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, September 2, 2026

AI Summary. Across surveyed countries, intended fertility and the ideal number of children both declined, while children came to be seen more as a constraint on parental freedom and less as a source of status. Gender roles grew less traditional and housework more equally shared, yet the belief that a fulfilled life requires children weakened most of all attitudes measured.

Raquel Fernández, Inés Berniell and Milagros Onofri National Bureau of Economic Research
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Fernández et al. cast doubt on Goldin’s hypothesis that men’s limited willingness to share domestic responsibilities is central to fertility decline, pointing instead to the erosion of the belief that children are necessary for a fulfilling life.

Are shifting attitudes about children behind falling fertility intentions?

Core argument: Intended fertility fell in every Generations and Gender Survey country, from 28% to 21% on average, while the ideal number of children fell in 17 of 22 International Social Survey Programme countries, from 2.42 to 2.31.

Figure 1 documents how fertility outcomes and attitudes changed over the decade. Intended fertility fell in every GGS country, from 28 to 21% on average (Figure 1a). The ideal number of children fell in 17 of the 22 ISSP countries, from 2.42 to 2.31 on average (Figure 1b). [Children] became more likely to be seen as constraining parental freedom and less likely to be seen as conferring status (Figure 1c). Gender roles became less traditional, and the division of household work became more equal [Figures 1i]. Despite this greater sharing of chores and care, work–family conflict rose sharply. The decade saw changes that might have been expected to make the burden of children lighter, at least for women. Simultaneously, however, children became less attractive and, above all, less necessary: the belief that a fulfilled life requires children lost more ground than any attitude we measure [Table 2, Part II, Panel B].

Takeaways by Macro Roundup® AI

  1. Intended fertility fell in every Generations and Gender Survey country, from 28% to 21% on average, while the ideal number of children fell in 17 of 22 International Social Survey Programme countries, from 2.42 to 2.31.
  2. Children became more likely to be seen as constraining parental freedom and less likely to be seen as conferring status, and the belief that a fulfilled life requires children lost more ground than any other attitude measured.
  3. Gender roles became less traditional and household work was divided more equally, yet work–family conflict rose sharply.

Related Articles:

  • The Rise of Female Autonomy and the Decline of Fertility: The Role of Mismatch — Across 22 countries, the gap between women's and men's daily hours of housework and caregiving is strongly correlated with lower total fertility rates. Countries that modernized rapidly show larger gender gaps in home work and lower fertility than those with more continuous economic growth since 1920.
  • Babies and the Macroeconomy — Fertility rates have fallen in nearly every country, but timing differed: some developed nations fell below the 2.1 replacement level as early as the 1970s, while others dropped to "lowest low" levels below 1.3. The author argues nations with rapid, discontinuous growth saw sharper declines as women's expectations outpaced tradition-bound men's willingness to share family time.
  • The Demographic Future of Humanity: Facts and Consequences — The authors estimate the world total fertility rate is around 2.17, below the global replacement rate of roughly 2.21, meaning humanity is already below replacement, with fertility and births falling faster than anticipated. They project middle-income countries' fertility may fall below that of rich countries outside East Asia, with emigration compounding population decline.

AI Summary. Yields on the longest-dated US government bonds returned to levels seen just before the Treasury Department expanded a bond buyback program aimed at halting their rise, with the 30-year yield at 5.27%. The 10-year yield, a benchmark for borrowing costs across loan types, stands at roughly 4.8%.

Greg Ritchie, Cameron Fozi, and Sydney Maki Bloomberg
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The US 10-year yield hit 4.8%, 10bp higher than its level prior to Treasury’s recent buybacks, and the 30-year yield rose to 5.27%, its pre-buyback level.

Have Treasury bond buybacks failed to hold down long-term yields?

Core argument: The 30-year Treasury yield reached 5.27% on Tuesday, the level seen moments before Scott Bessent announced an expanded buyback program on August 19, erasing the decline that followed.

The yields on the longest-dated US government bonds shot back to levels seen just before Scott Bessent shocked markets last month by expanding a buyback program in an effort to halt the rise. The gambit worked briefly, until the selloff that’s been sweeping through global markets pushed the government’s borrowing costs up again. By Tuesday, that drove 30-year Treasury yields to 5.27%, the level seen moments before Bessent announced the move on August 19. The 10-year yield — a crucial benchmark for the cost of all types of loans — is more than 10 basis points higher than it was then, at roughly 4.8%.

Takeaways by Macro Roundup® AI

  1. The 30-year Treasury yield reached 5.27% on Tuesday, the level seen moments before Scott Bessent announced an expanded buyback program on August 19, erasing the decline that followed.
  2. The 10-year Treasury yield, a benchmark for the cost of all types of loans, stands at roughly 4.8%, more than 10 basis points above its level just before Bessent's August 19 buyback expansion.
  3. Bessent's buyback expansion briefly halted the rise in long-dated US government borrowing costs until a selloff sweeping global markets pushed yields back up.

Related Articles:

  • Rising Bond Yields Are Good, Actually — Interest rates remain low relative to reasonable expectations of inflation and growth, with incomes and spending rising about 7% a year in dollar terms. Absent idle workers, machines, and materials, higher rates can help shift resources toward business equipment and nonresidential construction by discouraging consumer spending and housing or attracting foreign goods and services today.
  • Bessent Bounce Starts to Emerge in Long Bond Market Metrics — US Treasuries have outperformed equivalent-maturity interest-rate swaps, narrowing the 30-year swap spread to its tightest level in months and compressing the 10-year gap to around 38 basis points, a gauge of investors' willingness to hold government bonds. Pimco argues that buybacks may technically lower long-end yields, but structural US budget deficits requiring heavy Treasury issuance are not changing.
  • America’s Risky Debt: What Markets See That Policymakers Don’t — Two market-based measures suggest the safety premium investors pay to hold US Treasuries has compressed toward zero and at times reversed: the spread between top-rated corporate bonds and Treasuries after stripping out default risk, and the gap between currency-hedged foreign G10 government yields and Treasury yields at the same maturity, where longer-maturity comparisons now favor foreign bonds.

AI Summary. The New York Federal Reserve's measure of the extra yield investors demand for holding 10-year US government debt has moved sideways over the past year and sits below the comparable measures for Japan and Germany, indicating no deterioration in how markets price US fiscal sustainability or Federal Reserve credibility.

Torsten Sløk Apollo
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Citing the sideways movement in a FRBNY measure of the US 10-year term premium over the past year, Sløk suggests that the US fiscal situation is generating less investor concern than that of Germany and Japan, and may be focusing more on FFR hikes.

Are bond markets showing no deterioration in US fiscal credibility?

Core argument: The New York Fed's measure of the US 10-year term premium has moved sideways over the past 12 months, showing no deterioration on this measure in how the market prices US fiscal sustainability or Fed credibility.

The New York Fed’s measure of the US 10-year term premium has moved sideways over the past 12 months. On this measure, there has been no deterioration over the past year in how the market prices US fiscal sustainability or Fed credibility. The US term premium currently sits below the term premiums of Japan and Germany. This suggests that the market is less worried about the US fiscal situation compared with the fiscal situation in Germany and Japan. Put differently, the Fed went into 2026 expecting several cuts, and now the FOMC is leaning toward hiking. With this backdrop, it is not surprising that long rates are higher.

Takeaways by Macro Roundup® AI

  1. The New York Fed's measure of the US 10-year term premium has moved sideways over the past 12 months, showing no deterioration on this measure in how the market prices US fiscal sustainability or Fed credibility.
  2. The US term premium sits below the term premiums of Japan and Germany, suggesting the market is less worried about the US fiscal situation than about Germany's and Japan's.
  3. The Fed entered 2026 expecting several cuts and the FOMC is now leaning toward hiking, a backdrop against which higher long rates are unsurprising.

Related Articles:

  • America’s Risky Debt: What Markets See That Policymakers Don’t — Two market-based measures suggest the safety premium investors pay to hold US Treasuries has compressed toward zero and at times reversed: the spread between top-rated corporate bonds and Treasuries after stripping out default risk, and the gap between currency-hedged foreign G10 government yields and Treasury yields at the same maturity, where longer-maturity comparisons now favor foreign bonds.
  • Don’t Draw The Wrong Conclusion From Treasury Yields — Ten-year real yields equal the average expected overnight rate over the next decade plus a term premium, and fiscal credibility or debt sustainability concerns would show up as a higher term premium. With the term premium and inflation expectations contained, the increase in bond yields reflects higher expected long-term overnight rates.
  • What Are U.S. Treasury Markets Really Telling Us? Part II — A decomposition of the 2.54 percentage-point rise in the 10-year US Treasury yield attributes 1.56 points, nearly two-thirds, to a higher term premium rather than expected future short-term rates. The author argues the premium had earlier turned negative as the Federal Reserve absorbed long-dated Treasury and mortgage-backed issuance, removing interest-rate risk.

AI Summary. The average American worker earns enough to buy 10,215 Big Macs a year, the most of any country, followed by Switzerland and Australia. On an hourly basis, Switzerland leads at seven Big Macs per hour, ahead of America's six and Australia's five, reflecting longer American working hours.

Economist Staff The Economist
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The Economist’s venerable Big Mac Index is indicative of significantly higher after-tax, PPP-adjusted wages for American workers than for their French and German counterparts.

Which country's workers can buy the most Big Macs?

Core argument: The average American worker earns enough to buy 10,215 Big Macs a year, topping the McWages rankings, with Switzerland second and Australia third.

On an annual basis, America continues to top our McWages rankings. The average American worker earns enough to buy 10,215 Big Macs a year; Switzerland and Australia are in second and third place, respectively. But American working hours are supersized, too. On an hourly basis, Switzerland comes out on top: the average worker there earns the equivalent of seven Big Macs an hour, compared with America’s six. Australia ranks third, at five burgers for every hour worked.

Takeaways by Macro Roundup® AI

  1. The average American worker earns enough to buy 10,215 Big Macs a year, topping the McWages rankings, with Switzerland second and Australia third.
  2. On an hourly basis Switzerland leads, with the average worker earning the equivalent of seven Big Macs an hour, compared with six in the United States and five in Australia.
  3. American working hours are longer, which shifts the United States from first place on annual McWages to second on an hourly basis.

Related Articles:

  • The Big Mac Index At 40 — The Big Mac index, which compares burger prices across countries converted into dollars, shows currency misalignments in either direction at their widest since the mid-1990s, with American inflation, an undervalued Chinese yuan, and a falling yen cited as contributors. Big Mac prices also reflect domestic supply and demand for nontradeable goods.
  • Why Do Americans No Longer Work So Much More Than Non-Americans? — About half of the 1990s gap between American and European hours worked had reversed by the end of the 2010s. The authors estimate US hours per person declined after the 2000s because of rising benefits for the non-employed—especially health benefits like Medicaid—while non-US hours rose with higher wages and lower work costs.
  • Ed Conard Debates Furman On “The Expected Value of Risk Taking” — A debate on U.S. fiscal policy argues that spending increases, rather than the tax increases needed to fund them, slow growth, and that higher taxes would reduce the expected value of America's innovative risk-taking. The argument holds that cutting debt below 100% of GDP is critical.

AI Summary. An analysis of more than 31,000 global venture capital deals finds 62% lost money and over half lost 50–100% of invested capital, though the distribution of returns has much fatter tails than buyouts or public equities. Venture funds averaged a public market equivalent ratio of about 1.4, indicating returns above public markets.

Michael Mauboussin and Dan Callahan Morgan Stanley
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Btw the mid-90s and 2018, 62% of global venture capital investments lost money, and more than half of the deals lost 50–100% of invested capital. Yet US VC returned ~40% higher mean wealth btw 1984 and 2020 than a parallel investment path in the S&P 500.

Do most venture deals lose money while funds outperform public markets?

Core argument: Across more than 31,000 global venture capital deals from the mid-1990s to 2018, 62% lost money and over half of all deals lost 50–100% of invested capital, measured as multiples of invested capital.

Exhibit 8 shows in excess of 31,000 observations of returns, measured as multiples of invested capital at the beginning of the period, for global venture capital deals. These results are from the mid-1990s to 2018. 62% lost money and more than one-half of all deals lost 50 to 100% of invested capital. The offset is that the tails are much fatter than those for buyouts or public equities. Public market equivalent (PME) is generally reflected as a ratio between private equity and public market returns. A ratio above 1 reveals relative outperformance and below 1 means underperformance. Here’s an example of how PME works. Say a fund drew $200 million from its investors in January 2021 and paid out $470 million in December 2025. An investor could have invested the $200 million in the S&P 500, which returned $392 million over the same period. The PME would be 1.2 ($470/$392). For venture funds, the average over [1984-2020] was about 1.4.

Takeaways by Macro Roundup® AI

  1. Across more than 31,000 global venture capital deals from the mid-1990s to 2018, 62% lost money and over half of all deals lost 50–100% of invested capital, measured as multiples of invested capital.
  2. Venture capital return distributions have much fatter tails than those of buyouts or public equities, offsetting the majority of deals that lose money.
  3. Public market equivalent, the ratio of private equity returns to public market returns, averaged about 1.4 for venture funds from 1984 to 2020, with a ratio above 1 reflecting relative outperformance.

Related Articles:

  • Killer Incentives: Status Competition and Pilot Performance during World War II — Analysis of over 5,000 German World War II fighter pilots finds that public peer recognition was associated with higher victory scores among skilled pilots without higher mortality, while average pilots gained little in victories but died at higher rates. The authors conclude status-based awards can have uneven effects in high-risk settings.
  • The Deep End: 2025 Alternative Investments Review — In venture capital, only consistently investing with top-quartile managers outperformed the S&P 500, while the median manager at best matched public equity markets and fourth-quartile managers destroyed value relative to equities. Fees are part of the issue: an 11.7% annualized NASDAQ 100 return falls to 7.4% under a 2%/20% fee structure.
  • 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. The eurozone is the world's third-largest economy and second-largest source of demand but lacks the political cohesion to wield that power, given fragmented policymaking institutions and divergent member-state interests. If the US shrinks its trade deficit while China resists cutting its surpluses, Europe could absorb larger deficits by default, risking deindustrialization, rising debt, and weaker growth.

Michael Pettis Foreign Affairs
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Pettis suggests that if the US reduces its trade deficit while China maintains huge surpluses, a politically fragmented Europe will likely end up absorbing larger deficits, driving reduced competitiveness, deindustrialization, and weaker growth.

Will Europe absorb larger trade deficits if the US shrinks its own?

Core argument: The eurozone ranks as the world's third-largest economy and second-largest source of demand, yet its fragmented policymaking institutions and divergent member-state interests likely deny it the political ability to exercise that economic power.

The eurozone is the world’s third-largest economy and its second-largest source of demand, it has economic power at its disposal, but [likely not] the political ability to exercise this power, given its fragmented policymaking institutions and the often divergent interests of its member states. If the United States is able to reduce its trade deficit and expand its share of global manufacturing while China resists an equivalent contraction in its surpluses, a politically divided Europe could be forced to take on larger deficits almost by default. The costs could include deindustrialization, rising debt, and weaker growth. This process may have begun already.

Takeaways by Macro Roundup® AI

  1. The eurozone ranks as the world's third-largest economy and second-largest source of demand, yet its fragmented policymaking institutions and divergent member-state interests likely deny it the political ability to exercise that economic power.
  2. If the United States reduces its trade deficit and expands its share of global manufacturing while China resists an equivalent contraction in its surpluses, a politically divided Europe could be forced into larger deficits almost by default.
  3. The costs to Europe of absorbing larger deficits could include deindustrialization, rising debt, and weaker growth, a process that may have begun already.

Related Articles:

  • Understanding Global Imbalances — The US, China, Germany, and Japan account for roughly two-thirds of global current account imbalances, with the US deficit at 4% of GDP financed by capital inflows into dollar assets. The average duration of a surplus or deficit spell roughly doubled since the 1980s, building large net foreign asset and liability positions.
  • Imbalances Are Back On The Global Agenda — China's current account surplus remains about the same size relative to the world economy as it was in 2008, while net US liabilities reached 24% of global output in 2024 versus 6% in 2008, with government borrowing now the domestic counterpart of US external deficits. Such imbalances drive protectionist sentiment and have preceded financial crises.
  • Trade Intervention for Freer Trade — The authors argue the United States should counter surplus countries' trade policies either by restricting their goods exports through tariffs or by restricting their capital inflows through taxes, volume limits, reserve requirements, transaction approvals, or investor eligibility rules. They contend capital controls are a more targeted alternative to uniform tariffs, which impose equal costs on more and less mercantilist countries.

Thursday, September 3, 2026

AI Summary. Using American Community Survey data, the authors estimate that small minimum wage increases had no effect on employment while large increases had negative effects. Four years after the first increase, estimated employment effects approached −5pp for those aged 16–25 without a completed high school education and −3pp for all 16–21 year-olds.

Jeffrey Clemens and Michael Strain American Enterprise Institute
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While a state-level event study finds no employment effect from small minimum-wage hikes, imputation DiD estimates show that four years after large hikes, employment is ~5pp lower for 16–25-year-olds without a HS degree and ~3pp lower for all 16–21-year-olds.

Do large minimum wage increases reduce employment while small ones do not?

Core argument: Four years after enactment of the first increase, large minimum wage increases are estimated to reduce employment by roughly 5pp among individuals aged 16–25 without a completed high school education and about 3pp among all individuals aged 16–21.

Figure 4 reports our imputation difference-in-differences estimates for the effects of small and large minimum wage changes on employment among individuals aged 16–21 and among individuals aged 16–25 with less than a completed high school education. The samples are from the ACS [American Community Survey]. [The data span 2011-2019]. We compare estimates for large versus small increases. The estimates to the left of the vertical dashed lines reveal no concerning evidence of divergent preexisting trends. We find null effects for the states that enacted small minimum wage increases and negative effects for states with large minimum wage increases. By 4 years after the enactment of the first increase, the estimate has approached −5pp for individuals aged 16–25 with less than a completed high school education, and −3pp for the sample of all individuals aged 16–21. [Editor's note: The authors note that Section VIII of the paper, which contains the Figure 4 imputation DiD estimates, “presents estimates from a modern difference-in-differences estimator that falls outside of our pre-analysis plan.”  The results are somewhat larger than those reported in the Abstract.]

Takeaways by Macro Roundup® AI

  1. Four years after enactment of the first increase, large minimum wage increases are estimated to reduce employment by roughly 5pp among individuals aged 16–25 without a completed high school education and about 3pp among all individuals aged 16–21.
  2. States enacting small minimum wage increases show null employment effects, while states with large increases show negative effects, based on imputation difference-in-differences estimates using American Community Survey data spanning 2011–2019.
  3. The estimates for periods before enactment reveal no concerning evidence of divergent preexisting trends.

Related Articles:

  • The Heterogeneous Effects of Large and Small Minimum Wage Changes on Hours Worked: Evidence Using a Partially Pre-committed Analysis Plan — The authors estimate that hours worked fall substantially more in response to large minimum wage increases than small ones, with large statutory increases associated with a differential decline of 0.73 hours on average. The declines are larger for 16–25 year-olds without a completed high school education (-0.94 hours) than for all 16–21 year-olds (-0.51 hours).
  • Did California’s Fast Food Minimum Wage Reduce Employment? — The authors estimate that California's $20 fast food minimum wage, up from $16, raised fast food sector wages roughly 8% relative to the rest of the country while employment fell about 2.7% relative to fast food employment elsewhere in the US. Their median estimate implies 18,000 fewer California fast food jobs than otherwise.
  • Minimum Wages and the Rise of the Robots — State-level measures of exposure to industrial robots show substantial geographic variation across the US, with the highest concentrations in the Southwest, Midwest, and Northwest and the lowest in the Mountain West, parts of the South, and northern regions. The authors find state robot exposure is positively correlated with state minimum wage increases.

AI Summary. Pension funds and insurers in Canada, Denmark, Australia, Taiwan, Japan and Finland hedged just 41% of their foreign-currency exposure, the lowest share since at least 2015. With some of the largest holders of US assets carrying little protection against a weaker dollar, the currency is at risk of steeper declines if sentiment turns.

Ruth Carson, Masaki Kondo, and Anya Andrianova Bloomberg
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A Bloomberg analysis finds only 41% of global investors’ foreign-currency exposure is hedged in six major markets, the lowest level since 2015. Foreigners now hold almost $40T of American assets.

Does low currency hedging by foreign investors leave the dollar vulnerable?

Core argument: Pension funds and insurers in Canada, Denmark, Australia, Taiwan, Japan and Finland hedged just 41% of their foreign-currency exposure as of June 30, the lowest share since at least 2015.

Sift through the filings of pension funds and insurers around the world and one thing stands out: some of the biggest holders of US assets have little protection against a weaker dollar, leaving the currency at risk of steeper declines if sentiment suddenly turns. Across markets [Canada, Denmark, Australia, Taiwan, Japan and Finland for which data is available] investors hedged just 41% of their foreign-currency exposure as of June 30 — the lowest since at least 2015. While not a complete picture, it offers a glimpse into how the sudden rush last year to hedge against dollar losses triggered by President Donald Trump’s global tariff rollout has faded as the US currency slowly stabilized.

Takeaways by Macro Roundup® AI

  1. Pension funds and insurers in Canada, Denmark, Australia, Taiwan, Japan and Finland hedged just 41% of their foreign-currency exposure as of June 30, the lowest share since at least 2015.
  2. Some of the biggest holders of US assets have little protection against a weaker dollar, leaving the currency at risk of steeper declines if sentiment suddenly turns.
  3. The rush to hedge against dollar losses triggered by President Donald Trump's global tariff rollout has faded as the US currency slowly stabilized.

Related Articles:

  • Financial Innovation and the International Monetary System — The dollar accounts for 59% of cross-border payments messaged through SWIFT, far ahead of the euro's 14%, and its share of foreign exchange turnover has risen gradually to about 90% of the 200% total since 2010. Official holdings of U.S. Treasuries have leveled off near $4tn while foreign private holdings rose from $1tn to over $5tn.
  • 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.
  • Momentum, Rotation and the Value in Growth — After a fifteen-year stretch in which US equities, technology and growth stocks led, equity gains have broadened geographically, with the US the weakest of the major regions. The five largest US stocks now trade at a price-to-earnings ratio only marginally above the other 495, after holding a consistent premium since 2017.

AI Summary. An analysis of Epoch's Capabilities Index data, controlling for developer and model family, finds no statistically significant breakpoint in AI progress; a segmented model fits no better than a straight-line trend (p = 0.615), with the estimated slope change ranging from -8.4 to +23.4 points per year.

Paul Kedrosky Applied Complexity
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Kedrosky argues AI capabilities continue to improve, but “the full composite data shows flattening relative gains, not acceleration…rolling relative model gains have fallen from their 2024 peak, while model dispersion has narrowed sharply.”

Has AI capability progress accelerated beyond its linear trend?

Core argument: Using all observations from Epoch's Capabilities Index and controlling for developer and model family, a piecewise model shows no statistically significant breakpoint in AI capability trends (p = 0.615) and does not improve on a purely linear trend.

Using all Epoch’s Capabilities Index observations, and controlling for developer and model family, there is no statistically significant breakpoint. A piecewise model—which splits the series into intervals and applies a sub-function to each segment—does not improve on a purely linear trend: p = 0.615, The estimated change in slope has a confidence interval of -8.4 to +23.4 points per year. In short, the maths shows there is no model acceleration, contrary to claims, and as expected. The result comes from selecting frontier observations only, choosing a breakpoint, ignoring variance collapse, and fitting separate lines on either side.

Takeaways by Macro Roundup® AI

  1. Using all observations from Epoch's Capabilities Index and controlling for developer and model family, a piecewise model shows no statistically significant breakpoint in AI capability trends (p = 0.615) and does not improve on a purely linear trend.
  2. The estimated change in slope of the AI capabilities trend carries a confidence interval of -8.4 to +23.4 points per year.
  3. Apparent AI acceleration results from selecting frontier observations only, choosing a breakpoint, ignoring variance collapse, and fitting separate lines on either side of that breakpoint.

Related Articles:

  • Why .400 Hitters Disappeared — and What It Means for AI — Artificial intelligence models' capability gains are shrinking in percentage terms, falling from about 15% relative to the baseline early on to roughly 10% for the same absolute increment, narrowing the gap between frontier and good-enough models. The author argues this points to a commoditizing market where price, not minor model differences, becomes the main differentiator, pressuring frontier firms' margins.
  • Chart of the Day: Small Models are Closing the Gap to Frontier AI — Achieving 60% on MMLU, a test of academic reasoning, once required a 540bn-parameter model but was reached by a 3.8bn-parameter model two years later, a 142x reduction in parameters. Models small enough to run on phones or sensors shift inference from data centers to devices, weakening the case for paying cloud providers per token.
  • Anthropic’s Best AI Model Struggles To Attract Users As Cheaper Tools Thrive — Spending on Anthropic's largest and priciest AI model has plateaued at about 11% of total outlay on the company's tools, according to payments data from 70,000 companies, breaking a pattern of corporate users defaulting to the most powerful models. Analysts and investors cite its high price and older models' adequacy.

AI Summary. Wholesale diesel prices in New York harbour rose almost 7% to $4.71 a gallon following US air strikes on Iran, a surge expected to raise consumer costs because diesel powers American industry and agriculture. The US president summoned refiners including Marathon Petroleum, Phillips 66, Chevron and Valero Energy to press them to curb fuel price inflation.

Stephanie Findlay, Claire Jones and Jamie Smyth Financial Times
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Wholesale diesel for sale in New York harbor has risen ~7% to $4.71, largely reflecting a record-high “crack” spread, the premium of diesel over crude. US refinery utilisation had been at or above 95% for 12 consecutive weeks, the longest streak since 2000.

Do military strikes abroad push domestic diesel prices higher?

Core argument: Wholesale diesel in New York harbour jumped almost 7% to $4.71 a gallon after President Donald Trump ordered extensive air strikes on Iran.

Wholesale diesel for sale in New York harbour jumped almost 7% to $4.71 a gallon after the US president ordered extensive air strikes on Iran. Diesel powers American industry and agriculture and the wholesale contract’s price surge will translate into higher consumer costs just months ahead of congressional elections. Trump on Tuesday held talks with industry in the White House to press them to beat back the fuel price inflation. Marathon Petroleum, Phillips 66, Chevron, Delek US Holdings, PBF Energy and Valero Energy were among the companies summoned to Washington, according to people with knowledge of the event.

Takeaways by Macro Roundup® AI

  1. Wholesale diesel in New York harbour jumped almost 7% to $4.71 a gallon after President Donald Trump ordered extensive air strikes on Iran.
  2. Diesel powers American industry and agriculture, and the wholesale contract's price surge will translate into higher consumer costs months ahead of congressional elections.
  3. Trump summoned refiners including Marathon Petroleum, Phillips 66, Chevron, Delek US Holdings, PBF Energy and Valero Energy to the White House to press them to beat back fuel price inflation, according to people with knowledge of the event.

Related Articles:

  • U.S. Economy Less Vulnerable To Geopolitical Oil Price Shocks Than In The Past — The United States became a net oil exporter in late 2019, and oil and oil product spending fell from near 8% of GDP in 1980 to 3% in 2024. The authors estimate a 15% global oil supply disruption would now cut annualized U.S. real GDP growth by 0.3pp, versus 1.7pp in the rest of the world.
  • 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.
  • U.S. Crude Oil Production Rose In 2025, Setting New Record — U.S. crude oil production rose 3%, or 350,000 barrels per day, to an annual record of 13.6m barrels per day, with the Lower 48 states excluding the Gulf accounting for 83% of output. Active rigs fell 5% and wells drilled fell 1% as West Texas Intermediate prices dropped from $77 to $65 a barrel, but efficiency gains still lifted production.