“…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 fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
“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
“Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
“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
“…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
“…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 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
“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

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World Economic Outlook Steady but Slow: Resilience Amid Divergence

IMF Staff International Monetary Fund

Date Posted:: April 16, 2024
Is Database:: Database

In advanced economies, private capital formation remains 40% below its pre-crisis trend, with slower economic growth explaining about half the decline.

In OECD economies, business investment—the bulk of total investment—tumbled after 2008, and in 2021 it fell by about 40% of its pre-global-financial-crisis trend. For every 1pp decline in output growth that is not triggered by a contraction in business investment, there is a corresponding 2pp decrease in investment growth. This estimated output-investment relationship is used to calculate the investment shortfall from the growth slowdown following the global financial crisis. Comparing with the precrisis trend, Figure 3.8 suggests that as of 2021, about half of the shortfall in business investment since 2008 can be linked to weaker economic activity. [In a separate firm-level analysis of investments by public companies,] since 2008, Tobin’s q, an indicator of firms’ future productivity and profitability expectations, has decreased by 10 to 30% on average, contributing to the bulk of the explained decline in investment in both advanced and emerging market economies.

Takeaways by Macro Roundup^® AI

Business investment in OECD economies, the bulk of total investment, fell after 2008 and in 2021 declined by about 40% of its pre-global-financial-crisis trend.
Each 1pp decline in output growth not triggered by a contraction in business investment corresponds to a 2pp decrease in investment growth, an estimated relationship implying about half of the business investment shortfall since 2008 is linked to weaker economic activity as of 2021.
Tobin's q, an indicator of firms' future productivity and profitability expectations, has declined by 10–30% on average since 2008 in a firm-level analysis of public companies, contributing the bulk of the explained investment decline in both advanced and emerging market economies.

Higher Utilisation Explains The Recent Surge In Productivity Growth

Shane Boyle, John Fernald and Huiyu Li Center For Economic and Policy Research

Date Posted:: August 5, 2026
Is Database:: Database

US labor productivity has accelerated, with output per hour growing at a mean annual rate of 2.5% btw 2023–2026Q1, ~1pp above its 2005–2019 pace. The gains have largely been driven by higher input utilisation, which is ‘inherently temporary.”

Input utilisation is not observed directly for the entire economy; it must be inferred. Consider a firm that wants to meet strong demand but has a given capital stock, workforce, and technology. It can ask its existing workers to work longer (which we observe). It can also run its capital longer. Each margin is costly, for example, overtime pay, so firms typically use all of them at once. The observed margin serves as a proxy for the unobserved ones. The method infers changes in industry utilisation from observed movements in hours per worker, scaled by an estimated pass-through of those movements into labour productivity. Industry estimates are aggregated using Domar weights, which reflect each industry’s importance. The stacked bars in Figure 2 show measured TFP growth split into [Fernald's] measure of utilisation growth in light grey and utilisation-adjusted TFP growth in dark grey. In 2023, utilisation growth was a drag on measured TFP growth, and utilisation-adjusted TFP growth soared. Since the beginning of 2024, however, utilisation accounts for essentially all TFP growth. For now, the measured productivity gains appear to derive from “working harder” rather than “smarter.”

Takeaways by Macro Roundup^® AI

Since the beginning of 2024, utilisation growth accounts for essentially all measured total factor productivity growth, suggesting the measured productivity gains derive from "working harder" rather than "smarter".
In 2023, utilisation growth was a drag on measured TFP growth while utilisation-adjusted TFP growth soared, according to Fernald's decomposition of measured TFP.
Economy-wide input utilisation is not observed directly and is inferred from movements in hours per worker, scaled by an estimated pass-through into labour productivity, with industry estimates aggregated using Domar weights.

Why Wages And Productivity Look Set To Diverge Further

Joel Suss Financial Times

Date Posted:: July 27, 2026
Is Database:: Database
Is Important:: Important

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

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

Takeaways by Macro Roundup^® AI

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

What the World Cup Revealed About America

Jason Thomas Carlyle

Date Posted:: July 21, 2026
Is Database:: Database
Is Important:: Important

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

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

Takeaways by Macro Roundup^® AI

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

Cataloging Growth: A Re-Evaluation of 1900–1990

Verónica Bäcker-Peral and Benjamin Wittenbrink Massachusetts Institute of Technology

Date Posted:: July 20, 2026
Is Database:: Database
Is Important:: Important

Using 5.1mm Sears catalog listings and LLM-based hedonic estimation, this study finds real goods consumption grew 39-fold from 1900 to 1990, not 10.3-fold as official data imply, with the largest mismeasurement concentrated before WWII.

Measuring real GDP growth requires distinguishing changes in prices from changes in product quality... systematic quality adjustment. price indexes are unavailable for much of the twentieth century. We construct a new quality-adjusted price index using 5.1 million product listings from Sears catalogs, 1900–1990. The resulting cost-of-living index implies substantially lower goods inflation than conventional deflators between 1900 and 1990, real goods consumption grew by a factor of 39 using our index,compared with a factor of 10.3 using standard goods deflators. Figure 5 shows our estimates of the cost-of-living index for consumer goods in the solid red line. The dashed black line shows average cumulated price changes for the same sample of consumer goods. The gap.is largest before World War II, reversing the conventional view that goods consumption growth was slower before 1945 than in the post-war decades.As Gordon puts it, 'the history of price changes from 1914 to 1947 [is] the black hole where little is known.' This paper sheds light on that black hole. We estimate average annual real goods consumption growth of 5.4% for 1900-1939 and 4.2% for 1946-1980... the era of fastest growth was in the prewar, not postwar, contrary to conventional estimates.

Takeaways by Macro Roundup^® AI

Using a quality-adjusted price index built from 5.1 million Sears catalog listings, the authors estimate real goods consumption grew by a factor of 39 between 1900 and 1990, compared with a factor of 10.3 using standard goods deflators.
The authors estimate average annual real goods consumption growth of 5.4% for 1900–1939 and 4.2% for 1946–1980, implying the fastest growth came in the prewar rather than postwar era, contrary to conventional estimates.
The new cost-of-living index implies substantially lower goods inflation than conventional deflators, with the gap largest before World War II, a period Gordon describes as "the black hole where little is known.".

Can Africa Take The Asian Path To Growth?

Economist Staff The Economist

Date Posted:: July 15, 2026
Is Database:: Database

Most Sub-Saharan African countries had lower agricultural TFP in 2023 than they had a decade earlier. Btw 2008 and 2019, in the face of a rapidly rising population, small farms’ yields were falling by 3 to 4% per year.

In aggregate [sub-Saharan Africa's] farmers are growing more cereals, such as maize (corn) and rice, than ever: nearly five times as much as in the 1960s. But most of those gains came from cultivating more land, which cannot go on for ever. The amount of arable land per person has been falling for decades, and now sits at roughly the global average. That might not matter if farmers were also growing more crops per hectare. But recently gentle growth in agricultural productivity has given way to stagnation, perhaps even decline. Consider figures drawn from national statistics in Africa by the Food and Agriculture Organisation. Cereal yields did not grow between 2020 and 2024, the latest data point. Nor did total factor productivity (TFP), a measure of how efficiently inputs of all kinds (such as labour and machinery) are turned into produce. Most African countries had lower agricultural TFP in 2023 than a decade before.

Takeaways by Macro Roundup^® AI

Sub-Saharan Africa's farmers grow nearly five times as much cereal, such as maize and rice, as in the 1960s, but most of those gains came from cultivating more land rather than raising output per hectare.
Cereal yields in Africa did not grow between 2020 and 2024, and neither did total factor productivity, a measure of how efficiently inputs such as labour and machinery are turned into produce, according to Food and Agriculture Organisation figures drawn from national statistics.
Arable land per person in sub-Saharan Africa has been falling for decades and now sits at roughly the global average, while most African countries had lower agricultural total factor productivity in 2023 than a decade before.

AI, Immigration, and Collapsing Labor Force Participation

Paul Kedrosky Applied Complexity

Date Posted:: July 8, 2026
Is Database:: Database

Overall LFP is at a 50-year low. Kedrosky warns, “As fewer adults work or seek work, a larger fraction of voters experience the economy mostly as consumers, retirees, or rentiers, not as workers…[which] changes incentives around….taxation and redistribution.”

As fewer adults work or seek work, a larger fraction of voters experience the economy mostly as consumers, retirees, or rentiers, not as workers. That changes political incentives around wages, immigration, AI, taxation, and redistribution. The economy becomes increasingly dependent on a shrinking core. A shrinking group of workers generates the income, taxes, and innovation that support a growing number of non-workers. The economy becomes more fragile because labor shocks are concentrated among fewer participants. Capital must increasingly substitute for labor. Labor scarcity raises the return on automation, AI, robotics, and software. The AI bet becomes as much about compensating for workers' absence as simple replacement. Growth increasingly depends on productivity, on not participation. Any [productivity] miss will be much more consequential than in the past, given that labor no longer picks up the slack.

Takeaways by Macro Roundup^® AI

Falling labor force participation leaves a shrinking core of workers generating the income, taxes, and innovation that support a growing number of non-workers, and makes the economy more fragile because labor shocks are concentrated among fewer participants.
As more voters experience the economy as consumers, retirees, or rentiers rather than workers, political incentives shift around wages, immigration, AI, taxation, and redistribution.
Labor scarcity raises the return on automation, AI, robotics, and software, making the AI bet as much about compensating for workers' absence as replacing them, with growth depending on productivity rather than participation and any productivity miss more consequential than in the past.

In advanced economies, private capital formation remains 40% below its pre-crisis trend, with slower economic growth explaining about half the decline.

Why has business investment fallen below its pre-crisis trend?

Takeaways by Macro Roundup® AI

Related Articles:

US labor productivity has accelerated, with output per hour growing at a mean annual rate of 2.5% btw 2023–2026Q1, ~1pp above its 2005–2019 pace. The gains have largely been driven by higher input utilisation, which is ‘inherently temporary.”

Does higher input utilisation explain recent measured productivity growth?

Takeaways by Macro Roundup® AI

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

Are wages falling further behind productivity growth in advanced economies?

Takeaways by Macro Roundup® AI

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

Does retirement wealth explain why US spending outpaces peer economies?

Takeaways by Macro Roundup® AI

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Using 5.1mm Sears catalog listings and LLM-based hedonic estimation, this study finds real goods consumption grew 39-fold from 1900 to 1990, not 10.3-fold as official data imply, with the largest mismeasurement concentrated before WWII.

Does quality-adjusted pricing show faster goods consumption growth before the war?

Takeaways by Macro Roundup® AI

Related Articles:

Most Sub-Saharan African countries had lower agricultural TFP in 2023 than they had a decade earlier. Btw 2008 and 2019, in the face of a rapidly rising population, small farms’ yields were falling by 3 to 4% per year.

Is Africa's crop growth coming from more land, not higher yields?

Takeaways by Macro Roundup® AI

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Overall LFP is at a 50-year low. Kedrosky warns, “As fewer adults work or seek work, a larger fraction of voters experience the economy mostly as consumers, retirees, or rentiers, not as workers…[which] changes incentives around….taxation and redistribution.”

How does falling labor force participation reshape growth and fragility?

Takeaways by Macro Roundup® AI

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