Edward Conard

Top Ten New York Times Bestselling Author

  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…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
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “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
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, September 10, 2026

AI Summary. Firms set nominal wage increases by round-number rules—about 42% of increases below 6% fell within 0.01 percentage points of a whole or half number—and these rules rose only from about 2.7% to 3.5% as inflation peaked near 7%, contributing to falling real wages for job stayers.

Erik Hurst, Christina Patterson, Nela Richardson, and Ye Liv Wang University of Chicago
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ADP microdata from 2016–25 suggest firms set wages according to “wage norms” ~ invariant to inflation. The 2020–21 inflation surge mechanically reduced real wages. By the end of 2025, 34% of incumbent workers’ real wages were lower than in 2020.

Do round-number wage rules cause real wages to fall during inflation?

Core argument: Roughly 42% of all nominal wage increases below 6% fell within 0.01 percentage points of a whole or half number.

Roughly 42% of all nominal wage increases below 6% were within 0.01 percentage points of a whole or half number [Figure 6]. Figure 9 plots the employment-weighted average modal wage change across firms (solid line) alongside inflation rate (dashed line) from 2016 through 2025. In the pre-pandemic period, firm-level wage rules were relatively stable at a median of 2.7%, modestly above the rate of inflation. Beginning in 2021, inflation rose sharply, peaking at approximately seven percent in 2022. The average modal wage change also rose, reaching a peak of 3.5% in 2022 and 2023. By 2025, the median firm had a wage rule granting increases of three percent, roughly in line with inflation. The stickiness of firms’ wage rules in the face of inflationary pressure contributed to the systematic fall in real wages for job stayers. Evidence from Belgium [which has strong wage indexation], suggests that declining real wages, rather than inflation itself, helps explain the persistence of depressed consumer sentiment during the 2021–2024 period.

Takeaways by Macro Roundup® AI

  1. Roughly 42% of all nominal wage increases below 6% fell within 0.01 percentage points of a whole or half number.
  2. Firm-level wage rules held near a median of 2.7% before the pandemic, and the employment-weighted average modal wage change peaked at 3.5% in 2022 and 2023 while inflation peaked near 7% in 2022; by 2025 the median firm granted 3%.
  3. The stickiness of firms' wage rules amid inflationary pressure contributed to a systematic fall in real wages for job stayers, and evidence from Belgium, which has strong wage indexation, suggests falling real wages rather than inflation helps explain depressed consumer sentiment in 2021–2024.

Related Articles:

  • Do Voters Punish Inflation or Pay Cuts? Inflation and Real Wages in U.S. Elections — An analysis of U.S. counties estimates that where wages grew faster than prices, voters supported the incumbent party more, while counties with larger real wage losses than average shifted more toward the opposition. A one-standard-deviation larger real wage loss is associated with shifts of roughly 0.10 and 0.19 percentage points in vote share and margin.
  • Real Wages Start To Shrink In Developed Countries — US annual inflation of 3.8% outpaced average hourly earnings growth of 3.6%, leaving prices rising faster than pay for the first time in two years, while Eurozone workers face a fresh energy-driven setback. JPMorgan attributes the real wage decline to Middle East conflict and expects growth to resume if energy prices retreat.
  • 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.

AI Summary. Prime-age adults aged 25–54 and older workers aged 55–64 have higher employment rates in Europe than in the US, while US youth employment is higher because Europeans spend longer in education. The share of young people not in education, employment or training is higher in the US than in Europe.

Chris Giles Financial Times
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Despite Europe’s high social spending relative to the US, Chris Giles notes that prime-age adult (25–54) labor force participation in the Eurozone has overtaken that of the US, and there has been a dramatic convergence in the LFP of older workers.

Do Europeans work less than Americans?

Core argument: Prime-age adults aged 25–54 in Europe are more likely to be employed than their US counterparts, whether measured with EU or Eurozone data, and Europeans aged 55–64 also have higher employment rates than Americans.

It does not matter whether you use EU or Eurozone data, prime-age adults (between 25 and 54) in Europe are more likely to be in work than those in the US. Older people (between 55 and 64) also have higher employment rates in Europe. Younger people (between 15 and 24) are more likely to have a job in the US, but that results from Europeans educating themselves for longer. The proportion of young people not in education, employment or training is higher in the US than in Europe. So welfare is not stopping work. More than that, the higher-welfare north of Europe tends to have higher employment rates than the south, although there is convergence within the Eurozone. Spain, in particular, has enjoyed rapid improvements.

Takeaways by Macro Roundup® AI

  1. Prime-age adults aged 25–54 in Europe are more likely to be employed than their US counterparts, whether measured with EU or Eurozone data, and Europeans aged 55–64 also have higher employment rates than Americans.
  2. Young people aged 15–24 are more likely to have a job in the US than in Europe, but that gap results from Europeans spending longer in education, and the share not in education, employment or training is higher in the US.
  3. The higher-welfare north of Europe tends to have higher employment rates than the south, with convergence within the Eurozone and rapid improvement in Spain.

Related Articles:

  • 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.
  • The Future of European Competitiveness – A Competitiveness Strategy for Europe — A European Union competitiveness report attributes the EU's labour productivity growth gap with the US largely to weaker activity in information and communications technology and large-scale digital services; excluding main ICT sectors, EU productivity was broadly at par with the US from 2000-2019. It estimates Europe's investment share must rise about 5 percentage points of GDP.
  • 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. Yields on US government debt rose 5 to 12 basis points across maturities, with the 30-year benchmark reaching levels last seen in 2007. The higher yields drew strong demand at a $22bn auction of 30-year bonds, awarded at 5.308% — 2.7 basis points below pre-auction market levels — with a record-low 2.2% going to Wall Street dealers.

Elizabeth Stanton Bloomberg
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The 10-year Treasury yield rose 9bp to 4.92%, and the 30-year rose to ~5.35%. The increase in yields stoked demand at today’s 30-year auction, which cleared at 5.308%.

Do higher long-term yields attract stronger demand at bond auctions?

Core argument: The US Treasury's $22 billion auction of 30-year bonds cleared at 5.308%, 2.7 basis points below the pre-auction market level, the second-biggest negative gap on record over the past five years.

Yields on US government debt rose to fresh multiyear highs — stoking demand for an auction of 30-year bonds. Treasury yields rose by five to 12 basis points across maturities, with the 30-year benchmark reaching levels last seen in 2007. The selloff lured investors to a $22 billion auction of 30-year bonds, which drew historically strong demand. The new securities were awarded at 5.308%, nearly three basis points lower than their yield in pre-auction trading just before the bidding deadline, meaning that bidders at higher yield levels missed out. Investor demand was so strong that a record low 2.2% of the sale went to Wall Street dealers. The auction’s 5.308% result was 2.7 basis points lower than the market level going in, the second-biggest negative gap on record in the past five years.

Takeaways by Macro Roundup® AI

  1. The US Treasury's $22 billion auction of 30-year bonds cleared at 5.308%, 2.7 basis points below the pre-auction market level, the second-biggest negative gap on record over the past five years.
  2. Treasury yields rose by five to 12 basis points across maturities, with the 30-year benchmark reaching levels last seen in 2007, a selloff that drew investors to the 30-year auction.
  3. Wall Street dealers took a record low 2.2% of the US Treasury's 30-year bond sale amid strong investor demand.

Related Articles:

  • 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.
  • 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.
  • 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.

AI Summary. A European think tank notes that 30-year government bond yields in the US, Germany, France, Italy, the UK, and Japan all rose by 45-79 basis points over six months, with the US in the middle at 58. The article argues this reflects surging demand for funds from an AI-driven information technology spending boom rather than policy.

Paul Krugman Krugman Wonks Out
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Noting long-term yields have risen across advanced economies, Krugman argues increased yields over the last 6 months “may not have much to do with policy at all,” but are more likely due to “the surge in demand for funds as a result of the AI boom.”

Is a technology investment boom driving long-term bond yields higher?

Core argument: Bruegel notes that US, German, French, Italian, UK, and Japanese 30-year yields all rose by 45–79 basis points in the six months to August 28, with the US in the middle at 58 basis points.

What [has been] driving interest rates higher [in the six months to August 28]? The European think tank Bruegel notes “US, German, French, Italian, UK, and Japanese 30-year yields [all] rose by 45-79 basis points in the six months to 28 August, with the US in the middle at 58bp.” It may not have much to do with policy at all, [but is instead due to] the surge in demand for funds as a result of the AI boom. We are in the midst of a surge in spending on IT that is on track to be even bigger than the boom of the late 1990s, [when] long-term rates were even higher then than they are now, even though inflation was low and we had a budget surplus.

Takeaways by Macro Roundup® AI

  1. Bruegel notes that US, German, French, Italian, UK, and Japanese 30-year yields all rose by 45–79 basis points in the six months to August 28, with the US in the middle at 58 basis points.
  2. The rise in long-term yields may have little to do with policy and instead reflect the surge in demand for funds generated by the AI boom.
  3. IT spending is on track to exceed the late-1990s boom, when long-term rates were higher than they are now despite low inflation and a US budget surplus.

Related Articles:

  • Bessent’s Upsized Buybacks Get Hit by Treasury-Market Reality — The US Treasury tripled the size of a planned buyback of longer-dated government debt, saying it will purchase up to $6bn of outstanding securities maturing in the 10- to 20-year sector, up from the $2bn initially communicated to investors. Treasuries extended declines after the announcement, with 10-year yields rising.
  • 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.
  • 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.

AI Summary. Global investment in "deep tech" — companies whose products rest on major scientific or engineering advances — has exceeded $150bn since the start of 2024, more than the $133bn invested in the decade through 2019, excluding sums poured into AI start-ups. Failed battery and electric-vehicle bets from an earlier peak illustrate the risks of such moonshot dealmaking.

Tim Bradshaw Financial Times
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Since the start of 2024, more than $150B of venture capital has been invested into non-AI “deep tech” firms whose products are rooted in significant engineering advances, exceeding the $133B invested in such firms btw 2010 and 2019.

Is the AI boom pushing venture capital toward riskier moonshot bets?

Core argument: Global "deep tech" investment excluding AI start-ups has exceeded $150bn since the start of 2024, more than the $133bn invested in the entire decade through 2019, according to Dealroom.

The AI boom is fuelling a resurgence in ambitious “moonshot” bets, as early SpaceX backers’ huge returns and falling valuations for traditional software companies force tech investors to embrace riskier and more capital-intensive dealmaking. Excluding the giant sums ploughed into AI start-ups, global investment in “deep tech” — companies whose products are rooted in big scientific or engineering advances — has exceeded $150bn since the start of 2024, more than the $133bn in the entire decade to the end of 2019, according to Dealroom. This year’s deep-tech investments have not yet surpassed 2021’s peak, which was propelled by battery and electric vehicle deals for the likes of Rivian and Northvolt — many of which turned sour, highlighting the risks involved in moonshot dealmaking.

Takeaways by Macro Roundup® AI

  1. Global "deep tech" investment excluding AI start-ups has exceeded $150bn since the start of 2024, more than the $133bn invested in the entire decade through 2019, according to Dealroom.
  2. Huge returns for early SpaceX backers and falling valuations for traditional software companies are pushing tech investors toward riskier, more capital-intensive "moonshot" dealmaking.
  3. Deep-tech investment has not yet surpassed the 2021 peak, which was propelled by battery and electric vehicle deals for companies such as Rivian and Northvolt, many of which turned sour.

Related Articles:

  • Capital Is Making a Comeback — Tangible investment in property, factories and equipment fell from 12.5% to 8.5% of private gross domestic product, while intangible investment in intellectual property, software and process knowledge rose from about 11.5% to 16.75%. The author argues demand for tangible capital investment will now have to rise.
  • Public to Private Equity in the United States: A Long-Term Look — 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.
  • Gross and Net US Investment — Net US investment has fallen from roughly 40% of gross investment in the 1970s to about 25% in the past decade, meaning about three-quarters of gross investment now just replaces depreciating capital. The author attributes this gap to modern investment being more information-technology-related, which depreciates faster and requires more frequent replacement.

Friday, September 11, 2026

AI Summary. Data from AI router firms, which forward client queries to the lowest-cost model capable of an adequate response, show a declining share of queries that require closed-weight frontier models. This suggests open models are capturing usage from the largest AI providers.

Toby Nangle Financial Times
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Data on OpenRouter, an AI query triage service, show that at the start of the year, the share of queries routed to a closed-weight proprietary model was 60%. That share has declined to 24% as open-weight performance has improved relative to frontier models.

Are open models taking query share from the largest AI providers?

Core argument: AI routers such as OpenRouter take model-indifferent client queries and direct them to the lowest-cost model that produces a good-enough response, reserving frontier models for the hardest questions.

One way to see which way the wind is blowing on open-model versus closed-model usage is by looking at data from router firms like OpenRouter, the New York start-up that Stripe agreed to buy last month. AI routers work a bit like an AI query triage service with a toll booth strapped on. Clients rock up, basically model-indifferent, and rather than tie themselves to any given model, they just send their queries to the router, which then flips them on to the lowest-cost model that will produce a good enough response for whatever the task at hand. Asking really tough closed-end frontier-model-worthy questions? To a frontier model they go. Increasingly, the share of queries that are truly closed-weight frontier-model-worthy is declining.

Takeaways by Macro Roundup® AI

  1. AI routers such as OpenRouter take model-indifferent client queries and direct them to the lowest-cost model that produces a good-enough response, reserving frontier models for the hardest questions.
  2. The share of queries that are truly closed-weight frontier-model-worthy is declining, according to router firm data.
  3. Stripe agreed to buy OpenRouter, a New York start-up whose routing data offers a view of open-model versus closed-model usage.

Related Articles:

  • The AI Price Wars and Their Consequences — Artificial intelligence models are converging in capability and price, making switching easier and margins harder to defend, with US labs cutting prices on lower- and mid-tier offerings while keeping frontier models expensive. An 80% annual price decline requires 400% unit growth just to hold revenue flat, straining firms financing enormous capital spending.
  • OpenAI and Anthropic In Price War as Chinese AI Rivals Gain Ground — OpenAI cut its GPT-5.6 Luna prices by 80% and Anthropic launched Opus 5 at half the price of its Fable 5 model while cancelling a planned Sonnet 5 price increase. Headline token prices are not directly comparable, since more capable models can finish tasks using fewer tokens or attempts.
  • The AI Trade Is Losing One of Its Key Signals — An index blending artificial intelligence token prices and usage is ambiguous when it softens, since token prices have fallen more than 90% since 2023 while total spending has roughly doubled over the past year. Allianz Research measures a nearly 46% growth gap between artificial intelligence investment and sales, wider than the 32% divergence during the 2001 telecom bust.

AI Summary. The ARC-AGI exam was designed to test fluid intelligence—acquiring skills and solving unfamiliar problems from first principles—rather than recall of training data, and early models scored near zero while humans score 60%-70%. On the latest interactive version, GPT-6 Astra scored 62% with a standard harness and 99% with a reasoning-preserving harness.

Michael Cembalest J.P. Morgan
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Newly released Chat GPT-6 scored 62% on Francoise Chollet’s fluid human intelligence test when undirected by humans and 99% when directed.

Have AI models reached human-level performance on fluid intelligence tests?

Core argument: GPT-6 Astra scored 62% on ARC-AGI-3 with a standard harness and 99% with a Provider Adapter harness that uses OpenAI's context management features to preserve and reuse the model's reasoning between interactions.

In 2019, Francois Chollet created the ARC-AGI, an exam designed to show the gulf between AI model memorized answers and the fluid intelligence that people have. The exam assesses the ability to quickly acquire skills and solve unfamiliar problems from first principles, rather than just memorizing enormous amounts of training data and regurgitating information. GPT3 scored a zero on ARC-AGI-1 (humans score 60%-70%), and OpenAI o1 scored just 3% on ARC-AGI-2. In March 2026, Chollet and the ARC Prize Foundation released ARC-AGI-3, a harder set of problems that shifted from static to dynamic interactive video challenges. GPT-6 Astra scored 62% with a standard harness and 99% with a Provider Adapter harness (which uses OpenAI’s context management features to preserve and reuse the model’s reasoning between interactions).

Takeaways by Macro Roundup® AI

  1. GPT-6 Astra scored 62% on ARC-AGI-3 with a standard harness and 99% with a Provider Adapter harness that uses OpenAI's context management features to preserve and reuse the model's reasoning between interactions.
  2. Francois Chollet created ARC-AGI in 2019 to measure the ability to acquire skills quickly and solve unfamiliar problems from first principles rather than regurgitate memorized training data, with humans scoring 60%–70% on ARC-AGI-1.
  3. GPT-3 scored zero on ARC-AGI-1 and OpenAI o1 scored 3% on ARC-AGI-2, before Chollet and the ARC Prize Foundation released ARC-AGI-3 in March 2026, shifting from static problems to dynamic interactive video challenges.

Related Articles:

  • The AI Re-Acceleration That Wasn’t — 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.
  • 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.

AI Summary. US diesel pump prices reached a record $6.06 a gallon, above the prior high of $5.82, according to motorist group AAA. Diesel's role in the transport supply chain is feeding into rising producer prices, and grain farmers report that higher fuel and fertiliser costs are eating into profits.

Stephanie Findlay and Jamie Smyth Financial Times
Date Posted:

US retail diesel prices have climbed to an all-time nominal high of $6.06 per gallon. The previous nominal high in January 2022 would be $6.54 in current dollars.

Are record diesel prices raising producer costs and squeezing farmers?

Core argument: US diesel pump prices rose to a record $6.06 a gallon on Friday, according to AAA, exceeding the prior high of $5.82 set in 2022 after Russia's full-scale invasion of Ukraine.

The diesel pump price has surged this year and rose to $6.06 on Friday, motorist group AAA said, above the previous record high of $5.82 in 2022 following Russia’s full-scale invasion of Ukraine. Diesel’s critical role in the transport supply chain is also feeding into surging producer prices, which can stoke inflationary pressures at a time when Americans increasingly feel squeezed by affordability. The jump in diesel comes ahead of the autumn high season, where the fuel is used to power agricultural equipment to harvest and transport crops. Grain farmers in America’s Corn Belt have said they are facing a crisis with rising fuel and fertiliser prices eating into profits.

Takeaways by Macro Roundup® AI

  1. US diesel pump prices rose to a record $6.06 a gallon on Friday, according to AAA, exceeding the prior high of $5.82 set in 2022 after Russia's full-scale invasion of Ukraine.
  2. Diesel's role in the transport supply chain is feeding into surging producer prices, which can stoke inflationary pressures as Americans increasingly feel squeezed by affordability.
  3. The diesel price jump precedes the autumn high season, when the fuel powers agricultural equipment to harvest and transport crops, and Corn Belt grain farmers say rising fuel and fertiliser prices are eating into profits.

Related Articles:

  • US Diesel Prices Soar To Record High — US diesel pump prices reached a record average of $5.85 a gallon, according to the American Automobile Association, surpassing the previous high. Harvest season demand, early winter heating needs, and planned US refinery maintenance are likely to squeeze diesel supplies further.
  • 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.

AI Summary. A firm inflation reading raised the odds implied by interest-rate futures of a quarter-point Federal Reserve rate increase to about 85% from roughly 70%. The central bank has been divided, with three officials dissenting in favor of raising rates and oil prices climbing above $99 a barrel from $85.76.

Justin Lahart and Matt Grossman Wall Street Journal
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The implied likelihood of a September rate hike increased from 70% to 85% because the rate of inflation didn’t decline in August, headline and core CPI are 3.4% and 2.4% y/y, respectively.

Does a firm inflation reading raise the odds of a rate increase?

Core argument: Interest-rate futures imply about an 85% chance the Federal Reserve raises its target range for overnight rates by a quarter point, up from roughly 70% before the August inflation report.

The August inflation reading has big implications for a Fed that has been sharply divided over whether it should raise rates at its policy-setting meeting next week. At the Fed’s last meeting, in July, three officials dissented in favor of raising rates, and others have since said they could join them if inflation doesn’t improve. Interest-rate futures imply there is now about a 85% chance that the central bank will increase its target range on overnight rates by a quarter point. Prior to the report, the chances were about 70%. Further complicating the Fed decision, oil prices have surged this month, with crude lately fetching over $99 a barrel in Friday New York trading, versus $85.76 at the end of August.

Takeaways by Macro Roundup® AI

  1. Interest-rate futures imply about an 85% chance the Federal Reserve raises its target range for overnight rates by a quarter point, up from roughly 70% before the August inflation report.
  2. Three Federal Reserve officials dissented in favor of raising rates at the July meeting, and others have since said they could join them if inflation does not improve.
  3. Crude oil fetched over $99 a barrel in Friday New York trading, versus $85.76 at the end of August, further complicating the Federal Reserve's rate decision.

Related Articles:

  • Global Views: They’re Not Hiking — Estimated underlying trend job growth slowed to about 5k, below the estimated 50k breakeven pace, so similar readings would likely reverse part of the unemployment rate's decline from 4.5% to 4.1%. The authors argue that decline reflects lower labor force participation rather than higher employment, with wage growth still weak.
  • Home Alone: Inflation And The New Fed Chair — Current readings on labor market tightness, manufacturing price pressures, supply chain tightness and the output gap resemble conditions that have historically preceded Federal Reserve rate increases rather than cuts, and futures markets are pricing in hikes. Averaging several monetary policy rules implies a policy rate of 4.00%–4.85% versus the current 3.50%–3.75%.
  • Do Voters Punish Inflation or Pay Cuts? Inflation and Real Wages in U.S. Elections — An analysis of U.S. counties estimates that where wages grew faster than prices, voters supported the incumbent party more, while counties with larger real wage losses than average shifted more toward the opposition. A one-standard-deviation larger real wage loss is associated with shifts of roughly 0.10 and 0.19 percentage points in vote share and margin.

AI Summary. Global bond yields are rising and markets are differentiating between high- and low-debt countries, with the smallest cumulative yield increases relative to the global average in Switzerland, Norway, Sweden, New Zealand and Australia. The author argues this price action shows investors are agitated about deficits and debt.

Robin Brooks Robin Brooks Substack
Date Posted:

Brooks argues rising yields in advanced economies this year are driven by market’s “high alert” regarding debt. The highest cumulative rise in yields this year is in high-debt countries, and yields have risen on days with debt-related bad news.

Are rising bond yields showing investor concern about government debt?

Core argument: Global bond markets are differentiating between high- and low-debt countries as yields rise, with Switzerland, Norway, Sweden, New Zealand and Australia showing the lowest cumulative yield increases this year relative to a global average.

Markets are on high alert, which they wouldn’t be if they weren’t worried about debt. Markets are aggressively differentiating between high- and low-debt countries as global yields rise. The lowest cumulative rise in yields this year (relative to a global average) is in Switzerland, Norway, Sweden, New Zealand and Australia. High-frequency price action tells us exactly what markets think and they’re clearly agitated about deficits and debt. When Japan’s Takaichi said in January that she was done with “excessive” fiscal austerity, long-term yields spiked sharply. In fact, that spike was so big that it caused global contagion, with the NY Fed doing its infamous “rate check” a few days later to keep the Yen from collapsing. Then there's the US Treasury's surprise buyback announcement on August 19, which tanked the Dollar as precious metals rose.

Takeaways by Macro Roundup® AI

  1. Global bond markets are differentiating between high- and low-debt countries as yields rise, with Switzerland, Norway, Sweden, New Zealand and Australia showing the lowest cumulative yield increases this year relative to a global average.
  2. Japanese long-term yields spiked sharply after Takaichi said in January she was done with "excessive" fiscal austerity, a move large enough to cause global contagion and prompt the New York Fed's "rate check" days later to keep the Yen from collapsing.
  3. The US Treasury's surprise buyback announcement on August 19 tanked the Dollar while precious metals rose.

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AI Summary. Varsity sports participation varies with academic achievement: after adjusting for school size, 35% of students in the top quintile of eighth-grade math scores played varsity sports versus 12% in the bottom quintile. Students at the smallest schools were 2.8x as likely to participate as those at the largest.

Nat Malkus and Sam Hollon American Enterprise Institute
Date Posted:

A large sample of Indiana high school students shows a near-linear relationship between 8th grade math test scores and participation in varsity athletics. Academic success and participation in extracurriculars appear to be complementary.

How do academic achievement and school size shape varsity sports participation?

Core argument: After adjusting for school size, 35% of students in the top eighth-grade math achievement quintile played varsity sports in 2025, compared with 12% in the bottom quintile, with a largely linear relationship across quintiles.

We find large gaps in varsity sports participation by academic achievement, which we measure using students’ eighth-grade math test scores. Students who attended the smallest schools (first quintile) were 2.8 times as likely to participate in varsity sports as those who attended the largest schools (fifth quintile). We find that after adjusting for school size 35% of students in the top achievement quintile played varsity sports in 2025, compared with just 12% of students in the bottom quintile. In general, the relationship between achievement quintiles and varsity sports participation was remarkably linear. [The exception was football], the largest sport by participation [17% of all varsity athletes and overwhelmingly male]. Here the top quintile [in 8th grade math] had 20% lower odds of playing than students in the middle achievement quintile.

Takeaways by Macro Roundup® AI

  1. After adjusting for school size, 35% of students in the top eighth-grade math achievement quintile played varsity sports in 2025, compared with 12% in the bottom quintile, with a largely linear relationship across quintiles.
  2. Students at the smallest schools (first quintile by size) were 2.8 times as likely to participate in varsity sports as students at the largest schools (fifth quintile).
  3. Football, the largest sport at 17% of all varsity athletes and overwhelmingly male, is the exception: students in the top eighth-grade math quintile had 20% lower odds of playing than those in the middle quintile.

Related Articles:

  • An Extra Point for Attendance: The Impact of High School Varsity Athletics on Absenteeism — High school varsity athletes are absent about 1.37 percentage points less often than non-athletes over the school year, nearly 20% lower, after controlling for factors linked to both sports participation and attendance. Athletes' absence rates fall further while their sport is in season, which the authors argue suggests participation itself improves attendance.
  • The Benefits of Scholastic Athletics — Using longitudinal data with extensive controls for family background, ability, and personality, the authors estimate that college varsity athletes from disadvantaged backgrounds—including women and men from low-income families and Black men—earn more after graduation than comparable non-athletes. The authors conclude that participation in college sports promotes social mobility, with no evidence of adverse outcomes.
  • No Revenge for Nerds? Evaluating the Careers of Ivy League Athletes — Ivy League athletes are far more likely than non-athlete classmates to enter business and finance jobs, and the authors estimate they attain higher terminal wages, greater cumulative career earnings, and more senior positions, controlling for school, graduation year, major, and first job. The authors argue this suggests non-academic human capital developed through athletics is valued in the labor market.