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
  • “…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 provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “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
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “Unintended Consequences 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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, May 28, 2026

AI Summary. Japan's real effective exchange rate for the yen has fallen below Turkey's lira, signaling something profoundly wrong. Japan's gross government debt stands at 240% of GDP versus net debt of 130%, and selling some of the government's financial assets to pay down debt would reduce upward pressure on yields and downward pressure on the yen.

Robin Brooks Robin Brooks Substack
Date Posted:

Japan’s gross government debt stands at 240% of GDP, but net debt is only 130% due to large holdings of financial assets. Brooks suggests selling these to reduce borrowing costs and stabilize the yen, which is now underperforming even the Turkish Lira.

Can selling government financial assets ease Japan's debt and currency pressures?

Core argument: Japan's real effective yen fell below the Turkish lira in April 2026, a currency the author calls the world's weakest for over a decade under Erdogan's policies, which the author reads as a sign something is profoundly wrong.

The blue line in the chart shows the real effective Yen, which in April 2026 fell below the Turkish Lira (black line). This should alarm everyone in Japan. The Turkish Lira has been the world’s weakest currency for over a decade, thanks to Erdogan’s shambolic policies. For the Yen to fall below this is not a small thing. It signals that something is profoundly wrong. Japan’s government holds vast amounts of financial assets, which is why net debt is so much lower than gross debt. Gross debt stands at 240% of GDP, while the vertical axis shows that net debt is only 130% . The difference is financial assets that can be sold, with the cash used to pay down debt. Even a small step in this direction would get huge acclaim in financial markets, reducing upward pressure on yields and depreciation pressure on the Yen.

Takeaways by Macro Roundup® AI

  1. Japan's real effective yen fell below the Turkish lira in April 2026, a currency the author calls the world's weakest for over a decade under Erdogan's policies, which the author reads as a sign something is profoundly wrong.
  2. Japan's gross government debt stands at 240% of GDP while net debt is 130%, the difference being financial assets the government holds and could sell to pay down debt.
  3. The author argues that even a small move by Japan to sell government financial assets and repay debt would win acclaim in financial markets, easing upward pressure on yields and depreciation pressure on the yen.

Related Articles:

  • Global Debt Report 2026 — Gross central government borrowing across OECD countries rose 7% to a record $17tn, about 23% of GDP, and is projected to reach roughly $18tn, or 24% of GDP. The United States and Japan account for close to 80% of the area's refinancing requirements, with the US share rising from 57% to 70%.
  • Are Government Bonds Safe in Times of War and Pandemic? — Government bonds severely underperform in wartime, in absolute terms and relative to equities, housing, and economic growth, unlike in financial crises when bonds tend to outperform stocks. The U.S. and U.K. reduced war-driven debt-to-GDP ratios without explicit default, using surprise inflation and financial repression that shifted fiscal burdens onto bondholders.
  • Japan’s Debt Puzzle: Sovereign Wealth Fund from Borrowed Money — Japan's public sector operates as a highly leveraged sovereign wealth fund, funding risky assets by borrowing from banks and depositors at below-market rates, with returns sustaining its debt-to-GDP ratio above 200% without primary surpluses. The authors argue the resulting duration and currency mismatches expose Japan to mark-to-market losses that could trigger a fiscal crisis or a run on the yen.

AI Summary. Manufacturing in Japan, South Korea and Taiwan has narrowed around artificial intelligence: chips and AI-related gear account for over 40% of South Korean exports and 80% of Taiwan's, both up sharply from earlier shares. The Economist estimates the region's entire rise in industrial output is attributable to AI, with non-AI factory output shrinking.

Economist Staff The Economist
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The industrial production of Japan, South Korea and Taiwan has risen 15% since 2019 – entirely driven by AI-related demand. Apart from chip-making, IP has shown no trend since 2011. The fall in non-chip output is likely due to Chinese competition.

Is all industrial growth in north-east Asia coming from AI?

Core argument: The Economist finds that all of the 15% rise in north-east Asian industrial output since 2019 is attributable to AI, after counting firms not classified as AI-linked in official statistics, such as Japan's Advantest and Taiwan's Foxconn.

North-east Asian manufacturing is getting narrower. Chips and other gear related to AI make up over 40% of South Korean exports, more than double their share just two years ago. In Taiwan it is 80% of exports, compared with about half before the pandemic. After accounting for firms not neatly captured as AI-linked in official statistics, like Japan’s Advantest (which makes chip-testing gear) and Taiwan’s Foxconn (which produces data-centre servers, among other electronics), The Economist finds that all 15% of the region’s rise in industrial output since 2019 is thanks to AI. In Japan, South Korea and Taiwan output at factories unrelated to AI has shrunk in recent years.

Takeaways by Macro Roundup® AI

  1. The Economist finds that all of the 15% rise in north-east Asian industrial output since 2019 is attributable to AI, after counting firms not classified as AI-linked in official statistics, such as Japan's Advantest and Taiwan's Foxconn.
  2. Chips and other AI-related gear account for over 40% of South Korean exports, more than double their share two years earlier, and 80% of Taiwan's exports, compared with about half before the pandemic.
  3. Factory output unrelated to AI has shrunk in recent years in Japan, South Korea and Taiwan, leaving north-east Asian manufacturing narrower.

Related Articles:

  • China’s Next-Generation Industrial Policy — China's export growth is concentrated in upstream, higher-tech goods: exports of intermediate inputs rose 26% and capital goods 32% between 2021 and 2024, while consumption goods exports were broadly flat. This shift embeds China deeper in global production systems and aligns with its long-running import substitution strategy of localizing entire value chains.
  • China Is Making Trade Impossible — Interviews with Chinese economists, technologists and business leaders yielded no clear answer to what products China would want to buy from the rest of the world in future, beyond commodities, luxury goods and higher education. The author argues China sees nothing it cannot eventually make better and cheaper itself, undermining trade as a two-way exchange.
  • 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. The authors present descriptive evidence that global supply chain disruptions were associated with elevated transportation costs, goods supply-demand imbalances, and a surge in goods prices, steepening the aggregate supply curve. In the disrupted state, a contractionary monetary policy shock produces muted responses in real output and spare capacity but a substantially stronger decline in goods prices.

Xiwen Bai, Jesús Fernández-Villaverde, Yiliang Li and Francesco Zanetti National Bureau of Economic Research
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Bai, et al present evidence that btw 2017 and 2023, monetary tightening reduced US inflation relatively more than output during periods of global supply chain disruption, compared to undisrupted periods.

Does monetary tightening lower prices more when supply chains are disrupted?

Core argument: Using linear projections, the authors find that a contractionary monetary policy shock in the disrupted global supply chain regime produces muted responses in real GDP and spare capacity but a substantially stronger decline in PCE goods prices, especially shortly after impact.

We highlight important interrelated facts connecting global supply chain disruptions to domestic conditions in the U.S. between 2017 and 2023, showing that such disruptions were associated with elevated transportation costs, severe imbalances in the supply and demand for goods, and a surge in goods prices. Supply chain disruptions, which curtail the availability of goods in retail markets, increase the convexity of the aggregate supply curve [i.e. the curve steepens more sharply at higher hypothetical output levels]. As a result, adjustments in demand driven by monetary policy during disruptions lead to significant price changes with limited effects on real output. Next, we employ linear projections (LPs) to identify [the effects of] a contractionary monetary policy shock conditional on the state of the global supply chain. In the disrupted regime, a contractionary monetary policy shock generates muted responses in real GDP and spare capacity relative to the undisrupted regime, but a substantially stronger decline in PCE goods prices, especially in the short run following impact. [Given econometric limitations], we view the analysis not as a definitive assessment, but as descriptive evidence that the data are consistent with the mechanisms highlighted in our theoretical model.

Takeaways by Macro Roundup® AI

  1. Using linear projections, the authors find that a contractionary monetary policy shock in the disrupted global supply chain regime produces muted responses in real GDP and spare capacity but a substantially stronger decline in PCE goods prices, especially shortly after impact.
  2. The authors argue that supply chain disruptions curtail retail goods availability and increase the convexity of the aggregate supply curve, so monetary-policy-driven demand adjustments during disruptions move prices significantly with limited effects on real output.
  3. Global supply chain disruptions between 2017 and 2023 were associated with elevated transportation costs, severe imbalances in the supply and demand for goods, and a surge in goods prices in the U.S., which the authors present as descriptive evidence rather than a definitive assessment.

Related Articles:

  • How Have Swings in Demand Affected Global Supply Chain Pressures? — The Federal Reserve Bank of New York's Global Supply Chain Pressure Index isolates supply-side disruptions, while an auxiliary "Net" version captures stress from both supply and demand forces. A mix of supply and demand factors is driving an easing of net global supply chain pressure.
  • Revisiting the Phillips and Beveridge Curves: Insights from the 2020s Inflation Surge — The authors identify a "Beveridge threshold" level of labor market tightness—the ratio of job vacancies to unemployed workers—below which the relationship between inflation and economic activity steepens and labor market adjustment occurs mainly through vacancies rather than unemployment. They estimate that during the post-pandemic inflation surge the unemployment rate fell as much as 1.08 percentage points below this threshold.

AI Summary. U.S. households hold a record share of their assets in equities, exceeding the dot-com and Nifty Fifty eras, while price-earnings multiples sit near all-time highs and fewer than 10 stocks account for almost 40% of the S&P 500's market value. The author argues equity ownership has become structural rather than discretionary, making markets simultaneously more stable and more fragile.

Paul Kedrosky Applied Complexity
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Equities are now a record share of American households’ financial assets, surpassing the dot-com peak. Paul Kedrosky notes that passive inflows act to “damp ordinary selloffs,” but warns that “once flows reverse, there will be few marginal buyers left.”

Does record household equity ownership make markets more stable and more fragile?

Core argument: U.S. household equity allocation stands at a record, exceeding levels reached during the dot-com bubble and the Nifty Fifty era.

Households in the U.S. are at a record equity allocation, higher than in the dot-com or even the Nifty Fifty era. At the same time, market price-earnings multiples are not far from all-time highs, and index concentration is at a record, with fewer than 10 stocks making up almost 40% of the S&P 500's market cap. This has systemic implications: Equity ownership is now structural, not discretionary. Household “diversification” masks concentration. Monster AI IPOs will create forced-buying spirals. Public investors become the exit liquidity for private AI capital. Markets become simultaneously more stable and more fragile.

Takeaways by Macro Roundup® AI

  1. U.S. household equity allocation stands at a record, exceeding levels reached during the dot-com bubble and the Nifty Fifty era.
  2. Fewer than 10 stocks account for almost 40% of the S&P 500's market cap, a record index concentration, while price-earnings multiples sit not far from all-time highs.
  3. The analysis argues equity ownership has become structural rather than discretionary, that household diversification masks concentration, and that large AI IPOs will create forced-buying spirals with public investors serving as exit liquidity for private AI capital.

Related Articles:

  • 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.
  • 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.
  • 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. Fully closing Social Security's funding gap by raising the payroll tax rate would require an immediate, permanent increase from 12.4% to 17.6%, which would reduce labor supply and economic growth. Research on a prior benefit cut found affected Americans raised earnings by 61 cents per dollar of lost benefits, generating additional payroll tax revenue.

Andrew Biggs American Enterprise Institute
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Biggs argues that “fair” approaches to restoring Social Security solvency – those that do not cut already accrued benefits – are less effective than “unfair” ones that do, because the latter incentivize increased work effort, raising growth and revenue.

Does closing Social Security's gap with higher payroll taxes hurt growth?

Core argument: Keeping Social Security permanently solvent under the "fairness" model of paying accrued benefits in full would require an immediate and permanent payroll tax increase from 12.4% to 17.6%, which would decrease labor supply and reduce economic growth.

Imagine that Social Security reform follows the fairness model, in which accrued benefits are paid in full but the rate at which future benefits are earned is reduced. A simple way to do this is to increase the payroll tax rate To keep Social Security permanently solvent, meaning through 75 years and beyond, would require an immediate and permanent increase in the payroll tax rate [from] 12.4% to 17.6%. The higher rate would decrease labor supply and reduce economic growth. [Consider] an alternate reform, which looks clearly unfair: fix Social Security’s funding gap entirely by reducing accrued benefits that Americans already have earned. As of 2025, Americans had accrued $54 trillion in Social Security benefits. Social Security’s unfunded obligation as of 2025 was $26 trillion. So, roughly, this means cutting Americans’ “earned benefits” in half. [Analyzing the 1977 reform that undid the notorious 1972 “double-indexing” of benefits, a group of economists], using SSA earnings data, found that, for every dollar of lost benefits, the affected Americans increased their earnings by 61 cents. Moreover, these additional earnings would be taxed by Social Security, further strengthening the program’s finances. In effect, this makes cutting benefits a “cheaper” way to fix Social Security than raising taxes, because people respond in ways that also increase tax revenues.

Takeaways by Macro Roundup® AI

  1. Keeping Social Security permanently solvent under the "fairness" model of paying accrued benefits in full would require an immediate and permanent payroll tax increase from 12.4% to 17.6%, which would decrease labor supply and reduce economic growth.
  2. Americans had accrued $54 trillion in Social Security benefits as of 2025 against an unfunded obligation of $26 trillion, so closing the gap solely by cutting already-earned benefits would mean roughly halving those benefits.
  3. Economists analyzing the 1977 reform that undid the 1972 "double-indexing" of benefits found, using SSA earnings data, that affected Americans raised their earnings by 61 cents per dollar of lost benefits, earnings that Social Security would tax.

Related Articles:

  • Social Security and Trends in Wealth Inequality — The authors estimate that including Social Security in household wealth leaves top wealth shares little changed over three decades, with the top 10% and top 1% shares rising 1.1 and 1.6 percentage points versus roughly 9 and 6 points for marketable wealth alone. Social Security wealth grew from $7tn to $39tn.
  • How Federal Spending is Distributed by Age — An analysis classifying $4.4tn of $7tn in federal spending by age finds retirees aged 65 and older receive $2.7tn, 38.6% of total outlays and 61.9% of age-assignable spending, versus $1.2tn for working-age adults and $449bn for those under 26. Social Security and Medicare account for 80% of age-assignable spending on older adults.
  • The Great “Transfer”-mation — Government transfers rose from 8.2% of Americans' total personal income in 1970 to 17.6% in 2022, making them the third largest income source after work and investments. The share of U.S. counties drawing a quarter or more of personal income from transfers rose from under 1% in 1970 to 53% in 2022.

AI Summary. The US has warned Japan that deliveries of 400 Tomahawk cruise missiles, expected by April 2028, could be delayed by as much as two years. The Center for Strategic and International Studies says the US fired more than 1,000 Tomahawks from an estimated prewar inventory of 3,100 during five weeks of operations against Iran.

Demetri Sevastopulo Financial Times
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The US has notified Japan to expect “serious delays” in the delivery of 400 Tomahawk missiles Tokyo ordered in 2024, and were expected to start arriving in 2028, due to concerns about US magazine depth after the Iran war

Are wartime missile expenditures delaying cruise missile deliveries to allies?

Core argument: The US fired more than 1,000 Tomahawks from an estimated prewar inventory of 3,100 during five weeks of military operations against Iran, according to the Center for Strategic and International Studies.

Japan had expected to receive two batches of 200 missiles each by April 2028. One person familiar with the situation said Washington had warned that the delays could add as much as two years to the current delivery schedule. According to the Center for Strategic and International Studies, the US fired more than 1,000 Tomahawks out of an estimated prewar inventory of 3,100 during the five weeks of military operations against Iran. CSIS said that in took roughly four years to deliver Tomahawks to the US military from the time Congress has provided funding.

Takeaways by Macro Roundup® AI

  1. The US fired more than 1,000 Tomahawks from an estimated prewar inventory of 3,100 during five weeks of military operations against Iran, according to the Center for Strategic and International Studies.
  2. Washington has warned Japan that delays could add as much as two years to a schedule under which Tokyo expected two batches of 200 Tomahawk missiles each by April 2028, according to one person familiar with the situation.
  3. CSIS said Tomahawk deliveries to the US military have taken roughly four years from the time Congress provided funding.

Related Articles:

  • Last Rounds? Status of Key Munitions at the Iran War Ceasefire — U.S. forces may have expended more than half of prewar inventory for four of seven heavily used munitions in the 39-day air and missile campaign against Iran, with rebuilding to prewar levels projected to take one to four years. These munitions are also critical for a potential Western Pacific conflict.
  • The First 36 Hours of War Consumed Over 3,000 U.S.-Israeli Munitions — The authors estimate replacing two destroyed U.S. radars would take five to eight years and $1.1bn for one and 12–24 months and $50m–$75m for the other, making supply-chain fragility and replacement timelines a greater constraint than materials cost. Both systems require gallium, of which China controls 98% of global supply.
  • The U.S. Wants to Break China’s Drone Dominance. Here’s Where It Will Struggle — Fielding a drone fleet able to compete with China requires the U.S. to break China's monopoly on batteries and motors and to cut the cost of other components, where weak domestic demand is a key obstacle. Chinese producers hold 80% of the U.S. commercial drone market, and experts warn building mass-production infrastructure could take a decade or more.

Friday, May 29, 2026

AI Summary. Labor's share of gross domestic income fell to 51%, the lowest since records began in 1947, while profits' share rose to 12.1%, the highest since 1950. Inflation-adjusted hourly wages are up 3% since the end of 2019, compared with a 50% rise in profits.

Greg Ip Wall Street Journal
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At 51%, labor’s share of gross domestic income is at its lowest level since 1947. Corporate profits’ share of gross domestic income is now 12.1%, its highest level since 1950. In real terms, hourly wages are up 3% since Q4 2019, while profits have risen 50%.

Is labor's share of income falling while profits' share rises?

Core argument: Labor's share of gross domestic income fell to 51% in the first quarter, the lowest since records began in 1947, while profits' share rose to 12.1%, the highest since 1950.

To understand why people are so miserable about the economy, look no further than Thursday’s report on gross domestic product. Not how much GDP grew, but how it was divvied up. Worker compensation—wages and benefits—grew 0.8% in the first quarter from the fourth, while domestic corporate profits jumped 2.7%. As a result, labor’s share of gross domestic income (conceptually similar to GDP) sank to 51%, the lowest since records began in 1947. Profits’ share climbed to 12.1%, the highest since 1950. It’s the latest milestone in a trend that became pronounced in the 2000s, then picked up speed after the pandemic. Adjusted for inflation, hourly wages are up 3% since the end of 2019 while profits are up 50%. That, in a nutshell, explains the chasm between an ebullient stock market and anxious public.

Takeaways by Macro Roundup® AI

  1. Labor's share of gross domestic income fell to 51% in the first quarter, the lowest since records began in 1947, while profits' share rose to 12.1%, the highest since 1950.
  2. Worker compensation grew 0.8% in the first quarter from the fourth, while domestic corporate profits jumped 2.7%.
  3. Adjusted for inflation, hourly wages are up 3% since the end of 2019 while profits are up 50%, which the article offers as the explanation for the gap between an ebullient stock market and an anxious public.

Related Articles:

  • US Consumer Sentiment Slides to Record Low on Price Concerns — The University of Michigan's consumer sentiment index fell 5 points to 44.8, a record low and weaker than all economist projections in a Bloomberg survey. Consumers expect prices to rise 3.9% annually over the next five to 10 years, up from 3.5%, and 4.8% over the coming year.
  • Real Wages Start To Shrink In Developed Countries — US annual inflation of 3.8% outpaced average hourly earnings growth of 3.6%, leaving prices rising faster than pay for the first time in two years, while Eurozone workers face a fresh energy-driven setback. JPMorgan attributes the real wage decline to Middle East conflict and expects growth to resume if energy prices retreat.
  • Why the Labor Share Keeps Falling: Taxes! — The measured corporate labor share fell from 63% in 1978 to 58% in 2017, but the authors estimate that tax-driven reclassification of wages as S corporation profit and the shift of high-labor-share firms into partnerships account for about 1.6 percentage points, roughly a third of the decline.

AI Summary. Purchasing-power-parity comparisons match similar products across countries at a point in time, while national price deflators adjust for quality change over time, so the two can diverge even when both are well constructed. Standard measures show US labor productivity growing substantially faster than France's over three decades, while annual current-PPP conversion shows similar growth.

Philippe Aghion, Antonin Bergeaud and Luis Garicano Project Syndicate
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Responding to Krugman, Aghion, Bergeaud and Garicano argue that the US’s lead in technology “is not helping America and Europe in the same way. It has led to higher US wages and profits, and the gap is widening each year.”

Do different price conversion methods change measured productivity growth gaps?

Core argument: Seven standard measures of real labor-productivity growth, which convert GDP using national deflators from national accounts and related datasets, agree that US productivity has grown substantially faster than French productivity over three decades.

By comparing products at the same date, PPP tries to avoid [issues related to quality improvements]. If the same phone is sold in France and in the US in 2024, the PPP survey can compare the two prices directly. It does not have to ask whether the 2024 phone is better than the 2023 phone, but whether French and US American products are sufficiently similar at that date. This is why PPPs and national deflators can diverge even when both are well constructed. The national deflator adjusts for quality change over time, while the PPP comparison relies much more on product matching across countries at a point in time. When exact matches are unavailable or unrepresentative, the PPP comparison is solving a different problem than the price deflator. The table puts the issue in perspective. The first seven rows report standard real labor-productivity growth: GDP is transformed using national deflators, from national accounts and related datasets. The last row reports growth in output per hour when GDP is converted every year using current PPPs. The first seven rows agree that US productivity has grown substantially faster than French productivity for three decades. Now read the last row. Convert GDP every year with a current PPP, as in the Krugman-style calculation, and, voilà, French output per hour grows at a similar rate to the US.

Takeaways by Macro Roundup® AI

  1. Seven standard measures of real labor-productivity growth, which convert GDP using national deflators from national accounts and related datasets, agree that US productivity has grown substantially faster than French productivity over three decades.
  2. Converting GDP every year with current purchasing power parities, as in the Krugman-style calculation, yields French output per hour growing at a rate similar to the US.
  3. PPP comparisons rely on matching similar products across countries at a point in time while national deflators adjust for quality change over time, so the two can diverge even when both are well constructed.

Related Articles:

  • Challenging the Narrative of European Decline, Continued — Euro-area income per person falls behind the US when measured in constant 2021 prices but gains on the US when measured using each year's prices, suggesting Europe is holding its own in applying technology. The author argues Europe's real risk is being cut off from strategically important technologies.
  • European Stagnation Is Real — 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.
  • 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.

AI Summary. Past financial crises taught countries to accumulate US Treasuries, while war-related financial sanctions taught them to accumulate gold; the author argues a Strait of Hormuz crisis will push countries to stockpile industrial commodities, energy and food while reinvesting in their own power grids. Funding this would drain liquidity from global financial markets for years.

Louis-Vincent Gave Gavekal Research
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Louis-Vincent Gave argues that “the lesson of the Straight of Hormuz” is to continue the shift toward investments in gold and industrial commodities – which will create a sustained liquidity drain on global financial markets.

Will stockpiling commodities instead of reserves drain global market liquidity?

Core argument: The 1997–98 Asian and emerging market crisis, the 2008 global mortgage crisis, and the 2011–13 eurozone crisis each taught the same lesson: accumulate more US Treasuries.

The lesson of the 1997-98 Asian and emerging market crisis was to accumulate more US treasuries. The lesson of the 2008 global mortgage crisis was to accumulate more US treasuries.The lesson of the 2011-13 eurozone crisis was to accumulate more US treasuries. The lesson of the 2022 Ukraine war and consequent financial sanctions was to accumulate more gold. Then what will be the lesson of the Strait of Hormuz crisis? Odds are it will be to accumulate larger inventories of industrial commodities, energy and food while reinvesting in the resilience of one’s own power grid. All of this will require capital and therefore act as a sustained liquidity drain on global financial markets for years to come.

Takeaways by Macro Roundup® AI

  1. The 1997–98 Asian and emerging market crisis, the 2008 global mortgage crisis, and the 2011–13 eurozone crisis each taught the same lesson: accumulate more US Treasuries.
  2. The 2022 Ukraine war and the financial sanctions that followed shifted the lesson from accumulating US Treasuries to accumulating more gold.
  3. The likely lesson of the Strait of Hormuz crisis is to build larger inventories of industrial commodities, energy and food while reinvesting in the resilience of one's own power grid, requiring capital that would drain global market liquidity for years.

Related Articles:

  • 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.
  • 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.
  • 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.

AI Summary. Running standard demographic models—including the Cohort-Component, United Nations World Population Prospects, Lee-Carter, and Lotka-Volterra approaches—across all plausible analytical choices yields a wide range of possible global population outcomes for 2050 and 2075. The authors argue that presenting a single population trajectory hides the compounding uncertainty inherent in such projections.

Samuele Lo Piano, Marta Kuc-Czarnecka, Roger Pielke, and Andrea Saltelli Social Science Research Network
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Simulation of the decision chain yielding projections of world population in 2050 that range from 6 to 14B suggests most of the variance in demographic forecasts arises not from parameter uncertainty or data randomness but from model choice.

How much uncertainty do single-trajectory population projections hide?

Core argument: Propagating all plausible analytical choices through global population projections to 2050 and 2075 yields wide overall uncertainty distributions, with the Cohort-Component, UN World Population Prospects, Lee-Carter and Lotka-Volterra models showing distinct sensitivities and outcomes.

We explore demographic predictions by propagating all plausible choices that can be made during the analysis through the modelling process. This approach involves navigating the so-called ’garden of forking paths’—mimicking in silico what would happen if multiple investigators were to examine the same problem. For this, we now abandon [the Chinese government mathematician] Song Jian’s ‘historic’ model and turn to models currently in use: the Cohort-Component and UN WPP models, the Lee-Carter model and the Lotka-Volterra model. Note that in standard use, these tools are used in isolation, see e.g. the FAO’s How to Feed the World in 2050, resting on a single UN WPP population trajectory shielding the reader from the compounding effect of their uncertainty. Unsurprisingly, the exercise capturing the modelling of the modelling process for global population projections to 2050 and 2075 reveals distinct characteristics regarding the sensitivity and projection outcomes of the different models. Once abandoned the straitjacket of Song’s approach, uncertainty is free to manifest itself. The overall uncertainty distributions of the projected populations show a wide range of possible outcomes, reflecting the inherent uncertainties in demographic projections.

Takeaways by Macro Roundup® AI

  1. Propagating all plausible analytical choices through global population projections to 2050 and 2075 yields wide overall uncertainty distributions, with the Cohort-Component, UN World Population Prospects, Lee-Carter and Lotka-Volterra models showing distinct sensitivities and outcomes.
  2. Standard demographic practice uses these projection models in isolation, as in the FAO's How to Feed the World in 2050, which rests on a single UN World Population Prospects trajectory and shields readers from the compounding effect of their uncertainty.
  3. Abandoning Song Jian's historic model and navigating the "garden of forking paths"—mimicking in silico what would happen if multiple investigators examined the same problem—allows uncertainty in demographic projections to manifest itself.

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AI Summary. Japan's population fell from 126.1m in 2020 to 123m in 2025, the largest decline since census collection began in 1920, and is projected to reach 87m by 2070. All but two of Japan's 47 prefectures recorded decreases, while the Tokyo metropolitan area rose slightly to 37m.

Javier Hernández, Pablo Robles and Kiuko Notoya New York Times
Date Posted:

Japan’s population has declined by ~3.1mm people over the past five years. The countryside is depopulating, while the greater Tokyo area is still growing – and now accounts for ~30% of the population.

How steep is Japan's population decline and how widespread?

Core argument: Japan's population fell from 126.1 million in 2020 to 123 million in 2025, a drop of more than 3 million and the largest decrease since census collection began in 1920, according to preliminary census results.

Japan’s population fell by more than 3 million over the past five years, according to official statistics released on Friday, a drop that underscores the depths of the country’s accelerating demographic crisis. The population stood at 123 million in 2025, according to preliminary census results, down from 126.1 million in 2020. It is the biggest decrease since the government began collecting census data in 1920. Japan’s population peaked in 2008 at 128 million, and it is projected to fall to 87 million by 2070. The country is now roughly the same size it was in 1989. The census data shows that the demographic crisis has now reached almost every part of Japan. All but two of the country’s 47 prefectures reported population decreases in 2025, and the rate of decline is accelerating. Japan’s biggest cities are managing to stave off demographic decline — for now. The population of the Tokyo metropolitan area, which includes Tokyo and the surrounding prefectures of Kanagawa, Saitama and Chiba, rose slightly to 37 million in 2025. The area now accounts for roughly 30% of Japan’s total population.

Takeaways by Macro Roundup® AI

  1. Japan's population fell from 126.1 million in 2020 to 123 million in 2025, a drop of more than 3 million and the largest decrease since census collection began in 1920, according to preliminary census results.
  2. All but two of Japan's 47 prefectures reported population decreases in 2025, and the rate of decline is accelerating, according to the census data.
  3. Japan's population peaked at 128 million in 2008 and is projected to fall to 87 million by 2070, while the Tokyo metropolitan area rose slightly to 37 million in 2025, roughly 30% of the national total.

Related Articles:

  • Depopulation Globally and in the Asia-Pacific: The Shape of Things to Come — Population aging and fertility below replacement levels are connected to a revolution in family structure in which families grow smaller, fewer people marry, and voluntary childlessness becomes common across countries. As a result, families become less able to bear the demands that may be placed on them.
  • Japan’s Labor Market Under Demographic Decline: Evolving Dynamics and Macroeconomic Implications — Japan's fertility rate stood at 1.15 in 2024 and its working-age population peaked in 1995, with the total population peaking in 2008. Rising labor force participation among women and people 65 and over has more than offset the shrinking working-age population, but further gains are limited since both rates already rank among the highest internationally.
  • A Tale of Two Countries: The Real Estate Crises in 1990s Japan and Contemporary China — The authors argue Japan's prolonged recession reflected the interplay of slowing returns to investment, weak consumption, and negative sentiment, and that China is in the middle stages of a multi-year real estate correction under more difficult macroeconomic and demographic conditions. They note China retains advantages, including a state-dominated financial system with implicit government guarantees capable of large-scale intervention.