by a sizable increase in real GDP, a short-lived rise in inflation, and a roughly 9% increase in government consumption within three years.
  2. Defense spending booms widen external imbalances, with both the current account and trade balance deteriorating as imports accelerate on leakages from defense spending and stronger demand for foreign goods while exports remain broadly unchanged.
  3. Defense spending booms are associated with a subsequent increase in the capital stock and in total factor productivity, though the productivity effect loses statistical significance once capacity utilization is controlled for, while greater total factor productivity follows over longer horizons.

Related Articles:

  • The Intellectual Spoils of War? Defense RD, Productivity and International Spillovers — The authors estimate that a 10% increase in government-financed R&D, largely defense, is associated with a 4.3% rise in privately funded R&D across OECD countries, indicating "crowding in" rather than "crowding out." They also find international spillovers raise private R&D abroad, though the overall effect on US productivity growth is modest.
  • The Cold War and the U.S. Labor Market — The authors estimate that declining U.S. military procurement spending from the 1950s to the 1990s explains roughly 18–30% of the decline in manufacturing employment and just under 10% of the rise in top-decile income inequality. They argue Cold War procurement raised demand for manufacturing workers and helped sustain tight labor markets for low-skill workers.
  • 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.

Thursday, April 9, 2026

AI Summary. Estimates of the quantum computing power needed to run Shor's algorithm and break encryption have fallen from billions of qubits to a million, while existing machines have hundreds. Researchers have announced a design requiring only tens of thousands of qubits and an implementation of the algorithm 10x as efficient as the prior best.

Charlie Wood Quanta Magazine
Date Posted:

Two separate breakthroughs at Google and CalTech suggest the ability to run Shor’s algorithm, which would break the vast majority of current encryption, is a few years away. Google is planning on migrating to post-quantum cryptography by 2029.

Are quantum computers moving closer to breaking modern encryption?

Core argument: Caltech quantum physicists unveiled a design for a quantum computer that could break encryption with only tens of thousands of qubits, down from earlier estimates of billions and a more recent estimate of a million, and formed a company to build it.

For 30 years, Shor’s algorithm has been a security threat in theory only. Physicists initially estimated that they would need a colossal quantum machine with billions of qubits — the elements used in quantum calculations — to run it. That estimate has come down drastically over the years, falling recently to a million qubits. But it has still always sat comfortably beyond the modest capabilities of existing quantum computers, which typically have just hundreds of qubits. However, two different groups of researchers have just announced advances that notably reduce the gap between theoretical estimates and real machines. A star-studded team of quantum physicists at the California Institute of Technology went public with a design for a quantum computer that could break encryption with only tens of thousands of qubits and said that it had formed a company to build the machine. And researchers at Google announced that they had developed an implementation of Shor’s algorithm that is ten times as efficient as the best previous method.

Takeaways by Macro Roundup® AI

  1. Caltech quantum physicists unveiled a design for a quantum computer that could break encryption with only tens of thousands of qubits, down from earlier estimates of billions and a more recent estimate of a million, and formed a company to build it.
  2. Google researchers announced an implementation of Shor's algorithm that is ten times as efficient as the best previous method.
  3. Existing quantum computers typically have just hundreds of qubits, short of the estimates for running Shor's algorithm against encryption.

Related Articles:

  • An Old Problem Could Stop The U.S. From Leading On Quantum Computers — Many quantum computers depend on dilution refrigerators, produced by a few small firms in the US, Britain and Finland, and on critical minerals such as niobium, concentrated in Brazil, and tantalum, mined in Africa and mostly processed in China. China has announced mass production of a domestic dilution refrigerator and has been buying niobium mines.
  • Google Unveils Quantum Computing Breakthrough on Willow Chip — Google says its "Quantum Echoes" algorithm, run on its Willow quantum chip and detailed in a paper in Nature, is verifiable on other quantum computers and ran 13,000x faster than the world's best classical supercomputer. Google says the advance points to useful quantum applications in medicine and materials science within five years.
  • Google and IBM Believe First Workable Quantum Computer Is In Sight — IBM and Google each say they are on course to build an industrial-scale quantum computer by the end of the decade, with IBM publishing a blueprint filling in missing pieces from its earlier designs. The Pentagon's advanced research agency has begun studying quantum companies to identify which could reach practical size fastest.

AI Summary. Provisional data from the Centers for Disease Control and Prevention put the U.S. general fertility rate at a record low of 53.1 births per 1,000 women ages 15 to 44, with childbearing shifting toward older women. The total number of births held at roughly 3.6m for a sixth straight year.

Anthony DeBarros, Paul Overberg and Andrea Petersen Wall Street Journal
Date Posted:
Is Database:
Database

The US’s total fertility rate likely hit a record low of 1.57 in 2025, according to provisional CDC data. Childbearing continued to shift toward older women with the birthrate for American women 35–39 exceeding that of women 20–24 for the first time.

Why has the U.S. fertility rate fallen to a record low?

Core argument: The U.S. general fertility rate fell to a record low of 53.1 births per 1,000 women ages 15–44 in 2025, according to provisional CDC data, with childbearing continuing to shift toward older women.

The nation’s fertility rates hit record lows in 2025 as childbearing continued to shift toward older women, according to new federal data released Thursday. For the sixth straight year, the number of children born in the U.S. remained at roughly 3.6 million. The number of births per 1,000 women ages 15 to 44—the general fertility rate—reached a record low of 53.1 in 2025, according to provisional data from the Centers for Disease Control and Prevention. The rate has mostly headed down since 2007, a prerecession peak when millennial women started to enter their prime childbearing years. While non-Hispanic white women saw a small increase in births last year, births by women of other racial and ethnic groups declined slightly.

Takeaways by Macro Roundup® AI

  1. The U.S. general fertility rate fell to a record low of 53.1 births per 1,000 women ages 15–44 in 2025, according to provisional CDC data, with childbearing continuing to shift toward older women.
  2. The number of U.S. births held at roughly 3.6 million for the sixth consecutive year, even as the fertility rate has mostly declined since its 2007 prerecession peak, when millennial women began entering their prime childbearing years.
  3. Non-Hispanic white women saw a small increase in births in 2025, while births by women of other racial and ethnic groups declined slightly, according to the CDC data.

Related Articles:

  • The US Has One of the Highest Fertility Rates Among Peer Countries — The tempo-adjusted fertility rate, which accounts for shifts in the timing of births, shows the US rate falling since roughly 2009-10 and dropping below the 2.1 births-per-woman replacement level around 2017, reaching 1.82 in 2022. The US decline is less severe than in many peer countries.
  • The Eldest Millennials Had the Same Fertility as the Youngest Baby Boomers — Completed fertility for US women aged 41–44 has been stable for more than two decades, with the large decline having occurred earlier; among those with at least one native-born parent it averaged 1.88 children versus 1.87. What changed is timing: 30-year-old women averaged 1.34 children versus 0.98.
  • 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.

AI Summary. US labor force participation among women aged 25-54 has reached all-time highs, exceeding its previous 1999 peak, yet remains over 4 points below Europe's level and nearly 6 points below Japan's. About 3.5m prime-age American women are neither working nor looking for work, without children at home or husbands, compared with roughly 7m such men.

Nicholas Eberstadt American Enterprise Institute
Date Posted:
Is Database:
Database

Eberstadt finds as of the summer of 2025 ~7mm American men 25–54 were not in the labor force. Despite record high prime age female LFP, ~3.5mm prime age women are not working or looking for work, nor married or caring for children.

Does record female labor participation still leave room for improvement?

Core argument: US labor force participation for prime age women aged 25–54 reached all-time highs in 2023, exceeding its previous 1999 peak and inching slightly higher since.

Arguably the best performance of any major population group in the US workforce would be for prime age women, since the 25-54 female contingent has recently registered all-time highs, exceeding in 2023 its previous 1999 apex and inching slightly higher in the years since then. Even so: prime age female LFPRs in America in 2024 were distinctly below the corresponding levels in Europe (where they were over 4 points higher) and Japan (nearly 6 points higher). For even as workforce participation for American women 25-54 increases, we also see an ominous rise of the “prime age female dropout” women neither working nor looking for work, but also without children at home or husbands in the picture. This “prime age dropout” contingent accounts for about three and a half million women today—as against roughly seven million NILF (not in labor force) men—but it is growing exponentially, and the women in its ranks exhibit many of the same troubling proclivities of inactivity and pain medication consumption, according to self-reported BLS time use surveys.

Takeaways by Macro Roundup® AI

  1. US labor force participation for prime age women aged 25–54 reached all-time highs in 2023, exceeding its previous 1999 peak and inching slightly higher since.
  2. Prime age female labor force participation in the US in 2024 remained more than 4 points below Europe's level and nearly 6 points below Japan's, despite the American record highs.
  3. About 3.5 million American "prime age female dropouts" are neither working nor looking for work and have no children at home or husbands, against roughly 7 million men not in the labor force, with the female group growing exponentially.

Related Articles:

  • Do Adults Have the Skills They Need to Thrive in a Changing World? — An international assessment of adult skills describes numeracy proficiency levels ranging from counting objects and adding small whole numbers at the lowest level, to extracting information from tables and graphs and performing basic arithmetic with money and percentages at Level 1, up to analysing complex mathematical information and critically evaluating whether data support a claim at Level 5.
  • Military Officer Quality in the All-Volunteer Force — The authors find a steady decline in U.S. Marine Corps officers' General Classification Test scores, which is statistically associated with the expansion of college attendance and explains 96% of the measured change. They also find a positive association between African American officers and mean test scores, arguing affirmative action has not lowered officer quality.
  • Post-Pandemic Recovery for America’s Prime Age Labor Force: A Tale of Two Sexes — Prime-age women's labor force participation climbed about 5 points above its pre-pandemic level over a decade, while prime-age men's rose barely a point, only just regaining pre-pandemic levels. Despite economic expansion and labor shortages, work rates for prime-age American men are barely as high as at the trough of the severe Reagan-era recession.

AI Summary. Bank of America deposit data show after-tax wage and salary growth for higher-income households rose to 5.6% year-over-year, widening the gap with middle- and lower-income households to the largest since the series began in 2015. The bank points to bonus growth as a likely driver, with higher-income households posting positive bonus growth while other cohorts' was negative.

David Michael Tinsley Bank of America
Date Posted:
Is Database:
Database

Bank of America customer deposit data showed American “K-shaped” wage growth was extended in March with higher income households’ wage growth growing 5.6% y/y, while lower income households grew 1% y/y, the largest gap since 2015.

How unequal is after-tax wage growth across income groups?

Core argument: Bank of America deposit data shows higher-income households' after-tax wage and salary growth rose to 5.6% YoY in March from 4.2% in February, the highest for this cohort since August 2021.

Bank of America deposit data shows higher-income households’ after-tax wage and salary growth rose to 5.6% YoY in March, up from 4.2% YoY in February. This is the highest after-tax wage growth for this cohort since August 2021. There was also a rebound in middle- and lower-income households’ after-tax wage growth in March, to 2% and 1% YoY, respectively. But the gap between these cohorts’ and higher-income households’ wage growth still widened and is now the largest gap we’ve seen since the data series began in 2015. In our view, one driver of the current widening in after-tax wage growth between higher-income households and the other cohorts is likely bonus growth. An estimate of bonus growth based on Bank of America deposit data showed higher-income households saw solid positive growth over the first three months of 2026, while for middle- and lower-income households, bonus growth was negative. This divergence in bonus growth may fade as we move through the year (many higher-income households receive their bonuses in the early part of the year). But, even so, the persistence in the “K” shape between higher-income wage growth and other cohorts suggests underlying wage dynamics may continue to favor the higher-income group.

Takeaways by Macro Roundup® AI

  1. Bank of America deposit data shows higher-income households' after-tax wage and salary growth rose to 5.6% YoY in March from 4.2% in February, the highest for this cohort since August 2021.
  2. Middle- and lower-income households' after-tax wage growth rebounded to 2% and 1% YoY in March, but the gap versus higher-income households widened to the largest since the data series began in 2015.
  3. Bank of America views bonus growth as a likely driver of the widening gap, with deposit data estimates showing solid positive bonus growth for higher-income households over the first three months of 2026 and negative growth for middle- and lower-income households.

Related Articles:

  • K-Shaped Economy? — Available spending data does not support the narrative of a bifurcated "K-shaped" consumer economy: surveys show households earning under $50,000 reported spending growth of 5%, versus 4.6% for those earning over $100,000. Government data show the top income decile's share of aggregate spending at 22.8%, down from 23.4% a year earlier.
  • 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.
  • Is U.S. Wage Growth Slowing Or Not? — A slowdown in U.S. wage growth stems entirely from a sharp deceleration in the "private education and health services" sector, which employs one in four private-payroll workers and has historically tracked economy-wide wage trends. The slowdown would imply wage growth is no longer running faster than the pre-pandemic norm, a benign signal for inflation.

AI Summary. China's energy security rests on coal rather than imported oil and gas: the country consumes more than half the world's coal, and coal powers its industry and electricity system. Coal consumption has risen since 2022, with roughly 95GW of new coal capacity added in one year, exceeding Vietnam's entire installed electricity capacity.

Damien Ma Carnegie Endowment for International Peace
Date Posted:
Is Database:
Database
Is Important:
Important

Due to electrification, China’s energy security is not contingent on Hormuz. China is increasing its absolute coal generation capacity while coal’s share of domestic generation falls overall.

Does China's energy security depend on coal rather than oil imports?

Core argument: China added roughly 95GW of coal capacity in 2024, a decade high exceeding Vietnam's entire installed electricity capacity, with total coal consumption rising markedly since 2022 after Beijing's pivot to energy security following its domestic energy crisis.

[China's] energy security isn’t really tied to oil or gas, for which the country does depend on imports. It has always been inextricably linked to coal. China consumes more than half of the world’s coal, and it is the main commodity that powers Chinese industry and the electricity system. Total coal consumption has risen markedly since 2022, which aligns with the rebound in commissioned capacity resulting from Beijing’s hard pivot to energy security after the domestic energy crisis noted above. In 2024 alone, China added a staggering decade-high of ~95GW of coal capacity, which is larger than the entire installed electricity capacity of Vietnam. [While Chinese] solar power [has] achieved cost parity with coal, the country has a deep industrial base and a comprehensive electro-tech ecosystem that is intent on manufacturing a new energy landscape, or an “electro-state,” as some have come to call it. Peak coal is not only congruent with but is also a necessary condition for realizing this strategy.

Takeaways by Macro Roundup® AI

  1. China added roughly 95GW of coal capacity in 2024, a decade high exceeding Vietnam's entire installed electricity capacity, with total coal consumption rising markedly since 2022 after Beijing's pivot to energy security following its domestic energy crisis.
  2. China consumes more than half of the world's coal, the main commodity powering its industry and electricity system, and its energy security is linked to coal rather than to imported oil and gas.
  3. Chinese solar power has reached cost parity with coal, and the country's industrial base and electro-tech ecosystem aim to build an "electro-state," a strategy for which peak coal is a necessary condition.

Related Articles:

  • The Real China Model — China generates more electricity annually than the United States and European Union combined, having added capacity equivalent to the United Kingdom's total supply each year. Electricity makes up nearly 30% of China's energy use, versus 22% in the US and 21% globally, and its share is growing about 6% a year.
  • Fighting Words: The Energy Transition in 2026 — 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.
  • 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.