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


Monday, June 22, 2026

AI Summary. The authors estimate that surprises in US monetary policy spill over into exchange rates, with dollar-denominated reserves substantially mitigating depreciation pressures while non-dollar and gold reserves are associated with smaller effects. Aggregate reserve size alone does not capture external resilience; currency composition and access to dollar liquidity facilities are empirically relevant.

Joshua Aizenman, Jamel Saadaoui, Gazi Salah Uddin and Naoki Yago National Bureau of Economic Research
Date Posted:

When US dollar interest rates rise, currencies fall less if countries have a Fed swap line, substantial dollar FX reserves, or, to a lesser extent, gold. Sanctions and dollar access risk are pushing some reserve managers towards gold.

Does reserve currency composition determine how exchange rates absorb US monetary shocks?

Core argument: Using high-frequency exchange rate data and reserve currency composition for 18 countries, the authors find US monetary policy surprises spill over to exchange rates through dollar liquidity and capital flow channels.

This paper shows that US monetary policy surprises exert significant spillover effects on exchange rate through dollar liquidity and capital flow channels. Using high-frequency exchange rate data and detailed currency composition of reserves for 18 countries, we show that estimated reserve-buffer effects depend on their composition. Dollar-denominated reserves substantially mitigate depreciation pressures, while non-dollar reserves have smaller estimated effects. Gold reserves are also associated with smaller exchange-rate responses, though less strongly than liquid FX holdings due to differences in immediacy and usability. Our results highlight an empirical complementarity between reserve holdings and access to international liquidity facilities such as central bank swap and repo lines. These arrangements are associated with a smaller role for reserve depletion during periods of dollar funding stress. Aggregate reserve size alone does not capture all dimensions associated with external resilience; currency composition and access to dollar liquidity facilities are empirically relevant for exchange-rate responses to US monetary shocks. These findings are consistent with recent large-scale purchases and sales of gold reserves by emerging economies amid sanctions-related restrictions and geopolitical concerns about access to dollar liquidity.

Takeaways by Macro Roundup® AI

  1. Using high-frequency exchange rate data and reserve currency composition for 18 countries, the authors find US monetary policy surprises spill over to exchange rates through dollar liquidity and capital flow channels.
  2. Dollar-denominated reserves substantially mitigate depreciation pressures while non-dollar reserves show smaller estimated effects, and gold reserves are associated with smaller exchange-rate responses than liquid foreign exchange holdings, reflecting differences in immediacy and usability.
  3. The authors find access to central bank swap and repo lines empirically complements reserve holdings and is associated with a smaller role for reserve depletion during periods of dollar funding stress.

Related Articles:

  • The Boost From the Hard Assets Rotation — Analysts estimate that each 1bp increase in gold's share of US financial portfolios, driven by incremental purchases, raises gold prices by 1.5%, and with gold exchange-traded fund allocations at only about 0.2% of US private sector financial portfolios, further diversification is the main upside risk to a $5,400 gold price forecast.
  • 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%.
  • Gold Overtakes Euro as Global Reserve Asset, ECB Says — Gold has overtaken the euro as a global reserve asset, with central bank gold holdings reaching 36,000 tons, near the mid-1960s peak of 38,000 tons, helped by a 30% rise in the gold price. The European Central Bank finds countries geopolitically close to China and Russia accumulated gold more than others.

AI Summary. The euro has traded at a premium against the dollar relative to the Euro zone–US two-year forward interest rate differential since reciprocal tariffs were introduced, a decoupling that is milder for the British pound and absent for the Australian and Canadian dollars. The author argues that US and Chinese efforts to weaken their currencies will worsen euro overvaluation.

Robin Brooks Robin Brooks Substack
Date Posted:

Brooks argues the US and China are successfully “muscling their currencies down,” which in turn has led to “massive” Euro overvaluation. He expects the dollar to weaken vis-à-vis the Euro in H2.

Is the euro overvalued as other countries push their currencies down?

Core argument: EUR/USD tracked the Eurozone–US 2y2y forward rate differential closely through 2024 and early 2025 but decoupled after the April 2 rollout of reciprocal tariffs, trading at a premium to that differential ever since.

We’re in a beggar-thy-neighbor world where the US and China are successfully muscling their currencies down. This means the [Euro] has to appreciate by default, so Euro overvaluation is going to get worse before it gets better. The blue line in the top left chart is EUR/$. The black line is the differential of 2y2y forward interest rates in the Euro zone versus the US. I like using 2y2y forward rates because they’re a proxy for where terminal rates will be in any hiking or easing cycle. The striking thing about this chart is that EUR/$ moved very closely with the rate differential in all of 2024 and in early 2025, but then decoupled after the rollout of reciprocal tariffs on April 2. EUR/$ has been trading at a premium relative to the 2y2y forward differential ever since. The top right chart looks at whether there’s a similar decoupling for GBP/$. There is, but it’s much less noticeable. There’s no decoupling of this sort for AUD/$ in the bottom left chart and also nothing comparable going on for $/CAD in the bottom right chart.

Takeaways by Macro Roundup® AI

  1. EUR/USD tracked the Eurozone–US 2y2y forward rate differential closely through 2024 and early 2025 but decoupled after the April 2 rollout of reciprocal tariffs, trading at a premium to that differential ever since.
  2. With the US and China muscling their currencies down, the euro appreciates by default, so euro overvaluation is likely to worsen before it improves.
  3. GBP/USD shows a similar but much less noticeable decoupling from rate differentials, while AUD/USD and USD/CAD show no comparable decoupling.

Related Articles:

  • Currency Moves Can Drive Rebalancing — Trade responds to exchange-rate changes with a lag of roughly 8 to 12 quarters, and after the dollar fell from its mid-1980s peak the US trade deficit dropped from about 3% to about 1% of GDP while Japan's surplus fell from 4% to 2%. The author argues currency appreciation, not fiscal consolidation, drove that rebalancing.
  • The Dollar has Further to Fall — The author argues the dollar has considerably further to fall, noting Federal Reserve data show its real value nearly two standard deviations above its average since 1973, a level matched only twice before, each followed by depreciations of 25-30%. Financing the $1.1tn US current account deficit requires matching net capital inflows.
  • China’s Currency is Now Facing Substantial Appreciation Pressure — China's yuan faces appreciation pressure while Beijing maintains its commitment to currency stability, testing trading partners' willingness to absorb China's growing export surplus. If nominal appreciation is limited to a few percentage points, the real effective exchange rate stays at its depreciated level and China is likely to keep gaining global market share.

AI Summary. Nasdaq volatility relative to the S&P 500 has spiked to its highest level in many years, as investors pay far more for downside protection on artificial intelligence stocks than on the broad market. Perceived market fragility is concentrated in growth stocks while overall S&P 500 volatility remains relatively calm.

Torsten Sløk Apollo
Date Posted:

Sløk argues that the increase in Nasdaq 100 volatility, as measured by the VXN, relative to S&P 500 volatility, as measured by VIX, suggests investors are getting worried about technology stocks.

Are options markets pricing more risk in tech than the broad market?

Core argument: Nasdaq volatility relative to the S&P 500 has spiked to its highest level in many years, as investors demand far more options protection on AI names than on the broad market.

Nasdaq volatility relative to the S&P 500 has spiked to its highest level in many years. The jump reflects investors demanding far more protection on AI names than on the broad market, signaling that perceived market fragility is now heavily concentrated in growth stocks while overall S&P volatility stays relatively calm.

Takeaways by Macro Roundup® AI

  1. Nasdaq volatility relative to the S&P 500 has spiked to its highest level in many years, as investors demand far more options protection on AI names than on the broad market.
  2. Perceived market fragility is concentrated in growth stocks, with overall S&P 500 volatility staying relatively calm even as demand for protection on AI names climbs.

Related Articles:

  • Opportunities and Expectations: The Present Value of Growth Opportunities in Valuation — A stock's value can be split into steady-state value from current operations and the "present value of growth opportunities" from future value-creating investments, which has averaged 35% of the S&P 500's price historically. Lower shares of price attributed to growth opportunities have been associated with higher subsequent returns, most clearly at the extremes.
  • US Stock Market To Stop Shrinking For First Time In 23 Years — Goldman Sachs estimates that net supply of US equity — new shares issued less shares removed by buybacks and take-privates — will be roughly flat in 2026 after being negative since 2003, with a larger influx expected in 2027 as lock-up periods on this year's initial public offerings expire.
  • 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. A surge in US business formation is being driven by solo entrepreneurs, with growth in AI tool usage and in solopreneur activity in high-AI-adoption sectors suggesting artificial intelligence accounts for a meaningful portion of the increase. The authors argue AI is lowering barriers to starting and growing a business by expanding what one-person firms can do.

Ernie Tedeschi, Marisa Rama and Chris Cruickshank Stripe Economics
Date Posted:
Is Database:
Database

New US business applications have surged since late 2024, driven mainly by “likely nonemployer” filings representing “solopreneurs” rather than businesses expected to hire. Data suggest AI may be enabling this by filling capability gaps without hiring.

Is AI driving the surge in one-person business formation?

Core argument: The recent surge in US business formation is not reflected in high-propensity applications, but the evidence points toward a structural increase in genuine small business activity over 2025 and 2026, driven by solopreneurs.

While the recent surge in US business formation is not reflected in high-propensity applications, the evidence points toward a structural increase in genuine small business activity over 2025 and 2026, driven by solopreneurs. Preliminary evidence of growth in AI tool usage and solopreneur growth in high-AI-adoption sectors suggests that advances in AI are responsible for a meaningful portion of this growth. We believe AI is lowering barriers to business formation and growth by expanding the capabilities of solopreneurs, further improving tools and platforms that cater to new businesses, and creating a new set of opportunities for entrepreneurs to pursue. Whether the magnitude of this effect is as large as the most optimistic readings of the data suggest remains to be seen, but we believe we might be in the early innings of a fundamental acceleration in business formation—which could have ripple effects throughout the economy.

Takeaways by Macro Roundup® AI

  1. The recent surge in US business formation is not reflected in high-propensity applications, but the evidence points toward a structural increase in genuine small business activity over 2025 and 2026, driven by solopreneurs.
  2. Preliminary evidence of growth in AI tool usage and solopreneur growth in high-AI-adoption sectors suggests that advances in AI are responsible for a meaningful portion of this growth.
  3. AI appears to be lowering barriers to business formation and growth by expanding solopreneur capabilities, improving tools and platforms serving new businesses, and creating opportunities for entrepreneurs, with possible ripple effects throughout the economy.

Related Articles:

  • Solopreneurs, Solow, and the SaaSpocalypse — 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.
  • AI-Native Firms∗ — The authors find AI-native U.S. startups are 25% smaller than non-AI startups in the same industry and cohort, with 13% higher engineer shares, roughly 15% lower shares of entry-level workers and managers, flatter hierarchies, and comparable valuations. They argue embedding AI into products lets firms scale knowledge work without large teams.
  • 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.

AI Summary. Venture capital funding for defence technology start-ups working on drones, autonomous vessels and battlefield artificial intelligence has reached $12.3bn, almost double the comparable prior-year period and above the $9.95bn raised in the previous full year, according to data compiled by PitchBook. US start-ups captured $11.4bn of that total, with Anduril Industries alone accounting for nearly half.

Sylvia Pfeifer and Ivan Levingston Financial Times
Date Posted:

Defence startups have raised $12.3B in H1, outpacing the ~$10B invested in the sector in 2025. American start-ups capture 93% of the investment, though Anduril’s recent $5B round accounted for nearly half of that.

Is venture capital funding for defence tech start-ups surging?

Core argument: Defence technology start-ups have raised $12.3bn from venture capital funds since the start of 2026, almost double the same period last year and more than the $9.95bn raised in all of last year, according to PitchBook data compiled for the Financial Times.

Investors are pouring billions into defence technology start-ups as wars in Ukraine and the Gulf turn drones, autonomous vessels and battlefield AI into one of this year’s hottest venture capital bets. Companies in the sector have raised $12.3bn from VC funds since the start of 2026, almost double the amount raised in the same period last year and more than the $9.95bn achieved in the whole of last year, according to data compiled for the Financial Times by PitchBook. The boom is heavily concentrated in the US. American start-ups captured $11.4bn of the total — although Anduril Industries alone accounted for almost half of that.

Takeaways by Macro Roundup® AI

  1. Defence technology start-ups have raised $12.3bn from venture capital funds since the start of 2026, almost double the same period last year and more than the $9.95bn raised in all of last year, according to PitchBook data compiled for the Financial Times.
  2. US start-ups captured $11.4bn of the $12.3bn raised by defence tech companies, with Anduril Industries alone accounting for almost half of the American total.
  3. Wars in Ukraine and the Gulf have turned drones, autonomous vessels and battlefield AI into one of this year's hottest venture capital bets.

Related Articles:

  • Defense Spending: Macroeconomic Consequences and Trade-Offs — Peacetime defense spending booms—when the two-year average of defense outlays rises 1pp of GDP—are followed by sizable increases in real GDP, government consumption, investment, and the capital stock, with a short-lived rise in inflation. Imports accelerate while exports are broadly unchanged, widening current account and trade deficits.
  • America’s Fight Back Against China Starts In Los Angeles—In Flip-Flops — El Segundo, California has developed a self-reinforcing entrepreneurial cluster of defense and hardware startups founded by former employees of SpaceX, Palantir and Anduril who cashed in stock options to launch their own firms. One of them, drone maker Neros, says it has America's highest drone production rate and has worked to remove Chinese technology, including circuit boards, from its products.
  • Air Force Buys New Generation of Drones Made to Strike Deep Into Enemy Territory — The U.S. Air Force has agreed to deals with Anduril and General Atomics for autonomous drone jet fighters designed to help manned warplanes strike targets deep in enemy territory. The larger General Atomics FQ-42 carries missiles internally, while Anduril's FQ-44 carries munitions externally on its wings; costs are classified.

Tuesday, June 23, 2026

AI Summary. Women starting GLP-1 weight-loss treatment lose 1.4–2.5 BMI points, rising to 2.7–4.2 points after 1.5 years or more, and those who are single increase their probability of being married or cohabiting by 18.3 percentage points, with no change for women already partnered. Women not employed at the outset raise their employment rate by 13 percentage points.

Rebecca Diamond Harvard University
Date Posted:
Is Database:
Database

Women who began treatment with GLP-1 drugs when not currently married or partnered saw an increased probability of marriage or cohabitation of ~29pp after 6 quarters. Those not initially employed were 27pp more likely to be working after 6 quarters.

Does weight-loss medication improve women's marriage and employment outcomes?

Core argument: Women who were single when starting GLP-1 treatment raised their probability of being married or cohabiting by 18.3 pp overall and 28.6 pp (s.e. 7.1) at six or more quarters, building gradually as they lost weight.

BMI is flat before women start [GLP-1 treatment] and then falls (Figure 2, Panel A). All groups lose between 1.4 and 2.5 BMI points in the post period. These effects grow to between 2.7 and 4.2 BMI points at 1.5+ years after initiation. The largest magnitude change is in the marriage market. Women who are single when they start (Figure 2, Panel B) increase their probability of being married or living with a partner by 18.3 pp overall and 28.6pp (s.e. 7.1) at six or more quarters, building gradually as they lose weight. Partnered women’s relationships, by contrast, are stable. Their partnership probability barely moves (0.1 points, s.e. 1.8), and there is no excess relationship dissolution (0.0, s.e. 1.7). The marriage-market response is the making of new matches, not the breaking or remaking of old ones. In contrast, single women’s weight loss seems to dramatically affect first impressions of potential partners, leading to a large increase in marriage and cohabitation. This is consistent with prior work on the obesity penalty negatively affecting women in the marriage market. Figure 2, panels C and D show that women not employed at baseline move into work: their employment rate rises 13pp overall and 27pp after six or more quarters, and their weekly hours rise by nearly ten hours at the longer horizon.

Takeaways by Macro Roundup® AI

  1. Women who were single when starting GLP-1 treatment raised their probability of being married or cohabiting by 18.3 pp overall and 28.6 pp (s.e. 7.1) at six or more quarters, building gradually as they lost weight.
  2. Partnered women's relationships remained stable after GLP-1 initiation, with partnership probability moving 0.1 points (s.e. 1.8) and no excess dissolution (0.0, s.e. 1.7).
  3. Women not employed at baseline moved into work after GLP-1 initiation, with employment rates rising 13 pp overall and 27 pp after six or more quarters and weekly hours up nearly ten at the longer horizon.

Related Articles:

  • Victoria’s Secret Hits Record High as Bra Strategy Resonates — Victoria's Secret shares hit a record high after the lingerie retailer beat earnings estimates and raised its annual net sales guidance to as much as $7.13bn. The company has posted four consecutive quarters of annual revenue growth, with its bras gaining market share among 18- to 44-year-olds and growth in both the under-$50,000 and over-$200,000 income categories.
  • Today’s Most Important Technology — The share of patients taking semaglutide for weight control rather than type 2 diabetes rose from under 10% in 2019 to 41.7%. Obesity and overweight, affecting 1 in 8 people worldwide, cost the global economy $2tn — nearly 70 cents on the dollar from premature mortality and lost productivity — an impact projected to double by 2035 absent intervention.
  • National-Level and State-Level Prevalence of Overweight and Obesity Among Children, Adolescents, and Adults in the USA — An estimated 15.1m US children aged 5–14, 21.4m older adolescents aged 15–24, and 172m adults aged 25 and over had overweight or obesity, with adult prevalence highest in North Dakota for males (80.6%) and Mississippi for females (79.9%). Obesity prevalence among adolescents rose roughly 158–186% over three decades.

AI Summary. Inflation has outstripped wage growth in key private-sector industries including healthcare, finance, and retail for two straight months, largely because of a surge in energy prices driven by the Iran war. Gasoline prices have fallen since an interim US-Iran peace deal but remain nearly $1 a gallon above pre-conflict levels.

Augusta Saraiva and Maya Prakash Bloomberg
Date Posted:

Americans’ real disposable income has declined over the past two months as wage gains were offset by inflation. Bloomberg expects the dynamic to continue, as higher prices in sectors like food and transportation have “not fully materialized.”

Are rising energy prices eroding workers' real wages?

Core argument: Inflation has exceeded wage growth for two straight months in key private-sector industries including healthcare, finance, and retail, according to data compiled by Bloomberg, cutting workers' buying power.

Inflation has outstripped wage growth in key private-sector industries for two straight months, according to data compiled by Bloomberg. The sharp drop in buying power for employees in sectors ranging from healthcare to finance and retail was largely the result of a surge in energy prices driven by the Iran war, but the dynamic is likely to stick even as gasoline gets cheaper. Gas prices, which have dropped since the US and Iran agreed to an interim peace deal, are still almost $1 a gallon higher on average than they were before the conflict started at the end of February, based on American Automobile Association data. But war-driven inflation in other parts of the economy, like food and transportation, has yet to fully materialize.

Takeaways by Macro Roundup® AI

  1. Inflation has exceeded wage growth for two straight months in key private-sector industries including healthcare, finance, and retail, according to data compiled by Bloomberg, cutting workers' buying power.
  2. Gasoline prices remain nearly $1 a gallon above their average level before the Iran war began at the end of February, based on American Automobile Association data, despite falling since the US-Iran interim peace deal.
  3. War-driven inflation in food and transportation has yet to fully materialize, and the erosion of buying power is likely to stick even as gasoline gets cheaper.

Related Articles:

  • The Record Divide Between Corporate Profits and Worker Pay — 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.
  • US Consumer Sentiment Picks Up on Easing Gasoline Prices — US consumer sentiment rose for the first time in four months as lower gasoline prices offered some relief from a surge in inflation, with the University of Michigan's preliminary sentiment index increasing to 48.9 from a record low of 44.8. The reading beat most economists' expectations but remains the second lowest in data going back to the 1970s.
  • Do Voters Punish Inflation or Pay Cuts? Inflation and Real Wages in U.S. Elections — An analysis of U.S. counties estimates that where wages grew faster than prices, voters supported the incumbent party more, while counties with larger real wage losses than average shifted more toward the opposition. A one-standard-deviation larger real wage loss is associated with shifts of roughly 0.10 and 0.19 percentage points in vote share and margin.

AI Summary. The author argues that negative narratives, including pessimism about new technology, played an underappreciated role in the economic climate of the Great Depression, alongside more widely studied causes such as sweeping bank failures, a weak initial Federal Reserve response, and a tariff regime that reduced global trade.

Robert Shiller New York Times
Date Posted:

Shiller argues that fears around the potential impact of AI – often fostered by the words of AI executives themselves – are reducing consumer confidence and risk a negative feedback loop. “There is a risk that fear can actually help birth the reality.”

Did pessimistic narratives about technology deepen the Great Depression?

Core argument: The Great Depression, the decade of economic ruin following the 1929 stock market crash, stemmed from multiple factors including a lack of banking regulation and monetary policy that led to sweeping bank failures.

Such pessimism was present in the Great Depression, the decade of economic ruin that followed the stock market crash of 1929. There were many factors that contributed to making that period as difficult as it was. A lack of banking regulation and monetary policy led to sweeping bank failures, the Federal Reserve’s initial response was weak and ineffective, and a punishing tariff regime reduced global trade. Many of these causes have been widely studied; less understood is the role I believe negative narratives, including negative narratives about new technology, had on the economic climate.

Takeaways by Macro Roundup® AI

  1. The Great Depression, the decade of economic ruin following the 1929 stock market crash, stemmed from multiple factors including a lack of banking regulation and monetary policy that led to sweeping bank failures.
  2. The Federal Reserve's initial response to the Great Depression was weak and ineffective, and a punishing tariff regime reduced global trade.
  3. The author argues that negative narratives, including those about new technology, shaped the economic climate of the Great Depression, a role less understood than the widely studied causes.

Related Articles:

  • Emotions and Subjective Crash Beliefs — Using investor survey data and option prices, the authors decompose beliefs about stock market crashes into fundamental and subjective components, finding the subjective part is volatile and almost always positive. Investor sentiment, measured from survey narratives with a large language model, is correlated with this subjective component and with non-fundamental variation.
  • US Consumer Sentiment Picks Up on Easing Gasoline Prices — US consumer sentiment rose for the first time in four months as lower gasoline prices offered some relief from a surge in inflation, with the University of Michigan's preliminary sentiment index increasing to 48.9 from a record low of 44.8. The reading beat most economists' expectations but remains the second lowest in data going back to the 1970s.
  • Have We Entered an Era of High Productivity Growth? — Labor productivity has grown solidly while the San Francisco Federal Reserve's total factor productivity index, which adjusts for the equipment and technology workers use, has grown modestly, suggesting gains so far reflect better tools rather than broader advances. A regime-switching model puts the probability of a high-productivity regime at 57% using labor productivity and 21% using total factor productivity.

AI Summary. China's urban jobless rate for 16-to-24-year-olds excluding students fell to 15.6% from 16.3%, above the 14.9% recorded a year earlier, while the overall urban unemployment rate edged down to 5.1% from 5.2%. A record 12.7m students, about 4% more than the prior year, are expected to graduate over the summer.

Xinyi Wu South China Morning Post
Date Posted:

China’s youth unemployment (16–24) fell to 15.6% in May, down from 16.3% in April, but up from 14.9% last year. 12.7mm students will graduate this summer, ~4% more than last year.

Is China's youth unemployment rate still higher than a year ago?

Core argument: China's jobless rate for 16-to-24-year-olds excluding students fell to 15.6% in May from 16.3% in April, according to the National Bureau of Statistics, but remained above the 14.9% recorded in May of the prior year.

The jobless rate for the 16-to-24 age group, excluding students, fell to 15.6% in May from 16.3% in April, according to data released by the National Bureau of Statistics on Monday. The reading was higher than the 14.9% recorded in the same month last year. The outlook appears grim as a record 12.7 million students are expected to graduate this summer – around 4 per cent more than last year – suggesting that market conditions could tighten further in the coming months. The unemployment rate for those aged 25 to 29, also excluding students, stood at 7.2% in May, down from 7.4% in April. China’s overall urban unemployment rate inched down to 5.1% in May, from 5.2% in April, official data showed.

Takeaways by Macro Roundup® AI

  1. China's jobless rate for 16-to-24-year-olds excluding students fell to 15.6% in May from 16.3% in April, according to the National Bureau of Statistics, but remained above the 14.9% recorded in May of the prior year.
  2. A record 12.7 million Chinese students are expected to graduate this summer, around 4% more than last year, suggesting labour market conditions could tighten further in the coming months.
  3. China's unemployment rate for those aged 25 to 29, excluding students, stood at 7.2% in May, down from 7.4% in April, while the overall urban rate eased to 5.1% from 5.2%.

Related Articles:

  • China Says Hostile Foreign Forces Are Driving Its Youth to Slack Off — China's Ministry of State Security attributes youth disillusionment to ideological infiltration by foreign anti-China hostile forces, calling young people the primary targets of such efforts. Millions of young Chinese have embraced a "lying flat" mindset, rejecting pressure to overwork or leaving work entirely in an economy with limited well-paying jobs.
  • China Punishes ‘Excessively Pessimistic’ Social Media Users — China's internet regulator has launched a campaign to remove online content that incites "excessively pessimistic sentiment," panic, or defeatist ideas such as "hard work is useless." Authorities have punished bloggers who advocated working less, an influencer who said forgoing marriage and children made financial sense, and a commentator who said China's quality of life lags Western countries.
  • Macro Outlook 2026: Sturdy Growth, Stagnant Jobs, Stable Prices — China's growth is forecast at 4.8%, above the 4.5% consensus, with robust manufacturing offset by a housing drag on output estimated at about 1.5 percentage points as property sales run 60% below peak. Strong manufacturing and weak domestic demand are projected to lift China's current account surplus toward 1% of global output.

AI Summary. China sold about $4.5tn in goods and services to the rest of the world while spending just $3.4tn on foreign output, a gap the authors attribute not to improved competitiveness but to systematic transfers of spending power from Chinese households to businesses, local governments, and foreign consumers, which depress consumption and imports relative to production and exports.

Matt Klein The Overshoot
Date Posted:

Klein stresses the crucial role that Chinese underconsumption plays in China’s huge and growing trade surplus. If pre‑pandemic consumption trends had continued, retail sales would be 23% higher and living standards correspondingly better.

Does China's trade surplus stem from suppressed household spending rather than competitiveness?

Core argument: Chinese residents sold roughly $4.5T in goods and services to the rest of the world in 2025 while spending just $3.4T on foreign-produced goods and services, a gap the author argues improved competitiveness cannot explain.

In 2025, the last full year for which we have data, Chinese residents sold about $4.5T in goods and services to people in the rest of the world, but spent just $3.4T on goods and services produced outside of China. Improved “competitiveness” simply cannot explain the rise in China’s economy-wide trade surplus with the rest of the world. Instead, the source of China’s post-pandemic surplus is systematic transfers of spending power from ordinary Chinese to businesses, local governments, and foreign consumers. These transfers depress consumer spending and imports relative to production, investment, and exports. The best way to address (many of) the concerns of China’s trade partners is to raise the living standards of most Chinese people. It is better to start from the beginning and remember that the trade balance is the same thing as domestic production minus domestic demand. The initial downturn was caused by the (planned) withdrawal of consumer subsidies, which were completely ended in 2020. That coincided with falling spending on new vehicles, and therefore falling production by Chinese producers. Production gradually recovered, but domestic demand did not. Instead, the additional output all went towards exports.

Takeaways by Macro Roundup® AI

  1. Chinese residents sold roughly $4.5T in goods and services to the rest of the world in 2025 while spending just $3.4T on foreign-produced goods and services, a gap the author argues improved competitiveness cannot explain.
  2. The author attributes China's post-pandemic surplus to systematic transfers of spending power from ordinary Chinese to businesses, local governments, and foreign consumers, which depress consumer spending and imports relative to production, investment, and exports.
  3. China's consumer subsidies ended completely in 2020, coinciding with falling spending on new vehicles and falling domestic production, and while production gradually recovered, domestic demand did not, sending the additional output to exports.

Related Articles:

  • Sticking with What Works: Raising GDP Forecast on China’s Manufacturing Push — Stronger Chinese growth driven by export-oriented manufacturing may not produce net positive spillovers: for every 1pp export-driven boost to China's GDP, other economies may see a 0.1–0.3pp drag, with high-tech producers such as Europe and Japan facing greater pressure. Cheaper Chinese goods continue to exert a disinflationary impulse.
  • China’s Economy: Rightsizing 2025, Looking Ahead to 2026 — The authors argue China's official growth figures are inconsistent with ten consecutive quarters of deflation, estimating that real GDP is around 11% below official levels, with most of the adjustment in investment. That would imply a drop of roughly 9 percentage points in China's share of global investment, helping explain its export surge.
  • China’s Economy: Rightsizing 2025, Looking Ahead to 2026 — The authors argue China's official growth figures are inconsistent with ten consecutive quarters of deflation, estimating that real GDP is around 11% below official levels, with most of the adjustment in investment. That would imply a drop of roughly 9 percentage points in China's share of global investment, helping explain its export surge.

AI Summary. China has added 10 American companies to its "entities list," restricting trading with firms central to US efforts to build a rare earth supply chain rivaling Beijing's, including USA Rare Earth, MP Materials, and motor manufacturer Aveox.

Edward White Financial Times
Date Posted:

In an attempt to slow the American project to develop an independent rare earths supply chain, China sanctioned several US rare earths miners, processors, and battery manufacturers.

Is China restricting trade with US rare earth companies?

Core argument: China added 10 American companies to its "entities list," restricting trading with firms central to US efforts to build a rare earth supply chain rivaling Beijing's, according to a statement from the commerce ministry in Beijing.

China has restricted trading with several American companies, in a retaliatory move that targets some groups central to US attempts to build a rare earth supply chain to rival Beijing’s. USA Rare Earth and MP Materials, as well as high-tech motor manufacturer Aveox, were among the 10 American companies added to China’s “entities list,” according to a statement issued by the commerce ministry in Beijing.

Takeaways by Macro Roundup® AI

  1. China added 10 American companies to its "entities list," restricting trading with firms central to US efforts to build a rare earth supply chain rivaling Beijing's, according to a statement from the commerce ministry in Beijing.
  2. USA Rare Earth, MP Materials, and high-tech motor manufacturer Aveox are among the American companies covered by China's trading restrictions, a retaliatory move.

Related Articles:

  • How to Fight an Economic War — China earned about $3.4bn from exporting rare-earth elements and magnets in a year, while the U.S. Geological Survey estimates a 30% disruption to U.S. supply of the rare-earth element neodymium alone would cut U.S. GDP by 2.2%, over $600bn. This asymmetry gives Chinese export controls their leverage.
  • China Hatches Plan to Keep U.S. Military From Getting Its Rare-Earth Magnets — China is designing a "validated end-user" system that would fast-track rare-earth and other restricted material export approvals for U.S. firms while excluding companies tied to the U.S. military. The arrangement would let China ease export flows while keeping the materials away from U.S. military suppliers.
  • How Japan Built a Rare-Earth Supply Chain Without China — Japan has reduced its reliance on Chinese rare earths, with industry estimates putting China's share of Japanese rare-earth imports at roughly 60% to 70%, down from 90% or more. Japan's alternative chain runs from an Australian open-pit mine through a separation plant in Malaysia to Japanese magnet makers supplying automakers.