“A full-throated defense of economic dynamism.” - The Wall Street Journal
“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 very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
“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 very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
“…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
“…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
“Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
“Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
“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
“…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
“…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts

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How Much Is Donald Trump Costing America’s Economy?

Economist Staff The Economist

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

The AI buildout drove ~ half of US GDP growth in 2025, according to an Economist analysis. Non-residential non-AI related fixed investment contracted ~3% over the past year.

Strip out the splurge on information-processing equipment and software—the categories most closely tied to AI—and the picture looks grim. Over the past four quarters non-residential fixed investment excluding ai-related categories has contracted at an annualised rate of roughly 3%, compared with average growth of more than 5% in the previous decade. Investment in industrial and transport equipment has fallen by more than 2% over the past year. Manufacturing construction is down by 20%. In total, non-AI investment is running about $130bn below its trend from the last decade. This capex recession is reducing gdp growth by roughly 0.4 percentage points. [A] potential explanation, in which strong demand or heavy government borrowing pushes up interest rates and crowds out other private investment, also looks unpersuasive. Credit remains plentiful. The spreads between investment-grade corporate bond and Treasuries have seldom been this tight since the 1990s.

Takeaways by Macro Roundup^® AI

Investment-grade corporate bond spreads remain near 1990s lows despite capex weakness, indicating credit availability is not crowding out private investment.
Over the past four quarters non-residential fixed investment excluding ai-related categories has contracted at an annualised rate of roughly 3%.
Investment in industrial and transport equipment has fallen by more than 2% over the past year.

Gross and Net US Investment

Timothy Taylor Conversable Economist

Date Posted:: September 4, 2026
Is Database:: Database

U.S. real net private domestic investment—which adds to the American capital stock—is now only ~25% as large as gross investment, down from ~40% in the 1970s. Taylor suggests the widening gap between gross and net investment reflects the relatively rapid depreciation of IT-related capital.

The figure divides net investment by gross investment. Back in the 1970s, net investment was often around 40% of gross investment, but the share has been slumping over time. For the last decade or so, net investment has been about 25% of the gross–that is, about three-quarters of gross investment is just making up for depreciation of the pre-existing capital stock. The likely reason for the growing gap between gross and net investment is that modern investment is more likely to be related to information technology [which] depreciates more rapidly and thus needs to be replaced and updated more often. If we want the average US worker to be using a greater amount of capital on the job–which was one of the key drivers of rising labor productivity in the past–it now takes a bigger rise in gross investment to lead to a given rise in net investment.

Takeaways by Macro Roundup^® AI

Net investment has fallen from ~40% of gross investment in the 1970s to ~25% today, meaning three-quarters of gross investment now merely replaces depreciating capital rather than expanding the productive stock.
The shift toward information technology — which depreciates faster than physical machinery — is the primary driver of the widening gap between gross and net investment.
Raising capital per worker, a historic engine of labor productivity growth, now requires a substantially larger increase in gross investment than it did several decades ago.

Understanding AI and Productivity

Chad Syverson Economic Innovation Group

Date Posted:: August 28, 2026
Is Database:: Database

Syverson is skeptical that AI initiated the rise in productivity growth that began in 2023. The acceleration began while AI investment was small, and pandemic-era labor market churn and business dynamism match the acceleration’s start.

Productivity from mid-2022 on has maintained a faster-than-2010s trajectory involving annual growth of about 2.2%. Could this acceleration be due to AI? Perhaps. The timing leans against AI being the sole initial cause. Additionally, there were well-documented increases in economic dynamism (labor market churn and business formation) during the pandemic emergence whose timing matches the acceleration’s start. Regardless of AI’s current effect, the longer the aggregate productivity acceleration continues, the more plausible it is that AI is an important driver. As for the magnitude, a sustained increase from 1.5 to 2.2% annual productivity growth would be substantial (after a decade, GDP per capita would be 7% higher than otherwise), but hardly unprecedented. The 1995–2004 productivity boom saw annual productivity growth of nearly 3% per year, and other past general-purpose-technology-related productivity boosts saw labor productivity growth in excess of 2.5% for a decade or longer.

Takeaways by Macro Roundup^® AI

U.S. labor productivity has grown at roughly 2.2% annually since mid-2022, a pace exceeding the 2010s trend and, if sustained, implying GDP per capita roughly 7% higher within a decade than the prior trajectory.
The 1995–2004 productivity boom averaged nearly 3.0% annual growth, establishing that a durable AI-driven acceleration to 2.2% would be meaningful but well within historical precedent for general-purpose-technology cycles.
Pandemic-era surges in labor market churn and business formation align more precisely with the productivity acceleration’s start date than AI adoption does, complicating AI-as-sole-cause narratives.

US Widens AI-Driven Investment Gap With Europe

Sam Fleming, Amy Borrett and Olaf Storbeck Financial Times

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

Oxford Economics projects US real business investment will rise 40% over 2021–2027, ~3x the euro area’s 12%. US investment growth since 2024 has been largely information processing and software, but high US growth in GDP/hour is not “merely digital.”

Corporate spending on new equipment and facilities in the US is projected to increase 40% in real terms between 2021 and the end of next year, according to forecasts from Oxford Economics. The US surge compared with a real-terms increase of just 12% in the euro area, while German business investment is expected to have all but stagnated over the same period. Europe also faces a large and growing productivity gap with the US. “The United States has recently pulled further ahead of Europe,” Bart van Ark, a professor at the University of Manchester, told policymakers at the ECB Forum in Sintra. GDP per hour worked increased $14 in the US between 2018 and 2025, compared with just $2 in Europe. “The gap is not only a digital sector story,” added van Ark, stressing that the US outperformance extended to other sectors, including wholesale and retail as well as professional services.

Takeaways by Macro Roundup^® AI

U.S. corporate investment in equipment and facilities is projected to rise 40% in real terms between 2021 and end-2026, versus 12% in the euro area and near-zero growth in Germany, sharply widening the transatlantic capital-spending gap.
U.S. labor productivity rose $14 per hour worked between 2018 and 2025, versus $2 in Europe, with outperformance spanning wholesale, retail, and professional services—not solely the digital sector.

Why Big Tech’s AI Spending Is $3 Trillion Higher Than It Seems

Peter Rudegeair and Peter Santilli Wall Street Journal

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

A WSJ analysis finds 9 firms involved in the data center buildout have ~$3T in off-balance-sheet commitments largely tied to AI infrastructure. The growth in such obligations has outpaced the firms’ capex growth over the last year.

Nine top tech companies had some $3 trillion of off-balance-sheet commitments mostly related to AI, according to a Wall Street Journal analysis of footnotes in their most recent securities filings. Those obligations are growing faster than traditional “capex,” which totaled about $600 billion over the past year they reported, and were about triple what the companies owe under their outstanding leases and long-term borrowings.

AI Is Driving Up Treasury Yields: ‘It Just Touches Everything’

Davide Barbuscia, Ye Xie, and Michael MacKenzie Bloomberg

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

US investment-grade debt issuance is up 36% y/y to ~$1.5T. A BofA analysis argues the surge in this debt, alongside increased MBS issuance, has driven up the 10-year Treasury yield by ~.3pp this year.

[In 2026] investment-grade companies have sold nearly $1.5 trillion of bonds, a 36% jump from a year earlier, putting them on pace to eclipse the record from 2020, when businesses were rushing to seize on near-zero interest rates. As the slew of longer-dated bonds keeps hitting the market, some investors have sold US Treasuries. That freed up cash to buy higher-yielding debt from immensely profitable companies like Alphabet, whose recent 30-year debt was issued at a yield of nearly 6.4%, 1.15 percentage points more than comparable Treasuries. Quantifying the precise impact on interest rates is difficult and estimates vary. Bank of America economists said the AI borrowing is “potentially crowding out long-end Treasury demand” and has played a major role in the rise of bond yields. They estimated that the surge in corporate-debt sales — along with a rise in issuance of mortgage-backed securities — pushed up 10-year rates by about 0.3 percentage point this year.

Big Tech AI Spending Spree Tops $1tn

Ryan McMorrow, Rafe Rosner-Uddin and Hannah Murphy Financial Times

Date Posted:: July 31, 2026
Is Database:: Database

Google, Amazon, Microsoft and Meta’s combined free cash flow fell to a decadal low of ~$7B as their capex continues to rise.

Combined capital spending by Google, Amazon, Microsoft and Meta from the beginning of the AI boom in 2023 to the end of June hit $1.1tn, according to earnings reports from the four companies in the past two weeks. Several top executives acknowledged to analysts that the outlay on AI would continue to sap free cash flow in coming quarters. The free cash flow metric is closely watched as a measure of the cash companies have left to service debt or return to shareholders after covering their operating costs and capital spending.

The AI buildout drove ~ half of US GDP growth in 2025, according to an Economist analysis. Non-residential non-AI related fixed investment contracted ~3% over the past year.

Is weak business investment dragging down economic growth?

Takeaways by Macro Roundup® AI

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U.S. real net private domestic investment—which adds to the American capital stock—is now only ~25% as large as gross investment, down from ~40% in the 1970s. Taylor suggests the widening gap between gross and net investment reflects the relatively rapid depreciation of IT-related capital.

Does faster asset depreciation explain slowing productivity growth?

Takeaways by Macro Roundup® AI

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Syverson is skeptical that AI initiated the rise in productivity growth that began in 2023. The acceleration began while AI investment was small, and pandemic-era labor market churn and business dynamism match the acceleration’s start.

Is AI-driven productivity growth sustainable at historical technology boom levels?

Takeaways by Macro Roundup® AI

Related Articles:

Oxford Economics projects US real business investment will rise 40% over 2021–2027, ~3x the euro area’s 12%. US investment growth since 2024 has been largely information processing and software, but high US growth in GDP/hour is not “merely digital.”

Is artificial intelligence investment widening the transatlantic productivity divide?

Takeaways by Macro Roundup® AI

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A WSJ analysis finds 9 firms involved in the data center buildout have ~$3T in off-balance-sheet commitments largely tied to AI infrastructure. The growth in such obligations has outpaced the firms’ capex growth over the last year.

Are technology companies hiding the true cost of artificial intelligence?

Related Articles:

US investment-grade debt issuance is up 36% y/y to ~$1.5T. A BofA analysis argues the surge in this debt, alongside increased MBS issuance, has driven up the 10-year Treasury yield by ~.3pp this year.

Is artificial intelligence investment reshaping the government bond market?

Related Articles:

Google, Amazon, Microsoft and Meta’s combined free cash flow fell to a decadal low of ~$7B as their capex continues to rise.

Is Big Tech's trillion-dollar AI bet crowding out shareholder returns?

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Takeaways by Macro Roundup^® AI

Takeaways by Macro Roundup^® AI

Takeaways by Macro Roundup^® AI

Takeaways by Macro Roundup^® AI