Edward Conard

Top Ten New York Times Bestselling Author

  • “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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, July 21, 2026

AI Summary. About 73m US households hold retirement accounts, mostly defined-contribution plans whose balances have risen $6.7tn, and 45m households account for nearly $15tn in annual outlays, close to 3x Germany's economy and 70% of China's GDP. This group's spending has sustained faster growth than comparably wealthy economies.

Jason Thomas Carlyle
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Citing the spending of the top 45mm US households, Jason Thomas argues that US economic growth could be characterized less as ‘k-shaped’ than “travelling at two speeds, one roughly the same rate as Europe’s and another that’s racing far ahead.”

Does retirement wealth explain why US spending outpaces peer economies?

Core argument: Balances in US defined-contribution retirement plans have risen by $6.7tn since the start of 2019, a 12.7% annually compounded gain, with roughly 73 million US households holding retirement accounts.

Roughly 73 million US households have retirement accounts (primarily defined-contribution plans like 401ks) that consist primarily of claims on businesses whose revenue growth and market values provide another hedge against inflation. Balances in defined contribution plans have increased by $6.7 trillion (+12.7%, annually compounded) since the start of 2019. US personal savings rates have fallen sharply over the past year (from 5.5% in April 2025 to 3% in May 2026) but that seems entirely rational. If your retirement balance is far above where you expected it to be, why not spend a bit more of your current income than previously intended? If we net across these overlapping cohorts and exclude recent first-time home purchases, we’re left with 45 million households that combine to account for nearly $15 trillion in annual outlays. That’s an extraordinary sum, equal to nearly 3x the size of the entire German economy and 70% of the GDP of China. And this third of the population has not only been insulated from the inflation shock but also exhibits the propensity to spend out of wealth and income to an extent that’s sustained a far higher rate of GDP growth than observed in economies with comparable living standards.

Takeaways by Macro Roundup® AI

  1. Balances in US defined-contribution retirement plans have risen by $6.7tn since the start of 2019, a 12.7% annually compounded gain, with roughly 73 million US households holding retirement accounts.
  2. Netting overlapping cohorts and excluding recent first-time home purchases leaves 45 million US households accounting for nearly $15tn in annual outlays, equal to nearly 3x the German economy and 70% of China's GDP.
  3. The US personal savings rate fell from 5.5% in April 2025 to 3% in May 2026, a decline the article argues is rational when retirement balances sit far above expectations.

Related Articles:

  • K-Shaped Economy? — Available spending data does not support the narrative of a bifurcated "K-shaped" consumer economy: surveys show households earning under $50,000 reported spending growth of 5%, versus 4.6% for those earning over $100,000. Government data show the top income decile's share of aggregate spending at 22.8%, down from 23.4% a year earlier.
  • The K-Shaped Economy’s Defining Statistic Has Some Problems — The widely cited estimate that the top 10% of US earners account for 45% of consumer spending comes from a method combining Federal Reserve survey and financial-accounts data. Its author says he is more confident in the trajectory—a significant, consistent rise in the top 10% and 20% shares over 30–35 years—than the level.
  • The Two Europes — The International Monetary Fund projects Eastern European economies will close much of the gap with US per capita GDP — Poland from 34% to 67%, Romania 27% to 60%, Lithuania 29% to 69% — while Western Europe slips, with France falling from 86% to 71% and Italy from 93% to 68%.

AI Summary. Using linked Danish administrative data, the authors estimate that starting GLP-1 treatment reduces long-term sickness leave by 0.95 percentage points, a 17.3% decline from a pre-treatment mean of 5.5%, with no statistically significant effects on employment or total income over four years. The reduced absence is valued at 1.3–1.5% of annual labor income per employed person.

N. Meltem Daysal, Camille Fredrickson, Ida Kristiansen, Mircea Trandafir, et al. National Bureau of Economic Research
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In Danish data, GLP-1 treatment reduced long-term sick leave meaningfully and persistently, generating fiscal savings of 1.3 to 1.5% of annual labor income per employed individual, even in the absence of detectable gains in employment or income.

Do weight-loss drugs reduce long-term sickness leave without raising employment or income?

Core argument: GLP-1 treatment reduces long-term sickness leave by 0.95 percentage points, a 17.3% decline relative to the pre-initiation mean of 5.5%, according to estimates from linked Danish administrative data and a matched stacked difference-in-differences design.

This paper provides new evidence on the economic consequences of GLP-1 treatment using linked Danish administrative data and a matched stacked difference-in-differences design. Comparing early Ozempic initiators to observably similar patients who initiate four years later, we find that GLP-1 treatment reduces long-term sickness leave by 0.95 percentage points, corresponding to a 17.3% decline relative to the pre-initiation mean of 5.5% (Figure 2). This effect grows from roughly 0.8 percentage points in the first two post-initiation years to about 1.1 percentage points in years 3 and 4 (Figure 2) and is accompanied by declines in emergency department encounters and cardiovascular medication use, consistent with sustained treatment exposure and gradual improvements in underlying health. [There are no statistically significant or economically meaningful effects on employment or total income over four years.] Yet, even in their absence, GLP-1 treatment generates meaningful fiscal spillovers by reducing prolonged sickness absence, valued at 1.3–1.5% of annual labor income per employed individual. [The long-term sickness-leave results are robust across alternative specifications and comparison groups (Figure 3).]

Takeaways by Macro Roundup® AI

  1. GLP-1 treatment reduces long-term sickness leave by 0.95 percentage points, a 17.3% decline relative to the pre-initiation mean of 5.5%, according to estimates from linked Danish administrative data and a matched stacked difference-in-differences design.
  2. The estimated sickness-leave effect grows from roughly 0.8 percentage points in the first two post-initiation years to about 1.1 percentage points in years 3 and 4, alongside declines in emergency department encounters and cardiovascular medication use.
  3. GLP-1 treatment shows no statistically significant or economically meaningful effects on employment or total income over four years, while the reduction in prolonged sickness absence is valued at 1.3–1.5% of annual labor income per employed individual.

Related Articles:

  • 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.
  • GLP-1–Induced Weight Loss and the Female Obesity Penalty — 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.
  • 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.

AI Summary. Immigration from Asia and Latin America has been the chief driver of rising US diversity and the declining non-Hispanic White share of the population. Intermarriage across racial and ethnic lines is far more common among Hispanic and Asian Americans, and rising among Black and non-Hispanic White Americans, leaving more people outside single racial categories.

Justin Fox Bloomberg
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Less than half of Americans < 29 years old are non-Hispanic whites. As of 2020, 33.8mm Americans – 10.2% of the population – identify as being of two or more races, largely driven by intermarriage between whites and either Hispanics or Asian Americans.

Are immigration and intermarriage making single racial categories obsolete?

Core argument: Immigration from Asia and Latin America since the 1960s has been the chief driver of rising U.S. diversity and the declining non-Hispanic White share of the population.

The increase in immigration from Asia and Latin America since the 1960s has been the chief driver of the rise in diversity and decline in the non-Hispanic White share of the population. But those immigrants have been doing what generations of immigrants before them did and, well, becoming Americans. Marriages across racial and ethnic lines are much more prevalent among Hispanic and Asian Americans than Black or non-Hispanic White Americans, while intermarriage rates have been rising steadily for the latter two groups, too. As a result, a growing share of Americans just isn’t going to fit neatly into any single racial or ethnic category that the US government can come up with.

Takeaways by Macro Roundup® AI

  1. Immigration from Asia and Latin America since the 1960s has been the chief driver of rising U.S. diversity and the declining non-Hispanic White share of the population.
  2. Intermarriage across racial and ethnic lines is much more prevalent among Hispanic and Asian Americans than among Black or non-Hispanic White Americans, though rates have been rising steadily for the latter two groups as well.
  3. A growing share of Americans does not fit neatly into any single racial or ethnic category the U.S. government defines, as recent immigrants follow earlier generations in becoming Americans.

Related Articles:

  • Do Adults Have the Skills They Need to Thrive in a Changing World? — An international assessment of adult skills describes numeracy proficiency levels ranging from counting objects and adding small whole numbers at the lowest level, to extracting information from tables and graphs and performing basic arithmetic with money and percentages at Level 1, up to analysing complex mathematical information and critically evaluating whether data support a claim at Level 5.
  • Do Past Wealth Gaps Explain Modern Inequality? Evidence From Immigration To The United States — 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.
  • America’s Immigration Mess: An Illustrated Guide — Current Population Survey estimates indicate America's foreign-born population surpassed 50m for the first time and exceeded 15% of the national population, above the prior peak of 14.8% recorded in 1890. Mass immigration during that earlier wave was associated in contemporary opinion with widening income and wealth gaps and depressed wages for less-skilled native-born men, and sweeping national restrictions followed.

AI Summary. A monthly slowdown in U.S. consumer price inflation excluding energy is likely a fluke, reflecting a recurring post-pandemic pattern of summer slowdowns and unusually large price declines in a few categories such as motor vehicle insurance, phone bills, and jewelry. Wage growth and producer prices suggest underlying inflation running about 1–1.5 percentage points faster per year than before the pandemic.

Matt Klein The Overshoot
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US inflation seems to be slowing, but mostly due to transient effects, including seasonal fluctuations. Goods and services, both intermediate and final, continue to rise in price at an underlying rate of 1 to 1.5% of pre-pandemic levels, as do wages.

Does a monthly inflation slowdown signal genuine disinflation?

Core argument: Since the pandemic, price increases have run fastest in the first months of the year and then slowed temporarily every summer — in 2023, 2024, 2025, and to a lesser extent 2022.

Even sans the drop in prices of energy goods and services, the Consumer Price Index (CPI) was about the same in June as in May - seasonally-adjusted, the slowest pace of one-month inflation since Jan. 2021. While it would be tempting to conclude that the long-awaited disinflation has arrived, this is more likely a fluke. There are four basic reasons for skepticism: Since the pandemic, there has been a recurring seasonal pattern where price increases have been fastest in the first few months of the year, only for those spikes to be followed by temporary—and misleading—slowdowns in inflation every summer (in 2023, 2024, 2025, and to a lesser extent, 2022). Inflation ex-energy was depressed by extremely large and unusual price declines in a handful of odd categories (motor vehicle insurance, phone bills, and jewelry), while categories that have tended to be better barometers of underlying inflationary trends showed no meaningful deceleration. Data from the Producer Price Index (PPI) suggests that input costs, particularly for business services, are still rising rapidly. Most importantly, wage growth and the job market continue to be roughly consistent with underlying inflation being about 1-1.5pp faster per year than pre-pandemic.

Takeaways by Macro Roundup® AI

  1. Since the pandemic, price increases have run fastest in the first months of the year and then slowed temporarily every summer — in 2023, 2024, 2025, and to a lesser extent 2022.
  2. Wage growth and the job market remain roughly consistent with underlying inflation running about 1–1.5pp per year faster than pre-pandemic, while the Producer Price Index suggests input costs, particularly for business services, are still rising rapidly.

Related Articles:

  • The Labor Market Explains Why Inflation Won’t Go Away — Unemployment has stayed at or below the Federal Reserve's estimated non-accelerating inflation rate of unemployment of under 4.5% for 57 months, tied for the longest such streak on record. The author argues this persistent labor market tightness is a key reason inflation has remained elevated and that keeping interest rates higher for longer is needed to reach the 2% target.
  • The U.S. Job Market is (Still) Inflationary — Prices for locally produced U.S. services are rising about 1–1.5 percentage points faster than in the years just before the pandemic, leaving underlying inflation as far from the Federal Reserve's goals as it was three years ago. Prices for manufacturing components and data-center-related loaded circuit boards have also risen.
  • Inflation and Debt — 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.

AI Summary. Chinese regulators led by the Ministry of Commerce have consulted domestic artificial intelligence and chipmaking companies on limiting overseas transfer of model training data and foreign downloads of model weights, while still allowing overseas customers to access the models and services. Restrictions could also cover foreign acquisitions of strategic technology groups.

Zijing Wu and Ryan McMorrow Financial Times
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Chinese regulators are considering expanding and tightening export controls on Chinese AI models and semiconductor technologies.

Is China considering export controls on AI models and chips?

Core argument: China's Ministry of Commerce has consulted Alibaba, ByteDance, and Zhipu on limiting overseas transfer of key model-training data and foreign downloads of their model weights, while still permitting overseas customers to access the models and services, according to two people involved.

Regulators led by the Ministry of Commerce (MofCom) have been consulting leading domestic AI and chipmaking groups on how to prevent China’s advanced technologies and star start-ups from being acquired by the West, according to two people involved in the discussions. MofCom talked to AI companies including Alibaba, ByteDance, and Zhipu on limiting the transfer of key data for the training of their models overseas, as well as allowing their model weights to be downloaded by foreign users, the people said. China would still let overseas customers access the models and services, however. Potential restrictions could also be imposed on the overseas acquisition of strategic technology groups in areas such as agentic AI, the people said. This is mainly to address a loophole that Beijing believes has led to Meta’s $2bn acquisition of Manus, a deal that was subsequently ordered to be unwound by Chinese authorities.

Takeaways by Macro Roundup® AI

  1. China's Ministry of Commerce has consulted Alibaba, ByteDance, and Zhipu on limiting overseas transfer of key model-training data and foreign downloads of their model weights, while still permitting overseas customers to access the models and services, according to two people involved.
  2. Beijing is weighing restrictions on overseas acquisitions of strategic technology groups in areas such as agentic AI, mainly to close a loophole it believes enabled Meta's $2bn acquisition of Manus, a deal Chinese authorities ordered unwound.
  3. The Ministry of Commerce has led consultations with leading domestic AI and chipmaking groups aimed at preventing China's advanced technologies and star start-ups from being acquired by the West, according to two people involved in the discussions.

Related Articles:

  • China Weighs Limits on the AI Models American Companies Love — Chinese officials have discussed with domestic AI labs how to safeguard their most powerful models' proprietary technology, out of concern that sharing it could aid adversaries and be weaponized against China. Models from Chinese companies such as DeepSeek and Moonshot AI are widely used by US firms as a cheaper alternative to OpenAI and Anthropic.
  • Who’s Afraid of Chinese Models? — Demand for frontier artificial intelligence models exceeds supply because computing capacity is scarce, allowing chip suppliers and their customers to resell compute at high margins. The author argues alarm over Chinese models is overblown, expecting the inference market to grow faster than training costs so labs can thrive at lower prices.
  • China and the Future Of Science — China graduates about 5x as many medical and biomedical students as the US each year, 7x as many engineers, and nearly double the number of science and engineering PhDs, while one-sixth to one-fifth of US science and engineering graduates are themselves Chinese. One study found returning Chinese scientists lead-author 2.5x more papers than peers who stay in the US.

Wednesday, July 22, 2026

AI Summary. The number of reported software vulnerabilities has been rising, with 1.5%–2.0% exploited each year, and the average time from a vulnerability's disclosure to its first confirmed exploitation fell below 100 days, with median times reaching zero. The same AI tools that find and exploit flaws can also propose code fixes.

Michael Cembalest J.P. Morgan
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The median time to exploitation of a vulnerability has fallen from ~ one year in 2021 to one day in 2026, and is projected to decline to one minute by 2027 as AI tools defuse. Cembalest notes, “The same tools that are used to detect and exploit vulnerabilities can also be used to propose code fixes and remediate them.”

Can AI fix software vulnerabilities as fast as it exploits them?

Core argument: Average time between a vulnerability's initial publication and its first confirmed exploitation fell below 100 days in 2025, with median times to exploitation already falling to zero days, and some attacks occur before patches become available.

Even before Mythos and GPT 5.5 came along in 2026, companies and governments had to react with increasing speed once a vulnerability is disclosed. The number of reported vulnerabilities has been rising, of which 1.5% -2.0% get exploited each year [and] the time between initial publication of a given vulnerability and its first confirmed exploitation (TTE) declined to less than 100 days on average in 2025, with median times to exploitation already falling to zero days. In fact, some attacks are occurring even before patches become available. The most important epiphany is the following: the same tools that are used to detect and exploit vulnerabilities can also be used to propose code fixes and remediate them. Claude Security, GPT 5.5-Cyber and OpenAI’s Codex Security Plugin are notable examples.

Takeaways by Macro Roundup® AI

  1. Average time between a vulnerability's initial publication and its first confirmed exploitation fell below 100 days in 2025, with median times to exploitation already falling to zero days, and some attacks occur before patches become available.
  2. Reported vulnerabilities have been rising, of which 1.5%–2.0% are exploited each year, requiring companies and governments to react with increasing speed once a vulnerability is disclosed.
  3. The same tools used to detect and exploit vulnerabilities can also propose code fixes and remediate them, with Claude Security, GPT 5.5-Cyber, and OpenAI's Codex Security Plugin as notable examples.

Related Articles:

  • 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.
  • Emerging Details of Chinese Hack Leave U.S. Officials Increasingly Concerned — U.S. intelligence and national security officials have told major telecommunications companies to find a permanent way to expel Chinese hackers from the deepest parts of the nation's communications networks. Critical parts of the system date to the late 1970s or early 1980s and are too old to upgrade with modern cybersecurity protections.
  • 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. The US 30-year Treasury yield has traded above 5% for its longest stretch since 2007, with roughly 19% of trading sessions above that level, reflecting investor concerns about a growing debt pile and sticky inflation.

Michael MacKenzie and Ye Xie Bloomberg
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So far this year, the US 30-year has traded beyond 5% for 27 days ~19% of trading days, the most since 2007.

Are rising long-term bond yields signaling worries about debt and inflation?

Core argument: The US 30-year Treasury yield has traded above 5% for 27 days this year, about 19% of all sessions, the most since 2007, according to data compiled by Bloomberg.

The US 30-year bond yield is trading above 5% for the longest stretch since the dawn of the financial crisis, echoing investor concerns about a growing debt pile and sticky inflation. So far this year, the 30-year has traded beyond 5% for 27 days — or about 19% of all sessions, the most since 2007, according to data compiled by Bloomberg. It traded above that level for 50 days that year.

Takeaways by Macro Roundup® AI

  1. The US 30-year Treasury yield has traded above 5% for 27 days this year, about 19% of all sessions, the most since 2007, according to data compiled by Bloomberg.
  2. The 30-year yield traded above 5% for 50 days in 2007, according to data compiled by Bloomberg.
  3. The 30-year yield's longest run above 5% since the dawn of the financial crisis echoes investor concerns about a growing US debt pile and sticky inflation.

Related Articles:

  • How Sky-High Deficits Threaten the Bond Market — The gap between 30-year and 10-year US Treasury yields has widened to 0.5 percentage points from 0.2, which suggests investors are more wary of future deficits, inflation, or random shocks. Dealers now buy only 10–15% of Treasurys at auction, down from 40–50% previously, according to JPMorgan Chase data.
  • How Might Fiscal Policy Respond to the Rise of Artificial Intelligence? — The Congressional Budget Office estimates that a permanent 0.5 percentage point increase in annual productivity growth would lower publicly held federal debt after 30 years by 39% of GDP, offsetting roughly half the projected rise from 101% of GDP to 175%. Higher revenue and slower spending growth outweigh higher interest costs.
  • 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. US after-tax non-financial corporate profit margins remain elevated by historical standards, estimated at 7.6% versus a post-1949 high of 8.2%, while employee pay as a share of non-financial corporate gross value added has fallen from 66% to 56%. One argument holds that subdued demographic growth leads companies to prioritize maximizing margins over expanding capacity.

Tan Kai Xian Gavekal
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In Q1 2026, US after-tax non-financial margins were estimated at 7.6%, just short of the post-1949 high of 8.2% in Q2 of 2021. Tan Kai Xian argues US corporate profits may not mean revert due to increased automation as the workforce shrinks relative to the economy.

Does slower population growth push companies to maximize profit margins?

Core argument: US after-tax non-financial corporate profit margins were estimated at 7.6% in the first quarter of 2026, just below the post-1949 high of 8.2% set in the second quarter of 2021.

US corporate profit margins remain elevated by historical standards. In the first quarter of 2026, US after-tax non-financial margins were estimated at 7.6%, only just below the post-1949 high of 8.2% reached in the second quarter of 2021. The second-quarter earnings season has also begun strongly, according to FactSet data. Employee remuneration as a share of gross value added for US non-financial corporate businesses declined from 66% in the fourth quarter of 2001 to 56% in the first quarter of 2026. [Will Denyer argued] "When strong demographic growth powers rapid demand growth, companies concentrate on expanding capacity and sales—on growing along with the growing market. That means they tend to focus less on their margins—less on getting the biggest profit they can out of every dollar of revenues. In contrast, when demographic growth is subdued, and hence there is less potential demand growth, companies are not so bent on expanding capacity as fast as they can, and are far more interested in squeezing the maximum possible margin from every dollar of sales."

Takeaways by Macro Roundup® AI

  1. US after-tax non-financial corporate profit margins were estimated at 7.6% in the first quarter of 2026, just below the post-1949 high of 8.2% set in the second quarter of 2021.
  2. Employee remuneration as a share of gross value added for US non-financial corporate businesses fell from 66% in the fourth quarter of 2001 to 56% in the first quarter of 2026.
  3. Will Denyer argued that strong demographic growth leads companies to prioritize expanding capacity and sales, while subdued demographic growth pushes them to squeeze the maximum possible margin from every dollar of sales.

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.
  • The Post‑COVID Decline in the Labor Share — The share of US national income paid to workers fell 1.6 percentage points below its pre-pandemic level, reaching a post-war low. The authors find this decline stems mainly from changes within industries rather than shifts in activity across sectors, following cyclical patterns seen in earlier recessions.
  • End of an Era: The Coming Long-Run Slowdown in Corporate Profit Growth and Stock Returns — The authors estimate that declining interest and corporate tax rates accounted for over 40% of real corporate profit growth from 1989 to 2019, while falling risk-free rates explain the entire expansion in price-to-earnings multiples. Real earnings before interest and taxes grew slightly more slowly than in 1962–1989, at 2.2% versus 2.4% per year.

AI Summary. China's manufacturing export surplus is around 2% of world GDP, roughly twice the largest surplus Japan ever ran, while domestic demand has stalled. Unexplained negative net income of about $125bn on its $4tn in net foreign assets, versus an expected $100bn surplus, supports the argument that the renminbi is about 30% undervalued.

Martin Wolf Financial Times
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Martin Wolf estimates that under reasonable assumptions, China should be earning ~$100B annually on her $4T of foreign assets. Yet, China shows an unexplained negative net income of around $125bn on its net foreign asset position.

Is China's currency undervalued as its export surplus hits record levels?

Core argument: China's manufacturing export surplus stands at roughly 2% of world GDP, described as roughly twice the largest surplus Japan ever ran, while exports surge and domestic demand stalls.

China’s macroeconomics are very different from those obtained before the global financial crisis and, even more so, before the end of its property boom. Exports are surging, but domestic demand has stalled. China's export surplus in manufacturing is now around 2% of world GDP, which is “roughly twice the largest surplus Japan ever ran.” Most importantly, China shows an unexplained negative net income of around $125bn on its net foreign investments. But it should, on reasonable assumptions about the income it earns on its $4tn in net foreign assets, have a surplus of some $100bn. As a result, Brad Setser argues, the renminbi is by now some 30% undervalued. China’s policies look unavoidably threatening to much of the world. If a major trading partner runs huge and persistent trade and current account surpluses, everyone else has to run offsetting deficits. This leads to the shrinkage of sectors specialising in producing tradable goods and services, as well as huge domestic financial deficits.

Takeaways by Macro Roundup® AI

  1. China's manufacturing export surplus stands at roughly 2% of world GDP, described as roughly twice the largest surplus Japan ever ran, while exports surge and domestic demand stalls.
  2. China reports an unexplained negative net income of about $125bn on its net foreign investments, though reasonable assumptions about returns on its $4tn in net foreign assets imply a surplus near $100bn.
  3. Brad Setser argues the renminbi is some 30% undervalued; persistent Chinese trade and current account surpluses require offsetting deficits elsewhere, shrinking sectors producing tradable goods and services and producing large domestic financial deficits.

Related Articles:

  • The Dangerous Triumph Of Neo-Mercantilism — Neo-mercantilism is thriving in both China, which pairs infant-industry promotion with large trade surpluses, and in a United States focused on external deficits and protecting domestic markets. The author argues this will likely fracture the world economy, and that a new multilateral treaty could include a mechanism to combat large structural trade surpluses.
  • 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.

AI Summary. US voters most likely to identify as "very liberal" hold postgraduate degrees but household incomes of $30,000–$60,000 a year, an unusual combination given that education and income are typically positively correlated. In the Democratic Socialists of America's most recent member survey, 80% of members aged 25 or older had bachelor's degrees while 45% reported household incomes below $60,000.

Nate Silver Silver Bulletin
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Silver finds that the most liberal voters are highly educated and lower-income. Only 19% of Americans with a college degree had a household income of $60,000 or less, but responders to a DSA survey were ~ twice as likely to fall into that category.

Do highly educated, lower-income voters identify as very liberal?

Core argument: In the Democratic Socialists of America's 2021 member survey, 80% of members aged 25 or older held bachelor's degrees while 45% reported household incomes below $60,000 per year.

The US voters most likely to identify as “very liberal” are those with postgraduate degrees but lower-to-middle household incomes of $30K to $60K per year. This is very much also the sweet spot for the DSA. In the DSA’s most recent member survey in 2021, 80% of members aged 25 or older had bachelor’s degrees, but 45% had household incomes below $60,000 per year. This is unusual because education and income are usually substantially positively correlated. In the composite CES data, only 19% of Americans with bachelor’s degrees or higher had household incomes of $60K or below, while respondents to the most recent DSA survey [were twice as likely to fall into this category].

Takeaways by Macro Roundup® AI

  1. In the Democratic Socialists of America's 2021 member survey, 80% of members aged 25 or older held bachelor's degrees while 45% reported household incomes below $60,000 per year.
  2. Composite CES data show only 19% of Americans with bachelor's degrees or higher had household incomes of $60,000 or below, while DSA survey respondents were twice as likely to fall into that category.
  3. US voters most likely to identify as "very liberal" are those with postgraduate degrees and household incomes of $30,000 to $60,000 per year, an unusual pairing since education and income are usually substantially positively correlated.

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