Edward Conard

Top Ten New York Times Bestselling Author

  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “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
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, May 20, 2026

AI Summary. A survey of firms finds 18% use AI in at least one business function (32% employment-weighted), with adoption concentrated in large firms and knowledge-intensive sectors such as information, professional services, and finance. Scope remains narrow: 57% of adopters use AI in three or fewer functions, 66% use it to augment tasks, and only 2% report employment reductions.

Kathryn Bonney, Cory Breaux, Emin Dinlersoz, Lucia Foster, et al. National Bureau of Economic Research
Date Posted:

Census data show that 18% of US firms used AI in at least one function (32% employment-weighted). 66% say it augments work; only 2% report job cuts, but the deeper firms embed AI into operations, the more employment falls.

How widely are firms adopting AI, and does it reduce employment?

Core argument: AI use concentrates in large firms and knowledge-intensive sectors, reaching 50%–60% (60%–70% employment-weighted) among very large firms in Information, Professional Services, and Finance.

During Nov 2025–Jan 2026, 18% of firms used AI in at least one function (32%, employment-weighted), with adoption expected to reach 22% within six months. Use is concentrated in large firms and knowledge-intensive sectors, reaching 50%–60% (60%–70%, employment-weighted) among very large firms in Information, Professional Services, and Finance. Among adopters, scope remains limited: 57% use AI in three or fewer functions, most often Sales and Marketing (52%), Strategy (45%), and IT (41%). Worker-level use appears in 23% (41%, employment-weighted) of firms, primarily for writing, document analysis, and information search; 65% restrict use to three or fewer tasks. Evidence suggests both top-down and bottom-up diffusion: worker use can occur without firm adoption, and vice versa. Most firms (66%) use AI for task augmentation, while employment reductions are rare (2%).

Takeaways by Macro Roundup® AI

  1. AI use concentrates in large firms and knowledge-intensive sectors, reaching 50%–60% (60%–70% employment-weighted) among very large firms in Information, Professional Services, and Finance.
  2. Among adopters, 57% use AI in three or fewer functions, most often Sales and Marketing (52%), Strategy (45%), and IT (41%); 66% use AI for task augmentation, while employment reductions are rare (2%).

Related Articles:

  • Firm Data On AI — Survey data show around 70% of businesses use some artificial intelligence technology, with larger, more productive, and higher-paying firms more likely to adopt it. Firms report little employment effect and a modest productivity boost so far, but predict adoption will raise productivity by about 1.4% and cut employment by about 0.7% over three years.
  • 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.
  • Waiting for the AI J-Curve — Artificial intelligence has yet to appear in employment, productivity, or inflation data, or in profit margins and earnings expectations outside the largest technology firms. With fierce competition pushing large language model prices toward zero for users, value creation depends on sector-level implementation, and the author argues AI will likely enhance labor in some sectors rather than replace it across all.

AI Summary. Renminbi bonds have outperformed other major bond markets over horizons ranging from year-to-date to the past 10 years, and most countries now trade more with China than with the US. The author argues the world is not deglobalizing but "de-Westernizing," with greater trade with China making countries more willing to save in renminbi.

Charles Gave and Louis-Vincent Gave Gavekal
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Post-covid, Renminbi bonds have outperformed all major bond markets over 1, 3, 5, and 10 years. Charles and Louis-Vincent Gave argue that two parallel worlds are emerging: an inflationary OECD and a deflationary Asia/emerging markets.

Is rising trade with China making countries save in renminbi?

Core argument: Renminbi bonds have outperformed other major bond markets year to date and over the past 12 months, three years, five years, this decade, and the past 10 years.

Renminbi bonds have now outperformed other major bond markets year to date, over the past 12 months, three years, five years, so far this decade, and over the past 10 years. Most countries now trade more with China than with the US. This is arguably the major shift of the past two decades. Put differently, for all the talk of “deglobalization,” the world is not so much “deglobalizing” as “de-Westernizing.” The idea that the world is closing in on itself would sound silly to anyone living in Jakarta, Mumbai, Dubai, or São Paulo. And the more countries trade with China, the more comfortable they become saving in renminbi and buying renminbi bonds to fund future trade. In turn, this implies the coexistence of two worlds: one stable—Asia and emerging markets—and one unstable—the OECD; one inflationary—the OECD—and the other deflationary—Asia and emerging markets.

Takeaways by Macro Roundup® AI

  1. Renminbi bonds have outperformed other major bond markets year to date and over the past 12 months, three years, five years, this decade, and the past 10 years.
  2. Most countries now trade more with China than with the United States, a shift the author calls arguably the major one of the past two decades and a sign the world is "de-Westernizing" rather than deglobalizing.
  3. The author argues that greater trade with China makes countries more comfortable saving in renminbi and buying renminbi bonds, implying two coexisting worlds: a stable, deflationary Asia and emerging markets, and an unstable, inflationary OECD.

Related Articles:

  • Why Global Imbalances Matter — 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.
  • Is China’s High-Quality Investment Output Economically Viable? — China's technological progress and infrastructure do not refute claims of overinvestment, since overinvestment often produces real physical assets and technological gains yet still counts as overinvestment when it generates less real value than the resources, subsidies, and transfers it consumes. When such losses are capitalized, assets are carried above their real economic value.
  • Finding China in the U.S.TIC Data — China's holdings of U.S. assets began disappearing from U.S. custodial data after the G-7 immobilized Russia's reserves, and estimating them has grown harder as China diversified away from both U.S. and Belgium-based custodians. Estimates suggest a lower share in long-term Treasuries, more bills, and roughly 10% in agency bonds.

AI Summary. Unionized workers across New York City have won substantial pay increases, including a hotel housekeeper contract reaching six-figure salaries and commuter train workers who already averaged over $135,000 a year. Apartment-building workers are reviewing a tentative deal raising hourly wages $4.50 and guaranteeing a 15% pension increase.

Rachel Louise Ensign, Kate King and Justin Lahart Wall Street Journal
Date Posted:

NYC hotel housekeepers’ new 8-yr contract: hourly wage rises from $39.87 to $61.07, crossing $100,000/yr by year six. Striking LIRR workers, already averaging over $135,000, also won raises this week. Nurses and doormen notched similar gains this year.

Are city unions winning six-figure pay in new contracts?

Core argument: New York City hotel housekeepers won a contract that puts them on track to earn six-figure salaries in coming years.

New York City’s unionized workers are getting big raises. Hotel housekeepers won a contract this week that will have them earning six figures in coming years. Striking commuter train workers, who already earned over $135,000 on average, won pay increases this week too. Unionized apartment-building workers, including doormen, are currently reviewing a tentative agreement that would increase their hourly wages $4.50 an hour by 2030, according to the union representing them. If ratified, union members would also maintain free healthcare benefits and receive a 15% guaranteed pension increase, the union said. Employees would earn at least $71,000 in annual wages by the end of the four-year contract. Nurses at major city hospitals also held their largest and longest strike in city history earlier this year, securing salary increases of more than 12% over the course of the three-year contract.

Takeaways by Macro Roundup® AI

  1. New York City hotel housekeepers won a contract that puts them on track to earn six-figure salaries in coming years.
  2. Striking New York City commuter train workers, who already earned over $135,000 on average, won pay increases, while unionized apartment-building workers, including doormen, are reviewing a tentative deal raising hourly wages $4.50 by 2030.
  3. Nurses at major New York City hospitals held their largest and longest strike in city history, securing salary increases of more than 12% over a three-year contract.

Related Articles:

  • Labor Market Conflict and the Decline of the Rust Belt — The authors argue that persistent labor market conflict in the Rust Belt's main industries lowered investment and productivity growth, shifting employment to the rest of the country, and estimate it accounts for roughly half the decline in the region's share of US manufacturing employment. Rising foreign competition plays a more modest quantitative role.
  • 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.
  • Where Did All the American-Born Roofers Go? — The share of foreign-born workers in US construction is now nearly twice that of other industries, after being equal in the 1970s and 1980s, and 9 of 10 construction workers are nonunion. Unionized construction workers earn $1.15 for every $1 the average American worker earns hourly, down from $1.71, while nonunion construction workers earn 86 cents.

AI Summary. Patent data show the largest surge in space-related patenting occurred in the 1990s, alongside spectrum allocation, licensing regimes, and telecommunications and GPS demand, with incumbent aerospace firms accounting for most space patenting and entrants a growing minority share. The authors argue government's most consequential role lies in constructing appropriable markets rather than funding technology directly.

Ruben Gaetani and Alexander Whalley National Bureau of Economic Research
Date Posted:

The biggest post-1970s surge in space innovation came in the 1990s, when policy created commercial markets for satellites and communications. Incumbent firms, not “New Space” entrants, drove most of this boom and still account for most space patents.

What drove the surge in space innovation, market creation or funding?

Core argument: Patent data show the largest surge in space-related patenting occurred in the 1990s, coinciding with demand-side market creation through spectrum allocation, licensing regimes, and growing demand from telecommunications and GPS applications.

This paper uses patent data to examine the timing and composition of space innovation, finding patterns that challenge the popular narrative attributing commercial space transformation to entrepreneurial entrants after 2005. The largest surge in space-related patenting occurred in the 1990s, coinciding with demand-side market creation through spectrum allocation, licensing regimes, and growing demand from telecommunications and GPS applications. Throughout this period and since, incumbent aerospace firms have accounted for the majority of space-related patenting, with entrants contributing a growing but still minority share concentrated in broader space technologies rather than launch vehicles. These patterns are consistent with directed technical change: incumbents direct R&D toward policy-created markets accessible from existing capabilities, while entrants later bring science-based insights into domains requiring new technological paradigms. Government’s most consequential role in space innovation may lie in constructing appropriable markets rather than directly funding technological development or enabling entrepreneurial entry. Our findings reveal that the commercial space transformation is more closely connected to its government-led origins than narratives emphasizing entrepreneurial disruption suggest.

Takeaways by Macro Roundup® AI

  1. Patent data show the largest surge in space-related patenting occurred in the 1990s, coinciding with demand-side market creation through spectrum allocation, licensing regimes, and growing demand from telecommunications and GPS applications.
  2. Incumbent aerospace firms have accounted for the majority of space-related patenting throughout and since the 1990s, with entrants contributing a growing but still minority share concentrated in broader space technologies rather than launch vehicles.
  3. The authors argue that government's most consequential role in space innovation may lie in constructing appropriable markets rather than directly funding technological development or enabling entrepreneurial entry.

Related Articles:

  • Factories of Ideas? Big Business and the Golden Age of American Innovation — Using new data linking firms, patents, and inventors, the author estimates that America's great merger wave substantially increased innovation, raising breakthrough patents by 13% overall and 30% in science-based fields. Among firms already patenting, consolidation added about 6 patents and 0.6 breakthroughs per year, with corporate research laboratories identified as the key mechanism.
  • Mega Firms and New Technological Trajectories in the U.S. — The share of novel patents produced by the 50 largest US firms by sales followed a U-shaped path, falling from 1980 to the early 2000s before rising to its highest level by 2016. The authors find these firms' novel patents since 2001 generate more follow-on patents by other firms, suggesting knowledge diffusion.
  • Space: The Missing Element of Your Strategy — Private-sector funding of space-related companies has topped $10bn, close to a tenfold rise over the past decade, though the US government remains the largest source of space funding. If current momentum continues, commercial funding for space ventures could surpass government funding within 20 years.

AI Summary. The yield on 30-year US Treasury bonds reached 5.19%, its first time at that level since 2007. The author argues that the suddenness of such a move in yields, rather than the level itself, could dislodge the financing that underpins stocks and pressure credit markets.

John Authers Bloomberg
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Authers notes that the 30-year Treasury yield just hit a 19-year high, last seen in June 2007. He recalls that a column he co-wrote that month warned cheap money was ending. Weeks later, Bear Stearns’ hedge funds collapsed and the GFC spiral began.

Does the speed of rising bond yields threaten stocks and credit markets?

Core argument: The yield on 30-year Treasury bonds rose Tuesday to 5.19%, its first time at that level since June 2007.

The yield on 30-year Treasury bonds rose Tuesday to 5.19% for the first time since June 2007 (at . A similar headline appeared on a piece I wrote with my colleague Michael Mackenzie about that 2007 landmark for the Financial Times, our employer at the time, and it makes uncomfortably relevant reading today. The concern was that rates at these levels might burst higher, bringing down the then-booming stock market and putting unbearable pressure on credit markets. As I argued: "Money just seems too cheap. Bond yields are not high by historical standards, but the suddenness of their move might dislodge the financing that underpins stocks. If that scenario turns out to be true — and it is still too early to say that it will — the bond selloff might presage the end of an era for stocks." I hedged by saying that it was too early to tell, but that bond selloff did indeed signal the end of an era for equities. Within weeks, subprime credit was selling, two Bear Stearns hedge funds collapsed, and the long spiral into what we now call the Global Financial Crisis had begun.

Takeaways by Macro Roundup® AI

  1. The yield on 30-year Treasury bonds rose Tuesday to 5.19%, its first time at that level since June 2007.
  2. A 2007 Financial Times piece argued that money seemed too cheap and that the suddenness of the move in bond yields might dislodge the financing underpinning stocks, possibly presaging the end of an era for equities.
  3. Within weeks of the 2007 bond selloff, subprime credit was selling, two Bear Stearns hedge funds collapsed, and the spiral into the Global Financial Crisis had begun.

Related Articles:

  • Are Government Bonds Safe in Times of War and Pandemic? — Government bonds severely underperform in wartime, in absolute terms and relative to equities, housing, and economic growth, unlike in financial crises when bonds tend to outperform stocks. The U.S. and U.K. reduced war-driven debt-to-GDP ratios without explicit default, using surprise inflation and financial repression that shifted fiscal burdens onto bondholders.
  • Global Debt Report 2026 — Gross central government borrowing across OECD countries rose 7% to a record $17tn, about 23% of GDP, and is projected to reach roughly $18tn, or 24% of GDP. The United States and Japan account for close to 80% of the area's refinancing requirements, with the US share rising from 57% to 70%.
  • The Budget and Economic Outlook: 2026 to 2036 — The Congressional Budget Office projects the federal deficit will grow from $1.9tn (5.8% of GDP) to $3.1tn (6.7%) over a decade, above the 3.8% averaged over the past 50 years, with rising net interest costs driving much of the increase. Federal debt held by the public is projected to rise from 101% to 120% of GDP.

AI Summary. For three decades after commercial electricity delivery began in 1882, inflation-adjusted output per worker grew just 0.5% annually, accelerating to more than double that pace only after factories were redesigned around electric motors rather than retrofitted from steam. The author argues a near-term absence of productivity acceleration from AI is not evidence none is coming.

Ernie Tedeschi Stripe Economics
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Tedeschi points to a split in new US business formation: overall applications are rising, but filings from firms likely to hire employees have stalled. He argues AI may be fueling “solopreneur” activity by making it easier to launch without staff.

Does slow early productivity growth mean a new technology won't deliver?

Core argument: For the three decades after Edison began delivering commercial electricity in New York in 1882, inflation-adjusted output per worker grew just 0.5% annually, a sluggish pace relative to what electricity would eventually enable.

For three decades after Thomas Edison began delivering commercial electricity to New York customers in 1882, inflation-adjusted output per worker grew at just 0.5% annually—a sluggish pace relative to what electricity would eventually enable. The gains became evident only as the economy's capital stock and organizational practices adapted to the new technology: new factories designed around electric motors from the ground up, rather than retrofitted from steam. Some of the impetus for this replatforming came from the weapons production spurred by World War I. In the decade after 1917, productivity growth more than doubled its prior three-decade average. The implication for AI is that a near-term absence of productivity acceleration in the aggregate data should not be read as evidence that no acceleration is coming.

Takeaways by Macro Roundup® AI

  1. For the three decades after Edison began delivering commercial electricity in New York in 1882, inflation-adjusted output per worker grew just 0.5% annually, a sluggish pace relative to what electricity would eventually enable.
  2. Productivity gains from electricity emerged only as the economy's capital stock and organizational practices adapted, with new factories designed around electric motors from the ground up rather than retrofitted from steam.
  3. In the decade after 1917, productivity growth more than doubled its prior three-decade average, with some impetus for that replatforming coming from World War I weapons production.

Related Articles:

  • Sectors Embracing AI Are Seeing a Surge in New Business Formation — Sectors with the highest artificial intelligence adoption rates have also seen the strongest growth in new business applications, which one analysis interprets as evidence that AI is lowering the barriers to starting a company.
  • 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.
  • Which Entrepreneurs Boost Productivity? — The authors find that a minority of entrepreneurs are "transformative" — generating disproportionate productivity gains, scoring high on IQ tests, being well-educated, and hiring research and development workers. They argue that economies with more such entrepreneurs and R&D workers sustain higher long-run productivity growth.

Thursday, May 21, 2026

AI Summary. U.S. inflation has remained above the Federal Reserve's 2% target since 2022 while government borrowing runs high and companies borrow heavily to fund AI build-out. Even so, the 30-year Treasury yield reached a 19-year high of 5.18% while the 10-year yield, at 4.67%, sat below its October 2023 level.

Greg Ip Wall Street Journal
Date Posted:

With US deficits averaging 6.2% of GDP over 2023–2026 (vs. 4.8% over 2010–2019), political populism hindering fiscal restraint, AI Capex, and persistent inflation, 30-year Treasury yields hit a 19-year high of 5.18% Tuesday.

Are long-term Treasury yields lower than high borrowing and inflation suggest?

Core argument: The 30-year Treasury yield reached a 19-year high of 5.18% Tuesday before retreating several basis points, while the 10-year yield at 4.67% remained below its October 2023 level.

Government borrowing—everywhere, and especially in the U.S.—has been out of control for years. Inflation in the U.S. has been stuck above the Federal Reserve’s 2% target since 2022. Add in heavy corporate borrowing to fund the AI build-out, and you wonder why long-term interest rates aren’t higher. To be sure, the selloff has been mild in the scheme of things. The 30-year Treasury yield hit a 19-year high of 5.18% Tuesday [before retreating several bps]. Yet the more closely watched 10-year yield, at 4.67%, was lower than in October 2023. Both dropped back Wednesday on hopes oil will resume flowing through the Strait of Hormuz.

Takeaways by Macro Roundup® AI

  1. The 30-year Treasury yield reached a 19-year high of 5.18% Tuesday before retreating several basis points, while the 10-year yield at 4.67% remained below its October 2023 level.
  2. Government borrowing worldwide, and especially in the U.S., has been out of control for years, with U.S. inflation stuck above the Federal Reserve's 2% target since 2022.
  3. Heavy corporate borrowing to fund the AI build-out adds to the pressures on long-term interest rates, though both the 30-year and 10-year Treasury yields dropped back Wednesday on hopes oil will resume flowing through the Strait of Hormuz.

Related Articles:

  • Capital Is Making a Comeback — Tangible investment in property, factories and equipment fell from 12.5% to 8.5% of private gross domestic product, while intangible investment in intellectual property, software and process knowledge rose from about 11.5% to 16.75%. The author argues demand for tangible capital investment will now have to rise.
  • Are Government Bonds Safe in Times of War and Pandemic? — Government bonds severely underperform in wartime, in absolute terms and relative to equities, housing, and economic growth, unlike in financial crises when bonds tend to outperform stocks. The U.S. and U.K. reduced war-driven debt-to-GDP ratios without explicit default, using surprise inflation and financial repression that shifted fiscal burdens onto bondholders.
  • Global Debt Report 2026 — Gross central government borrowing across OECD countries rose 7% to a record $17tn, about 23% of GDP, and is projected to reach roughly $18tn, or 24% of GDP. The United States and Japan account for close to 80% of the area's refinancing requirements, with the US share rising from 57% to 70%.

AI Summary. Business investment outside artificial intelligence has been weak, contributing just 1.54% to total capital expenditure growth. The author argues AI investment is not crowding out other projects, since the spread between return on capital and cost of capital has stayed positive and US nonfinancial corporations' capital spending is below their gross savings.

Tan Kai Xian Gavekal
Date Posted:

US non-residential fixed investment grew +5.8% Y/Y in Q1 2026, driven by AI-related spending, while non-AI capex was minimal. Gavekal does not see crowding out from AI or deficits. Returns on capital > borrowing costs by several pp, and firms sit on trillions in cash.

Is AI investment crowding out other business capital spending?

Core argument: Non-AI business capex contributed just 1.54% to total US capex growth, a share that has barely been exceeded over the last two years.

Outside AI, business capex was anemic, contributing just 1.54% to total capex growth—a share that has barely been exceeded for the last two years. While investment is clearly attracting a lot of financial and real resources, the crowding-out thesis does not stand up well to scrutiny. If the demand for capital generated by AI investment were really pricing other projects out of the market, then the real cost of borrowed capital would have increased materially. That is what happened in the tech boom of the late 1990s. But this time around, the “Wicksellian spread” between return on capital and cost of capital has remained positive. The US corporate sector has abundant internally generated funds for capex. The US nonfinancial corporate financing gap—the difference between capex and gross savings—is negative. This suggests that businesses are not investing beyond their means, and therefore are not forced to pick and choose between investment opportunities. US businesses have enough financial capacity to invest both in AI and non-AI projects. The tightening of immigration policy under Donald Trump has brought US labor force growth (and population growth) almost to a standstill. This implies slower consumer demand growth and less incentive for business capex.

Takeaways by Macro Roundup® AI

  1. Non-AI business capex contributed just 1.54% to total US capex growth, a share that has barely been exceeded over the last two years.
  2. The crowding-out thesis does not hold up well, as the Wicksellian spread between return on capital and cost of capital has remained positive, unlike the late-1990s tech boom when real borrowing costs rose materially.
  3. The US nonfinancial corporate financing gap—capex minus gross savings—is negative, suggesting businesses have sufficient internally generated funds to invest in both AI and non-AI projects rather than choosing between them.

Related Articles:

  • Competitive Advantage Period: The Neglected Value Driver — 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.
  • Corporate America Is Minting Money—and Not Just in Tech and Finance — Earnings per share for S&P 500 companies are estimated to grow more than 13% year over year for a sixth straight quarter, with sales growth and improving margins accompanying the gains. Share buybacks are contributing less to earnings growth than in many quarters, with the gap between earnings-per-share and net income growth just under 1 percentage point.
  • End of an Era: The Coming Long-Run Slowdown in Corporate Profit Growth and Stock Returns — The authors estimate that declining interest and corporate tax rates accounted for over 40% of real corporate profit growth from 1989 to 2019, while falling risk-free rates explain the entire expansion in price-to-earnings multiples. Real earnings before interest and taxes grew slightly more slowly than in 1962–1989, at 2.2% versus 2.4% per year.

AI Summary. Artificial intelligence company Anthropic generated $4.8bn in quarterly sales and is set to post a $559m quarterly operating profit, with revenue growth outpacing Zoom during the pandemic and Google and Facebook before their stock listings. Its accounting methods are unclear, as it isn't yet subject to public-company reporting rules.

Berber Jin Wall Street Journal
Date Posted:

Anthropic’s revenue is set to more than double to $10.9B in Q2, delivering its first operating profit ($559M) — versus guidance last summer that pointed to no full-year profit before 2028.

Is a leading AI company about to turn its first profit?

Core argument: Anthropic generated $4.8 billion in first-quarter sales, with quarterly revenue growing faster than Zoom did during the pandemic and faster than Google and Facebook in the run-up to their IPOs.

Anthropic generated $4.8 billion in sales in the first quarter. Its quarterly revenue is now growing faster than Zoom did during the pandemic, and Google and Facebook in the run-up to their initial public offerings. It is set to turn an operating profit of $559 million in the June quarter. It is unclear what accounting methods Anthropic has used to book revenue and costs, as the company isn’t yet required to follow the financial-reporting requirements of a public company. Anthropic and OpenAI both account for revenue differently in ways that can make comparisons between the two companies difficult. Anthropic counts sales of its technology through cloud partners as revenue, while OpenAI doesn’t. An Anthropic spokeswoman has said this is consistent with standard accounting practices because the company is the principal in the transaction.

Takeaways by Macro Roundup® AI

  1. Anthropic generated $4.8 billion in first-quarter sales, with quarterly revenue growing faster than Zoom did during the pandemic and faster than Google and Facebook in the run-up to their IPOs.
  2. Anthropic is set to post an operating profit of $559 million in the June quarter, its first profitable quarter.
  3. Anthropic's accounting methods for booking revenue and costs are unclear because the company is not yet subject to public-company financial-reporting requirements, and it counts sales through cloud partners as revenue while OpenAI does not.

Related Articles:

  • Bayes and Base Rates 2.0: How History Can Guide Our Assessment of the Future — Applying historical base rates to OpenAI's published sales forecasts, the authors find that no U.S. public company in roughly 18,900 firm-period observations from 1950 to 2024 achieved five-year sales growth as fast as the company projects. Reported forecasts imply compound annual growth rates ranging from 85% to 118%.
  • 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.
  • An AI IPO Impact Update: The AnthroPix Effect May Be $5-Trillion+ — 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.

AI Summary. Excluding artificial-intelligence-related categories, US non-residential fixed investment has contracted at roughly a 3% annual rate over the past year, versus average growth above 5% in the prior decade, running about $130bn below trend and cutting GDP growth by roughly 0.4 percentage points. Credit remains plentiful, with tight corporate bond spreads.

Economist Staff The Economist
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The AI buildout drove ~ half of US GDP growth in 2025, according to an Economist analysis. Non-residential non-AI related fixed investment contracted ~3% over the past year.

Is business investment outside artificial intelligence shrinking?

Core argument: Excluding AI-related information-processing equipment and software, U.S. non-residential fixed investment has contracted at an annualised rate of roughly 3% over the past four quarters, against average growth above 5% in the previous decade.

Strip out the splurge on information-processing equipment and software—the categories most closely tied to AI—and the picture looks grim. Over the past four quarters non-residential fixed investment excluding ai-related categories has contracted at an annualised rate of roughly 3%, compared with average growth of more than 5% in the previous decade. Investment in industrial and transport equipment has fallen by more than 2% over the past year. Manufacturing construction is down by 20%. In total, non-AI investment is running about $130bn below its trend from the last decade. This capex recession is reducing gdp growth by roughly 0.4 percentage points. [A] potential explanation, in which strong demand or heavy government borrowing pushes up interest rates and crowds out other private investment, also looks unpersuasive. Credit remains plentiful. The spreads between investment-grade corporate bond and Treasuries have seldom been this tight since the 1990s.

Takeaways by Macro Roundup® AI

  1. Excluding AI-related information-processing equipment and software, U.S. non-residential fixed investment has contracted at an annualised rate of roughly 3% over the past four quarters, against average growth above 5% in the previous decade.
  2. Non-AI investment is running about $130bn below its trend from the last decade, with industrial and transport equipment investment down more than 2% over the past year and manufacturing construction down 20%.
  3. The capex recession in non-AI investment is reducing U.S. GDP growth by roughly 0.4 percentage points, and crowding out by higher interest rates looks unpersuasive as an explanation, since credit remains plentiful and investment-grade corporate spreads over Treasuries have seldom been this tight since the 1990s.

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AI Summary. An analysis published by Bloomberg attributes roughly 40% of Germany's shortfall in economic output to lost export markets, another 40% to higher energy prices, and the remaining 20% to weak domestic demand, bureaucracy and other factors. The author argues German politics overemphasizes bureaucracy while China's pressure on the country's industrial base erodes export demand.

Sander Tordoir and Brad Setser Centre for European Reform
Date Posted:

Germany’s economy is 6% below its pre-pandemic path; its exports to China are down more than 40% as a share of GDP since 2021, while China’s trade surplus with the EU is growing around 30% a year on heavy subsidies.

Is Germany's economic shortfall driven by lost exports rather than bureaucracy?

Core argument: A Bloomberg analysis published in late 2024 traces roughly 40% of Germany's GDP shortfall to lost export markets, another 40% to higher energy prices, and the remaining 20% to weak domestic demand, bureaucracy and other factors.

Germany's difficulty in diagnosing the drivers of its malaise resembles a Phantomschmerz – a pain felt where something vital has already been lost. That missing limb is export demand, chopped off by China's profound pressure on Germany's industrial base. According to an analysis published by Bloomberg in late 2024, roughly 40 per cent of Germany's GDP shortfall can be traced to lost export markets, another 40 per cent to higher energy prices, and the remaining 20 per cent to weak domestic demand, bureaucracy and other factors. By focusing overly on bureaucracy, German politics has got the 80-20 rule the wrong way around.

Takeaways by Macro Roundup® AI

  1. A Bloomberg analysis published in late 2024 traces roughly 40% of Germany's GDP shortfall to lost export markets, another 40% to higher energy prices, and the remaining 20% to weak domestic demand, bureaucracy and other factors.
  2. Germany's lost export demand is attributed to China's pressure on the German industrial base, a loss likened to a Phantomschmerz, or pain felt where something vital has already been gone.
  3. German politics has inverted the 80-20 rule by concentrating on bureaucracy, which sits in the 20% category alongside weak domestic demand, rather than on the export and energy losses making up 80% of the GDP shortfall.

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AI Summary. SpaceX reported revenue of $18.7bn, up from $14bn a year earlier, while swinging from a $791m profit to a loss of $4.94bn, according to its filing. Its Starlink satellite internet business supplies about two-thirds of sales, with subscribers rising from 2.3m to 8.9m over two years.

Loren Grush, Bailey Lipschultz, and Sana Pashankar Bloomberg
Date Posted:

SpaceX’s 2025 capex hit $20.74B, with more than half flowing to AI. The AI segment lost $6.36B. Starlink’s $4.42B in operating income only partly offset this loss.

Is rapid revenue and subscriber growth accompanied by widening losses?

Core argument: SpaceX reported $18.7 billion in 2025 revenue, up from $14 billion in 2024, while swinging from a $791 million profit in 2024 to a $4.94 billion loss last year, according to its filing.

SpaceX's filing depicts a conglomerate with a maturity practically unheard of in a pre-IPO company. Overall, SpaceX had $18.7 billion in revenue in 2025, up from $14 billion the previous year. During that period, the company swung from a profit of $791 million in 2024 to a loss of $4.94 billion last year, according to the filing. So far, it derives the majority of its revenue from its Starlink satellite internet business, which accounted for about two-thirds of sales in the first quarter of 2026. Subscribers to SpaceX's Starlink internet service have roughly doubled over the past couple of years from 2.3 million in 2023 to 4.4 million in 2024 and up to 8.9 million in 2025. Income from those operations reached $4.42 billion last year, compared with $2 billion a year earlier.

Takeaways by Macro Roundup® AI

  1. SpaceX reported $18.7 billion in 2025 revenue, up from $14 billion in 2024, while swinging from a $791 million profit in 2024 to a $4.94 billion loss last year, according to its filing.
  2. Starlink accounted for about two-thirds of SpaceX's sales in the first quarter of 2026, with income from those operations reaching $4.42 billion last year versus $2 billion a year earlier.
  3. Starlink subscribers rose from 2.3 million in 2023 to 4.4 million in 2024 and 8.9 million in 2025.

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