Edward Conard

Top Ten New York Times Bestselling Author

  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “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
  • “…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
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…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 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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Monday, April 13, 2026

AI Summary. Forward price-to-earnings ratios for the largest US information technology companies have compressed from 40x to 20x, returning to levels last seen before the artificial intelligence boom began.

Torsten Sløk Apollo
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The forward P/E ratio of today’s 10 largest components of the S&P 500’s IT sector has halved from 40x to 20x, and is now back to its 2022 level, at the inception, of the AI boom.

Have tech valuations fallen back to pre-AI-boom levels?

Core argument: Forward P/E ratios for the 10 largest S&P 500 Information Technology components have compressed from 40x to 20x, returning to levels last seen before the AI boom began.

The chart compares the forward P/E ratios for the S&P 500 and [NVIDIA, Apple, Microsoft, Broadcom, Oracle, Micron, Palantir, AMD, Cisco, and Applied Materials, the 10 largest components of] the S&P 500 Information Technology sector. Tech valuations have compressed from 40x to 20x, and we are back at levels last seen before the AI boom began.

Takeaways by Macro Roundup® AI

  1. Forward P/E ratios for the 10 largest S&P 500 Information Technology components have compressed from 40x to 20x, returning to levels last seen before the AI boom began.
  2. NVIDIA, Apple, Microsoft, Broadcom, Oracle, Micron, Palantir, AMD, Cisco, and Applied Materials are the 10 largest components of the S&P 500 Information Technology sector, whose forward P/E ratios are compared with those of the S&P 500.

Related Articles:

  • One Hundred Years in the U.S. Stock Markets — Over a century, U.S. publicly traded stocks generated roughly $91tn in shareholder wealth enhancement, with returns strongly positively skewed and dominated by a relatively small number of high-performing firms. Because most possible outcomes fall below the mean in a skewed distribution, the authors argue financial planning should focus on median outcomes or the full distribution.
  • Chart of the Day: The Hateful Eight is 85% of S&P 500 Decline — Eight mega-cap technology companies — Microsoft, Nvidia, Google, Apple, Amazon, Meta, Tesla, and Oracle — account for 85% of the S&P 500's decline, subtracting roughly 576 index points, while the remaining ~490 companies collectively added about 100 points. Because of their outsized index weights, benchmark performance reflects a handful of firms rather than broad market breadth.
  • 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.

AI Summary. Anthropic reports that its Mythos model has detected thousands of high-severity cyber vulnerabilities, including ones found by chaining multiple obscure software weaknesses, and that these hacking skills are emergent rather than a designed capability. Mythos completed a corporate network attack simulation estimated to take an expert over 10 hours, which no other frontier model had solved.

Michael Cembalest J.P. Morgan
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Anthropic’s Mythos has “superior” token efficiency to Anthropic’s prior models and is better at complex software engineering. However, Cembalest argues the potential cybersecurity concerns related to the model are real.

Can AI systems autonomously discover major cyber vulnerabilities without being designed to?

Core argument: Anthropic reports that Mythos has detected thousands of high-severity cyber vulnerabilities, some created by chaining together multiple obscure software weaknesses.

Anthropic reports that Mythos has detected thousands of high-severity cyber vulnerabilities, some of them created by chaining together multiple obscure software weaknesses. The remarkable part is that Mythos cyberhacking skills are “emergent” (the byproduct of other goals) since it wasn’t designed specifically for that purpose. In one instance, Mythos solved a corporate network attack simulation estimated to take an expert over 10 hours (no other frontier model had been able to do this), with Anthropic noting that Mythos can chain multiple separate vulnerabilities together to escape the “renderer sandbox” and “operating system sandbox” (security features that isolate JavaScript, HTML and CSS from the operating system, and protect the OS itself). The good news: in a properly configured sandbox with modern patches, Mythos was unable to find any novel exploits.

Takeaways by Macro Roundup® AI

  1. Anthropic reports that Mythos has detected thousands of high-severity cyber vulnerabilities, some created by chaining together multiple obscure software weaknesses.
  2. Mythos solved a corporate network attack simulation estimated to take an expert over 10 hours, which no other frontier model had been able to complete, according to Anthropic.
  3. Anthropic notes that Mythos can chain separate vulnerabilities to escape the renderer and operating system sandboxes, but found no novel exploits in a properly configured sandbox with modern patches.

Related Articles:

  • Anthropic Claims Its New A.I. Model, Mythos, Is a Cybersecurity ‘Reckoning’ — 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.
  • Anthropic Model Scare Sparks Urgent Bessent, Powell Warning to Bank CEOs — The US Treasury and Federal Reserve convened Wall Street leaders over concerns that Anthropic's Mythos artificial intelligence model and similar systems could usher in an era of greater cyber risk. The meeting aimed to ensure banks are aware of the possible risks and are taking precautions to defend their systems.
  • Does Gemini Show That Scaling Still Works? No. — The author argues that frontier model pre-training is becoming uneconomic, delivering only marginal capability gains for enormous spending on chips, power, and compute. Meaningful advances have shifted to post-training, inference-time compute, and tool-augmented reasoning rather than raw model size.

AI Summary. Output per hour in the US nonfarm business sector rose 2.1% last year and has averaged 2.1% annually over the past six years, up from 1.5% a year from 2007 to 2019. Over a recent 12-month span the labor force shrank by 554,000 amid immigration crackdowns and large-scale baby-boomer retirements.

Harriet Torry Wall Street Journal
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American non-farm business productivity rose 2.1% in 2025, essentially at its annualized mean since Q4 2019 – compared to a 1.5% average between 2007 and 2019 – amidst the 2025 labor force falloff of 554,000, unprecedented in recent history.

Can the economy grow while the labor force shrinks?

Core argument: Output per hour in the U.S. nonfarm business sector rose 2.1% last year, according to the Labor Department, and has averaged 2.1% over the past six years, up from 1.5% a year over 2007–2019.

According to the Labor Department, output per hour in the nonfarm business sector rose 2.1% last year. Growth has also averaged 2.1% over the past six years, a pickup from the 1.5% a year average from 2007 to 2019. This comes amid a falloff, unprecedented in recent history, in labor-force and job growth. In the year through March, immigration crackdowns and continuing, large-scale retirements among the baby-boomer generation mean the labor force—people working or looking for a job— declined by 554,000.

Takeaways by Macro Roundup® AI

  1. Output per hour in the U.S. nonfarm business sector rose 2.1% last year, according to the Labor Department, and has averaged 2.1% over the past six years, up from 1.5% a year over 2007–2019.
  2. The U.S. labor force—people working or looking for work—declined by 554,000 in the year through March, amid immigration crackdowns and large-scale baby-boomer retirements.
  3. The pickup in U.S. productivity growth coincides with a falloff in labor-force and job growth that is unprecedented in recent history.

Related Articles:

  • Concentrated Growth: The Role Of The IT Sector — Since 1988, total factor productivity in the information technology sector has risen about 178%, versus about 12% across all non-IT sectors combined, while aggregate productivity rose about 40%. The IT sector accounts for roughly 45% of cumulative aggregate productivity growth, once sectoral linkages to downstream industries are weighted in.
  • Labor Force Growth, Breakeven Employment, and Potential GDP Growth — Slowing net immigration could cut US labor force growth so much that the breakeven pace of job creation falls to nearly zero — under 10,000 jobs a month — far below any point in the past 65 years. Monthly payroll declines as large as 100,000 would then not be unusual even with output at potential.
  • How Does Immigration Shape Average Labor Productivity? Evidence from the CPS — A worker-quality index built from US household survey data stayed within 1% of its starting level despite a shift toward more immigrant workers, while official nonfarm business productivity rose 8.2%. Lower predicted wages among Central American arrivals were offset by European and Asian immigrants, whose predicted wages exceed the US-born average by about 20%.

AI Summary. Restaurant executives identify dishwashers as among their hardest positions to fill, with dishwasher pay averaging about $32,500 a year, in the bottom third of restaurant jobs according to jobs platform Indeed. Some high-end restaurants use service fees shared among hourly staff to lift dishwasher earnings and retain them.

Heather Haddon Wall Street Journal
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High churn among dishwashers is putting upward pressure on pay, with some high-end restaurants paying ~$70,000 annually relative to a ~$32,500 mean, and other restaurants investing in automation, such as $15,000 Japanese robotic dishwashers.

Can higher pay solve restaurants' hardest hiring problem?

Core argument: Dishwashers' pay averages roughly $32,500 a year, in the bottom third of restaurant jobs, according to jobs platform Indeed, even as they mop floors, take out the trash and are often the last to leave at night.

Rick Cardenas, CEO of Darden Restaurants, said dishwashers are his top employment concern. At New York City-based Union Square Hospitality Group, which operates Union Square Cafe and Gramercy Tavern, CEO Chip Wade agrees, with the company providing meals and family discounts to help keep its dishwashers. [Overall], dishwashers’ pay averages around $32,500 a year, ranking in the bottom third of restaurant jobs, according to jobs platform Indeed. [But] they are also essential workhorses, often the last to leave at night, after mopping floors and taking out the trash, [and high-end restaurants are facing pressure to raise their compensation]. Chicago-based John’s Food and Wine, which serves a $52 red snapper and an $83 steak, charges a 20% service fee across all orders, divided up among hourly staff. Last year, the restaurant’s dishwashers averaged earnings of $70,000 as a result. “They are highly valued and their value comes with being paid well,” said Tom Rogers, the restaurant’s co-owner. The restaurant has had two of its three dishwashers since around the time it opened two years ago.

Takeaways by Macro Roundup® AI

  1. Dishwashers' pay averages roughly $32,500 a year, in the bottom third of restaurant jobs, according to jobs platform Indeed, even as they mop floors, take out the trash and are often the last to leave at night.
  2. Chicago's John's Food and Wine charges a 20% service fee on all orders that is divided among hourly staff, and its dishwashers averaged $70,000 in earnings last year; two of its three dishwashers have stayed since it opened two years ago.
  3. Darden Restaurants CEO Rick Cardenas said dishwashers are his top employment concern, and Union Square Hospitality Group CEO Chip Wade agrees, with his company providing meals and family discounts to retain dishwashers.

Related Articles:

  • Minimum Wages and the Rise of the Robots — State-level measures of exposure to industrial robots show substantial geographic variation across the US, with the highest concentrations in the Southwest, Midwest, and Northwest and the lowest in the Mountain West, parts of the South, and northern regions. The authors find state robot exposure is positively correlated with state minimum wage increases.
  • Did California’s Fast Food Minimum Wage Reduce Employment? — The authors estimate that California's $20 fast food minimum wage, up from $16, raised fast food sector wages roughly 8% relative to the rest of the country while employment fell about 2.7% relative to fast food employment elsewhere in the US. Their median estimate implies 18,000 fewer California fast food jobs than otherwise.
  • AI and the Fable of the ATMs — Bank tellers per branch fell steadily as automated teller machines spread, and total teller employment held up only because banking deregulation drove a rise in branch numbers; teller jobs are down nearly 40% from their peak. The author argues invoking this case for AI requires identifying an equivalent offsetting source of labor demand.

AI Summary. Households in China with a son save more where local male-female ratios are skewed, while savings by households with a daughter show no such relationship; the authors estimate this competition in the marriage market accounts for more than half the rise in China's household saving rate from 1990 to 2007, contributing to excess saving and a larger current account surplus.

Chang Ma and Shang-Jin Wei National Bureau of Economic Research
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A less-discussed structural factor behind China’s high saving and CA surplus is its skewed sex ratio. Excess marriageable men lead parents of sons to increase saving to boost marital prospects, explaining half of the rise in saving btw 1990 and 2007.

What drives China's current account surplus besides trade policy?

Core argument: The authors estimate that competitive saving driven by China's skewed male-female ratio in the youth cohort accounts for more than half of the increase in China's household saving rate between 1990 and 2007.

One motivation for personal or household saving is to raise one’s competitiveness in the dating and marriage market. This component of saving tends to rise with an increase in the imbalance of the male-female ratio in the marriage age cohort (in either direction). In China’s case, a rise in the male-female ratio in the youth cohort since the 1990s has translated into a powerful force to lift the household saving rate. As the marriage market becomes increasingly competitive for young men, parents with a son raise their saving to improve their son’s relative standing in the [marriage] market. A combination of having a son at home and living in a region with a skewed sex ratio greatly pushes up the household saving rate, [while] savings by households with a daughter are not systematically related to the local sex ratio. Across regions, the local sex ratio in the youth cohort strongly predicts the local household saving rate. Their estimates suggest that this mechanism accounts for more than half of the increase in China’s household saving rate between 1990 and 2007. This upward pressure on saving, combined with relatively stable investment demand, generates persistent excess saving and a higher current account surplus.

Takeaways by Macro Roundup® AI

  1. The authors estimate that competitive saving driven by China's skewed male-female ratio in the youth cohort accounts for more than half of the increase in China's household saving rate between 1990 and 2007.
  2. Chinese households with a son living in regions with skewed sex ratios show markedly higher saving rates, while saving by households with a daughter is not systematically related to the local sex ratio.
  3. The authors argue that upward pressure on Chinese household saving, combined with relatively stable investment demand, generates persistent excess saving and a higher current account surplus.

Related Articles:

  • China’s Alarming Sex Imbalance — An analysis of UN population projections and China's 2020 census projects the ratio of men to women at prime marriage ages will peak at 119 men per 100 women by 2027, implying 22.5m more men than women in those cohorts, and remain high for decades. The share of unmarried men aged 25-39 rose from 13% to 30%.
  • ‘No Marriage, No Children’ Is China’s Ticking Timebomb — China registered about 6.1m marriages in its most recent year, the lowest since public records began in 1986 and less than half the 2013 peak, with roughly 30% of 30-year-olds unmarried versus 15% a decade earlier. Births of 9.54m were the second-lowest since the People's Republic of China was founded in 1949.
  • 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. China recorded its first year-on-year increase in factory gate prices since 2022, and a former official of its top macroeconomic planning body warned that costs in energy-intensive sectors such as logistics, transportation, aviation, shipping and steel had jumped as much as 25%, eating into corporate profits and pressuring smaller companies.

Edward White Financial Times
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Factory gate prices in China recorded their first y/y increase since 2022, driven by supply chain disruptions from the Iran War. Gasoline prices are up 38% since the start of the war, and diesel has risen 41%.

Are rising factory gate prices squeezing China's industrial profits?

Core argument: China's domestic spot prices for some high-grade helium have surged 110% since the attacks on Iran began, while some lower-grade liquid helium prices are running 65% higher since the start of the year, according to Trivium China.

In March, China recorded its first year-on-year increase in factory gate prices since 2022. Peng Shaozong, a former official with the National Development and Reform Commission (NDRC), Beijing’s top macroeconomic planning body, cautioned in an unusually candid policy paper in late March that, amid a complex and severe external environment, China “must abandon wishful thinking” and start considering worst-case scenarios. Peng, who is now vice-president of the China Society for Economic Reform, warned that costs in energy-intensive sectors such as logistics, transportation, aviation, shipping and steel had jumped as much as 25%, eating into corporate profits and putting severe pressure on smaller companies. Analysts from Trivium China, a Beijing-based consultancy, said last week that domestic Chinese spot prices for some high-grade helium had surged 110% since the attacks on Iran were launched while prices for some lower-grade liquid helium were tracking 65% higher since the start of the year.

Takeaways by Macro Roundup® AI

  1. China's domestic spot prices for some high-grade helium have surged 110% since the attacks on Iran began, while some lower-grade liquid helium prices are running 65% higher since the start of the year, according to Trivium China.
  2. Peng Shaozong, a former NDRC official now vice-president of the China Society for Economic Reform, warned in a late-March policy paper that China "must abandon wishful thinking" and begin considering worst-case scenarios amid a complex and severe external environment.
  3. Peng Shaozong warned that costs in energy-intensive sectors including logistics, transportation, aviation, shipping and steel had jumped as much as 25%, eating into corporate profits and putting severe pressure on smaller companies.

Related Articles:

  • Shattered Assumptions And The Energy Quandary — The author argues that energy, rather than fixed income, now serves as the true hedge to equity positions, pushing investors, companies and countries to review their energy allocations and policies. Chinese government bonds diversified equity risk when no other major bond market did, which the author attributes to China being the only major economy without a meaningful inflation problem.
  • The Rise Of The Security Premium — 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.
  • 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.

Tuesday, April 14, 2026

AI Summary. China's record goods trade surplus surpassed $1tn, driven by fierce domestic competition among manufacturers that investors describe as malignant but that yields high-quality products at prices rivals struggle to match. European leaders have called the surge of high-tech Chinese goods an existential threat to their continent's manufacturing.

Ryan McMorrow, Sam Fleming, Peter Foster and Joe Leahy Financial Times
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As Chinese firms’ profits vanish in the face of “involution,” a second China Shock is underway. China boosted exports ~15% y/y in the first 3 months of 2026. China’s Jaecoo 7 SUV, with a starting price of £29,000, was the UK’s best-selling car in March.

Is domestic competition in China making its manufacturers unbeatable abroad?

Core argument: China recorded a record goods trade surplus surpassing $1tn in 2025, alongside a surge of high-quality Chinese goods sold at low prices.

“Companies that can survive in China are unbeatable anywhere else in the world,” says Huang He, an investor in Mega-Senway and more than a dozen other Chinese industrial groups. Chinese founders have to “use every possible means” to survive, he says, collectively creating the country’s unmatchable competitiveness. “China is full of engineers — tech barriers last six months to a year at most.” For Huang it feels like a whirlpool sucking his company downwards. “This is not a healthy situation,” he says. “There’s malignant competition.” The outside world sees unstoppable Chinese champions selling quality products at impossible prices. After racking up a record trade surplus in goods that surpassed $1tn in 2025. France’s President Emmanuel Macron, one of several European leaders to visit Beijing in the past six months, did not mince his words on a threat he sees as existential. The surge of high-quality Chinese goods, he said, represented nothing less than a “question of life or death” for manufacturing on his continent.

Takeaways by Macro Roundup® AI

  1. China recorded a record goods trade surplus surpassing $1tn in 2025, alongside a surge of high-quality Chinese goods sold at low prices.
  2. French President Emmanuel Macron called the surge of high-quality Chinese goods a "question of life or death" for manufacturing in Europe.
  3. Chinese investor Huang He attributes China's competitiveness to founders using "every possible means" to survive and an abundance of engineers that limits technology barriers to six months to a year, calling the resulting "malignant competition" unhealthy.

Related Articles:

  • The Deflation Doom Loop Trapping China’s Economy — China's broad price gauge, the GDP deflator, has been negative since 2023, indicating weak domestic demand, with profits shrinking across industries from steel and electric vehicles to cosmetics and profit margins among publicly traded mainland firms at their lowest since 2009. Fixed-asset investment in homes, factories and roads fell for the first time on record.
  • What’s New About Involution? — China's cycle of relentless competition and price cutting stems from its long-standing growth model, with the latest phase driven by an engineered shift of investment from property into manufacturing that was not tied to expected demand growth. Administrative fixes and exports shift excess capacity between sectors rather than resolving it.
  • 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.

AI Summary. Foreign official purchases of dollars are too small to mirror the US current account deficit, and net official financial inflows have fluctuated around zero even as the deficit widened; the euro area runs a current account surplus despite the euro's reserve role. The author argues materially reducing the US fiscal deficit is the key policy prerequisite for global rebalancing.

Maurice Obstfeld Peterson Institute for International Economics
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Noting the minimal relationship between official liabilities and the CA, Obstfeld argues that the reserve currency role of the dollar is not the cause of the trade deficit. He urges reduction in the US fiscal deficit to increase national saving.

Does the dollar's reserve role drive the US current account deficit?

Core argument: US net incurrence of liabilities to official foreign holders over 2003–25, measured as a share of GDP, is usually far too small to mirror the US current account deficit, contradicting claims that official dollar purchases feed one-for-one into it.

Critics of the dollar's global role have argued that foreign official dollar purchases (labeled US incurrence of official liabilities in the figure) feed one-for-one into US current account deficits. To illustrate the true loose relationship between these two variables, the figure shows both of them over the 2003–25 period, as percentages of GDP. US net incurrence of liabilities to official holders, reported with a minus sign as in standard balance-of-payments methodology, is usually far too small to mirror the US current account deficit. And since roughly 2014, net official financial inflows have fluctuated around zero as the current account deficit has widened. To be sure, the strong international demand for dollars may make the dollar stronger against foreign currencies than it would be otherwise, [but] while they imply a smaller current account balance, they do not necessarily imply a negative balance and certainly not a rising negative balance, especially when foreign dollar reserve holdings have been shrinking relative to global economic activity (as figure 1 also implies). The euro is the world's second reserve currency, yet the euro area has a current account surplus. Britain had surpluses up until World War I despite issuing the world's premier global currency and hosting its leading financial center. Reducing the US fiscal deficit materially and sustainably is the most important US policy prerequisite for global current account rebalancing.

Takeaways by Macro Roundup® AI

  1. US net incurrence of liabilities to official foreign holders over 2003–25, measured as a share of GDP, is usually far too small to mirror the US current account deficit, contradicting claims that official dollar purchases feed one-for-one into it.
  2. Since roughly 2014, US net official financial inflows have fluctuated around zero while the US current account deficit widened, and foreign dollar reserve holdings have been shrinking relative to global economic activity.
  3. The euro area runs a current account surplus despite the euro's status as the world's second reserve currency, and Britain ran surpluses until World War I while issuing the premier global currency and hosting its leading financial center.

Related Articles:

  • US Notches One of Its Biggest Annual Trade Gaps Since 1960 — The US goods and services trade deficit reached $901.5bn for the year, one of the largest in data going back to 1960. US companies increased imports of computers and accessories by nearly $145bn from the prior year, an acceleration in demand that reflects large-scale artificial intelligence investment.
  • The U.S. Trade Deficit: Myths and Realities — Taxing capital inflows would weaken the dollar but could raise domestic interest rates and depress investment, harming long-term growth, while an interest rate cut absent recession would be inflationary and erode any real depreciation needed to durably improve the trade balance. Fiscal restraint could weaken the dollar and reduce the trade deficit.
  • Pettis on Obstfeld — Pettis argues that saving rates in China, Japan, South Korea, Germany, Russia and Saudi Arabia are driven by their own domestic policies and conditions, and in turn drive the US saving rate. He notes the US has an open capital account, deep financial markets, and limited intervention in credit allocation.

AI Summary. Surging AI demand is straining computing capacity: Anthropic's Claude programming interface recorded 98.95% uptime over a 90-day span, below the 99.99% software companies typically promise, as its annualized revenue run rate climbed from $9bn to $14bn to $30bn. The company has capped how much usage customers can consume during weekday peak morning hours.

Angel Au-Yeung and Robbie Whelan Wall Street Journal
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Anthropic has started to ration token use as demand surges. Spot prices have risen. Rent for an hour’s use of one of Nvidia’s Blackwell chips costs $4.08, up 48% over the last two months, according to the Ornn Compute Price Index.

Is surging AI demand outstripping available computing capacity?

Core argument: Anthropic's Claude API posted a 98.95% uptime rate over the 90 days ending April 8, short of the 99.99% "four nines" that software companies typically commit to customers.

The reliability of core services on the internet is often measured in “nines”. Four nines means 99.99% of uptime—a typical percentage that a software company commits to customers. As of April 8, Anthropic’s Claude API had a 98.95% uptime rate in the last 90 days. The frequent outages at Anthropic are happening as the AI lab is experiencing explosive growth. At the end of 2025, the company hit $9 billion in annual run rate, which means the company was on track to make that amount of revenue in the next 12 months. By February, that figure ballooned to $14 billion. Two months later, it doubled to $30 billion. In late March, Anthropic suddenly announced it would limit the amount of tokens that users could burn through during peak hours from 5 a.m. to 11 a.m. Pacific Time on weekdays. Historically, price increases have been among the only ways to address a supply crunch, but such a move could be perilous for frontier AI companies, which are in a ferocious competition to gain users.

Takeaways by Macro Roundup® AI

  1. Anthropic's Claude API posted a 98.95% uptime rate over the 90 days ending April 8, short of the 99.99% "four nines" that software companies typically commit to customers.
  2. Anthropic's annual run-rate revenue rose from $9 billion at the end of 2025 to $14 billion by February and $30 billion two months later, a period marked by frequent outages.
  3. Anthropic announced in late March that it would limit the tokens users can consume during peak hours of 5 a.m. to 11 a.m. Pacific Time on weekdays.

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.
  • 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.
  • I Thought I Understood A.I. Companies. I Couldn’t Have Been More Wrong — Low switching costs among artificial intelligence services have pushed companies to pass innovation gains to users, with a $20-per-month subscription price unchanged even as features and performance improved substantially. One analysis found GPT-4-equivalent performance now costs $0.40 per million tokens versus $20, equivalent to a 70% annual deflation rate.

AI Summary. Rising US electricity costs are burdening consumers and stirring voter anger, with the rapid build-out of artificial intelligence data centers, tariffs, and upgrades to an aging grid pushing power prices higher at rates unseen in decades. Utility bills have moved to the center of US politics alongside grocery prices.

Josh Saul and Ari Natter Bloomberg
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Nationwide, the average price for residential electricity increased ~28% btw 2020 and 2025. 11 of the 13 states with a competitive house race saw an increase of more than 30% btw 2020 and the start of this year.

Are data centers, tariffs, and grid upgrades driving electricity bills into politics?

Core argument: US electricity prices are rising at rates unseen in decades, driven by the rapid build-out of AI data centers, tariffs, and upgrades to an aging grid.

Across the country, soaring electricity costs are burdening consumers and stirring voter anger. The rapid build-out of artificial intelligence data centers, along with tariffs and upgrades to an aging grid, has raised power prices at rates unseen in decades. The war in Iran is throwing global energy markets into upheaval, adding a surge in gasoline prices to affordability concerns. The energy strains have propelled the once-mundane utility bill to the center of US politics, a place it hasn’t occupied since electricity became a staple of American life. After a 2024 election in which voter concerns over inflation and the economy helped send Donald Trump back to the White House, the outcome of this year’s midterms stands to be as much about the price of power as the price of groceries.

Takeaways by Macro Roundup® AI

  1. US electricity prices are rising at rates unseen in decades, driven by the rapid build-out of AI data centers, tariffs, and upgrades to an aging grid.
  2. The war in Iran is throwing global energy markets into upheaval and pushing up gasoline prices, compounding affordability concerns for American consumers.
  3. Utility bills have moved to the center of US politics, and this year's midterm outcome stands to be as much about the price of power as the price of groceries.

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  • The Macroeconomic Spillovers From AI Electricity Demand — Higher electricity demand from artificial intelligence is estimated to exert a 0.1 percentage point drag on GDP growth over two years, as weaker consumer spending is partly offset by higher utility capital spending. The present value of those GDP losses amounts to less than 3% of estimated AI-induced GDP growth.
  • 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.
  • U.S. Electricity Generation in 2025 Hit A Record, Again — U.S. electricity net generation reached a record 4.43 terawatt hours, up 2.8% from the prior year's high, contrasting with relatively flat generation from the mid-2000s to the early 2020s. Much of the recent demand growth comes from the commercial sector, which includes data centers, and the industrial sector.

AI Summary. Harvard's Remodeling Futures Program reports that 49% of U.S. home-improvement spending now goes to necessary replacements such as heating and cooling systems, with homeowners spending an average of $9,030 on replacement projects like windows, up 59% from 2009 after adjusting for inflation.

Veronica Dagher Wall Street Journal
Date Posted:

America’s housing stock is aging, with the median age of a home climbing to 44 years old. The cost of maintaining a home has increased, with real structural repair costs rising ~14.1%, and plumbing costs 23.6%, between 2022 and 2024.

Are aging homes pushing homeowner repair and replacement costs higher?

Core argument: U.S. homeowners spent an average of $9,030 on replacement projects such as windows in 2023, up 59% from 2009 after adjusting for inflation, according to Rachel Drew of Harvard's Remodeling Futures Program.

49% percent of all improvement spending is now for necessary replacements like HVAC that owners can’t delay, said Rachel Drew, director of Harvard’s Remodeling Futures Program. In 2023, homeowners in the U.S. spent an average of $9,030 on replacement projects such as windows, up 59% from 2009 after adjusting for inflation, said Harvard’s Drew. Financial advisers traditionally suggested setting aside 1% of a home’s value annually for upkeep, but many now argue that isn’t enough. While 1% may cover routine upkeep, 2% to 3% provides a more realistic cushion for expected maintenance, home-improvement projects and unexpected repairs, particularly for older homes, said Angie Hicks, co-founder of home-services company Angi.

Takeaways by Macro Roundup® AI

  1. U.S. homeowners spent an average of $9,030 on replacement projects such as windows in 2023, up 59% from 2009 after adjusting for inflation, according to Rachel Drew of Harvard's Remodeling Futures Program.
  2. Rachel Drew of Harvard's Remodeling Futures Program said 49% of all home-improvement spending now goes to necessary replacements such as HVAC that owners cannot delay.
  3. Angie Hicks, co-founder of home-services company Angi, said the traditional advice to set aside 1% of a home's value annually may cover routine upkeep, while 2% to 3% offers a more realistic cushion, particularly for older homes.

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  • Productivity Stagnation in the Construction Industry: An International Perspective — The authors estimate that tighter land use regulation accounts for 40% of the gap in productivity growth between US construction and the rest of the economy, with weak innovation and quality mismeasurement each accounting for 20%. Across major economies, regulation and mismeasurement explain most of US construction's underperformance.
  • Five Decades of Decline: U.S. Construction Sector Productivity — U.S. construction labor productivity in 2023 was essentially unchanged from 1948, with real output per worker in 2020 more than 30% below its 1970 level, even as aggregate U.S. labor productivity tripled between 1950 and 2020. Construction accounted for about 4.5% of U.S. GDP in 2024.

AI Summary. The author estimates Iran earned about $100m a day from crude sales before the war and roughly $175m a day afterward, so a US-enforced blockade would deal its economy a heavy blow. An earlier US maximum-pressure sanctions campaign cut Iranian crude earnings to no more than $10m a day without forcing Iran to yield.

Javier Blas Bloomberg
Date Posted:
Is Database:
Database
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Before the war, Iran was earning ~$100mm a day from oil exports, which rose to ~$175mm during the war, before the blockade. The US “maximum pressure” campaign of 2018–2021 had reduced Iran’s oil revenue to ~$10mm a day without changing Tehran’s behavior.

Would cutting off oil revenue force Iran to negotiate?

Core argument: Iran's crude sales earned roughly $100 million a day before the war and have risen to about $175 million a day since Feb. 27, by the author's back-of-the-envelope calculations.

According to my back-of-the-envelope calculations, Iran was making about $100 million a day selling its crude before the war. Since Feb. 27, that’s risen to around $175 million a day. If the US enforces the blockade, the Iranian economy will suffer an enormous blow on top of the war destruction. But whether that economic hit translates into a softer negotiation approach remains to be seen. Targeting Iranian oil revenue has been tried before — and it failed. In 2020-2021, when Trump launched a maximum pressure campaign of sanctions, Iranian crude exports dropped to fewer than 250,000 daily barrels for several months just as oil prices were depressed due to the impact of the pandemic. Even allowing for some exports slipping under the radar, Iran was earning no more than $10 million a day selling crude — and it still didn’t buckle.

Takeaways by Macro Roundup® AI

  1. Iran's crude sales earned roughly $100 million a day before the war and have risen to about $175 million a day since Feb. 27, by the author's back-of-the-envelope calculations.
  2. Under Trump's 2020-2021 maximum pressure sanctions campaign, Iranian crude exports fell below 250,000 barrels a day for several months and revenue reached no more than $10 million a day, yet Iran did not buckle.
  3. US enforcement of the Hormuz blockade would deal the Iranian economy an enormous blow on top of war destruction, though whether that translates into a softer negotiating approach remains to be seen.

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  • Salem’s Lot: Gulf War Update; The Purge Of Senior US Military Officers; A US Fossil Fuel Reliance Fever Dream — The US is not insulated from market effects of a Strait of Hormuz closure: while US natural gas prices have declined this year, most other hydrocarbon and refined product prices have risen materially, with US crude oil, wholesale gasoline, naphtha, shipping fuel and some petrochemical increases exceeding those in Europe and Asia.
  • Shattered Assumptions And The Energy Quandary — The author argues that energy, rather than fixed income, now serves as the true hedge to equity positions, pushing investors, companies and countries to review their energy allocations and policies. Chinese government bonds diversified equity risk when no other major bond market did, which the author attributes to China being the only major economy without a meaningful inflation problem.