Edward Conard

Top Ten New York Times Bestselling Author

  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…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 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
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “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 very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “Unintended Consequences 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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, September 16, 2026

AI Summary. Median U.S. household income rose 2.6% to $87,460, the highest level on record in data going back to 1967. Median income increased 3% for White households, 2.9% for non-Hispanic White households, and 4.8% for Black households, while changes for Asian and Hispanic households were not statistically significant.

Melissa Kollar and Zach Scherer U.S. Census Bureau
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Real US median household income increased 2.6% year over year in 2025 to a record high of $87,460.

Has median U.S. household income reached its highest level on record?

Core argument: Median U.S. household income reached $87,460 in 2025, up 2.6% from $85,210 in 2024 and the highest on record in data dating back to 1967.

In 2025, median household income was $87,460, an increase of 2.6% from the 2024 estimate of $85,210. Household income in 2025 was the highest on record dating back to 1967. For all demographic characteristics of the householder the median household income estimates in 2025 were either higher than the 2024 estimates or were not statistically different from 2024. Median household income increased by 3% for White households, 2.9% for non-Hispanic White households, and 4.8% for Black households. Median income did not change significantly for Asian or Hispanic households.

Takeaways by Macro Roundup® AI

  1. Median U.S. household income reached $87,460 in 2025, up 2.6% from $85,210 in 2024 and the highest on record in data dating back to 1967.
  2. Median household income rose 4.8% for Black households, 3% for White households, and 2.9% for non-Hispanic White households in 2025, while Asian and Hispanic households saw no statistically significant change.
  3. Across all demographic characteristics of the householder, 2025 median household income estimates were either higher than or not statistically different from 2024 estimates.

Related Articles:

  • Income in the United States: 2024 — U.S. median household income was $83,730, not statistically different from the prior year's $82,690, according to Census Bureau estimates. Across most demographic subgroups, median household income was higher or not statistically different from the prior year, with the exception of Black households, which saw a decline.
  • US Focus: The Effect Of Soaring Profits — US nominal pre-tax corporate profits in the national accounts grew 23% over the past year, a pace not seen outside post-recession spikes since the mid-2000s. Wider margins were the key driver, as domestic profit growth far exceeded the 8% rise in corporate value added, pushing margins near all-time highs while the labor share hit new lows.
  • The College Wage Premium in the Generative AI Era — The U.S. college wage premium fell from 0.626 to 0.575 after four decades of expansion, implying the first sustained negative growth in relative demand for college-educated labor. The authors estimate that weaker wage growth in occupations highly exposed to artificial intelligence accounts for roughly 28% of that decline, though the patterns are not causal.

AI Summary. AI adoption has risen to 22.4%, with labor market effects visible but narrow: employment drags appear in marketing, graphic design, customer service, and some tech occupations, offset by 209k in added data center-exposed construction jobs. Corporate layoffs attributed to AI totaled 113k year-to-date, including 11k in a single month.

Sarah Dong and Joseph Briggs Goldman Sachs
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While finding a “slight positive correlation between AI adoption and unemployment among younger workers,” GS argues AI’s impact on the labor market remains “narrow.” The technology sector’s share of total employment continues to decline relative to its pre-2022 trend.

Is AI's labor market impact still narrow as adoption rises?

Core argument: AI adoption rose to 22.4%, with labor market effects remaining visible but narrow, concentrated in marketing, graphic design, customer service, and some tech occupations.

AI’s labor market impact remains visible but narrow. We continue to observe employment drags in specific industries where AI-use cases have been established such as marketing, graphic design, customer service, and some tech occupations. However, this is offset by construction job growth in data center-exposed categories, which is up 209k since 2022 (relative to broader construction employment trends). The tech share of total employment continues to decline relative to the pre-2022 trend. The correlation between AI adoption and broad labor market slack measures remains limited but has strengthened in recent months. Corporate layoffs attributed to AI affected 11k employees in June, bringing the 2026 YTD total to 113k.

Takeaways by Macro Roundup® AI

  1. AI adoption rose to 22.4%, with labor market effects remaining visible but narrow, concentrated in marketing, graphic design, customer service, and some tech occupations.
  2. Construction employment in data center-exposed categories is up 209k since 2022 relative to broader construction employment trends, offsetting employment drags in industries with established AI use cases.
  3. Corporate layoffs attributed to AI affected 11k employees in June, bringing the 2026 year-to-date total to 113k, while the correlation between AI adoption and broad labor market slack measures remains limited though it has strengthened in recent months.

Related Articles:

  • Graduating into Disruption: Labor Market Outcomes for AI-Exposed College Majors — College graduates in the majors most exposed to artificial intelligence show statistically significant employment declines following the arrival of AI chatbots, with the most-exposed 10% of majors down about 5 percentage points and the seventh and eighth deciles down about 2 points. The authors note flat pre-2020 trends and precise timing argue against alternative explanations such as uneven post-pandemic recovery.
  • Looking for the Ladder — The article argues that the hiring downturn in occupations most exposed to generative AI reflects interest-rate sensitivity rather than AI itself, since roughly 38% of workers in the most AI-exposed quintile work in information, finance and insurance, and professional and technical services, versus under 2% in the least-exposed quintile.
  • Canaries in the Coal Mine? Six Facts about the Recent Employment Effects of Artificial Intelligence — Employment for workers aged 22–25 in the occupations most exposed to artificial intelligence has declined roughly 18pp relative to less-exposed peers, with no comparable decline in other age groups. The authors find this operates mainly through reduced hiring, concentrated where AI substitutes for human tasks rather than complements them.

AI Summary. The authors estimate the heritability of labor market outcomes by comparing the excess similarity of same-sex over opposite-sex twins with the corresponding difference among ordinary siblings. They caution that social interaction between twins, assortative mating, genetic dominance, population stratification, or indirect parental effects can bias such estimates upward or make them reflect non-genetic influences.

David Card, Jesse Rothstein and Moises Yi National Bureau of Economic Research
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Analysis of 44,500 twin pairs suggests ~one-third of the variation in log earnings is due to genetic differences – likely an upper bound, because same-sex twins may influence one another and share more similar environments than ordinary same-sex siblings.

How reliable are twin-based estimates of heritability in earnings?

Core argument: The authors identify heritability of U.S. labor market outcomes from a difference-in-differences comparing same-sex versus opposite-sex twins against the corresponding difference among ordinary siblings, adjusting for the estimated share of same-sex twins who are identical.

Our model identifies heritability from the difference-in-differences of same-sex vs. opposite-sex twins vs. siblings. [Specifically], the model attributes to genetic differences the excess similarity of same-sex over opposite-sex twins over and above the corresponding difference among ordinary siblings, adjusting for the estimated share of same-sex twins who are identical. The ordinary-sibling comparison is intended to remove family influences that differ between sons and daughters. Social interactions may lead to an over-estimate of the genetic component in earnings. The estimated heritability of outcomes may be biased in the presence of assortative mating, genetic dominance, population stratification, or violations of the assumption that the home environment is shared to the same degree for MZ as for DZ twins. Even when estimated without bias, heritability need not indicate direct genetic effects – it also may reflect indirect or cultural effects (e.g., effects of the parents’ genes on a child’s outcomes, not operating through the child’s own genes. Twins may [also] influence each other directly – for example in their choice of jobs -- inflating the correlation in their outcomes.

Takeaways by Macro Roundup® AI

  1. The authors identify heritability of U.S. labor market outcomes from a difference-in-differences comparing same-sex versus opposite-sex twins against the corresponding difference among ordinary siblings, adjusting for the estimated share of same-sex twins who are identical.
  2. Social interactions between twins, such as influencing each other’s job choices, may inflate the correlation in their outcomes and lead to an over-estimate of the genetic component in earnings.
  3. Estimated heritability may be biased by assortative mating, genetic dominance, population stratification, or unequal sharing of the home environment between identical and fraternal twins, and even unbiased estimates may reflect indirect or cultural effects such as parents’ genes.

Related Articles:

AI Summary. Much of the official-sector inflow into the U.S. now comes from investors who are not traditional reserve managers, and those flows remain heavily tilted toward the dollar and toward risk assets rather than Treasuries. The author argues this shift in the global investor base helps explain why Treasuries trade at a discount while the dollar retains a premium.

Brad Setser and Alex Etra Council on Foreign Relations
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The stock of global dollar reserves has been roughly stable over the past decade. The world is not moving away from the dollar: dollar assets are shifting from official holdings of Treasurys towards private and quasi-sovereign holdings of risk assets.

Why do Treasuries trade at a discount while the dollar keeps premium?

Core argument: Most official-sector inflows into the U.S. come from investors who are not classic reserve managers, and those flows remain heavily tilted toward the dollar, so any real de-dollarization would likely begin among these investors.

Most of the current flow into the US from the “official” sector is coming from investors who are not classic reserve managers. Those flows remain heavily tilted toward the dollar, at least for now. Any real de-dollarization would likely occur first among these investors. Put differently, the dollar’s global role is increasingly as a source of returns, not a source of safety. The foreign bid, private and public, is for risk, not for Treasuries. It is currently fashionable in some circles to point to the diminution of the “convenience yield” on Treasuries even while the U.S. dollar continues to enjoy such a privilege. But the shift in the global investor base and their apparent portfolio preference for U.S. risk assets in lieu of Treasuries may help explain the divergence between the convenience yield on Treasuries and the convenience yield on the USD.

Takeaways by Macro Roundup® AI

  1. Most official-sector inflows into the U.S. come from investors who are not classic reserve managers, and those flows remain heavily tilted toward the dollar, so any real de-dollarization would likely begin among these investors.
  2. The dollar’s global role is increasingly as a source of returns rather than safety, with the foreign bid, private and public, directed at risk assets rather than Treasuries.
  3. The shift in the global investor base toward U.S. risk assets in lieu of Treasuries may help explain the divergence between the convenience yield on Treasuries and that on the dollar, and suggests the “profit dollar” is likely trading at a historical premium.

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.
  • Foreign Investors Prefer US Stocks To Treasuries As Debt Worries Grow — International flows into US stocks averaged 2.8% of US GDP over a year, overtaking flows into US Treasuries at 2% of GDP for the first time this century outside brief episodes during the Covid-19 pandemic and after the global financial crisis, according to Deutsche Bank analysis of US Treasury data.
  • World’s Unusually High Dollar Exposure Risks Fueling Selloff — 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.

AI Summary. Cumulative US borrowing from the rest of the world has reached 118% of GDP since 2000 as domestic savings fell short of investment, with growing global trade volumes boosting foreign demand for Treasuries and holding down US borrowing costs. The author argues stagnating trade and narrowing deficits shrink that funding subsidy.

Jason Thomas Carlyle
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US cumulative foreign borrowing since 2000 has reached 118% of GDP, but the US has earned more on foreign assets than foreigners earned on US liabilities. Carlyle speculates that this “exorbitant privilege” could erode if globalization unwinds.

Does shrinking global trade raise US borrowing costs?

Core argument: Cumulative US borrowing from the rest of the world has reached 118% of GDP since 2000, as domestic savings consistently fell short of domestic investment, with effective US net borrowing costs below zero until recently.

The size of the implicit US borrowing subsidy rose with global trade volumes. The growth in trade during the period of “globalization” was driven by the rise of globally-interconnected production networks, with production processes sliced into stages and distributed across borders. Businesses at each stage of the process would both invoice and get invoiced in dollars. This [plausibly] boosted demand for Treasuries to meet dollar payment obligations and backstop foreign banking systems, which placed downward pressure on Treasury yields and cheapened broader dollar funding costs.

Takeaways by Macro Roundup® AI

  1. Cumulative US borrowing from the rest of the world has reached 118% of GDP since 2000, as domestic savings consistently fell short of domestic investment, with effective US net borrowing costs below zero until recently.
  2. The implicit US borrowing subsidy grew with global trade volumes, as foreign demand for Treasuries to meet dollar payment obligations and backstop foreign banking systems pressed Treasury yields down and cheapened broader dollar funding costs.
  3. Policies that scale back US external commitments, narrow the goods trade deficit, and restrict foreign adversaries’ access to dollar clearing further reduce the foreign savings available and willing to be recycled into low-yielding US assets.

Related Articles:

  • Global Trade Imbalances: Actual Problems, Unlikely Solutions — Foreign capital flowing into the US is shifting from government purchases of US Treasury bonds toward private foreign investment in US stocks and other riskier assets. This means a share of future gains from US productivity-enhancing investment will flow to these foreign investors, who are likely more willing to sell and exit if returns worsen.
  • Honey, Who Shrunk the U.S. Income Surplus? — Foreign holdings of U.S. financial assets are valued at $69tn versus $41tn of U.S. holdings abroad, a gap that has been mounting for decades. With the net liability position in interest-bearing assets at -$15tn, a 1 percentage point rise in interest rates would subtract $150bn from the U.S. net investment income balance.
  • https://www.edwardconard.com/2025/04/01/without-spending-cuts-brace-for-slow-growth/ — My Wall Street Journal Op-Ed: Without Spending Cuts, Brace for Slow Growth

AI Summary. A peer-reviewed analysis of a conceptual General Fusion plant design found that, because the plant consumes energy itself, only about 40% of its electricity would be available for sale, requiring it to generate more than twice as much power as a conventional thermal plant to deliver the same amount to the grid.

Ryohtaroh Satoh Financial Times
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Steven Cowley, director of the Princeton Plasma Physics Laboratory, says he is “confident” that a fusion plant will be built by the end of the 2030s, but cautions it will be a “technology experiment,” not a commercial project.

How much of a fusion plant's electricity is available for sale?

Core argument: Adam Jackson’s peer-reviewed paper on General Fusion’s 2023 conceptual plant design found only about 40% of the electricity generated would be available for sale to the grid, with the rest consumed by the plant itself.

Adam Jackson, a former systems engineer at General Fusion, thinks fusion companies are unrealistic about electricity pricing. In a peer-reviewed paper published after he left, Jackson analysed a conceptual plant design by General Fusion from 2023. Because the plant itself was consuming energy, only about 40% of the electricity would be available for sale to the grid. General Fusion estimates that the cost of building and operating a fusion plant over its lifetime will be $64-$73 per MWh of electricity it produces. Commonwealth Fusion Systems, the industry’s biggest player backed by Google, has a target of about $50/MWh for its commercial plant, while stressing that the figure is a guideline. In the US, electricity from a new nuclear power plant costs about $71/MWh, while solar from a farm, rather than rooftops, may cost about $38/MWh.

Takeaways by Macro Roundup® AI

  1. Adam Jackson’s peer-reviewed paper on General Fusion’s 2023 conceptual plant design found only about 40% of the electricity generated would be available for sale to the grid, with the rest consumed by the plant itself.
  2. Jackson’s paper found that a fusion plant would need to generate more than twice as much electricity as a conventional thermal power plant to deliver the same amount to the grid.
  3. General Fusion estimates lifetime build and operating costs of $64–$73/MWh and Commonwealth Fusion Systems targets about $50/MWh as a guideline, against roughly $71/MWh for electricity from a new US nuclear plant and about $38/MWh for solar farms.

Related Articles:

  • Moonshot Capitalism: AI Rewrites The Venture Capital Playbook — 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.
  • China’s Scaling Prowess Comes For Fusion — China directs $1–1.5bn a year in public funding to fusion research, exceeding the roughly $900m in total annual public funding across the rest of the world, while US private fusion funding has averaged $200–500m a year with sharp swings. China's state-led stability contrasts with America's fragmented, private-sector-driven approach.
  • 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.

Thursday, September 17, 2026

AI Summary. The official U.S. poverty rate fell 0.5 percentage points to 10.2%, a third consecutive annual decline and among the lowest on record, with 34.5m people in poverty. Poverty rates hit historic lows for Hispanic individuals, down 1.2 points to 13.9%, and children under 18, down 1.0 point to 13.4%.

Christina Bijou and Emily Shrider U.S. Census Bureau
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According to the Census Bureau, the poverty rate in the US fell .5pp in 2025 to 10.2%, one of the lowest rates on record. The poverty rate for children fell to a historical low of 13.4%. Census’s income measure does not include taxes or non-cash government transfers.

Is the U.S. poverty rate falling to record lows?

Core argument: The official U.S. poverty rate fell 0.5 percentage points to 10.2% in 2025, the third consecutive annual decline and one of the lowest rates on record, with 34.5 million people in poverty.

In 2025, the official poverty rate fell 0.5 percentage points to 10.2%, the third consecutive annual decline and one of the lowest rates on record. There were 34.5 million people in poverty in 2025. Poverty rates for Hispanic individuals and children under age 18 both fell to historic lows in 2025. Between 2024 and 2025, the poverty rate for Hispanic individuals fell 1.2 percentage points to 13.9%. The child poverty rate fell 1 percentage point to 13.4%.

Takeaways by Macro Roundup® AI

  1. The official U.S. poverty rate fell 0.5 percentage points to 10.2% in 2025, the third consecutive annual decline and one of the lowest rates on record, with 34.5 million people in poverty.
  2. The poverty rate for Hispanic individuals fell 1.2 percentage points to 13.9% between 2024 and 2025, a historic low.
  3. The poverty rate for children under age 18 fell 1.0 percentage point to 13.4% in 2025, a historic low.

Related Articles:

  • Poverty and Dependency in the United States, 1939–2023 — Extending a consistent poverty measure back to 1939, the authors estimate US absolute poverty fell from 48.5% to 19.5% between 1939 and 1963, driven by growth in market income rather than government transfers net of taxes. Poverty fell no faster in the 24 years after the War on Poverty than before.
  • Evaluating the Success of the War on Poverty since 1963 Using an Absolute Full-Income Poverty Measure — The authors estimate that an absolute full-income poverty measure, which counts a fuller set of income sources and adjusts thresholds only for inflation, fell from 19.5% to 1.6%, versus an official decline to 10.5%. They also find relative poverty reductions modest and government dependence more than doubled among working-age adults.
  • The Great “Transfer”-mation — Government transfers rose from 8.2% of Americans' total personal income in 1970 to 17.6% in 2022, making them the third largest income source after work and investments. The share of U.S. counties drawing a quarter or more of personal income from transfers rose from under 1% in 1970 to 53% in 2022.

AI Summary. Census data show the number of U.S. families with inflation-adjusted incomes above $150,000 grew from under 3m in 1967 to over 31m in 2025, while families earning under $75,000 fell by almost 3m in absolute terms. The share of families with multiple earners has not increased much over that period.

Jeremy Horpedahl Economist Writing Every Day
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In 1967, just 5.5% of American families had an inflation adjusted income of $150,000 or more. In 2025, 35.7% did. During that timeframe, the share of families with a real income less than $75,000 declined from 63.4% to 32.8%.

Are more American families reaching higher inflation-adjusted income levels?

Core argument: The number of U.S. families with incomes above $150,000 in 2025 inflation-adjusted dollars rose from fewer than 3 million in 1967 to over 31 million in 2025, according to Census data.

In 1967 there were fewer than 3 million families with incomes over $150,000 (in 2025 inflation-adjusted dollars). By 2025, that had grown to over 31 million families. If we look at the highest income threshold in this Census data — over $200,000 — the number of families has grown from just 1 million in 1967 to over 20 million in 2025. And there are fewer lower-income families too: the number of families under $75,000 shrunk, not just as a proportion of the total but even in absolute terms by almost 3 million families from 1967 to 2025. Of course, some of these families do have more earners than in 1967, though we shouldn’t overstate that too much. Using other data from Census, we can see that the share of families with multiple earners hasn’t increased much since 1967, and especially hasn’t since the mid-1990s.

Takeaways by Macro Roundup® AI

  1. The number of U.S. families with incomes above $150,000 in 2025 inflation-adjusted dollars rose from fewer than 3 million in 1967 to over 31 million in 2025, according to Census data.
  2. Families earning over $200,000, the highest income threshold in the Census data, grew from about 1 million in 1967 to over 20 million in 2025.
  3. Families with incomes under $75,000 declined by almost 3 million in absolute terms from 1967 to 2025, while Census data show the share of families with multiple earners has not increased much since 1967, and especially not since the mid-1990s.

Related Articles:

  • Income in the United States: 2025 — Median U.S. household income rose 2.6% to $87,460, the highest level on record in data going back to 1967. Median income increased 3% for White households, 2.9% for non-Hispanic White households, and 4.8% for Black households, while changes for Asian and Hispanic households were not statistically significant.
  • The Middle Class Is Shrinking Because of a Booming Upper-Middle Class — Analyses showing a shrinking middle class typically use relative income thresholds that rise with median income, so they can register decline even when living standards rise across the distribution. Using an absolute definition, the authors find the core middle class shrank because the upper-middle class grew from 10% of families to 31%, doubling its income share.
  • Who Sees Themselves as Working Class? — Survey data indicate 60% of U.S. adults say the term "working class" describes them well, including half of those with a bachelor's degree and half of upper-income Americans. Identification is highest among blue-collar workers at 77%, versus 61% in other occupations, and ranges from 52% of Asian adults to 62% of White adults.

AI Summary. An analysis of 22 rich countries estimates that if each refinanced its entire debt at current five-year bond yields, Britain would need the largest primary surplus to stabilize its debt-to-GDP ratio, about 1.5%, followed by Italy at 1.4%, France at 1.2% and America at 1%.

Economist Staff The Economist
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Refinancing the entire US debt stock at the current five-year borrowing rate, on current growth forecasts, would require a primary surplus of 1% of GDP to hold the debt ratio stable, a fiscal consolidation of 4.7pp. In October 2025, it would have required 2.3pp.

How much belt tightening would rich countries need to stabilize debt?

Core argument: The Economist calculates that Britain would need the largest primary surplus of 22 rich countries, about 1.5% of GDP, to hold its debt-to-GDP ratio stable if it replaced its entire debt stock at today’s five-year yields.

The Economist calculated what would happen if rich countries had to replace their entire debt stocks at today’s five-year bond yields, using IMF forecasts for nominal growth. Out of 22 countries, Britain would need to run the largest primary surplus, of about 1.5% of GDP, merely to keep its debt-to-GDP ratio stable. Italy and France are next, needing surpluses of 1.4% and 1.2%, respectively. America is not far behind, requiring one of 1%. Japan can run a deficit of 0.8% since its growth is estimated to outpace the interest rate on its debt. America is running a primary deficit of nearly 4% of GDP, meaning significant belt tightening of nearly five percentage points of GDP is needed to stabilise its debt ratio at today’s borrowing costs. The situation is deteriorating fast as a result of persistent deficits and surging yields. Just a year ago America required an adjustment of more than two percentage points less than it does today.

Takeaways by Macro Roundup® AI

  1. The Economist calculates that Britain would need the largest primary surplus of 22 rich countries, about 1.5% of GDP, to hold its debt-to-GDP ratio stable if it replaced its entire debt stock at today’s five-year yields.
  2. America requires a primary surplus of 1% of GDP to stabilise its debt ratio at today’s borrowing costs while running a primary deficit of nearly 4%, implying belt tightening of nearly five percentage points of GDP, by The Economist’s calculation.
  3. Japan can run a primary deficit of 0.8% of GDP and still keep its debt burden stable because its growth is estimated to outpace the interest rate on its debt, while Italy and France need surpluses of 1.4% and 1.2%.

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.
  • The United States Capital Structure — Because Social Security and Medicare benefits are politically untouchable, retirees effectively hold the most senior claim on US government resources while Treasury bondholders hold the riskiest one. On this argument, bondholders absorb adverse fiscal shocks through surprise inflation, financial repression, or both.
  • 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. The Federal Reserve described its rate increase as having "removed a dose of accommodation" and as a start to showing it is serious, implying the policy rate remains accommodative and further increases are coming. Market-implied expectations have shifted to price in three additional hikes before the tightening cycle ends.

John Authers Bloomberg
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Authers argues a hiking cycle is underway, citing the unanimous decision to hike, the “dot plot” and Warsh’s comments framing the hike as “the removal of some accommodation,” implying the FOMC doesn’t view policy as restrictive.

Is the Fed signaling more rate increases ahead?

Core argument: Markets, as gauged by Bloomberg World Interest Rate Probabilities, have braced for three more Fed hikes, against an implied peak below 4% when Warsh took office in May.

The key was what Warsh didn’t say, rather than what he did. There was no suggestion that this was a one-off. Instead, he said the FOMC has “removed a dose of accommodation” — not all of it, implying the rate was still accommodative and that there would be more doses in the prescription. He added that the hike “starts to show we’re serious about this.” If that was only a start to the seriousness, the direct implication is to brace for more. As a result, the market priced in a lot of tightening. Implicit fed funds rates, as gauged by the Bloomberg World Interest Rate Probabilities, were projected to peak below 4% when Warsh took office in May — at a point when the market had already had time to adjust to the energy shock from the Iran war. Expectations crept up a bit by the time he spoke at Jackson Hole; and since then the market has braced for three more hikes before the Fed is done.

Takeaways by Macro Roundup® AI

  1. Markets, as gauged by Bloomberg World Interest Rate Probabilities, have braced for three more Fed hikes, against an implied peak below 4% when Warsh took office in May.
  2. Warsh said the FOMC has "removed a dose of accommodation" rather than all of it, implying the policy rate remains accommodative and that further doses are in the prescription.

Related Articles:

  • Just Waiting for Disinflation is Not Enough — About 52% of consumer price index components are rising at least 3% year-over-year, down from 73% at the peak but above the 32% average from 2000 to 2020, and such breadth measures track actual inflation closely. Weighting components by spending shares makes the current episode resemble milder past inflation accelerations rather than the largest ones.
  • 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%.
  • US Diesel Hits Record $6 A Gallon On Iran Supply Shock — 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.

AI Summary. The US is reopening the Santa Teresa, New Mexico port to Mexican live cattle shipments, the second port to reopen after livestock imports were halted to prevent the spread of the New World screwworm parasite. Nearly 500,000 cattle moved through the port in 2024, about 40% of US imports from Mexico.

Ilena Peng Bloomberg
Date Posted:

There are now only two active screwworm cases in Texas as the outbreak recedes. The largest port for live cattle from Mexico is reopening, “a significant step in the Trump administration’s efforts to ease the pressures of a domestic cattle shortage.”

Is the US reopening its largest port to Mexican cattle imports?

Core argument: The US is reopening the Santa Teresa, New Mexico port to Mexican live cattle shipments; the port handled nearly 500,000 head in 2024, about 40% of total US cattle imports from Mexico.

The US is reopening its biggest port for Mexican live cattle shipments. The port in Santa Teresa, New Mexico, is the second to reopen, after the US in late 2024 stalled livestock shipments from Mexico in order to prevent the spread of the deadly New World screwworm. Nearly 500,000 cattle were shipped through the Santa Teresa port in 2024, amounting to about 40% of the US’s total imports from Mexico Concerns over the screwworm in the US have faded, with only two active cases remaining in Texas. Infestations of the parasite, which can be deadly if left untreated, have totaled less than 50 since its detection in the US in June. Still, there are nearly 2,000 active cases in Mexico. The US has been dispersing sterile male flies, which contain the disease by mating with wild female flies to curb reproduction.

Takeaways by Macro Roundup® AI

  1. The US is reopening the Santa Teresa, New Mexico port to Mexican live cattle shipments; the port handled nearly 500,000 head in 2024, about 40% of total US cattle imports from Mexico.
  2. Santa Teresa is the second port to reopen after the US stalled Mexican livestock shipments in late 2024 to prevent the spread of the New World screwworm.
  3. US screwworm infestations have totaled fewer than 50 since the parasite’s detection in June, with two active cases remaining in Texas, while Mexico has nearly 2,000 active cases.

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