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, May 12, 2026

AI Summary. America's post-2019 productivity acceleration came largely from professional services and management—about 10% of output and heavy users rather than producers of new technology—and from oil and gas. The information industry grew productivity around 6% annually, no faster than its 2000-19 average, with its output share steady at 5.3–5.5%.

Economist Staff The Economist
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The 2019–2024 uptick in US productivity wasn’t driven by the information sector, whose growth and scale is on par with its 2000–2019 mean, but rather by professional services and management, which together make up ~10% of the economy.

Which industries are driving America's recent productivity acceleration?

Core argument: America's "information" industry, spanning software, telecoms, publishing and film-making, led productivity growth at roughly 6% a year in 2019–2024, no higher than its 2000–2019 annual average.

Between 2019 and 2024 the “information” industry—which covers areas from software and telecoms to publishing and film-making—came top with an annual rate of around 6%. That was no higher than the annual average in 2000-19. Nor is America’s recent uptick the consequence of this particularly efficient industry accounting for a bigger slice of the economy: in the past six years the sector’s share of total American output has hovered between 5.3% and 5.5%. Instead, some of the biggest jumps in productivity growth have come in professional services and management. Together, these make up around 10% of the American economy, up a little from 2019. They are the sorts of businesses that do not produce new technology, but are voracious users of it. Productivity growth also sped up in oil and gas. The shale-fracking revolution of the 2010s turned America from a net energy importer to an exporter. In 2023 it sold half as much energy abroad, net of imports, as Saudi Arabia. Since then, construction of new liquefaction plants for natural gas has allowed America to send the fuel to Europe and Asia, where it fetches higher prices than at home.

Takeaways by Macro Roundup® AI

  1. America's "information" industry, spanning software, telecoms, publishing and film-making, led productivity growth at roughly 6% a year in 2019–2024, no higher than its 2000–2019 annual average.
  2. The information sector's share of total American output stayed between 5.3% and 5.5% over the past six years, so the productivity uptick did not come from that industry taking a larger slice of the economy.
  3. Some of the biggest productivity jumps came in professional services and management—about 10% of the American economy, up a little from 2019—which use technology heavily rather than produce it, and in oil and gas.

Related Articles:

  • Killer Incentives: Status Competition and Pilot Performance during World War II — Analysis of over 5,000 German World War II fighter pilots finds that public peer recognition was associated with higher victory scores among skilled pilots without higher mortality, while average pilots gained little in victories but died at higher rates. The authors conclude status-based awards can have uneven effects in high-risk settings.
  • Attention (And Money) Is All You Need: Why Universities Are Struggling to Keep AI Talent — The annual compensation gap between top industry and academic artificial intelligence researchers widened from roughly $294,000 to $1.5m, coinciding with accelerating academic out-migration toward large incumbent technology firms. Researchers who move to industry cut paper production by about 63% while increasing patent filings nearly sixfold, consistent with a shift from open science toward proprietary innovation.
  • An AI Productivity Boom? Don’t Count Your (Productivity Data) Chickens — Measured productivity can rise from compositional effects when lower-wage, lower-productivity workers leave the labor force, as happened during Covid and 2009, and immigration policy changes could produce a similar effect. Much of the recent productivity boost appears to come from capital utilization tied to increased investment in AI rather than workers becoming more productive using AI.

AI Summary. US growth in GDP per capita has outpaced Europe's on conventional measures, yet European relative GDP per capita measured at purchasing power parity has not fallen. A model in which the US produces all technology output, and technology alone enjoys productivity growth, generates rising US real GDP at chained constant prices while relative GDP at current prices stays unchanged.

Paul Krugman Krugman Wonks Out
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Krugman presents an example in which US and European output growth diverge, yet relative GDPs in purchasing power terms remain constant, as the drop in the relative price of tech goods enriches Europe, even though its own output remains constant.

Why has US growth outpaced Europe's without changing relative purchasing-power income?

Core argument: Conventional measures show US GDP per capita growth outpacing Europe's since 2000, yet European relative GDP per capita measured at purchasing power parity has not declined — the US-Europe paradox.

Conventional measures of growth in GDP per capita have favored the United States since 2000. But European relative GDP per capita measured at PPP has not declined. Call all this the US-Europe paradox. Of course, it isn’t really a paradox. It makes perfect sense given US dominance of sectors that are experiencing rapid productivity growth, which leads to a rise in relative US GDP at constant prices but doesn’t translate into a rise in relative GDP at current prices. I assume that the US has a comparative advantage in T [Tech], and hence that all T is produced there. T experiences more rapid technological progress than N [nontech]. I assume that productivity in that sector rises at a rate ⍴, versus zero in N. Given these assumptions, what does the model imply for measured growth and relative performance? The model implies that all T will be concentrated. Because T attracts a share 𝜏 of world spending, it will also account for a share 𝜏 of world GDP, and hence 2𝜏 of US GDP. Given this, technological progress in T implies rising US real GDP, measured the way we actually calculate it — as growth in “chained” constant prices — at a rate of 2𝜏𝜌. Growth in EU real GDP is zero. Yet relative GDP at current prices remains 1.

Takeaways by Macro Roundup® AI

  1. Conventional measures show US GDP per capita growth outpacing Europe's since 2000, yet European relative GDP per capita measured at purchasing power parity has not declined — the US-Europe paradox.
  2. The model assumes the United States holds a comparative advantage in tech and produces all of it, with tech productivity rising at rate ⍴ while nontech productivity growth is zero.
  3. The model implies US real GDP in chained constant prices grows at twice tech's share of world spending times ⍴ while EU real GDP growth is zero, yet relative GDP at current prices remains 1.

Related Articles:

  • Is Europe in Economic Decline? — French gross domestic product per person, adjusted for purchasing power, was 74% of the US level in 2001 and 73% in 2024, while Germany closed some of the gap, indicating European living standards have not fallen behind. Higher measured US growth is attributed to rapid productivity growth in information technology, a sector the US dominates.
  • Ed Conard Debates Furman On “The Expected Value of Risk Taking” — A debate on U.S. fiscal policy argues that spending increases, rather than the tax increases needed to fund them, slow growth, and that higher taxes would reduce the expected value of America's innovative risk-taking. The argument holds that cutting debt below 100% of GDP is critical.
  • The Two Europes — The International Monetary Fund projects Eastern European economies will close much of the gap with US per capita GDP — Poland from 34% to 67%, Romania 27% to 60%, Lithuania 29% to 69% — while Western Europe slips, with France falling from 86% to 71% and Italy from 93% to 68%.

AI Summary. A closed-end fund holding small private stakes in OpenAI, SpaceX, and Anthropic has more than doubled in under two weeks and trades at nearly triple its last reported net asset value. The author argues this reflects investor appetite for any exposure to pre-IPO artificial intelligence companies, which will pull money out of other assets.

Paul Kedrosky Notes on Complexity
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Public vehicles holding private market shares in Anthropic are “going parabolic.” Kedrosky notes the sum of SpaceX’s, OpenAI’s and Anthropic’s gross valuations at IPO may now be above $5T.

Will demand for pre-IPO AI exposure draw money out of other assets?

Core argument: DXYZ, a closed-end fund holding modest stakes in private tech companies including OpenAI, SpaceX, and Anthropic, has more than doubled over ten days and rose 30% in a single session.

Public vehicles holding private market shares in Anthropic are going parabolic. Case in point, DXYZ, a closed-end fund holding various private tech companies, including OpenAI, SpaceX, and Anthropic, albeit in modest percentages. The fund's stock has more than doubled in the last ten days, and is up 30% today alone. While it seems likely was partly a short squeeze on a closed-end fund whose price was almost triple (!) its last posted net asset value, it's also the fervor for any exposure whatsoever to pre-IPO AI companies, in particular the Anthropix troika. This will only get more dramatic in the coming weeks and months. Money will increasingly flood out of a host of financial nooks and crannies, and into anything with any connection to what's coming. The money has to come from somewhere, the appetite is immense.

Takeaways by Macro Roundup® AI

  1. DXYZ, a closed-end fund holding modest stakes in private tech companies including OpenAI, SpaceX, and Anthropic, has more than doubled over ten days and rose 30% in a single session.
  2. The author attributes DXYZ's surge partly to a short squeeze in a closed-end fund trading at nearly triple its last posted net asset value, and partly to investor fervor for any exposure to pre-IPO AI companies.
  3. The author argues money will increasingly flow out of other financial holdings into anything connected to the coming AI listings, putting the potential "AnthroPix" effect at $5 trillion or more.

Related Articles:

  • The Coming Mega-IPO Flow & Funding Problem of 2026 — Adjusted for inflation, SpaceX alone would rank as the second-largest initial public offering ever, behind Saudi Aramco, and three such listings together would exceed the entire 1995–2000 dot-com wave. Funding that equity supply requires selling existing holdings, and index rule changes make passive funds forced buyers, pressuring large-cap technology stocks.
  • Trampled Underfoot by a Stampede of Unicorns — A database trawl counts 1,727 private companies valued above $1bn globally, and if private market valuations are accurate, the largest of them have outperformed public markets since the pandemic. Several, led by SpaceX and OpenAI, plan initial public offerings, which can signal trouble ahead since insiders are choosing to sell.
  • 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.

AI Summary. The authors use the end of UK sugar rationing as a natural experiment and estimate that a sugar-rich early-childhood diet raised adult chronic inflammation, diabetes, cholesterol and arthritis, and led to less human capital, lower odds of a skilled occupation, and less wealth. They also find early exposure elevated sugar consumption across the lifespan.

Paul Gertler and Tadeja Gračner Working Paper
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Using a regression discontinuity design exploiting the end of sugar rationing in September 1953, Gertler and Gračner find that birth cohorts post-dating the policy change experience worse lifetime outcomes in many health measures as well as economic success.

Does a sugar-rich early childhood diet worsen adult health and wealth?

Core argument: Using the end of UK sugar and sweets rationing in 1953 as a natural experiment, the authors find that early-childhood exposure to a sugar-rich diet increased adult chronic inflammation, a marker of chronic disease.

We study the long-term effects of exposure to a sugar-rich diet in early childhood on health and economic well-being in later adulthood, and identify diet as a possible pathway. We exploit the end of sugar and sweets rationing in 1953 in the UK as a natural experiment inducing variation in exposure to a sugar-rich diet in early childhood. We find that the end of rationing increased the adult prevalence of chronic inflammation, an important marker of chronic disease. We also find increases in poor metabolic health; particularly diabetes, cholesterol and arthritis. Finally, we find that excessive intake of sugar also results in worse economic outcomes; specifically, in reduced human capital accumulation, a lower likelihood of having a skilled occupation, and a lower accumulation of wealth. While the effects of a sugar-rich diet early in life may have affected these outcomes directly via physiological programming, we find that a sugar-rich diet early in life elevated free sugar consumption across lifespan, consistent with evidence that life-long dietary preferences and habits form early, and that sugar may be addictive.

Takeaways by Macro Roundup® AI

  1. Using the end of UK sugar and sweets rationing in 1953 as a natural experiment, the authors find that early-childhood exposure to a sugar-rich diet increased adult chronic inflammation, a marker of chronic disease.
  2. The authors find that early-childhood exposure to a sugar-rich diet raised the prevalence of poor metabolic health in later adulthood, particularly diabetes, cholesterol and arthritis.
  3. Early exposure to a sugar-rich diet is associated with worse economic outcomes — reduced human capital accumulation, a lower likelihood of holding a skilled occupation, and lower wealth accumulation — and with elevated free sugar consumption across the lifespan.

Related Articles:

AI Summary. Sweden has opened public services to private providers, with nearly half of primary healthcare clinics privately owned and one in three public high schools privately run, up from 20% in 2011. Its public social spending has fallen to 24% of GDP, similar to the US and below the over 30% in France and Italy.

Tom Fairless Wall Street Journal
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Swedish public social spending is now 23.7% of GDP, just 1pp above that of the US and well under France’s 31.6%. Market-based reforms in the 1990s brought overall government spending down from 69.4% to 49.3% in 2024.

How has Sweden shrunk its state by privatizing public services?

Core argument: Sweden's total public social spending, covering healthcare, education and welfare payments, has fallen to 24% of GDP, similar to the U.S. and well below the over 30% of nations like France and Italy.

For decades, Sweden was shorthand for the brand of high-tax, high-spend government that managed people’s lives from cradle to grave through state-run hospitals, schools and care homes. No longer. With little fanfare, this Nordic country of 11 million has embraced capitalism. Today, nearly half of primary healthcare clinics are privately owned, many by private-equity firms. One in three public high schools is privately run, up from 20% in 2011. School operators are listed on the stock exchange. The capitalist makeover has allowed Sweden to do what few industrialized countries have managed in recent years: shrink the size of the state. That has enabled the government to sharply lower taxes and, economists say, sparked a surge in entrepreneurship and economic growth. Its total public social spending bill—which includes healthcare, education and all welfare payments—has fallen to 24% of gross domestic product, similar to the U.S. and well below the over 30% for nations like France and Italy. Sweden’s economy is expected to grow by around 2% a year through 2030, roughly the same pace as the U.S. and double the growth rates of France and Germany, according to an April forecast by the International Monetary Fund.

Takeaways by Macro Roundup® AI

  1. Sweden's total public social spending, covering healthcare, education and welfare payments, has fallen to 24% of GDP, similar to the U.S. and well below the over 30% of nations like France and Italy.
  2. Nearly half of Sweden's primary healthcare clinics are privately owned, many by private-equity firms, and one in three public high schools is privately run, up from 20% in 2011, with school operators listed on the stock exchange.
  3. An April forecast by the International Monetary Fund projects Sweden's economy will grow around 2% a year through 2030, roughly matching the U.S. and double the growth rates of France and Germany.

Related Articles:

  • How Sweden Overcame Socialism — After government spending reached 70% of GDP and public debt 80% of GDP, Sweden adopted market-oriented reforms including privatized healthcare services, for-profit schools, reduced welfare benefits, deregulation of electricity and transportation, and a corporate tax cut from 28% to 22%. Public debt has since fallen to 41% of GDP, with growth outpacing European Union peers by roughly 1 point annually.
  • Reforming the Welfare State: Recovery and Beyond in Sweden — Sweden's structural reforms — flexible exchange rates, inflation targeting, a smaller public sector, less generous social insurance, and deregulated markets — accompanied export-led growth, a current account surplus lasting over a decade, government spending falling to 52% of GDP, and central government debt dropping from nearly 80% of GDP to about half that.
  • The US Has One of the Highest Fertility Rates Among Peer Countries — The tempo-adjusted fertility rate, which accounts for shifts in the timing of births, shows the US rate falling since roughly 2009-10 and dropping below the 2.1 births-per-woman replacement level around 2017, reaching 1.82 in 2022. The US decline is less severe than in many peer countries.

AI Summary. US consumer prices rose 3.8% from a year earlier, driven by higher gasoline and grocery costs, according to the Bureau of Labor Statistics. Inflation outpaced wage growth, leaving inflation-adjusted wages lower than a year earlier for the first time in three years.

Mark Niquette Bloomberg
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Real wages fell for the first time in three years as headline CPI rose 3.8% y/y in April, reaching its highest level since spring 2023. Core rose 2.8% y/y.

Is inflation now outpacing wage growth?

Core argument: The US consumer price index rose 3.8% from a year earlier in April, the most since 2023, according to Bureau of Labor Statistics data.

US inflation accelerated in April on rising gasoline and grocery costs, exceeding wage growth in a double-whammy for already strained consumers. The consumer price index rose 3.8% from a year earlier, according to Bureau of Labor Statistics data out Tuesday, the most since 2023. After adjusting for inflation, wages fell for the first time in three years.

Takeaways by Macro Roundup® AI

  1. The US consumer price index rose 3.8% from a year earlier in April, the most since 2023, according to Bureau of Labor Statistics data.
  2. April's inflation acceleration reflected rising gasoline, grocery and rent costs, and it exceeded wage growth, straining consumers already under pressure.
  3. Inflation-adjusted wages fell in April for the first time in three years, according to Bureau of Labor Statistics data.

Related Articles:

  • A Q&A on Our Economic Forecasts Amid the Evolving War with Iran — The authors forecast that the drag on US growth from higher oil prices will roughly offset the boost from recent tax cuts, and have lowered their GDP growth projection by 0.5 percentage points to 2.0%. Their baseline now runs about half a percentage point below estimated potential growth, with adverse scenarios three-quarters to a full point below.
  • You Can’t Print Molecules — Rebuilding after a disruption to a key shipping strait would require governments to finance defense, strategic reserves, domestic energy production, and infrastructure at the same time that inflation expectations are raising funding costs. The author argues capital will rotate out of asset-light sectors that thrived on open sea lanes and cheap energy into asset-heavy physical ones.
  • Abandon Ship! — 42 AI-related stocks have accounted for 75%-85% of S&P 500 returns, earnings and capital spending since generative AI chatbots launched, and 80%-100% over the more recent period. Unlike the dot-com era, rising tech capital spending has not been accompanied by increased debt financing in aggregate.

Wednesday, May 13, 2026

AI Summary. Comparing the United States, France, and Germany at current purchasing power parity prices shows the European economies roughly constant relative to America since 2000, but current-price measures miss output gains in sectors where prices fall, such as software. The author argues constant-price comparisons, the standard approach for growth over time, reveal greater European stagnation.

Pieter Garicano and Luis Garicano Silicon Continent
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Granting that falling US tech prices limited Europe’s welfare decline relative to the US, the Garicanos argue “Europe is being pushed away from the next round of technology industries,” – a long‑run drag on wages, profits, and strategic influence.

Do constant-price comparisons reveal greater European stagnation?

Core argument: Krugman's comparison of the United States, France, and Germany at purchasing power parity in current prices shows French and German positions relative to America roughly constant since 2000.

Krugman bases his analysis on the comparison of the United States, France, and Germany at purchasing power parity in current prices. If we use this metric, France’s and Germany’s position relative to America has been roughly constant since 2000. [first figure in gallery] But current price comparisons miss productivity gains in sectors where prices fall. Imagine America produces twice as much software, while the price of each unit of software halves. At current prices, the value of American software output looks unchanged even though the volume of software produced has doubled. For comparisons of growth over time, most economists commonly use constant prices: they fix the base-year PPP price level and apply each country’s own real output growth on top of it. In the previous example, you would use the relative prices from 2000 to measure both 2000 and 2024 output and correctly identify that American output of software has doubled [featured image]. If American leadership in technology is the product of agglomeration in Silicon Valley, Seattle, and Austin, then Europe is not merely consuming the same iPhones at the same price as Americans. Europe is being pushed away from the next round of technology industries, because those industries will emerge in existing clusters. The measures Krugman uses understate European stagnation.

Takeaways by Macro Roundup® AI

  1. Krugman's comparison of the United States, France, and Germany at purchasing power parity in current prices shows French and German positions relative to America roughly constant since 2000.
  2. Current-price comparisons miss productivity gains in sectors where prices fall, as when American software output doubles while unit prices halve, leaving measured value unchanged.
  3. Most economists use constant prices for growth comparisons over time, fixing the base-year PPP price level and applying each country's own real output growth, a method suggesting Krugman's measures understate European stagnation.

Related Articles:

  • Is Europe in Economic Decline? — French gross domestic product per person, adjusted for purchasing power, was 74% of the US level in 2001 and 73% in 2024, while Germany closed some of the gap, indicating European living standards have not fallen behind. Higher measured US growth is attributed to rapid productivity growth in information technology, a sector the US dominates.
  • Ed Conard Debates Furman On “The Expected Value of Risk Taking” — A debate on U.S. fiscal policy argues that spending increases, rather than the tax increases needed to fund them, slow growth, and that higher taxes would reduce the expected value of America's innovative risk-taking. The argument holds that cutting debt below 100% of GDP is critical.
  • The Two Europes — The International Monetary Fund projects Eastern European economies will close much of the gap with US per capita GDP — Poland from 34% to 67%, Romania 27% to 60%, Lithuania 29% to 69% — while Western Europe slips, with France falling from 86% to 71% and Italy from 93% to 68%.

AI Summary. US inflation exceeded year-over-year growth in average hourly earnings, with wages up 3.6% against 3.8% inflation pushed up by surging fuel costs, according to the Labor Department. After seasonal adjustment and rounding, that leaves inflation-adjusted hourly wages down 0.3%.

Harriet Torry and Drew An-Pham Wall Street Journal
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As prices have risen over the past two months, real wages have fallen for the first time since spring 2023. Real hourly earnings are down 0.3% y/y.

Are rising fuel costs pushing inflation above wage growth?

Core argument: Inflation-adjusted hourly wages fell 0.3% year over year in April, after seasonal adjustment and rounding, as inflation of 3.8% outpaced average hourly earnings growth of 3.6%, according to the Labor Department.

April marked the first time inflation topped year-over-year growth in average hourly earnings since April 2023, according to the Labor Department. While hourly wages rose a seasonally adjusted 3.6% on the year through April, the pace has mostly slowed over the past four years as hiring cooled from a post pandemic hot streak. Meanwhile, inflation was 3.8% year over year, pushed up by surging fuel costs. After seasonal adjustment and rounding, the Labor Department said this leads to a 0.3% decline in inflation-adjusted hourly wages, also known as real hourly earnings.

Takeaways by Macro Roundup® AI

  1. Inflation-adjusted hourly wages fell 0.3% year over year in April, after seasonal adjustment and rounding, as inflation of 3.8% outpaced average hourly earnings growth of 3.6%, according to the Labor Department.
  2. April marked the first month since April 2023 in which year-over-year inflation topped growth in average hourly earnings, with surging fuel costs pushing inflation up.
  3. Average hourly wage growth has mostly slowed over the past four years as hiring cooled from a post-pandemic hot streak, reaching a seasonally adjusted 3.6% on the year through April.

Related Articles:

  • The Cost of Money is Part of the Cost of Living: New Evidence on the Consumer Sentiment Anomaly — Variation in the University of Michigan consumer sentiment index that inflation and unemployment cannot explain is strongly correlated with growth in consumer borrowing costs, such as mortgage and car loan rates. The authors estimate that including interest payments and homeownership costs in the consumer price index would raise measured inflation from 3% to 9%.
  • A Q&A on Our Economic Forecasts Amid the Evolving War with Iran — The authors forecast that the drag on US growth from higher oil prices will roughly offset the boost from recent tax cuts, and have lowered their GDP growth projection by 0.5 percentage points to 2.0%. Their baseline now runs about half a percentage point below estimated potential growth, with adverse scenarios three-quarters to a full point below.
  • US Inflation Accelerates as Gas, Rent and Food Prices Climb — US consumer prices rose 3.8% from a year earlier, driven by higher gasoline and grocery costs, according to the Bureau of Labor Statistics. Inflation outpaced wage growth, leaving inflation-adjusted wages lower than a year earlier for the first time in three years.

AI Summary. US net exports of crude and refined products have reached a record average of 5.9m barrels a day, up from 3.3m a year earlier, versus net imports above 5m a decade ago. Strategic Petroleum Reserve releases hit a record weekly pace above 1.2m barrels a day, which would leave the reserve at 242m barrels.

Javier Blas Bloomberg
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Over the past four weeks, American net exports of crude and refined products have averaged 5.9mm bpd, an ~79% y/y increase. Half of the net increase is a function of the SPR release, which at its current rate has 117 more days to run.

How long can the US keep supplying oil to global markets?

Core argument: US net exports of crude and refined products averaged a record 5.9 million barrels a day over the past four weeks, up from 3.3 million a year earlier, compared with net imports above 5 million a decade ago.

Over the last four weeks, US net exports of crude and refined products have averaged a record high of 5.9 million barrels a day, up from 3.3 million a year ago. Only a decade ago, the US was a net importer in excess of 5 million. Last week, the US put into the market more than 1.23 million barrels a day from the SPR, the highest weekly volume ever — and well above naysayers’ predictions that the emergency stockpile wouldn’t be able to do anything near 1 million, let alone more. Through last week, the SPR has released about 31 million barrels since Trump tapped it. Assuming the release rate of about 1.2 million barrels a day continues until the final drop, Washington has another 117 days — or the beginning of September. Trump could order further releases, but that will push an already weakened SPR to its limit. After the full loan is released, the reserve would be left with 242 million barrels, the lowest since the early 1980s.

Takeaways by Macro Roundup® AI

  1. US net exports of crude and refined products averaged a record 5.9 million barrels a day over the past four weeks, up from 3.3 million a year earlier, compared with net imports above 5 million a decade ago.
  2. The Strategic Petroleum Reserve supplied more than 1.23 million barrels a day last week, the highest weekly volume ever and above predictions that the stockpile could not approach 1 million.
  3. The Strategic Petroleum Reserve has released about 31 million barrels since Trump tapped it, and at roughly 1.2 million barrels a day Washington has another 117 days, after which the reserve would hold 242 million barrels, the lowest since the early 1980s.

Related Articles:

  • 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.
  • You Can’t Print Molecules — Rebuilding after a disruption to a key shipping strait would require governments to finance defense, strategic reserves, domestic energy production, and infrastructure at the same time that inflation expectations are raising funding costs. The author argues capital will rotate out of asset-light sectors that thrived on open sea lanes and cheap energy into asset-heavy physical ones.
  • China’s Invisible Hand Is Rebalancing the Oil Market — Chinese state-owned oil companies have been reselling cargoes to European and Asian buyers, a sign of surplus that has capped benchmark crude prices and collapsed the premiums paid for physical barrels from about $30 above benchmarks to as little as $1. Satellite data show Chinese commercial stockpiles still rising.

AI Summary. Census Bureau microdata analysis finds that in Illinois annual out-migration by households earning under $50K fell by 104K while out-migration by households earning over $200K rose by 54K. Across the Midwest, adults with a bachelor's degree or higher now make up 57% of out-migrants, up from around 40%.

Aziz Sunderji Home Economics
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The “Brain Drain” is ongoing in the Midwest. The fraction of adult out-migrants with at least a bachelor’s degree is now 57%, up from ~40% in 2005. “It’s the most educated and highest-earning that are still leaving in droves.”

Are the most educated and highest-earning residents leaving the Midwest?

Core argument: Annual out-migration by Illinois households earning over $200K rose by 54K between 2014–15 and 2023–24, according to the author's analysis of Census Bureau microdata.

Take Illinois, the most populous Midwestern state: my analysis of Census Bureau microdata shows that between 2014–15 and 2023–24, annual out-migration by households earning under $50K fell by 104K. Out-migration by Illinois households earning over $200K rose by 54K over the same period. Across the region, the trend along educational lines is the same: the bachelor’s-or-higher share of adult out-migrants is now 57%, up from around 40% in 2005. It’s the most educated and highest-earning that are still leaving in droves.

Takeaways by Macro Roundup® AI

  1. Annual out-migration by Illinois households earning over $200K rose by 54K between 2014–15 and 2023–24, according to the author's analysis of Census Bureau microdata.
  2. Annual out-migration by Illinois households earning under $50K fell by 104K between 2014–15 and 2023–24, according to the author's analysis of Census Bureau microdata.
  3. Adults with a bachelor's degree or higher make up 57% of out-migrants from the Midwest, up from around 40% in 2005.

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AI Summary. US inflation driven by energy prices, tariffs, and immigration restrictions is proving stickier than the Federal Reserve expected, limiting rate cuts, while the Treasury funds record deficits almost entirely with short-term bills to avoid pushing up long-term yields. The author argues rates stay higher for longer, so investment returns must come from operational improvement rather than valuation expansion.

Torsten Sløk Apollo
Date Posted:

The lack of fiscal space in the US implies to Sløk that a recession would not bring down rates. “Rates are staying higher for longer across the curve, and the traditional path to value creation through multiple expansion is largely closed.”

Do sticky inflation and bill-funded deficits keep rates higher for longer?

Core argument: The Treasury is funding record deficits almost entirely through T-bills to avoid pushing long yields higher, a strategy that cannot continue indefinitely; when coupon issuance eventually rises, the supply shock will push long yields higher.

In the front end, inflation driven by higher energy prices, tariffs, and immigration restrictions is proving stickier than the Fed expected, constraining how aggressively it can cut. At the long end, the fiscal trajectory is structurally bearish for bonds. The Treasury is already funding record deficits almost entirely through T-bills to avoid putting upward pressure on long yields, a strategy that cannot continue indefinitely. When coupon issuance eventually has to increase, the supply shock will push long yields higher, not lower. And in a recession, the deficit blows out further, requiring even more issuance at precisely the moment when market appetite for duration is most uncertain. The bottom line is that rates are staying higher for longer across the curve, and the traditional path to value creation through multiple expansion is largely closed. Value will have to come from the hard work of operational improvement, i.e., earnings growth, margin expansion, and cash generation, and not from the discount rate doing investors a favor.

Takeaways by Macro Roundup® AI

  1. The Treasury is funding record deficits almost entirely through T-bills to avoid pushing long yields higher, a strategy that cannot continue indefinitely; when coupon issuance eventually rises, the supply shock will push long yields higher.
  2. Inflation driven by higher energy prices, tariffs, and immigration restrictions is proving stickier than the Fed expected, constraining how aggressively the Fed can cut rates at the front end of the curve.
  3. In a recession the deficit blows out further, requiring even more issuance when market appetite for duration is most uncertain, leaving rates higher for longer across the curve and largely closing the traditional path to value creation through multiple expansion.

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AI Summary. Countries running persistent trade surpluses, such as China, Germany and Japan, have built their economies around an excess supply of tradeable goods and services, leaving them dependent on deficit countries to absorb it. That dependence gives deficit countries bargaining power and exposes surplus countries to pressure to expand domestic demand.

Martin Wolf Financial Times
Date Posted:
Is Database:
Database

Chinese aggregate debt relative to GDP is now on par with the US level. As a surplus country, China is subject to pressure (external and internal) to expand domestic demand, reducing deflationary pressure.

Do trade deficit countries hold bargaining power over surplus countries?

Core argument: Surplus countries face external and internal pressure to expand domestic demand and so reduce deflationary pressure on trading partners, as happened to the US in the 1920s, Japan in the 1980s, and China after the 2007–09 financial crisis.

Surplus countries are not in as controlling a position as one might suppose. One source of weakness is that they will be subject to pressure (external and internal) to expand domestic demand (as was the US in the 1920s) and so reduce deflationary pressure on their partners. Exactly that happened to Japan in the 1980s and to China after the financial crisis of 2007-09. The implication is that deficit countries, while ostensibly in a weaker position, have power, too. Yes, credit to them can be cut off. But countries with structural surpluses of savings over investment and so external surpluses (such as China, Germany and Japan) have built their economies around excess supply of tradeable goods and services. Suddenly losing these may inflict a slump. Moralists in surplus countries complain about the profligacy of deficit countries. But they need them.

Takeaways by Macro Roundup® AI

  1. Surplus countries face external and internal pressure to expand domestic demand and so reduce deflationary pressure on trading partners, as happened to the US in the 1920s, Japan in the 1980s, and China after the 2007–09 financial crisis.
  2. Deficit countries hold power despite their ostensibly weaker position, since countries with structural savings surpluses such as China, Germany, and Japan have built their economies around excess supply of tradeable goods and services.
  3. Suddenly losing deficit-country demand for tradeable goods and services could inflict a slump on surplus economies, whose moralists complain about deficit-country profligacy while needing those countries.

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