Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…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 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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Monday, July 27, 2026

AI Summary. Google's ATLAS data show workplace AI use spans over 68% of occupations representing above 88% of US employment, but depth is shallow: AI is used for only 21% of tasks in the median occupation with any use, mostly collaborative rather than automating. Over 86% of conversational AI interactions occur outside work.

Fabien Curto Millet, Zanna Iscenko, Scott Strand, et al. Google
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Google’s new AI & Economy ATLAS maps 15M AI interactions to occupations, tasks, and activities, showing AI use is pervasive but not intensive, collaborative more than autonomous, and used mostly at home, suggesting GDP accounting understates its value.

How broad and deep is workplace AI adoption across occupations?

Core argument: Google's ATLAS v1.0 finds AI adoption in the workplace spans over 68% of all occupations, representing just above 88% of total US employment, including software developers and market researchers as well as farmers, industrial engineers, and foresters.

AI has diffused very broadly in both work and life. Adoption in the workplace spans over 68% of all occupations that collectively represent just above 88% of total US employment, including both much-discussed occupations such as software developers and market researchers, and those less-discussed such as farmers, industrial engineers, and foresters. Though broadly used at work, the overall depth of AI’s use is shallow. ATLAS data shows that AI is used for only 21% of total tasks in the median occupation with any AI use. Only 3% of occupations showed AI usage for over 75% of their tasks. While there is some task automation, the vast majority of use so far is collaborative and assistive to tasks and work. ATLAS points to a complex relationship between AI usage and expertise. When classified according to expertise levels, tasks requiring lower-to-middle levels of expertise tend to see relatively higher AI usage than the highest expertise level tasks, despite ATLAS data also suggesting high-earning workers—and therefore those with more scarce skills and expertise—adopt AI at the highest rates. AI is delivering real utility at home that standard economic metrics may miss. Over 86% of interactions with conversational AI happen outside of work, and humans’ daily time allocation strongly and positively predicts where people direct their AI questions.

Takeaways by Macro Roundup® AI

  1. Google's ATLAS v1.0 finds AI adoption in the workplace spans over 68% of all occupations, representing just above 88% of total US employment, including software developers and market researchers as well as farmers, industrial engineers, and foresters.
  2. AI's use is shallow, covering only 21% of total tasks in the median occupation with any AI use, with just 3% of occupations showing AI usage for over 75% of their tasks and the vast majority of use collaborative and assistive.
  3. Over 86% of interactions with conversational AI happen outside of work, and humans' daily time allocation strongly and positively predicts where people direct their AI questions, utility that standard economic metrics may miss.

Related Articles:

  • Expertise — The authors' model of automation predicts that occupations with rising expertise requirements see higher wages but falling employment, while those with declining requirements see lower wages alongside rising employment. Analyzing employment and earnings data by occupation across four decades, they find changes in occupational expertise strongly predict changes in occupational wages.
  • Generative AI and Entrepreneurship — The authors find that startups with a larger share of tasks doable by generative AI cut employment beginning immediately after ChatGPT's release, with technically proficient founders restructuring teams toward higher-skill roles. Venture investors made smaller but more numerous deals, and new firm entry offset the decline in total startup employment.
  • America Is Experiencing A Productivity Miracle — America's post-2019 productivity acceleration came largely from professional services and management—about 10% of output and heavy users rather than producers of new technology—and from oil and gas. The information industry grew productivity around 6% annually, no faster than its 2000-19 average, with its output share steady at 5.3–5.5%.

AI Summary. In the US, Europe and Japan, pay growth has decoupled from productivity growth, with productivity pulling ahead. US labor productivity, measured as real GDP per hour worked, is more than 5x its 1947 level while real hourly compensation is only about 3x, and median wage growth lags even further behind.

Joel Suss Financial Times
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In advanced economies, increases in labor productivity growth have decoupled from real wage growth, especially post-1980.

Are wages falling further behind productivity growth in advanced economies?

Core argument: US labour productivity, measured as real GDP per hour worked, is more than five times its 1947 level, while real hourly compensation is only about three times greater.

In the US, Europe and Japan, pay growth has decoupled from productivity growth, with the latter having pulled ahead. US Labour productivity — measured as real GDP per hour worked — is now more than five times greater than in 1947, whereas real hourly compensation is only about three times greater. Median wage growth has lagged even further behind productivity growth, with inequality pushing the average wage higher than the median. (The figures above show average rather than median wages; plotting median wages would show an even greater divergence.)

Takeaways by Macro Roundup® AI

  1. US labour productivity, measured as real GDP per hour worked, is more than five times its 1947 level, while real hourly compensation is only about three times greater.
  2. Pay growth has decoupled from productivity growth in the US, Europe and Japan, with productivity pulling ahead in all three.
  3. Median wage growth has lagged productivity growth by even more than average wage growth, as inequality pushes the average wage above the median.

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.
  • AI and Productivity — The recent pickup in US labor productivity appears driven by higher utilization of existing capital—running factories, server racks, and hotel rooms harder—rather than by firm-level efficiency gains from AI. Adoption remains too thin and the cross-sectional evidence too weak to conclude that AI-driven productivity gains are already widespread.
  • Understanding Trends in Worker Pay over the Past 50 Years — Productivity growth has been unequal across industries, across firms within industries, and across workers within firms, slowing growth in both the productivity and the pay of the median worker. The authors argue that working- and middle-class men earlier received "breadwinner rents"—pay above their marginal value to employers—and then endured slow wage growth as women's workforce participation rose.

AI Summary. Only 20% of global household wealth growth came from net new investment in real assets such as machinery, housing, infrastructure and intellectual property, down from a 30% average over the prior quarter century. Nearly 60% came from asset prices rising faster than inflation and negative net worth in other sectors.

Rebecca Anderson, Jan Mischke, Arvind Govindarajan, Sylvain Johansson, et al. McKinsey
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A McKinsey analysis finds global wealth is increasingly composed of “paper wealth,” driven by the rise of US equity values to 2.4x the book value of net corporate assets, and the debt of Chinese corporations, which grew to 80% of their real asset value.

Is household wealth growth driven more by asset prices than investment?

Core argument: Only 20% of global household wealth growth in 2025 came from net new investment in real assets such as machinery, homes, infrastructure, and intellectual property less depreciation, versus a 30% average over 2000–2024.

In 2025, global wealth growth was driven to a greater extent by paper wealth, or nominal asset value growth decoupled from the real economy. Only 20% of household wealth growth was based on net new investment (real assets including machinery and equipment, homes and buildings, infrastructure, and intellectual property, less depreciation), compared to 30% on average from 2000 to 2024. Nearly 60% came from asset price growth above and beyond general inflation and negative net worth positions from other sectors. [For example, this includes equity value growth above net assets for corporations as well as government bonds greater than the book value of government assets]. This was a marked increase over the average from 2000 to 2024, when paper gains drove one-third of global wealth growth.

Takeaways by Macro Roundup® AI

  1. Only 20% of global household wealth growth in 2025 came from net new investment in real assets such as machinery, homes, infrastructure, and intellectual property less depreciation, versus a 30% average over 2000–2024.
  2. Nearly 60% of 2025 global household wealth growth came from asset price gains above general inflation plus negative net worth positions in other sectors, compared with about one-third on average over 2000–2024.
  3. Paper wealth, meaning nominal asset value growth decoupled from the real economy, drove a greater share of global wealth growth in 2025, including equity values above corporate net assets and government bonds exceeding the book value of government assets.

Related Articles:

  • The Next Crash: Why This Time Might Not Be Different — The "excess CAPE yield" — the gap between cyclically adjusted earnings yields on stocks and inflation-adjusted Treasury bond yields — stands at 1.4%, far below its long-run average of 4.7%. Historically, a low excess yield has been associated with poor subsequent 10-year excess returns on stocks, though it does not reliably predict an imminent crash.
  • The Summer I Turned Pretty — A warning sign in a boom cycle is when companies closest to final demand weaken while capital spending beneficiaries keep thriving, as when telecom operators' shares rolled over while communications equipment stocks kept rising. Semiconductor stock prices and free cash flow are soaring while large cloud providers' shares stagnate and their free cash flow plummets.
  • One Hundred Years in the U.S. Stock Markets — Over a century, U.S. publicly traded stocks generated roughly $91tn in shareholder wealth enhancement, with returns strongly positively skewed and dominated by a relatively small number of high-performing firms. Because most possible outcomes fall below the mean in a skewed distribution, the authors argue financial planning should focus on median outcomes or the full distribution.

AI Summary. An analysis of census data found the number of children under 18 in large U.S. cities fell 6% over a decade, versus 1% nationwide, with children under 5 down 15% in big cities versus 7% nationally. The number of children declined in about two-thirds of the 38 U.S. cities with more than 500,000 residents, including some cities gaining population overall.

Rachel Louise Ensign and Paul Overberg Wall Street Journal
Date Posted:

The number of children living in the US declined 1% overall btw 2015 and 2024, while the number living in large American cities fell 6%. The number of American children under the age of 5 fell 7%, while the number living in big cities fell 15%.

Are large U.S. cities losing children faster than the nation overall?

Core argument: The number of children under 18 living in big U.S. cities fell 6% over the past decade, versus a 1% decline nationwide, according to a Wall Street Journal analysis of census data from 2015 through 2024.

The number of children under 18 living in big U.S. cities is down 6% in the past decade, the Journal found, compared with a 1% decline nationwide. The drop is especially stark among families with little kids: The number of children under age 5 in big cities fell 15%, compared with a drop of 7% nationwide. Even cities that are gaining population are losing children. In all, the number of children declined in about two-thirds of the 38 U.S. cities with more than 500,000 residents. The Journal analyzed census data from 2015 through 2024, the most recent data available.

Takeaways by Macro Roundup® AI

  1. The number of children under 18 living in big U.S. cities fell 6% over the past decade, versus a 1% decline nationwide, according to a Wall Street Journal analysis of census data from 2015 through 2024.
  2. The number of children under age 5 in big U.S. cities declined 15%, compared with a 7% drop nationwide, the Wall Street Journal found.
  3. The number of children declined in about two-thirds of the 38 U.S. cities with more than 500,000 residents, including cities that are gaining population overall.

Related Articles:

  • Young Families Have Stopped Leaving Big Cities, For Now — New data show the population of children under five in large U.S. urban counties fell 0.2%, matching the national rate of decline and ending a stretch in which big cities lost young children faster than the country as a whole. Every large urban county with under-five growth since 2020 is in Texas, North Carolina, or Florida.
  • City Parenting Has Become A Financial Flex — Census data show the under-18 population fell 22% in Chicago, 23% in Los Angeles and 12% in New York between 2010 and 2024, while wealthier white families defy the trend in central neighborhoods of the densest, richest cities. Brooklyn's white child population grew 13% over that period, rising from a third to more than two-fifths of the total.
  • The Demographic Outlook: 2026 to 2056 — The Congressional Budget Office projects the US population rises from 349m to 364m between 2026 and 2056, with annual growth slowing from 0.3% over the next decade to 0.1% thereafter before reaching zero and then shrinking. Declining fertility is projected to push deaths above births starting in 2030, increasingly offsetting net immigration.

AI Summary. Established defence contractors including Lockheed Martin and BAE Systems have participated in a record $4.1bn of venture capital rounds, according to data compiled by Dealroom, as they seek early-stage exposure to potentially lucrative technologies. Thirteen of the largest arms makers are estimated to have raised internal research and development spending by more than 25% to $11.6bn.

Aaron Kirchfeld and Sylvia Pfeifer Financial Times
Date Posted:

According to an analysis by Vertical Research Partners, 13 of the largest defense firms (not including Airbus and Boeing) have increased internal R&D spending by more than 25% since 2021. Large defense firms have also increased their venture investments.

Are established defense contractors ramping up investment in military start-ups?

Core argument: Defence primes including Lockheed Martin and BAE Systems have participated in a record $4.1bn of venture capital rounds so far this year, according to data compiled by Dealroom.

So-called defence primes, with longstanding ties to western governments and militaries including Lockheed Martin and BAE Systems, have participated in a record $4.1bn in venture capital rounds so far this year, according to data compiled by Dealroom. [The] shift was on display at this year’s flagship industry event in Farnborough outside London, where a record half of the 1,636 exhibitors were from the defence sector, where traditionally civil aerospace dominated. The defence primes have increased investments into research and development activities, as well as into venture capital funds to gain early-stage exposure to potentially lucrative technologies. Thirteen of the world’s biggest arms makers, excluding Airbus and Boeing due to their large civil operations, are estimated to have increased their internal R&D spending by more than 25% to $11.6bn from 2021 to 2026, according to analysis by Vertical Research Partners.

Takeaways by Macro Roundup® AI

  1. Defence primes including Lockheed Martin and BAE Systems have participated in a record $4.1bn of venture capital rounds so far this year, according to data compiled by Dealroom.
  2. Vertical Research Partners estimates that 13 of the world's biggest arms makers, excluding Airbus and Boeing because of their large civil operations, raised internal R&D spending by more than 25% to $11.6bn from 2021 to 2026.
  3. At the Farnborough industry event outside London, a record half of the 1,636 exhibitors came from the defence sector, at a show traditionally dominated by civil aerospace.

Related Articles:

  • Is the Industrial Base on a Wartime Footing? A Progress Report — About 10,000 new firms have entered the US defense market in two years, and nontraditional companies received over $120bn in contract obligations in fiscal 2025, while munitions contract obligations have risen 330% since fiscal 2010. The Defense Department is signing large-scale multiyear munitions agreements and backing a rare earth supply chain outside Chinese control.
  • America’s Latest Weapon Against Iran: Sea Drones — The US has deployed Saronic Corsairs, 24-foot uncrewed speedboats built in Texas that travel more than 1,000 miles, carry payloads up to 1,000 pounds, and cost less than $1m each. Their maker, Saronic, raised $1.75bn at a $9.25bn valuation from investors including 8VC, Caffeinated Capital, and Andreessen Horowitz.
  • The Intellectual Spoils of War? Defense RD, Productivity and International Spillovers — The authors estimate that a 10% increase in government-financed R&D, largely defense, is associated with a 4.3% rise in privately funded R&D across OECD countries, indicating "crowding in" rather than "crowding out." They also find international spillovers raise private R&D abroad, though the overall effect on US productivity growth is modest.

Tuesday, July 28, 2026

AI Summary. Analysts modeling six long-term macro scenarios project that equity returns fall below their long-run average in every case except one combining strong growth with an artificial intelligence boom and rising return on equity. Bond returns are also projected to run somewhat below average, offering little buffer in adverse, inflation-prone scenarios.

Christian Mueller-Glissmann, Andrea Ferrario, Alessandro Giglio, Giovanni Ferrannini, et al. Goldman Sachs
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Goldman models six scenarios, from AI best plus “Goldilocks” (steady growth, tame 2% inflation, rising profits) to stagflation. Equities beat their post-1950 average only in the best case; elsewhere they lag, and inflation risk blunts bonds’ protection.

Do long-term macro scenarios point to below-average equity and bond returns?

Core argument: Across six long-term scenarios derived from a macro-based return framework, equity returns fall below the long-run average in all but "Goldilocks + AI boom," which assumes continued return-on-equity expansion and strong GDP growth.

The outlook for balanced portfolios in the coming years is closely linked to the AI boom and risks from inflation. We derive new scenarios using our macro-based long-term return framework: (1) Goldilocks + AI boom, with continued ROE expansion and strong GDP growth, (2) Goldilocks, but with stable ROE, (3) Reflation, with strong nominal growth but lower ROE and (4) Goldilocks + AI bust, in which ROE declines and GDP growth weakens, (5) Stagnation, with weaker growth but ROE somewhat in-line with its 5-year average and (6) stagflation, similar to the 1970s. In all scenarios except 'Goldilocks + AI boom', equity returns are below the long-run average. Equity risk premia for both the 'normal' Goldilocks backdrop and for Reflation are near the long-run average. However, for the more negative scenarios equity returns and equity risk premia are much worse. But bond returns are also somewhat below average in most scenarios and unlikely to provide much of a large buffer in those adverse scenarios, especially those with inflation risk.

Takeaways by Macro Roundup® AI

  1. Across six long-term scenarios derived from a macro-based return framework, equity returns fall below the long-run average in all but "Goldilocks + AI boom," which assumes continued return-on-equity expansion and strong GDP growth.
  2. Equity risk premia sit near the long-run average in the "normal" Goldilocks and Reflation scenarios, but equity returns and risk premia are much worse in the more negative scenarios, including AI bust, stagnation, and 1970s-style stagflation.
  3. Bond returns are somewhat below average in most of the scenarios and are unlikely to provide much of a buffer in adverse outcomes, particularly those carrying inflation risk.

Related Articles:

  • The Global Balance Sheet 2026: Imbalance And Divergence — Only 20% of global household wealth growth came from net new investment in real assets such as machinery, housing, infrastructure and intellectual property, down from a 30% average over the prior quarter century. Nearly 60% came from asset prices rising faster than inflation and negative net worth in other sectors.
  • The Summer I Turned Pretty — A warning sign in a boom cycle is when companies closest to final demand weaken while capital spending beneficiaries keep thriving, as when telecom operators' shares rolled over while communications equipment stocks kept rising. Semiconductor stock prices and free cash flow are soaring while large cloud providers' shares stagnate and their free cash flow plummets.
  • 2026 Outlook: Tech Tonic — A Broadening Bull Market — Most major equity markets have outperformed the US, with Europe, China and Asia generating almost double US total returns in dollar terms and gains of 54% in Italy, 73% in Spain and 71% in Korea. US returns have been driven by strong earnings, particularly in technology, while Europe's have come largely from rising valuations.

AI Summary. The cost of insuring debt against default for Oracle, SpaceX, Alphabet, Amazon, Meta, Broadcom, and Nvidia has reached record highs, with Oracle's five-year credit protection quoted at 215 basis points versus 144 earlier in the year. S&P Global Ratings cut Oracle to one notch above junk, citing an uncertain path to profitability amid massive AI investments.

Michelle Chan and Ramsay Hodgson Financial Times
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The cost of CDS contracts on corporate debt tied to the data center buildout has risen to record highs; five-year CDS on Oracle’s debt, which is now just above junk status, were quoted at ~215bps, up from 144bps at the start of the year.

Is the cost of insuring big tech debt hitting record highs?

Core argument: Oracle's five-year credit default swap was quoted at 215 basis points on Monday, up from 144 bps at the start of the year, meaning investors pay $215,000 annually to insure $10mn of debt against default, according to LSEG data.

Prices for credit default swaps, popular tools to bet against corporate debt tied to Oracle, SpaceX, Alphabet, Amazon, Meta, Broadcom, and Nvidia, have risen to record highs in recent days, according to LSEG data. The moves have been most acute at Oracle, whose five-year CDS was quoted at 215 basis points on Monday, up from 144 bps at the start of the year, meaning that investors now need to pay $215,000 annually to insure $10mn of debt against default. The database group last month said it would invest $70bn in the coming year to finance its data centre build-out, prompting S&P Global Ratings to downgrade its credit rating to triple B minus, just one notch above junk status, citing an uncertain path to profitability amid massive AI investments. The concern is spreading beyond Oracle, with the cost of protecting Nvidia’s five-year debt also hitting a record of 79 bps.

Takeaways by Macro Roundup® AI

  1. Oracle's five-year credit default swap was quoted at 215 basis points on Monday, up from 144 bps at the start of the year, meaning investors pay $215,000 annually to insure $10mn of debt against default, according to LSEG data.
  2. S&P Global Ratings downgraded Oracle to triple B minus, one notch above junk status, citing an uncertain path to profitability amid massive AI investments, after Oracle said it would invest $70bn in the coming year to finance its data centre build-out.
  3. Credit default swap prices on debt tied to Oracle, SpaceX, Alphabet, Amazon, Meta, Broadcom and Nvidia have risen to record highs, with the cost of protecting Nvidia's five-year debt reaching a record 79 basis points.

Related Articles:

  • A Slower AI Payoff Would Be Everyone’s Problem — If artificial intelligence profits arrive later than expected, committed capital spending and depreciation would still hit on schedule, squeezing margins, stretching balance sheets toward more debt and possible ratings downgrades, and repricing equities. Because a handful of large technology firms dominate the indices, the author argues the damage would spread to chips, power, data centers and the broader market.
  • Alphabet Falls as $205 Billion Spending Plan Fuels AI Cost Fear — Alphabet raised its projected annual capital expenditures to $195bn–$205bn from a prior forecast of $190bn, and its shares fell amid concern over artificial intelligence costs. The Google parent reported negative free cash flow of $5.9bn in the quarter, its first negative quarterly cash flow since going public more than two decades ago.
  • Bond Traders Stunned as Losses on SpaceX’s New Debt Keep Growing — SpaceX's $25bn bond offering has weakened in secondary trading, with paper losses relative to Treasuries totaling roughly $305m. Traders attribute the selling to fast-money accounts seeking quick profits rather than buy-and-hold investors, though the company also won investment-grade ratings despite expectations of years of negative cash flow.

AI Summary. US growth in new-business applications is concentrated in professional services (up 25% over four years), retail (18%), and health care and social assistance (18%) rather than artificial-intelligence startups. The share of applications the Census Bureau deems likely to hire at least one employee has fallen to 30% from 38%.

Economist Staff The Economist
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New business formation in the US is back at its pre-pandemic level. The share of new-business applications deemed likely to employ someone other than the founder in the near future was 30% in 2025, down from 38% in 2019 perhaps suggesting AI is driving “solopreneurship.”

Is the surge in new-business applications driven by AI startups?

Core argument: New-business applications rose most in professional services (+25% between 2021 and 2025), retail (+18%), and health care and social assistance (+18%), with AI startups in Silicon Valley accounting for only a small part of the increase.

Buzzy artificial-intelligence startups in Silicon Valley account for only a small part of the increase. The industries witnessing the biggest flurry of applications are professional services (up 25% between 2021 and 2025), retail (18%), and health care and social assistance (18%). The share of new-business applications that the Census Bureau deems “high-propensity” (meaning they are likely to employ at least one person other than the founder in the near future) was only 30% last year, down from 38% in 2019. Aaron Terrazas, an economist at Gusto [a payroll platform] reckons that much of the value generated by AI could end up accruing not to corporate giants, but to Etsy sellers and small-town accountants.

Takeaways by Macro Roundup® AI

  1. New-business applications rose most in professional services (+25% between 2021 and 2025), retail (+18%), and health care and social assistance (+18%), with AI startups in Silicon Valley accounting for only a small part of the increase.
  2. The share of U.S. new-business applications the Census Bureau deems "high-propensity," meaning likely to employ at least one person besides the founder soon, was 30% last year, down from 38% in 2019.
  3. Aaron Terrazas, an economist at the payroll platform Gusto, reckons much of the value generated by AI could accrue to Etsy sellers and small-town accountants rather than corporate giants.

Related Articles:

  • The Age Of The Solopreneur — A surge in US business formation is being driven by solo entrepreneurs, with growth in AI tool usage and in solopreneur activity in high-AI-adoption sectors suggesting artificial intelligence accounts for a meaningful portion of the increase. The authors argue AI is lowering barriers to starting and growing a business by expanding what one-person firms can do.
  • Which Entrepreneurs Boost Productivity? — The authors find that a minority of entrepreneurs are "transformative" — generating disproportionate productivity gains, scoring high on IQ tests, being well-educated, and hiring research and development workers. They argue that economies with more such entrepreneurs and R&D workers sustain higher long-run productivity growth.
  • Continued Rise in Business Formation — The gap between growth-oriented and value-oriented new business applications is widening, a divergence likely driven by a proliferation of startups built around artificial intelligence. Large language models are lowering the barriers to starting a business.

AI Summary. Using new price indexes for child- and adult-specific goods, the authors estimate that real spending per child and per parent each rose by about half from 1990 to 2023, indicating a broad rise in household consumption rather than a child-specific one. The share of household spending going to children was stable, near 30% for one child and 40% for two.

Christina Patterson and Heather Sarsons National Bureau of Economic Research
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A Child Cost Index newly created by Patters and Sarsons finds little rise in costs per child relative to adult consumption (not counting parental leisure time). Higher child costs are thus unlikely to be the main explanation for falling fertility.

Has spending on children risen faster than spending on parents?

Core argument: Real spending per child and real spending per parent each rose by roughly one-half between 1990 and 2023, deflated by the authors' new child and adult cost indices, and moved closely together over the medium run.

Figure 6 shows that real spending on children has increased substantially. Panel (a) plots real spending per child, deflated [by the authors’ new] child cost index, together with real spending per parent, deflated by [their adult cost index.] Both series rise by roughly one-half between 1990 and 2023 and move closely together over the medium run. Thus, households devote more real resources to children today than in 1990, but this increase appears to be part of a broader rise in household consumption rather than a child-specific expansion in required market inputs. Panel (b) reinforces this interpretation by plotting the share of total household spending allocated to children, separately by family size. Children absorb a large share of household resources in every year of the sample, but that share is strikingly stable over time within family size. Households with one child allocate just under 30% of total spending to that child in both 1990 and 2023. The sacrifice of adult consumption associated with children is therefore large, but it is not a recent development. Panel (b) also reveals clear economies of scale in child-rearing. Moving from one to two children raises the child share of household spending from roughly 30% to roughly 40%, far less than a doubling, and the incremental spending share falls further for larger families.

Takeaways by Macro Roundup® AI

  1. Real spending per child and real spending per parent each rose by roughly one-half between 1990 and 2023, deflated by the authors' new child and adult cost indices, and moved closely together over the medium run.
  2. Households with one child allocated just under 30% of total spending to that child in both 1990 and 2023, a share that is stable over time within family size.
  3. Moving from one child to two raises the child share of household spending from roughly 30% to roughly 40%, far less than a doubling, with the incremental share falling further for larger families.

Related Articles:

  • America’s Big Cities Are Rapidly Losing Kids — An analysis of census data found the number of children under 18 in large U.S. cities fell 6% over a decade, versus 1% nationwide, with children under 5 down 15% in big cities versus 7% nationally. The number of children declined in about two-thirds of the 38 U.S. cities with more than 500,000 residents, including some cities gaining population overall.
  • City Parenting Has Become A Financial Flex — Census data show the under-18 population fell 22% in Chicago, 23% in Los Angeles and 12% in New York between 2010 and 2024, while wealthier white families defy the trend in central neighborhoods of the densest, richest cities. Brooklyn's white child population grew 13% over that period, rising from a third to more than two-fifths of the total.
  • The Demographic Outlook: 2026 to 2056 — The Congressional Budget Office projects the US population rises from 349m to 364m between 2026 and 2056, with annual growth slowing from 0.3% over the next decade to 0.1% thereafter before reaching zero and then shrinking. Declining fertility is projected to push deaths above births starting in 2030, increasingly offsetting net immigration.

AI Summary. China's manufacturing surplus excluding gold and semiconductors keeps rising. Excluding gold imports equal to 1.5 percentage points of GDP, China's goods surplus would be close to 7% of GDP.

Brad Setser Council On Foreign Relations
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Properly accounting for imports of gold and chips, China’s goods surplus grew $80B in H1 2026, Setser finds. China’s surplus expanded to ~7% of GDP in Q2, “an absolutely massive number for an economy as big as China.”

Is China's trade surplus actually shrinking?

Core argument: Excluding the 1.5 percentage points of GDP in gold imports in the second quarter, China's goods surplus would be close to 7% of GDP, a massive number for an economy of China's size.

The easiest way to see what is happening is just to focus on the manufacturing surplus without gold and chips. It keeps on rising. In fact, without the 1.5 pp of GDP in gold imports in q2, the goods surplus would be close to 7% of GDP -- an absolutely massive number for an economy as big as China.

Takeaways by Macro Roundup® AI

  1. Excluding the 1.5 percentage points of GDP in gold imports in the second quarter, China's goods surplus would be close to 7% of GDP, a massive number for an economy of China's size.
  2. China's manufacturing surplus excluding gold and chips keeps rising, offering the clearest view of what is happening to the country's external surplus.

Related Articles:

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  • 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.
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AI Summary. Air defense against Iranian missile attacks has achieved high but imperfect interception rates, and the interceptors expended have left Patriot inventories under 1,000 and THAAD inventories at about 250. Diminished stockpiles may force more risk-taking on interceptions and pose a near- to medium-term risk to U.S. readiness for a war with China in the western Pacific.

Mark Cancian and Chris Park Center for Strategic and International Studies
Date Posted:

CSIS estimates that US interceptor stocks are down significantly from pre-war levels; Patriot stocks are likely ~33–35% of pre-war levels and THAAD stocks ~52–62%. “There are no good alternatives to Patriot and THAAD for ballistic missile defense.”

How do depleted missile interceptor stockpiles affect US readiness?

Core argument: U.S. Patriot interceptor inventories have fallen below 1,000 and THAAD inventories to roughly 250 after extensive use in the Iran War air defense campaign, which achieved high though imperfect interception rates.

The [Iran War] air defense campaign has been largely successful with high—though not perfect—interception rates. While some Iranian attacks got past defenses, causing casualties and extensive base damage, these attacks have been unable to diminish U.S. and coalition operations. This has required extensive use of interceptors, with Patriot inventories now under 1,000 and THAAD inventories at about 250. Diminished stockpiles may force the United States and its coalition partners to take more risks with interceptions. There are no good alternatives to Patriot and THAAD for ballistic missile defense. Navy ships, with Standard Missiles that can intercept such threats, generally are too far away. Expended munitions create a near- to medium-term risk for U.S. readiness to fight a war against China in the western Pacific. The Trump administration’s munitions request of $95 billion in the FY 2027 defense budget and $21 billion in the war supplemental reflects this urgency.

Takeaways by Macro Roundup® AI

  1. U.S. Patriot interceptor inventories have fallen below 1,000 and THAAD inventories to roughly 250 after extensive use in the Iran War air defense campaign, which achieved high though imperfect interception rates.
  2. Expended munitions create a near- to medium-term risk for U.S. readiness to fight a war against China in the western Pacific, and the Trump administration has requested $95 billion for munitions in the FY 2027 defense budget and $21 billion in the war supplemental.

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  • Is the Industrial Base on a Wartime Footing? A Progress Report — About 10,000 new firms have entered the US defense market in two years, and nontraditional companies received over $120bn in contract obligations in fiscal 2025, while munitions contract obligations have risen 330% since fiscal 2010. The Defense Department is signing large-scale multiyear munitions agreements and backing a rare earth supply chain outside Chinese control.
  • Lockheed Seeks European Production for Cheaper Patriot Missile — Lockheed Martin plans to field a lower-cost Patriot missile, the PAC-3 Adapted Capability Effector, priced at less than half the roughly $4mn per-missile cost of its current PAC-3 MSE interceptors, developed and manufactured with US and European industry partners. The company cites soaring military demand for more cost-effective ways to counter drones.
  • 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.