Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…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
  • “…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
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


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
Date Posted:

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
Date Posted:

“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
Date Posted:

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
Date Posted:
Is Database:
Database
Is Important:
Important

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.

Thursday, July 2, 2026

AI Summary. The Economist's summer barbecue index, tracking ten cookout staples across 25 American cities, finds the basket costs an average of $81, 12% more than a year earlier and the fastest annual increase in a decade. That outpaced grocery-price inflation of less than 3%, reflecting unusually sharp price increases in several barbecue items.

Economist Staff The Economist
Date Posted:

A market basket for a summer BBQ in the US has risen 12% y/y, according to an Economist analysis. Meat prices were the dominant factor. Overall grocery prices rose only 3%.

How much have cookout staple prices risen compared with grocery inflation?

Core argument: The Economist's summer barbecue basket of ten cookout staples costs an average of $81 across 25 American cities, 12% more than a year ago, the fastest annual increase in a decade.

To calculate the bill, The Economist has created a summer bbq Index, tracking ten cookout staples in 25 American cities. Our basket should feed four hungry adults and includes protein (1.5 pounds, or 675g of rib-eye steak, two pounds of ground beef and of frying chicken, and a pack of pork sausage), carbs (two pounds of potatoes, a big bag of potato crisps, which Americans insist on calling chips, and a loaf of bread), beverages (a 64-ounce, or two-litre, bottle of Coke and a six-pack of beer) and lettuce. Using prices gathered by the Council for Community and Economic Research, a think-tank, we then compared the cost of our basket with median hourly pay in each metro area to see how long the typical worker must toil to afford it all. The index offers an unappetising conclusion. Across the 25 cities in our sample, the basket now costs an average of $81, 12% more than a year ago, the fastest annual increase in a decade. That far outpaced grocery-price inflation of less than 3%, reflecting the unusually sharp increases in several items in our barbecue basket.

Takeaways by Macro Roundup® AI

  1. The Economist's summer barbecue basket of ten cookout staples costs an average of $81 across 25 American cities, 12% more than a year ago, the fastest annual increase in a decade.
  2. The barbecue basket's 12% price rise far outpaced grocery-price inflation of less than 3%, reflecting unusually sharp increases in several items in the basket.
  3. The Economist built its index using prices gathered by the Council for Community and Economic Research and compared the basket's cost with median hourly pay in each metro area to gauge how long a typical worker must work to afford it.

Related Articles:

  • What’s at Stake for Beef as Flesh-Eating Screwworm Cases Exceed Two Dozen — 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.
  • Gas Prices Wipe Out More Than a Year of Wage Gains — Rising gasoline prices have pushed average hourly earnings 0.7% below their year-earlier level after adjusting for inflation, erasing more than a year of wage gains. Inflation eroding wage increases is one reason consumer sentiment sits near record lows despite relatively low unemployment and a strong stock market.
  • 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. OpenAI has discussed giving the US government a 5% stake in the $852bn company, with the proposed arrangement extending to similar stakes in other US artificial intelligence firms, as the company seeks financial buy-in from the administration to clear political obstacles.

Cristina Criddle and George Hammond Financial Times
Date Posted:

OpenAI is considering giving the USG a 5% stake in the firm. OpenAI’s proposal would “involve other US AI companies handing over a similar stake.”

Are AI companies offering the government equity stakes to clear political obstacles?

Core argument: OpenAI has discussed handing a 5% stake to the US government, as the $852bn AI start-up seeks to clear political obstacles by securing financial buy-in from the Trump administration.

OpenAI has discussed giving a 5% stake to the US government as the $852bn AI start-up seeks to clear political obstacles by securing financial buy-in from the Trump administration. The proposed arrangement would involve other US AI companies handing over a similar stake, although it is not clear if the other labs would be willing to do so. Altman has been in active talks with the administration about the issue of public ownership, including Trump, Commerce Secretary Howard Lutnick, and Treasury Secretary Scott Bessent, according to multiple people familiar with the matter. The OpenAI chief has also spoken to Democratic Senator Bernie Sanders in recent weeks. Sanders has pushed for public ownership of closer to half of each US AI company through a sovereign wealth fund.

Takeaways by Macro Roundup® AI

  1. OpenAI has discussed handing a 5% stake to the US government, as the $852bn AI start-up seeks to clear political obstacles by securing financial buy-in from the Trump administration.
  2. The proposed arrangement would involve other US AI companies handing over similar stakes, though it is unclear whether the other labs would be willing to do so.
  3. Sam Altman has discussed public ownership with Trump, Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent, and with Democratic Senator Bernie Sanders, who has pushed for public ownership of closer to half of each US AI company through a sovereign wealth fund.

Related Articles:

  • OpenAI Leans Toward Waiting Until Next Year for I.P.O. — OpenAI is leaning toward delaying its initial public offering until next year, according to people involved in the company's deliberations. Advisers have cautioned that retail investor enthusiasm may be limited, following a decline in SpaceX's stock after its public offering and choppy markets in which technology stocks have dragged down indexes.
  • OpenAI Isn’t Yet Working Toward an IPO, CFO Says — OpenAI is seeking backing from banks, private equity, and potentially governments to help guarantee financing for AI chips, arguing such guarantees could lower borrowing costs and raise the amount of debt it can take on. The company expects to spend roughly $600bn on computing power from Oracle, Microsoft, and Amazon.
  • AI: The ROI Runway Could Be Long Outside the Tech Sector — 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.

AI Summary. US technology and finance firms offer new engineering graduates higher pay and greater prestige than large industrial companies like Boeing, whereas engineering graduates in France, Japan, China, and Germany take industrial jobs such as Airbus at a fraction of US engineering pay. The author argues this talent pull is a genuine obstacle to re-industrializing the US.

Louis-Vincent Gave Gavekal
Date Posted:
Is Database:
Database

Louis-Vincent Gave notes that while “Airbus can hire the cream of the French, or even European, crop,” established American industrial firms like Boeing may struggle to attract engineering talent due to competition from startups and Wall Street.

Does tech and finance pay pull engineering talent away from US industry?

Core argument: Engineering graduates in France, Japan, China, and Germany take jobs at industrial firms such as Airbus for a fraction of US engineering pay, while US graduates target Google, Microsoft, Meta, Goldman Sachs, or Morgan Stanley.

Shifts in staff compensation stacked the decks against Boeing and other big US industrial companies—at least relative to other industrial powers. In France, for example, graduates of engineering schools will gladly take jobs at Airbus and be paid a fraction of what an engineer makes in the US. The same is true in Japan, China, and Germany. In the US, however, a new engineering graduate today likely has his or her sights on a job at Google, Microsoft, or Meta, or alternatively at Goldman Sachs or Morgan Stanley. Such jobs offer better pay and more social prestige, along with the promise of stock options and potential riches. Now the SpaceX IPO has turned this dial all the way up to 11. In short, for the past 15 years or so, the US tech industry has sucked most of the oxygen out of the room. This is true for capital allocation and stock market performance, and it follows that the same has also been true for human resources and talent acquisition. This seems like a genuine hurdle to today’s widespread hopes of re-industrializing the US.

Takeaways by Macro Roundup® AI

  1. Engineering graduates in France, Japan, China, and Germany take jobs at industrial firms such as Airbus for a fraction of US engineering pay, while US graduates target Google, Microsoft, Meta, Goldman Sachs, or Morgan Stanley.
  2. US technology and finance jobs offer better pay and more social prestige than industrial employers, along with stock options and the promise of riches, shifting compensation against Boeing and other large US industrial companies.
  3. The US tech industry has drawn most capital allocation, stock market performance, and talent for roughly 15 years, and the SpaceX IPO intensifies that pull, posing a hurdle to hopes of re-industrializing the US.

Related Articles:

  • Military Officer Quality in the All-Volunteer Force — The authors find a steady decline in U.S. Marine Corps officers' General Classification Test scores, which is statistically associated with the expansion of college attendance and explains 96% of the measured change. They also find a positive association between African American officers and mean test scores, arguing affirmative action has not lowered officer quality.
  • Boeing Battles Brain Drain As Engineers Chase the Allure of Space — The average tenure of a Boeing engineer has fallen from 16.4 years to 12.6 years, according to data from the union representing 12,000 Boeing engineers, with tenure shortening in almost every age bracket. Analysts, recruiters and union officials describe this "brain drain" as a drag on operations that could make launching a new plane harder.
  • Speed Can Reindustrialize America — The US has a relative surplus of low-paid hourly workers and a shortage of high-skill workers, so many less productive US manufacturers could buy a robot but could not attract the talent to program it. China faces the opposite conditions, with underemployed STEM graduates, residency rules complicating coastal factory hiring, and robot programmers earning a fraction of US wages.

AI Summary. Polling finds Democrats ahead in only two Republican-held Senate states — leading by 7 points in North Carolina and 2 in Maine — fewer than the four pickups needed to win the chamber. Republicans lead by 2 points in Alaska and Iowa and 3 in Ohio, with Texas tied, margins within the polls' sampling error.

Nate Cohn New York Times
Date Posted:

As of today, NYT polling suggests the Democrats’ standard-bearers are leading in two of six competitive Senate seats. Other than in NC, the results are within the margin of error. The Democrats need a net change of four seats to flip the chamber.

Do Democrats lead in enough Senate races to win the chamber?

Core argument: Polls show Democrats leading in only two Republican-held Senate states — North Carolina, where Roy Cooper is up seven points, and Maine, where Graham Platner is up two — short of the minimum of four they would need to win the chamber.

The polls find Democrats ahead in only two Republican-held states, less than the minimum of four they would need to win the chamber, with Roy Cooper leading by seven percentage points in North Carolina and Graham Platner leading by two in the previously reported poll of Maine. Republicans lead by two points in Alaska and Iowa and by three points in Ohio. The race in Texas is tied. It’s important to emphasize that the results of most of these races — including the three races where Republicans lead in the poll — are within the margin of error. The margin of sampling error among the likely electorate is plus or minus 4.8 percentage points in Maine, 4.5 percentage points in Texas, 4.9 percentage points in Alaska, and 4.7 percentage points in Iowa, North Carolina, and Ohio. The margin of sampling error when analyzing the states together is plus or minus 1.9 percentage points.

Takeaways by Macro Roundup® AI

  1. Polls show Democrats leading in only two Republican-held Senate states — North Carolina, where Roy Cooper is up seven points, and Maine, where Graham Platner is up two — short of the minimum of four they would need to win the chamber.
  2. Republicans lead by two points in Alaska and Iowa and by three points in Ohio, while Texas is tied, with all three Republican-leading races falling within the margin of error.
  3. The margin of sampling error among the likely electorate is plus or minus 4.8 points in Maine, 4.5 in Texas, 4.9 in Alaska, and 4.7 in Iowa, North Carolina and Ohio, and 1.9 points across the states combined.

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.
  • Is The Vibecession Real — Or Is The Survey Broken? — 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.
  • 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.