Edward Conard

Top Ten New York Times Bestselling Author

  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…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
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…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 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
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…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 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 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


Tuesday, June 30, 2026

AI Summary. Public debt in advanced economies has risen steadily, limiting governments' ability to cushion higher energy prices. Cyclically adjusted primary deficits averaged 1.9% of GDP in advanced economies since 2022 versus 1.1% over the two preceding decades, and 1.8% in emerging markets versus 0.1% from 2000–2019.

BIS Staff Bank of International Settlements
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BIS warns, “Countries can no longer count on nominal growth to stabilise debt dynamics. They now must run primary surpluses or significantly smaller deficits to maintain stable debt-to-GDP ratios.”

Has rising public debt reduced governments' ability to cushion energy price shocks?

Core argument: Cyclically adjusted primary deficits in advanced economies averaged 1.9% of GDP from 2022 onwards, nearly double the 1.1% recorded over the two preceding decades.

Many countries entered the current energy crisis with limited fiscal space. Public debt in [Advanced Economies] (AE) has risen steadily over recent years (Graph 15.A), reducing governments’ ability to cushion fallout from higher energy prices. Although the increase partly reflects successive shocks, from the Covid-19 recession to the war in Ukraine, persistent failures to make meaningful progress on fiscal consolidation during economic expansions have also played a part. Cyclically adjusted primary deficits in AEs averaged 1.9% of GDP from 2022 onwards (Graph 15.B), nearly double the 1.1% recorded over the two preceding decades. [Emerging market economies] (EME) have seen an even sharper deterioration (1.8% since 2022 versus 0.1% between 2000 and 2019). Fiscal positions are set to remain strained over the coming years. Debt servicing costs are unlikely to ease soon, as higher interest rate payments continue to weigh on fiscal accounts (Graph 15.C). Deficits in 2027 are projected at or above 2025 levels in most jurisdictions.

Takeaways by Macro Roundup® AI

  1. Cyclically adjusted primary deficits in advanced economies averaged 1.9% of GDP from 2022 onwards, nearly double the 1.1% recorded over the two preceding decades.
  2. Emerging market economies saw a sharper fiscal deterioration, with cyclically adjusted primary deficits averaging 1.8% of GDP since 2022 versus 0.1% between 2000 and 2019.
  3. Deficits in 2027 are projected at or above 2025 levels in most jurisdictions, with debt servicing costs unlikely to ease as higher interest rate payments weigh on fiscal accounts.

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.
  • Our Thoughts on Large US Deficits and Their Impact on Bond Yields — Total borrowing in the US is about average despite high government deficits, as high public borrowing has contributed to the need for higher interest rates that have depressed private sector borrowing. Risk premiums on long-dated debt look about average, with no market signs that economic or debt limits are currently being hit.

AI Summary. Gold fell below $4,000 a troy ounce, down nearly 14% over three months, its worst quarterly performance in more than a decade after reaching a record high near $5,595. Analysts attribute the decline to expectations of US interest rate rises, outflows from gold-backed funds, traders shifting into AI stocks, and Chinese bank restrictions on retail bullion trading.

Leslie Hook Financial Times
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Gold fell below $4,000 a troy ounce for the first time since November; the decline may be driven in part by the more-hawkish-than-expected stance Kevin Warsh, along with many FOMC participants, has taken since Warsh’s arrival at the Fed.

Why has gold fallen to its worst quarter in over a decade?

Core argument: Gold fell below $4,000 a troy ounce, dipping to $3,943 — its lowest since November — leaving it down nearly 14% over three months, its worst quarterly performance in more than a decade.

The price of gold fell below $4,000 a troy ounce on Tuesday as it headed for its worst quarterly performance in more than a decade. The price of bullion dipped just below $3,943, its lowest level since November, in early trading before recovering slightly, leaving it down nearly 14% over the past three months. Having rocketed to a record high of nearly $5,595 in January, driven by frenzied speculation among retail traders, gold has been hit hard as the hawkish stance of new US Federal Reserve chair Kevin Warsh boosts expectations of interest rate rises this year. Some traders have also sold gold to fund bets on soaring AI stocks and chipmakers or SpaceX’s record IPO, analysts say. In recent weeks, outflows from gold-backed exchange-traded funds, combined with new restrictions by some Chinese banks on bullion trading by retail investors, have further weighed on the price.

Takeaways by Macro Roundup® AI

  1. Gold fell below $4,000 a troy ounce, dipping to $3,943 — its lowest since November — leaving it down nearly 14% over three months, its worst quarterly performance in more than a decade.
  2. Gold reached a record high of nearly $5,595 in January, driven by frenzied speculation among retail traders, before the hawkish stance of new US Federal Reserve chair Kevin Warsh boosted expectations of interest rate rises this year.
  3. Analysts say some traders sold gold to fund bets on soaring AI stocks and chipmakers or SpaceX's record IPO, while outflows from gold-backed exchange-traded funds and new Chinese bank restrictions on retail bullion trading weighed on the price.

Related Articles:

  • The Debasement Trade Is Unraveling and Kevin Warsh Is One Big Reason — The "debasement trade" — favoring gold and Bitcoin over a dollar seen as vulnerable to inflationary, fiscal and monetary excess — has been a defining market narrative, but a new Federal Reserve chairman's emphasis on price stability as the overriding priority lifted the dollar and long-dated Treasuries at the expense of gold and crypto.
  • 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. AI company valuations rest on the assumption that profit margins across non-tech firms will eventually rise, but outside a handful of sectors adoption is slow, creating a divergence between front-loaded valuations and slower cash flows. If the per-use costs of AI models converge toward zero, revenue may be insufficient for all major cloud providers.

Torsten Sløk Apollo
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Sløk notes there are no signs of rising profit margins outside of the tech sector; AI’s ROI runway outside the tech sector may be long, creating a divergence between “front-loaded valuations today and a much slower cash flow reality.”

How long is the payoff runway for AI outside tech?

Core argument: AI company valuations rest on the promise that margins across the S&P 493 will eventually climb, embedding assumptions about future earnings into present market prices.

The value of AI companies today rests entirely on the promise that margins in the S&P 493 will eventually climb. That promise is the link to current market prices, since implicit in the valuations of AI companies are assumptions about future earnings. That's why the current debate about token costs, model routing, and token marketplaces is important. If token costs converge toward zero for most AI use cases, then there is not enough revenue for all hyperscalers, even in a situation where compute demand surges higher. The key issue is the length of the ROI runway outside the tech sector. In a handful of sectors, implementation is nearly immediate. But that is the exception. This creates a dangerous divergence between aggressive, front-loaded valuations today and a much slower cash flow reality, since equity markets priced for instant earnings growth will face a painful repricing if the productivity hockey stick takes five years rather than five months. If token costs converge toward zero for most AI use cases, then there is not enough revenue for all hyperscalers even in a situation where compute demand surges higher.

Takeaways by Macro Roundup® AI

  1. AI company valuations rest on the promise that margins across the S&P 493 will eventually climb, embedding assumptions about future earnings into present market prices.
  2. Equity markets priced for instant earnings growth face a painful repricing if the productivity hockey stick takes five years rather than five months, with near-immediate implementation confined to a handful of sectors.

Related Articles:

  • The State of the AI Economy — An analysis estimates the AI ecosystem generated $110bn in revenue over 12 months excluding double-counting, with the most recent month annualizing to a $175bn run rate. After separating AI-specific capital spending from the roughly $120bn hyperscalers already spent annually and depreciating compute over 6 years, revenues attributable to hyperscalers roughly cover depreciation.
  • Why .400 Hitters Disappeared — and What It Means for AI — Artificial intelligence models' capability gains are shrinking in percentage terms, falling from about 15% relative to the baseline early on to roughly 10% for the same absolute increment, narrowing the gap between frontier and good-enough models. The author argues this points to a commoditizing market where price, not minor model differences, becomes the main differentiator, pressuring frontier firms' margins.
  • Semiquincententacles — Leading artificial-intelligence labs are moving to usage-based token pricing on a cost-plus basis that includes total ownership costs, pushing token prices higher and giving some enterprises reason to migrate to cheaper open models. Frontier models remain necessary for cybersecurity, distillation training, agents, and scientific discovery, where maximum performance is required.

AI Summary. Historical records indicate immigrants arriving in the United States around the turn of the twentieth century came with almost no wealth, and by 1920 nearly half of white adults were foreign-born or had foreign-born parents. Households of Southern or Eastern European ancestry, who arrived later with fewer resources, are on average wealthier than those of Northwestern European ancestry.

Brian Marein Wake Forest University
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Except possibly at the very top of the distribution which SIPP cannot measure, the wealth of “new” Southern and Eastern European immigrants to the US has fully caught up with “old” immigrants. Wealth converges quickly once earnings inequality vanishes.

Do initial wealth disadvantages among immigrant groups persist across generations?

Core argument: Households of Southern or Eastern European ancestry, whose families arrived later and with substantially fewer resources, are on average wealthier than those of Northwestern European ancestry, contrary to what persistent initial wealth disadvantages would predict.

Inferring the determinants of long-run inequality from group-level data is complicated by the arrival of 30 million Europeans during the Age of Mass Migration (roughly 1850 to 1924), who are by construction included in average white wealth despite having no direct claim to the wealth accumulated by earlier Americans. By1920, nearly half of white adults were either foreign-born or had foreign-born parents. Using the United States Immigration Commission Reports (commonly known as the Dillingham Commission Reports), I document that immigrants at the turn of the twentieth century arrived with almost no wealth. [Thus] a large share of the white population started from a substantial wealth disadvantage. Northwestern Europeans comprised the overwhelming majority of earlier immigrants, dating back to the initial European settlement of North America, while Southern and Eastern Europeans predominated at the turn of the twentieth century. If initial wealth disadvantages persisted across generations, one would expect households of Southern or Eastern European ancestry to possess less wealth than those of Northwestern European ancestry, since their families arrived later and started with substantially fewer resources. In fact, they do not. On average, they are wealthier.

Takeaways by Macro Roundup® AI

  1. Households of Southern or Eastern European ancestry, whose families arrived later and with substantially fewer resources, are on average wealthier than those of Northwestern European ancestry, contrary to what persistent initial wealth disadvantages would predict.
  2. Roughly 30 million Europeans arrived during the Age of Mass Migration, spanning about 1850 to 1924, and by 1920 nearly half of white adults were foreign-born or had foreign-born parents, yet all are included in average white wealth.
  3. The United States Immigration Commission Reports, known as the Dillingham Commission Reports, indicate that immigrants at the turn of the twentieth century arrived with almost no wealth, so a large share of the white population started from a substantial wealth disadvantage.

Related Articles:

  • The Myth of Nordic Mobility: Social Mobility Rla — Correcting for measurement error by using relative rather than absolute correlations among relatives, the authors estimate that educational intergenerational mobility in Denmark and Sweden is much lower than conventionally measured, with parent-child and sibling correlations much higher. They argue Nordic education spending and income compression have at best modestly reduced families' role in children's educational outcomes.
  • 00 to 2022 — Using a genealogical database of 422,374 English people with rarer surnames, the authors find social status persists strongly even among distant relatives, with status correlations declining by a constant factor of 0.79 per step in the lineage across all status measures and eras studied. The authors argue this constancy suggests social interventions have modest effects.
  • Changing Opportunity: Sociological Mechanisms Underlying Growing Class Gaps and Shrinking Race Gaps in Economic Mobility — Across the 1978 to 1992 birth cohorts, adult household incomes fell for white children raised in low-income families and rose for those raised in high-income families, increasing the intergenerational persistence of income ranks among white children by 28%. Over the same cohorts, adult incomes rose for Black children at all parental income levels.

AI Summary. Screwworm infections have been confirmed in more than two dozen animals, including cattle, sheep, goats and a dog, threatening Texas, which produces roughly 14% of US beef supply. The outbreak comes with the US cattle herd at its lowest level in generations and beef prices at or near record highs.

Erin Ailworth and Michael Hirtzer Bloomberg
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The US has now confirmed more than two dozen screwworm infections. At ~86mm the US cattle herd is at its lowest level since 1951, and beef prices are near record highs.

Does a screwworm outbreak threaten US beef supply and prices?

Core argument: Screwworm infections have been confirmed in more than two dozen animals since early June, including cattle, sheep, goats and a dog, threatening Texas, the top US beef-producing state.

[Screwworm] infections have been confirmed in more than two-dozen animals, including cattle, sheep, goats and even a dog, since early June. That’s threatening the country’s top beef-producing state, Texas, at a time when the US cattle herd is already at its lowest level in generations. The infestation couldn’t come at a worse time. Beef prices are at or near record highs. And with Texas producing roughly 14% of the country’s beef supply, the ramifications could extend far beyond its borders. During a major screwworm outbreak in 1976, the fly infected 1.8 million head of cattle and sheep in Texas.

Takeaways by Macro Roundup® AI

  1. Screwworm infections have been confirmed in more than two dozen animals since early June, including cattle, sheep, goats and a dog, threatening Texas, the top US beef-producing state.
  2. Texas produces roughly 14% of US beef supply, and the infestation arrives with the US cattle herd at its lowest level in generations and beef prices at or near record highs.
  3. During a major screwworm outbreak in 1976, the fly infected 1.8 million head of cattle and sheep in Texas.

Related Articles:

  • Deadly Screwworm Pest Spreads in Texas With Two New Cases — The US Department of Agriculture confirmed two more detections of New World screwworm in Texas, bringing the total to four and raising concern the parasitic fly is spreading in the largest cattle-producing state. The detections add pressure on a US beef industry already facing tight supply, with the domestic herd at a 75-year low.

AI Summary. JPMorgan has created a $10bn fund that invests the bank's own capital directly into companies including an Idaho gold mine and a San Diego maker of artificial-intelligence-powered fighter drones, reviving Wall Street's older "merchant banking" tradition. The bank has said it wants to eventually allocate $20bn or more to the fund.

Alexander Saeedy Wall Street Journal
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Under a new initiative, Jamie Dimon is directly investing $10B of JPM’s own capital into US defense and national security firms. The bank has also targeted $1.5T in lending and financing for defense, energy, and critical supply chains by 2035

Are banks investing their own capital directly into defense and mining companies?

Core argument: JPMorgan hired Todd Combs, formerly a star investment manager at Berkshire Hathaway, to run a $10 billion direct-investment fund, and Jamie Dimon has said he wants to eventually allocate $20 billion or more to it.

The new program harks back to a former tradition on Wall Street of “merchant banking,” when Gilded Age banks and their successors in the 1980s invested their capital directly into the stock of companies such as Consolidated Edison, U.S. Steel, and RJR Nabisco, making bankers powerful sculptors of America’s industrial might. The bank hired Berkshire Hathaway’s star investment manager, Todd Combs, to run the $10 billion fund. So far, the fund has invested in a gold mine in Idaho and a San Diego-based manufacturer of fighter drones powered by artificial intelligence. Dimon has said he wants to eventually allocate $20 billion or more to the fund.

Takeaways by Macro Roundup® AI

  1. JPMorgan hired Todd Combs, formerly a star investment manager at Berkshire Hathaway, to run a $10 billion direct-investment fund, and Jamie Dimon has said he wants to eventually allocate $20 billion or more to it.
  2. The JPMorgan fund's investments so far include a gold mine in Idaho and a San Diego-based manufacturer of fighter drones powered by artificial intelligence.
  3. JPMorgan's program harks back to Wall Street's merchant banking tradition, when Gilded Age banks and their 1980s successors invested their own capital directly in the stock of companies such as Consolidated Edison, U.S. Steel, and RJR Nabisco.

Related Articles:

  • Trump Invokes Cold War-Era Law to Boost Munitions Production — The U.S. has invoked the Defense Production Act to expand munitions output amid doubts that American weapons makers can meet increased demand. U.S. officials say more than 1,000 long-range Tomahawk missiles and 1,500–2,000 air-defense interceptors have been fired in the war with Iran, and replacing those stockpiles could take up to six years.
  • US Defence Groups To Meet Donald Trump As Missile Production Struggles — Research from PwC finds the five largest US defence contractors had a combined backlog of undelivered orders of $1.36tn, up 24% from the prior year, as Lockheed Martin, Northrop Grumman, Raytheon and L3Harris invest billions of dollars expanding manufacturing. The US government has signed framework agreements with four companies to produce more than 10,000 low-cost cruise missiles over three years.
  • 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.

Wednesday, July 1, 2026

AI Summary. Congressional Budget Office long-term projections show sustained primary deficits of 2% of GDP driving the debt-to-GDP ratio steadily higher, a path the agency itself labels unsustainable. Closing a 2% of GDP fiscal gap is economically straightforward for a growing country at peace, but inflation or default would not resolve the problem, since prospective deficits still require continued borrowing.

John Cochrane Stanford University
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Cochrane points out that neither inflation nor default will solve the real fiscal problem – prospective primary deficits and the interest to cover them. “If we wipe out all current debt, we still must finance endless primary deficits.”

Can inflation or default fix ongoing primary deficits?

Core argument: CBO long-term projections show steady primary deficits of 2% of GDP driving a slow explosion in the US debt-to-GDP ratio, a scenario the CBO itself labels "unsustainable.".

Figure 5.4 plots the Congressional Budget Office long-term projections for debt to GDP and deficits. The steady 2% of GDP primary deficits lead to a slow explosion of the debt to GDP ratio. These projections assume that nothing bad will happen again. Surely something bad will happen at some point in the next 30 years. The US will want to meet future crises with more borrowed or printed money. Yet, as forecasts, these projections are too pessimistic. This scenario will not happen. The CBO itself labels the scenario “unsustainable.” Debt to GDP cannot grow forever. The only question is how it will not happen. The good news is that fixing a 2% of GDP fiscal gap in a prosperous, growing country at peace is not that hard as an economic matter. As straightforward as a fiscal reform is as a matter of economics, it does seem to be beyond the capacity of the current US political system. Inflation or default will not cure the US or other advanced-country fiscal problems. The fiscal problem is prospective deficits; poor prospects for repayment, not so much current debt. If we wipe out all current debt, we still must finance endless primary deficits. And the day after a $36 trillion default or Weimar hyperinflation, who is going to lend a trillion or so new dollars to the US each year?

Takeaways by Macro Roundup® AI

  1. CBO long-term projections show steady primary deficits of 2% of GDP driving a slow explosion in the US debt-to-GDP ratio, a scenario the CBO itself labels "unsustainable.".
  2. Closing a 2% of GDP fiscal gap in a prosperous, growing country at peace is not hard as an economic matter, yet such fiscal reform appears beyond the capacity of the current US political system.
  3. Inflation or default will not cure US fiscal problems, because the issue is prospective deficits and poor prospects for repayment rather than current debt: even after a $36 trillion default, the US would still need to borrow about a trillion dollars a year.

Related Articles:

  • Fiscal Narratives for US Inflation — Fiscal theory attributes the deflation of the deep recession to a fall in real interest rates that lowered real interest costs on government debt, an effect that outweighed large deficits. The predicted deflation spiral and the hyperinflation forecast from quantitative easing both failed to materialize.
  • Fiscal Influences on Inflation in OECD Countries, 2020-2022 — Across 21 economies, the authors find that headline and core inflation responded positively to a measure of government spending increases scaled by pre-pandemic debt-to-GDP and average debt duration. Estimated coefficients of 0.4–0.5 suggest 40–50% of the extra spending was financed through inflation, with the rest through conventional public finance.
  • 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. Across G10 economies, Japan carries a far higher gross public debt burden yet its 30-year government bond yield is barely above Germany's, which the author argues shows Japanese long-term yields should be much higher. As long as that is prevented, the yen stays under depreciation pressure toward 170 per dollar and intervention grows less effective.

Robin Brooks Robin Brooks Substack
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“Despite its much higher debt burden, Japan’s 30-year yield is barely higher than that of Germany,” Brooks notes. The BOJ’s suppression of yields continues to make the Yen unattractive, and thus poised for a fall. Brooks sees a drop to 170 yen/dollar.

Do suppressed long-term bond yields keep a currency under depreciation pressure?

Core argument: Japan's 30-year government bond yield sits barely above Germany's despite a far higher gross public debt burden, which the author reads across G10 economies as evidence that Japan's long-term yields should be much higher.

The chart, which - for all G10 economies - shows the 30-year government bond yield on the vertical axis and gross public debt on the horizontal axis. Despite its much higher debt burden, Japan’s 30-year yield is barely higher than that of Germany. This is the best illustration that Japan’s long-term yields should be much higher. As long as that’s not allowed to happen, the Yen remains under depreciation pressure, and intervention will become increasingly ineffective. One way or another, $/JPY is going to 170.

Takeaways by Macro Roundup® AI

  1. Japan's 30-year government bond yield sits barely above Germany's despite a far higher gross public debt burden, which the author reads across G10 economies as evidence that Japan's long-term yields should be much higher.
  2. The author argues that as long as Japan's long-term yields are not allowed to rise, the yen remains under depreciation pressure and intervention becomes increasingly ineffective.
  3. The author projects that the dollar-yen exchange rate will reach 170 one way or another.

Related Articles:

  • Yen Hits Four-Decade Low in Historic Slide That’s Rattled Japan — The yen weakened past 161.95 per dollar to its lowest level since 1986, putting traders on alert for Japanese intervention to support the currency. The weak yen is lifting exporters' profits and Japanese stocks to record highs while raising import costs for oil and gas and fueling inflation that hurts consumers.
  • 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%.
  • Can Japan Escape Its Debt Trap? — 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.

AI Summary. The Index of Consumer Sentiment is distorted by an oversampling of Democrats and by a shift from telephone to online polling that made responses more negative, with partisan nonresponse and respondents using economic questions to express political views. Adjusting for both leaves sentiment historically low but not at Great Recession lows.

Joel Wertheimer Silver Bulletin
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The Michigan ICS currently oversamples democrats and the move from phone to online surveys amplified negative sentiment. When both changes are accounted for “ICS is still low historically — but not depths-of-the-Great-Recession low.”

Do survey flaws exaggerate how weak consumer sentiment appears?

Core argument: The Index of Consumer Sentiment reported a 49.5 reading on June 26th, but the author argues the headline figure is misleading without corrections for too many Democrats in the sample and the shift from telephone to online polling.

On Friday [June 26th], the Index of Consumer Sentiment (ICS) reported a 49.5 reading for consumer sentiment, but without properly correcting for the survey’s issues, the headlines are misleading. [Firstly] there are too many Democrats in the sample. As partisanship has continued to increase over the past two decades, the effect on the survey has become more pronounced. So far during Trump’s second term, the gap between partisans equates to nearly 53 points of consumer sentiment. [Secondly], as with election polls, the ICS has struggled amid a shift away from telephone polling [as] the switch to online polling made responses more negative. There are issues both with partisan nonresponse, with some political groups more likely to respond than others, and partisan expressive response, with survey-takers using questions about the economy to express political sentiment. When both adjustments are [accounted for], ICS is still low historically — but not depths-of-the-Great-Recession low.

Takeaways by Macro Roundup® AI

  1. The Index of Consumer Sentiment reported a 49.5 reading on June 26th, but the author argues the headline figure is misleading without corrections for too many Democrats in the sample and the shift from telephone to online polling.
  2. The gap between partisans during Trump's second term equates to nearly 53 points of consumer sentiment, an effect the author says has become more pronounced as partisanship increased over the past two decades.
  3. Adjusting for both partisan composition and the move to online polling, which made responses more negative, leaves consumer sentiment low historically but not at depths-of-the-Great-Recession levels, according to the author.

Related Articles:

  • 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.
  • This Doommaxxing Has Got to Stop — 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.

AI Summary. The authors estimate that about $200bn of “missing” labor compensation would account for roughly a third of the fall in the labor share since the late 1970s, which workers owning a bit above 10% of corporate profits through stock compensation would cover. Spread across the 4.2m top-decile public company employees, that implies about $40,000 in additional pay each.

Owen Zidar and Eric Zwick The Everywhere Millionaire
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Zidar & Zwick suggest about one‑third of the post‑1970s drop in labor’s share is due to stock‑based pay to workers, in addition to the one‑third they already attribute to pass‑through income. That leaves only around one‑third for genuine shifts in technology, power, etc.

Does stock compensation explain part of the falling labor share?

Core argument: The authors report 2017 employee compensation of $7.2 trillion against corporate value added of $12.2 trillion after adjusting for the rise of pass-throughs, with unadjusted corporate profits, which exclude partnership profits, at $1.7 trillion.

In our data for 2017, after adjustments for the rise of pass-throughs, we report employee compensation of $7.2 trillion and corporate value added of $12.2 trillion. The unadjusted corporate profits number (which excludes partnership profits) is $1.7 trillion. If we could find around $200 billion of “missing” labor compensation, that would account for about a third of the fall in the labor share since the late 1970s. Thus, if workers owned a bit above 10% of those corporate profits via stock compensation, then that would cover the difference. Distributing this amount across the top 10% of public company employees, of which there are 4.2 million, this ownership would imply an additional $40,000 or so in pay. The aggregate numbers are thus quite plausible in terms of how much pay might have shifted to corporate profits serving as tax-preferred payments to high earners.

Takeaways by Macro Roundup® AI

  1. The authors report 2017 employee compensation of $7.2 trillion against corporate value added of $12.2 trillion after adjusting for the rise of pass-throughs, with unadjusted corporate profits, which exclude partnership profits, at $1.7 trillion.
  2. The authors estimate that roughly $200 billion of "missing" labor compensation would account for about a third of the fall in the labor share since the late 1970s, a sum covered if workers owned somewhat above 10% of corporate profits via stock compensation.
  3. Spread across the 4.2 million employees in the top 10% of public company workforces, that amount would imply about $40,000 in additional pay each, which the authors consider plausible as pay shifted into corporate profits serving as tax-preferred payments to high earners.

Related Articles:

  • 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.
  • Human Capitalists — Equity-based pay has grown to nearly 45% of total compensation for high-skilled workers, and counting it reduces the measured decline in labor share since the 1980s by over 60% while turning the high-skilled labor share decline into an increase of almost 1%. Such workers own 7% of public companies, earning over $85bn annually in equity compensation.
  • Capitalists in the Twenty-First Century — Most income at the top of the US distribution is non-wage income, primarily profits from closely-held, mid-market firms in skill-intensive industries owned by working-age individuals. The authors find private business profit falls by three-quarters after an owner retires or dies prematurely, indicating most top earners are "working rich" deriving income from human capital.

AI Summary. An analysis projects barely 15GW of net-new firm US grid capacity that operators can recognize to serve data centers and other constant loads, rising toward 20GW+ by the end of the decade. After covering peak demand and required reserve margins, the authors estimate spare capacity approaches zero and turns negative by 2027.

Jeremie Eliahou Ontiveros, Sebastian Orejas, Ellie Holbrook and Dylan Patel Semianalysis
Date Posted:

A Semianalysis forecast suggests “Behind-The-Meter” production “will power well over half of new US datacenters in 2028+,” as the US grid cannot scale to keep pace with AI Labs’ and hyperscalers’ demand.

Can the US grid add enough firm capacity to serve data centers?

Core argument: The authors forecast barely 15GW of net-new Effective Load Carrying Capability (ELCC) capacity added annually to the US grid, rising toward 20GW+ by the end of the decade, to serve firm datacenter load alongside other firm load such as industrial plants and semiconductor fabs.

The chart shows the three core building blocks of our forecast: Expected Datacenter US Gross Power Demand, available US Grid Capacity, and New Grid Supply. Our forecast points to barely 15GW of net-new Effective Load Carrying Capability (ELCC) capacity being added annually, with a rising trend towards 20GW+ by the end of the decade. This is effectively all the firm capacity being added to the system that a grid operator can recognise to serve firm datacenter load, as well as other firm load like industrial plants, semiconductor fabs, etc. Netting that accredited supply against peak demand and required reserve margins is what yields headroom itself, the spare accredited capacity a market has left to host new load after covering its own peak demand and required reserve margin. On this basis, available headroom is already approaching zero and turns negative by 2027, based on our analysis of required reserve margins across the country.

Takeaways by Macro Roundup® AI

  1. The authors forecast barely 15GW of net-new Effective Load Carrying Capability (ELCC) capacity added annually to the US grid, rising toward 20GW+ by the end of the decade, to serve firm datacenter load alongside other firm load such as industrial plants and semiconductor fabs.
  2. Available US grid headroom — the spare accredited capacity left after covering peak demand and required reserve margins — is approaching zero and turns negative by 2027, according to the authors' analysis of required reserve margins across the country.
  3. The authors build their forecast from three components: expected datacenter US gross power demand, available US grid capacity, and new grid supply.

Related Articles:

  • America’s Electricity Gap — US power consumption has risen more in the past two years than in the previous 15 combined, yet supply has not kept pace and electricity prices have climbed more in four years than in the prior 14. The US Energy Information Administration projects generation to grow another 4.6%, with commercial users including data centers driving most added demand.
  • Fighting Words: The Energy Transition in 2026 — Estimates based on primary energy overstate how much electricity is needed to replace oil in passenger cars, since electric motors convert 80%-90% of electricity into motion versus about 18% for gasoline cars. Measuring useful final energy net of waste heat avoids this "primary energy fallacy": the US consumed 45 exajoules of useful final energy versus 95 exajoules of primary energy.
  • Electricity 2026 — Global electricity demand is projected to grow faster than the world economy throughout the forecast period, driven by electricity-intensive industries, air conditioning, data centres and continued electrification. US electricity demand is forecast to rise about 2% a year over 2026-2030, more than twice the past decade's rate, with data centres accounting for almost half that growth.

AI Summary. The US government lifted foreign access restrictions on Anthropic's Fable 5 artificial intelligence model, clearing it for wider distribution after the company addressed safety concerns. Anthropic is redeploying the model with new classifiers designed to block additional cybersecurity tasks and is developing a framework with Amazon, Microsoft, Google, and other partners to analyze attempts to bypass its safeguards.

Shirin Ghaffary and Maggie Eastland Bloomberg
Date Posted:

The USG removed export controls on Anthropic’s Fable 5, a commercial version of Mythos, after the firm deployed a new “set of classifiers to target and block more cybersecurity tasks.”

Will new safety safeguards lift export restrictions on advanced AI models?

Core argument: The US government removed foreign access restrictions on Anthropic's Fable 5 AI model, clearing it for wider distribution after the company resolved the Trump administration's safety concerns.

The US government removed foreign access restrictions on Anthropic PBC’s Fable 5 artificial intelligence model, clearing it for wider distribution after the startup resolved the Trump administration’s safety concerns. Anthropic said that it is redeploying Fable 5 with a new set of classifiers to target and block more cybersecurity tasks. The company has also begun developing a framework for analyzing jailbreaks and evaluating responses together with Amazon, Microsoft, Google, and other partners in Project Glasswing, a collective of roughly 200 organizations cleared by Anthropic to use Mythos to hunt for cyber vulnerabilities.

Takeaways by Macro Roundup® AI

  1. The US government removed foreign access restrictions on Anthropic's Fable 5 AI model, clearing it for wider distribution after the company resolved the Trump administration's safety concerns.
  2. Anthropic is redeploying Fable 5 with a new set of classifiers designed to target and block more cybersecurity tasks.
  3. Anthropic has begun developing a framework for analyzing jailbreaks and evaluating responses with Amazon, Microsoft, Google, and other partners in Project Glasswing, a collective of roughly 200 organizations cleared by Anthropic to use Mythos to hunt for cyber vulnerabilities.

Related Articles:

  • Anthropic Block Marks US Reversal, Warning to Silicon Valley — The US government ordered an AI startup to disable access to its most advanced AI models for all foreign nationals after discovering that the guardrails on a newly released model could be bypassed. The company called the response "disproportionate" and warned such an approach could halt all new model deployments by frontier AI developers.
  • Misanthropic: On Mythos, Bad Human Behaviors and Systems Vulnerabilities — Anthropic reports that its Mythos model has detected thousands of high-severity cyber vulnerabilities, including ones found by chaining multiple obscure software weaknesses, and that these hacking skills are emergent rather than a designed capability. Mythos completed a corporate network attack simulation estimated to take an expert over 10 hours, which no other frontier model had solved.
  • China’s Own Mythos Is Coming — America Must Prepare — The authors argue the US can extend its estimated seven-month lead in artificial intelligence by closing gaps in export controls: halting all AI chip exports to China including less advanced models, curbing smuggling networks, blocking cloud and remote access to controlled chips and US models, and restricting chipmaking equipment.