“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
“…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
“…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
“…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
“…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
“…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
“A full-throated defense of economic dynamism.” - The Wall Street Journal
“Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
“…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
“Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University

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Labor Force Growth, Breakeven Employment, and Potential GDP Growth

Seth Murray and Ivan Vidangos Federal Reserve Board

Date Posted:: April 10, 2026

Slow population growth due to the decline in net immigration and an aging workforce suggest breakeven employment growth is now likely “near-zero,” which implies negative job growth will be almost as likely as positive job growth in any given month.

The rapid slowing of net immigration may translate into such a large drop in labor force growth that the breakeven pace could fall to nearly zero, requiring less than 10,000 new jobs per month in 2026. This near-zero pace of breakeven job growth is substantially lower than at any point in the past 65 years. One important implication of a near-zero breakeven pace is that, even if the output of the U.S. economy (GDP) is growing at the same pace as potential output (potential GDP), employment growth in any given month is almost as likely to be negative as it is to be positive. Furthermore, these negative prints of job growth could be large in any given month. The gray shaded area in Figure 2 shows the 90-percent confidence interval of total employment growth based on the BLS's estimate of the standard error of monthly payroll employment growth from their establishment survey. This 90-percent confidence interval implies that it would not be unusual for there to be one or more months in 2026 with declines in total payroll employment as large as -100,000 jobs, even if economic output was growing at the rate of potential output growth.

Takeaways by Macro Roundup^® AI

Monthly employment can decline by 100,000 jobs or more while the economy still grows at its potential rate next year.
Negative job growth months will become statistically normal rather than exceptional as breakeven employment approaches zero levels unseen in six.

What’s Behind the Declining Trend Unemployment Rate?

Andreas Hornstein, Marianna Kudlyak, Greeshma Avaradi and Taerin Kim Federal Reserve Bank of San Francisco

Date Posted:: August 26, 2026
Is Database:: Database

Hornstein et al find that about half of the ~3pp drop in the trend unemployment rate since 1976 is due to compositional change in the work force towards lower unemployment “types ” – in particular, older and more educated workers.

We find that the trend unemployment rate declined from 7.8% in 1976 to 4.8% in 2024 [Figure 1]. Roughly half of that decline reflects compositional change. Figure 2 separates the estimated cumulative change in the annual unemployment trend since 1976 into its components. The total decline was about 3.3 percentage points by 2024. Changes in workforce composition account for a little more than half of that decline. Rising educational attainment is the single largest compositional force, lowering the trend about 1pp. Figure 4 plots estimated education shares for entering cohorts of women, and these patterns are similar for male cohorts (not shown). The figure shows a steady long-run fall in the share of new female cohorts with less than high school education and a steady rise in the share with some college or a college degree. [Returning to Figure 2], changes in group-specific LFP rate trends contribute only ~0.3 pp. The remaining decline, a bit under 1pp, comes from lower group-specific trend unemployment.

Takeaways by Macro Roundup^® AI

The U.S. trend unemployment rate fell 3.3 percentage points—from 7.8% in 1976 to 4.8% in 2024—with rising educational attainment alone accounting for 1.0 percentage point of that structural decline.
Workforce compositional shifts explain slightly more than half of the 3.3-percentage-point decline in trend unemployment since 1976, making demographic change the dominant driver over the period.
Group-specific labor force participation trends contributed only 0.3 percentage points to the trend unemployment decline, while lower group-specific unemployment rates drove the remaining approximately 1.0 percentage point reduction.

College Grads Struggle to Find Jobs. Non-Grads Are Giving Up

Justin Fox Bloomberg

Date Posted:: August 25, 2026
Is Database:: Database

Labor force participation is rising for American college graduates aged 25–29, and is now at 89.4% – above its pre-pandemic level. Participation among non-college members of that age cohort is falling; at 78.7%, it is now below its pre-pandemic level.

The narrowing of [the unemployment gap btw college and non-college workers] in recent years has lent support to narratives that college diplomas are losing their value amid the rise of large language models, the purported return of blue-collar work, and other job market changes. But while it may well be that diplomas have lost value, the recent shrinking of the young-adult education-unemployment gap seems to be driven mainly by a different phenomenon. Growing numbers of young adults without college degrees simply aren’t trying to find work and thus aren’t counted in unemployment calculations. The employment-population ratio for young college grads is not far off from where it was just before the pandemic and seems as if it might be headed upward again after a sharp drop in 2023 and 2024, for non-grads it is 1.7 percentage points lower than before the pandemic and clearly trending downward.

Takeaways by Macro Roundup^® AI

The narrowing education-unemployment gap among young adults reflects labor force withdrawal by non-degree holders—not diminished diploma value—as workers who stop seeking jobs are excluded from unemployment calculations.
Young adults without college degrees carry an employment-population ratio 1.7 percentage points below pre-pandemic levels and trending downward, while college graduates have nearly recovered to pre-pandemic parity.

The Big Exceptions To The American Manufacturing Jobs Decline

Jiaxin (Jason) He Agglomerations

Date Posted:: July 24, 2026
Is Database:: Database

The US has lost 300,000 manufacturing jobs since their recent peak in Q2 2023. Two subsectors have seen strong job growth: aerospace manufacturing added 43,000 jobs, and electrical equipment, cable and battery manufacturing added 36,200.

Aerospace leads all manufacturing industries in job growth since 2023. Last year it also posted the largest nominal trade surplus of any manufacturing industry, at $116.7 billion. Driving the growth has been strong commercial and passenger airline demand, including a record-high order backlog. Boeing, the world’s leading airplane manufacturer, returned to profitability and high delivery volumes in 2025. The employment surge in the electrical components subsector tells a different story. It owes its strength to two industries: electrical equipment manufacturing and batteries, wires, cables, and miscellaneous electrical components. These are among the industries that bore the brunt of the China Shock and suffered acute decline in the 2000s. Green energy and electric vehicles likely contributed to their initial recovery, raising demand for batteries and electrical infrastructure. But their continued growth even after the cancellation of EV subsidies in 2025 points to a different, potent, and entirely unsurprising driver: Artificial Intelligence. AI’s manufacturing footprint runs the length of the supply chain. Dedicated data centers more than doubled their real consumption of electrical equipment and components from 2019 to 2024.

Takeaways by Macro Roundup^® AI

Aerospace posted a $116.7 billion trade surplus—the largest of any U.S. manufacturing industry—while leading all sectors in job growth since 2023, driven by record commercial airline order backlogs and Boeing's return to profitability and high delivery volumes.

The Labor Market Explains Why Inflation Won’t Go Away

Torsten Sløk Apollo

Date Posted:: July 17, 2026
Is Database:: Database

US unemployment has been under the Fed’s 4.5% estimate of the non-accelerating inflation rate of unemployment (NAIRU) for 57 months. Sløk argues “persistent tightness is a key reason inflation has remained elevated.”

With the Fed estimating the non-accelerating inflation rate of unemployment (NAIRU) at below 4.5%, and unemployment having stayed at or below that level for 57 months, tied for the longest such streak on record, the labor market has been operating in excess-demand territory for an unusually long time. That persistent tightness is a key reason inflation has remained elevated: when unemployment runs below NAIRU, wages and prices face sustained upward pressure. Prior episodes of sub-4.5% unemployment were typically far shorter. The current one is one of the longest on record, which helps explain why the ongoing inflation overshoot since 2021 has been so stubborn. The bottom line is that a strong economy is the reason why inflation has been high, and only by keeping rates higher for longer can the Fed cool inflation down towards the FOMC’s 2% inflation target.

Labor Force Participation Is High If You Measure It Right

Justin Fox Bloomberg

Date Posted:: July 16, 2026
Is Database:: Database
Is Important:: Important

Adjusted for the age composition of the population, US labor force participation, at 61.8%, is near an all-time high, reflecting delayed retirement of older workers.

The labor force participation rate is the number of people 16 and older who have jobs or are actively looking for them, divided by the civilian (that is, not uniformed military) noninstitutional (that is, not in prison or the like) population 16 and older. While this percentage can tell us useful things about, say, the sustainability of Social Security or the overall availability of labor, its validity as a gauge of the health of the labor market is limited by the reality that labor force participation varies greatly by age. It’s a flawed metric that is currently more flawed than usual as the youngest members of the giant baby boom generation age into their mid-60s. The addition this year of nearly 1.7 million 65-and-older Americans to the BLS population estimates, because of belated adjustments stemming from the 2020 Census, just adds to the distortions.

'Nobody Wants to Work Anymore': Lifetime Labor Market Experiences and the Decline of Male LFP in the United States

Remy Levin and Daniela Vidart National Bureau of Economic Research

Date Posted:: June 16, 2026
Is Database:: Database
Is Important:: Important

Btw 1986 and 2019, prime-age males who grew up observing a one–SD lower male earnings history had a 7pp lower LFP rate in adulthood, holding current labor‑market conditions fixed.

We propose a new channel contributing to the long-run decline in [male labor force participation] (MLFP) in the United States: changes in American men’s lifetime experiences of the aggregate male labor market have shaped their beliefs about the returns to participation, influencing labor supply decisions in ways that persist even in the face of current market conditions. MLFP and national lifetime male labor market experiences, holding contemporaneous conditions fixed, are highly correlated over time (Figure 1, Panel A). Second, the decline in MLFP is largely driven by cohort-level differences: recent cohorts participate at lower rates than previous generations at every age (Figure 1, Panel B). These patterns suggest that men’s labor market participation is the history, embedded in each cohort’s memory, of the labor markets experienced by the men around them. The effects on MLFP are stronger for experiences of same-race male labor markets, demonstrating the central role of reference-group identity, and are driven by conditions experienced during men’s formative childhood years not explained by educational attainment of subjects or their fathers. Finally, we show that lifetime male labor market experiences are correlated with direct measures of men’s personal wage and employment expectations, but not their expectations for the macroeconomy as a whole.

Takeaways by Macro Roundup^® AI

Male labor force participation decline correlates strongly with cohort-level lifetime labor market experiences, driving persistent participation gaps across generations independent.
Same-race male labor market conditions experienced during childhood shape adult participation expectations more than macroeconomic beliefs, leading to reference-group-driven labor.
Recent cohorts participate at lower rates than previous generations at every age, demonstrating that formative-year labor market exposure—not education—drives long-run.

Slow population growth due to the decline in net immigration and an aging workforce suggest breakeven employment growth is now likely “near-zero,” which implies negative job growth will be almost as likely as positive job growth in any given month.

Takeaways by Macro Roundup® AI

Related Articles:

Hornstein et al find that about half of the ~3pp drop in the trend unemployment rate since 1976 is due to compositional change in the work force towards lower unemployment “types ” – in particular, older and more educated workers.

Is rising education driving down structural unemployment?

Takeaways by Macro Roundup® AI

Related Articles:

Labor force participation is rising for American college graduates aged 25–29, and is now at 89.4% – above its pre-pandemic level. Participation among non-college members of that age cohort is falling; at 78.7%, it is now below its pre-pandemic level.

Are non-graduates disappearing from the job market?

Takeaways by Macro Roundup® AI

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The US has lost 300,000 manufacturing jobs since their recent peak in Q2 2023. Two subsectors have seen strong job growth: aerospace manufacturing added 43,000 jobs, and electrical equipment, cable and battery manufacturing added 36,200.

Are aerospace and electrical components bucking the broader manufacturing decline?

Takeaways by Macro Roundup® AI

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US unemployment has been under the Fed’s 4.5% estimate of the non-accelerating inflation rate of unemployment (NAIRU) for 57 months. Sløk argues “persistent tightness is a key reason inflation has remained elevated.”

Does tight labor demand explain persistent inflation pressure?

Related Articles:

Adjusted for the age composition of the population, US labor force participation, at 61.8%, is near an all-time high, reflecting delayed retirement of older workers.

Does labor force participation tell us what we think it does?

Related Articles:

Btw 1986 and 2019, prime-age males who grew up observing a one–SD lower male earnings history had a 7pp lower LFP rate in adulthood, holding current labor‑market conditions fixed.

Does weak labor market exposure permanently reduce male workforce participation?

Takeaways by Macro Roundup® AI

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Takeaways by Macro Roundup^® AI

Takeaways by Macro Roundup^® AI

Takeaways by Macro Roundup^® AI

Takeaways by Macro Roundup^® AI

Takeaways by Macro Roundup^® AI