Edward Conard

Top Ten New York Times Bestselling Author

  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…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
  • “…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 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
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


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.

Related Articles:

  • 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
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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.

Related Articles:

  • Inflation Is Down, But Americans Still Feel an Affordability Squeeze — Average US weekly pay has risen 31% over six years, outpacing prices, but inflation erased most of those gains. Grocery prices are up about 30% since early 2020, a young married couple now needs 70% of annual household income for an average down payment versus 58% in 2019.
  • 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
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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.

Related Articles:

  • Are We Running Out Of Oil — An analysis of country- and product-specific oil markets identifies pockets of potential extreme tightness if the Strait of Hormuz remains effectively closed, with critically low supplies of the petrochemical feedstocks naphtha and liquefied petroleum gas in Asia and cross-product scarcity in multiple Asian countries.
  • 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.

Wednesday, April 15, 2026

AI Summary. Data indicate persistence in returns on invested capital has increased since 2000, with large companies the main beneficiaries; the information technology sector's aggregate return was 19% versus a 10.8% median from 1970 to 2024. Of about 13,800 U.S. public firms listing from 1976 to 2019, 18% survived.

Michael Mauboussin and Dan Callahan Morgan Stanley
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The Competitive Advantage Period (CAP), the period in which the market implies a firm can earn a return greater than its cost of capital, for most firms is 5–20 years, as ROIC regresses to the mean. Persistence of ROIC has increased, driven by a small number of large firms since 2000.

Have high returns on invested capital become more persistent for large companies?

Core argument: The aggregate return on invested capital for the information technology sector was 19% from 1970 to 2024 versus a median of 10.8%, and has on average exceeded the 75th-percentile company's ROIC since the Great Recession, meaning a small number of large companies determine the sector aggregate.

The data suggest that persistence in ROIC is up since 2000 and that large companies are the main beneficiaries of the implied expansion in CAPs. To illustrate the point, the aggregate ROIC for the information technology sector was 19% versus the median of 10.8% from 1970 to 2024. As striking, the aggregate ROIC for the sector has been greater on average than the ROIC for the 75th-percentile company (i.e., the ROIC below which 75% of data fall), since the Great Recession. This means a small number of large companies are determining the aggregate figure for the sector. From 1926 to 2025, the average listing time for a public company in Bessembinder’s database was 11.7 years, and the median listing time was 6.8 years. About 9% of listed companies at the beginning of 2026 were more than 50 years old. Modeling perpetual growth without considering mortality can create a mismatch. Exhibit 7 shows what happened to about 13,800 U.S. public firms that started trading between 1976 and 2019, excluding financial firms. For every 100 companies, 18 survived and 82 died. Of those that died, 43 were the result of mergers and acquisitions. The other 39 were delisted for reasons other than M&A, with the majority of those for “cause.” This happens when a company files for bankruptcy or fails to meet certain requirements set by an exchange.

Takeaways by Macro Roundup® AI

  1. The aggregate return on invested capital for the information technology sector was 19% from 1970 to 2024 versus a median of 10.8%, and has on average exceeded the 75th-percentile company's ROIC since the Great Recession, meaning a small number of large companies determine the sector aggregate.
  2. Of roughly 13,800 non-financial U.S. public firms that began trading between 1976 and 2019, 18 of every 100 survived and 82 died, 43 through mergers and acquisitions and 39 delisted for other reasons, the majority for cause such as bankruptcy.
  3. The average listing time for a public company in Bessembinder's database was 11.7 years from 1926 to 2025, with a median of 6.8 years, and about 9% of companies listed at the start of 2026 were more than 50 years old.

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.
  • The Long Goodbye? Incumbent Competitiveness in the 21st Century — Value creation among large American companies has become concentrated in a newer cohort of firms: businesses founded after World War II accounted for 8% of the top 50 companies' total market value in 1990 but 77% by 2024. The leading 20th-century incumbents are fading as this newer group takes over.
  • The Economics of Inequality in High-Wage Economies — Information technology created investment opportunities exceeding the supply of properly trained talent, while trade with low-wage economies, low-skilled immigration, trade deficits, and aging demographics eased constraints on low-skilled labor and risk-averse savings. The author argues this framework, rather than rising cronyism, explains high returns to success, slowing productivity growth, and low interest rates.

AI Summary. Saudi Arabia's balance of payments breakeven exceeds $90 a barrel on about 7m barrels a day of exports, so oil near $100 would not generate a large Saudi surplus. Each $10 rise in oil prices adds roughly $160bn to the import bills of Europe and South and East Asian importers.

Brad Setser Council on Foreign Relations
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Oil settling at ~$100–120 won’t increase the supply of “petrodollars” or capital flows from the Middle East as at the margin the increased East Asian energy spending will largely flow to exporters outside the Gulf.

Would higher oil prices produce a large Saudi surplus?

Core argument: Saudi Arabia's balance of payments breakeven exceeds $90 a barrel on roughly 7 million barrels a day of exports, so oil near $100 would not generate the large surplus a petrodollar system would require.

The Saudis aren’t going to generate a big surplus to reinforce the postulated petrodollar system with oil at around $100—not when their balance of payments breakeven (on around 7 million barrels a day of exports) is over $90 a barrel. But if the benchmark price of oil converges to around $100 for an extended period of time, a bit of Asia’s massive current account surplus will flow to those oil exporters able to supply the global market while flows through the Strait are limited. For reference, the average price of Brent in 2025 was just under $70 a barrel. A $10 barrel increase in the price of oil raises the import bill of Europe and the oil importers of South and East Asia by about $160 billion. East Asia in aggregate imports around 20 million barrels day, so every $10 a barrel raises East Asia’s import bill by $70-80 billion over the course of a year. But East Asia can afford a big shock. A sustained $50 a barrel shock (oil at $120 a barrel) would reduce East Asia’s current account surplus by $350 billion (more, if counting gas), leaving the combined surplus of Korea, Taiwan, Japan, and China well above $1 trillion.

Takeaways by Macro Roundup® AI

  1. Saudi Arabia's balance of payments breakeven exceeds $90 a barrel on roughly 7 million barrels a day of exports, so oil near $100 would not generate the large surplus a petrodollar system would require.
  2. A $10 a barrel increase in oil raises the import bill of Europe and South and East Asian oil importers by about $160 billion, with East Asia's roughly 20 million barrels a day of imports accounting for $70–80 billion.
  3. A sustained $50 a barrel shock, with oil at $120, would cut East Asia's current account surplus by $350 billion, leaving the combined surplus of Korea, Taiwan, Japan, and China well above $1 trillion.

Related Articles:

  • Oil, War and the Global Economy: The Market’s Narrative in March 2026 — Sovereign credit ratings in the war-zone countries have not changed, but market-based measures of default risk have risen across much of the Middle East, with larger increases in Qatar, the United Arab Emirates and Turkey than in Saudi Arabia and Kuwait. The United States has also seen its default-risk spread surge, and global sovereign spreads rose about 12%.
  • 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.
  • Are We Running Out Of Oil — An analysis of country- and product-specific oil markets identifies pockets of potential extreme tightness if the Strait of Hormuz remains effectively closed, with critically low supplies of the petrochemical feedstocks naphtha and liquefied petroleum gas in Asia and cross-product scarcity in multiple Asian countries.

AI Summary. The European Union's Industrial Accelerator Act would let member states veto foreign investments above €100mn in strategic sectors such as batteries, electric vehicles, solar panels and critical raw materials when the investor comes from a country holding over 40% of global manufacturing capacity, unless conditions on local jobs, joint ventures, intellectual property, research spending and local sourcing are met.

Barney Jopson, Joe Leahy and Ian Johnston Financial Times
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The EU’s “Made In Europe Act” would condition Chinese market access on IP transfers, FDI and joint ownership in strategic sectors. A Rhodium analysis found there was ~$12B of Chinese greenfield investment in European factories in 2025, 3x the 2022 level.

Should Europe block foreign investment in strategic manufacturing sectors?

Core argument: The EU's Industrial Accelerator Act would let member states veto any foreign direct investment above €100mn in strategic sectors when the investor comes from a country holding more than 40% of global manufacturing capacity.

[The EU's] Industrial Accelerator Act (IAA) [will allow] member states veto any FDI exceeding €100mn in strategic sectors if the investor is from a country with more than 40% of global manufacturing capacity. Those sectors include batteries, EVs, solar panels and the extraction and processing of critical raw materials — all areas where China dominates. To win approval, investment projects must fill at least half of their jobs with EU workers and satisfy three of five other conditions. One is that the investment must be undertaken via a joint venture. Another is that the foreign partner does not own more than 49% of the entity — a condition unpopular with Chinese companies, according to European officials. Other conditions cover the licensing of intellectual property rights, spending 1% of revenue on research and development in the EU, and publishing a strategy for sourcing 30% of inputs from the bloc.

Takeaways by Macro Roundup® AI

  1. The EU's Industrial Accelerator Act would let member states veto any foreign direct investment above €100mn in strategic sectors when the investor comes from a country holding more than 40% of global manufacturing capacity.
  2. The sectors covered by the Industrial Accelerator Act include batteries, EVs, solar panels, and the extraction and processing of critical raw materials, all areas where China dominates.

Related Articles:

  • 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.
  • How German Industry Can Survive the Second China Shock — The European Union has 30mm manufacturing jobs, and China has grown from a $4tn economy producing under 15% of global manufacturing output to an $18tn economy producing over a third, with well over 50% of global capacity in many sectors. European tariffs on Chinese electric vehicles limit import competition but do not offset lost export markets.
  • Places versus People: The Ins and Outs of Labor Market Adjustment to Globalization — Analysis of U.S. register data finds that employment levels in places exposed to Chinese import competition more than fully rebound, while employment-to-population ratios stay depressed and manufacturing employment continues to shrink. The authors find the recovery comes almost entirely from young adults and foreign-born immigrants taking first jobs in lower-wage service sectors, with both in- and out-migration remaining depressed.

AI Summary. Ford's chief executive argues Chinese carmakers should be barred from the US market, contending that large direct government support lets them undercut prices and that camera-equipped Chinese vehicles collecting data pose national security risks. He has told US officials that Chinese automakers building cars in America should be required to form joint ventures controlled by US automakers.

Keith Naughton Bloomberg
Date Posted:

Jim Farley the CEO of Ford, argued that allowing Chinese automakers into the American market would be “devastating” to American manufacturing. The US currently has a 100% tariff on Chinese-made electric vehicles.

Should Chinese carmakers be barred from the US market?

Core argument: Ford CEO Jim Farley warned of national security risks from technology-laden Chinese vehicles on US roads, saying "All of these vehicles have 10 cameras" and "They can collect a lot of data.".

The Ford leader contends the “huge direct support” Chinese carmakers receive from their government gives them an unfair advantage to slash prices and decimate domestic automakers in the US, “There is no way this is a fair fight.” Farley also warned of national security risks from allowing technology-laden Chinese vehicles to navigate US roads. “All of these vehicles have 10 cameras,” Farley said. “They can collect a lot of data.” President Donald Trump in January told the Detroit Economic Club he was willing to “let China come in” as long as they built factories and hired American workers. Farley subsequently told administration officials that Chinese carmakers should have to form joint ventures where US automakers hold controlling stakes in order to build cars in America, Bloomberg has reported.

Takeaways by Macro Roundup® AI

  1. Ford CEO Jim Farley warned of national security risks from technology-laden Chinese vehicles on US roads, saying "All of these vehicles have 10 cameras" and "They can collect a lot of data.".
  2. President Donald Trump told the Detroit Economic Club in January he was willing to "let China come in" if Chinese carmakers built factories and hired American workers.
  3. Farley told administration officials that Chinese carmakers should be required to form joint ventures in which US automakers hold controlling stakes in order to build cars in America, Bloomberg has reported.

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  • Canada and China Slash Tariffs As They Mend Ties After Years Of Dispute — Canada agreed to accept 49,000 Chinese electric vehicles at a 6.1% tariff, down from 100%, while China will cut its levy on Canadian canola seed to 15% from an effective rate of about 85%. Canada's canola exports to China were valued at nearly C$5bn (US$3.6bn), and Canada's original 100% electric vehicle tariff was adopted at Washington's urging.
  • Will China Take Over the Global Auto Industry? — The global auto market has historically been regional, with most cars sold in a region also built there. Overcapacity in China's internal combustion sector, expanding electric-vehicle capacity, ample state bank credit, and a weaker yuan could concentrate global auto production in China absent restrictions such as the US 100% tariff on Chinese electric vehicles.
  • Cheap Chinese Cars Are Taking Over Roads From Brazil to South Africa — Inexpensive cars from Chinese makers such as BYD, Chery, Great Wall and SAIC are gaining share in emerging markets, reaching nearly 10% of sales in South Africa, 8% in Turkey and close to a third in Chile. Chinese automakers' market share outside China is projected to rise to 13% by 2030 from 3%.

AI Summary. The average new car transaction price is around $50,000, with new cars under $20,000 essentially unavailable, while auto repair costs rose 15% over the past year to roughly $840 per visit. The author argues the US should stop protecting Detroit and open the market to Chinese cars.

Clifford Winston New York Times
Date Posted:
Is Database:
Database

In 2012, there were ~12 new cars available for around $25,000 in real terms in the US. Today, there are only 4 new cars available at that price point. Clifford Winston notes allowing Chinese imports would likely increase that number to 11.

Would opening the US market to Chinese cars restore affordable vehicles?

Core argument: The average transaction price for a new car sits around $50,000, and in December it became nearly impossible to find a new car for less than $20,000.

The average transaction price for a new car now sits around $50,000. In December, it became just about impossible to find one for less than $20,000. For anyone on a budget, an aging car is a trap. Auto repair costs jumped 15% in the last year alone, driven by the complexity of modern sensors and labor shortages. An average trip to the mechanic now costs roughly $840. To fix the problem, policymakers must overturn what has been for decades the third rail in American politics. It is time to stop coddling Detroit automakers [and open] the American market to cars made in China and elsewhere. Chinese cars aren’t just cheaper than the American alternatives. They’re often better. Take BYD’s slightly more upscale Seal sedan. It’s similar to Tesla’s Model 3, introduced nine years ago. But the Seal costs roughly $20,000 less than the Model 3. The Seal’s premium model offers substantially more horsepower, and its battery not only lasts longer, it can also be 80% charged in just 37 minutes. The Seal isn’t just a budget alternative; it is a more advanced machine.

Takeaways by Macro Roundup® AI

  1. The average transaction price for a new car sits around $50,000, and in December it became nearly impossible to find a new car for less than $20,000.
  2. Auto repair costs rose 15% over the past year, driven by the complexity of modern sensors and labor shortages, with an average trip to the mechanic costing roughly $840.
  3. BYD's Seal sedan costs roughly $20,000 less than Tesla's Model 3, and the Seal's premium model offers substantially more horsepower, a longer-lasting battery, and an 80% charge in 37 minutes.

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AI Summary. Massachusetts caps annual property tax revenue growth at 2.5% unless voters approve an override, and South Hadley voters rejected ballot measures meant to close a $3m deficit driven partly by a 42% jump in healthcare costs and reduced state aid. Municipalities nationwide face the end of federal pandemic aid, higher costs, and state-imposed revenue limits.

Scott Calvert Wall Street Journal
Date Posted:

Voters in South Hadley, MA overwhelmingly rejected a property tax increase by 65 to 34%, that advocates argued was needed to prevent steep cuts in education spending, in part due to a 42% increase in the town’s health care costs.

Will voters reject property tax increases as local budget deficits grow?

Core argument: South Hadley, Massachusetts voters rejected two ballot questions that would have permanently lifted the sum the town can raise through property taxes well above the current $35 million, leaving a $3 million deficit.

Massachusetts law largely caps annual property tax revenue increases at 2.5%. Anything more requires a voter-approved override. Facing a $3 million deficit, South Hadley’s elected selectboard put [two] override questions on the ballot. Either would have permanently lifted the sum that can be raised via property taxes well above the current $35 million. South Hadley’s fiscal plight, driven partly by a 42% jump in healthcare costs and reduced state aid, is a preview of what other communities nationwide can expect, according to Chris Morrill, chief executive of the Government Finance Officers Association, which represents public-finance officials in the U.S. and Canada. Towns across the U.S. are grappling with the end of federal pandemic aid that propped up budgets, along with higher municipal costs and, in many cases, state-imposed revenue limits.

Takeaways by Macro Roundup® AI

  1. South Hadley, Massachusetts voters rejected two ballot questions that would have permanently lifted the sum the town can raise through property taxes well above the current $35 million, leaving a $3 million deficit.
  2. Massachusetts law largely caps annual property tax revenue increases at 2.5% unless voters approve an override, and South Hadley's shortfall was driven partly by a 42% jump in healthcare costs and reduced state aid.
  3. Chris Morrill, chief executive of the Government Finance Officers Association, says South Hadley's fiscal plight previews what other U.S. communities can expect as federal pandemic aid ends alongside higher municipal costs and state-imposed revenue limits.

Related Articles:

  • Massachusetts Loses Billions in Income After Millionaire Tax — Internal Revenue Service data show residents leaving Massachusetts took a net $4.2bn in adjusted gross income with them, an 8% year-over-year increase, in the first year of a 4% surtax on incomes above $1m, though the number of departing taxpayers slowed. Net outflows predate the surtax, and surtax collections have risen every year.
  • The Robin Hood State Is Coming For The Rich — In the US, increased redistribution has offset rising pre-tax inequality: Congressional Budget Office data show inequality of taxable income near record highs while inequality after taxes and transfers was lower than in several earlier years and only slightly above 1986. The top 1% of earners paid 40% of income tax in 2022, up from 33% in 2001.
  • Behavioral Responses to State Income Taxation of High Earners: Evidence from California — A California ballot measure raising top marginal income tax rates by up to 3 percentage points prompted an additional 0.8% of the affected tax base to leave the state, with an estimated income elasticity of 2.5–3.2 for high earners who stayed. The authors estimate these responses eroded 45.2% of windfall revenues within one year and 60.9% within two.