Edward Conard

Top Ten New York Times Bestselling Author

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Upside of Inequality Oxford Unintended Consequences

Europe USA Relative Performance

Evidence comparing economic performance in Europe and the United States, including growth, productivity, investment, innovation, wages, regulation, energy, and capital markets. Coverage examines the sources of divergence and convergence.

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. Oxford Economics projects US corporate spending on new equipment and facilities will rise 40% in real terms over a roughly five-year span, versus 12% in the euro area, with German business investment nearly stagnant. US output per hour worked rose $14 between 2018 and 2025, compared with $2 in Europe.

Sam Fleming, Amy Borrett and Olaf Storbeck Financial Times
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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 US business investment growing far faster than Europe's?

Core argument: Oxford Economics projects US corporate spending on new equipment and facilities will rise 40% in real terms between 2021 and the end of next year, versus 12% in the euro area.

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

  1. Oxford Economics projects US corporate spending on new equipment and facilities will rise 40% in real terms between 2021 and the end of next year, versus 12% in the euro area.
  2. German business investment is expected to have all but stagnated between 2021 and the end of next year, according to Oxford Economics forecasts.
  3. GDP per hour worked rose $14 in the US between 2018 and 2025 compared with $2 in Europe, with Bart van Ark telling the ECB Forum in Sintra that US outperformance extended beyond the digital sector to wholesale and retail and professional services.

Related Articles:

  • The Two Europes — The International Monetary Fund projects Eastern European economies will close much of the gap with US per capita GDP — Poland from 34% to 67%, Romania 27% to 60%, Lithuania 29% to 69% — while Western Europe slips, with France falling from 86% to 71% and Italy from 93% to 68%.
  • 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.
  • 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.

AI Summary. Europe consumes AI products like ChatGPT without capturing the capital gains, payroll taxes on high-paid engineers, or agglomeration effects, because the tax base accrues where high-value production occurs rather than where products are consumed. The author argues Europe's welfare commitments were implicitly backed by expected future growth that is no longer anticipated.

Hanno Lustig The Two Cents
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Lustig argues that Krugman is wrong to dismiss concerns about slower European growth relative to the US based on welfare measures: “Europe’s social model is not financed out of consumer surplus; it is financed out of taxable income and taxable profits.”

Does consuming AI without producing it erode Europe's tax base?

Core argument: Europe consumes ChatGPT but collects none of the capital gains, payroll taxes on million-dollar AI engineers, or agglomeration effects, because the tax base migrates to where high-value production occurs rather than where products are consumed.

Europe consumes ChatGPT; it does not collect the capital gains, the payroll taxes on million-dollar AI engineers, or the agglomeration effects. The worst possible combination for a welfare state: contented consumers committed to the status quo, eroding public finances. The tax base migrates to where the high-value production takes place, not where the products are ultimately consumed. All this insurance that European states are committed to providing was implicitly backed by the promise of future growth. And that growth is no longer expected to materialize, but the promises remain. The problem is not simply that Europeans chose a different point on the efficiency-equity frontier. Their choices have shifted the frontier itself inward over time, leaving future generations of Europeans with a trade-off that is much worse.

Takeaways by Macro Roundup® AI

  1. Europe consumes ChatGPT but collects none of the capital gains, payroll taxes on million-dollar AI engineers, or agglomeration effects, because the tax base migrates to where high-value production occurs rather than where products are consumed.
  2. Europe's welfare-state insurance was implicitly backed by a promise of future growth that is no longer expected to materialize, while the promises themselves remain in place.
  3. European choices have shifted the efficiency-equity frontier itself inward over time, leaving future generations with a worse trade-off rather than merely a different point on the same frontier.

Related Articles:

  • European vs. U.S. Economic Performance: An Update — Productivity growth from 2000-2019 was higher in the US than in western Europe, but almost half the gap disappears when information and communications technology is excluded, even though tech was 9.2% of US output versus 5.4% in the EU. The author estimates this difference in industrial mix accounts for roughly 40% of the overall productivity growth gap.
  • 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.
  • European Stagnation Is Real — Comparing the United States, France, and Germany at current purchasing power parity prices shows the European economies roughly constant relative to America since 2000, but current-price measures miss output gains in sectors where prices fall, such as software. The author argues constant-price comparisons, the standard approach for growth over time, reveal greater European stagnation.

AI Summary. Comparisons of living standards across countries can use "constant price" purchasing power parities, which extrapolate from a base year using national inflation measures, or "current price" parities recalculated annually; the debate over whether Europe has fallen behind the U.S. turns on which method is preferable. The two methods agree when inflation is measured consistently across countries.

Matt Klein The Overshoot
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Addressing whether intra-country growth comparisons should use constant or current price PPPs, Klein notes that for Japan, both give the same conclusion. ICT‑related price and quality‑adjustment asymmetries—while present—have not yielded large PPP drift.

Does the method of comparing prices across countries change living standards conclusions?

Core argument: The dispute over whether Europe's living standards have fallen relative to the U.S. turns on which purchasing power parity method is preferred: constant price PPPs anchored to a base year or current price PPPs recalculated each year.

One obvious approach would be to start from a given base year and then run the data forwards and backwards using national measures of inflation. This generates “constant price purchasing power parities”. In any given year, the relative purchasing power between two societies is sensitive to the starting benchmark, but the direction of travel always looks the same. The other obvious approach would be to recalculate the price parities each year, if possible, and then use those to compare incomes each year. This creates “current price purchasing power parities.” The argument about whether Europe’s living standards have fallen relative to the U.S. is an argument about whether one method is better than the other. In theory these should produce more or less the same answers as long as inflation is measured consistently across countries and as long as the mix of items tracked does not change. Sometimes, that is exactly what happens. Both methods produce essentially the same results when comparing Japanese and U.S. incomes over time, for example.

Takeaways by Macro Roundup® AI

  1. The dispute over whether Europe's living standards have fallen relative to the U.S. turns on which purchasing power parity method is preferred: constant price PPPs anchored to a base year or current price PPPs recalculated each year.
  2. Constant price purchasing power parities, built by running data forward and backward from a base year using national inflation measures, yield relative purchasing power that is sensitive to the starting benchmark, though the direction of travel looks the same.
  3. In theory the two purchasing power parity methods should produce roughly the same answers as long as inflation is measured consistently across countries and the mix of tracked items does not change, as happens when comparing Japanese and U.S. incomes.

Related Articles:

  • Europe Versus America: A Response to the Critics — The author argues that standard productivity measures do not carry the implications for cross-country comparisons of living standards and economic welfare that many economists assume, rather than that European productivity is mismeasured. Faster measured US productivity growth coexists with European relative productivity and purchasing power at current prices not declining.
  • The Mismeasurement of European Productivity — European productivity growth has trailed the United States for three decades, and measures using current purchasing-power-parity conversions versus national price deflators answer different questions. The authors argue the flat current-purchasing-power-parity series reflects changing the price yardstick each year rather than showing Europe is keeping pace.
  • 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.

AI Summary. Seasonally adjusted monthly tourist arrivals to the US from Germany, Italy, Spain, and the UK show no collapse in foreign travel, with arrivals from Italy reaching an all-time high. The UK accounts for by far the largest share of arrivals among these four countries, followed by Germany and Italy.

Robin Brooks Robin Brooks Substack
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Foreign tourist arrivals in the US–especially from Europe–remain buoyant. Italy posted a new all-time high in April 2025; data provide evidence contrary to the narrative warning of a collapse in travel to the US.

Have European tourist arrivals to the US declined?

Core argument: Seasonally adjusted monthly tourist arrivals to the US from Germany, Italy, Spain and the UK show no collapse in foreign travel through April 2025, based on National Travel and Tourism Office data from January 2015 onward.

[The charts show] monthly tourist arrivals into the US from January 2015 to April 2025, the latest month for which data are available. Source for these data is the National Travel and Tourism Office (NTTO). Travel is highly seasonal, so I seasonally adjust these data. This means you can compare arrivals during the peak summer vacation season with arrivals at other times of the year. Data are for Germany (top left), Italy (top right), Spain (bottom left) and the UK (bottom right). The scale of these charts is different, with tourism from the UK by far the most important across these four countries, followed by Germany and Italy. What’s notable is that there’s no collapse in foreign travel to the US. In fact, in one case - Italy - arrivals posted a new all-time high in April 2025.

Takeaways by Macro Roundup® AI

  1. Seasonally adjusted monthly tourist arrivals to the US from Germany, Italy, Spain and the UK show no collapse in foreign travel through April 2025, based on National Travel and Tourism Office data from January 2015 onward.
  2. Italian arrivals to the US posted an all-time high in April 2025, the latest month for which National Travel and Tourism Office data are available.
  3. The UK is by far the largest source of US-bound tourists among Germany, Italy, Spain and the UK, followed by Germany and then Italy.

Related Articles:

  • European Travellers Cancel US Visits As Trump’s Policies Threaten Tourism — Overnight visitors from western Europe to the US fell 17% year-on-year, with declines of more than 20% from countries including Ireland, Norway and Germany, according to the International Trade Administration. Total overseas visitors dropped 12% year-on-year, the steepest decline since pandemic travel restrictions.
  • U.S. Is Top Investment Destination Despite Falling Inflows — United Nations data show the U.S. remained the top destination for foreign direct investment even as inflows fell to $285bn from $388bn, driven mainly by a drop in foreign purchases of American companies. China recorded its highest-ever inflow at $189bn, a 5% increase, much of it from European businesses.
  • European Travellers Cancel US Visits As Trump’s Policies Threaten Tourism — Overnight visitors from western Europe to the US fell 17% year-on-year, with declines of more than 20% from countries including Ireland, Norway and Germany, according to the International Trade Administration. Total overseas visitors dropped 12% year-on-year, the steepest decline since pandemic travel restrictions.

AI Summary. US labour productivity has grown by 30% since the 2008-09 financial crisis, more than three times the pace in the Eurozone and the UK, and the US accounts for 83% of venture capital funding across G7 economies over the past decade. Eurozone output is projected by the International Monetary Fund to expand by 0.8% this year.

Valentina Romei, William Crofton, and Colby Smith Financial Times
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Draghi noted that excluding the tech sector, “EU productivity growth over the past 20 years would be broadly at par with the US.” The US dominates global R&D, and per data from Preqin accounts for 83% of VC funding in G7 economies over the past decade.

Why is US productivity growth outpacing other advanced economies?

Core argument: US labour productivity has grown 30% since the 2008–09 financial crisis, more than three times the pace of the Eurozone and the UK, a gap visible for a decade.

US labour productivity has grown by 30% since the 2008-09 financial crisis, more than three times the pace in the Eurozone and the UK. That productivity gap, visible for a decade, is reshaping the hierarchy of the global economy. Economic growth in the Eurozone has been a third of the US’s since the pandemic, and output is set to expand by just 0.8% this year, according to the IMF. Similarly, the economies of Japan and the UK have grown only by 3% over the past five years. In fact, in productivity growth, the US is rapidly outstripping almost all advanced economies. According to data by Preqin, the US accounts for 83% of the amount of VC funding in G7 economies over the past decade. The country also attracted 14.6% of the world’s overall greenfield foreign direct investment in the first 10 months of 2024, according to fDi Markets data — a record high. Germany, by contrast, registered its lowest share of global FDI in 18 years.

Takeaways by Macro Roundup® AI

  1. US labour productivity has grown 30% since the 2008–09 financial crisis, more than three times the pace of the Eurozone and the UK, a gap visible for a decade.
  2. Eurozone growth since the pandemic has been a third of the US rate, with output set to expand 0.8% this year according to the IMF, while Japan and the UK have grown only 3% over five years.
  3. The US accounted for 83% of venture capital funding across G7 economies over the past decade, according to Preqin, and drew a record 14.6% of global greenfield foreign direct investment in the first 10 months of 2024, according to fDi Markets, while Germany registered its lowest share in 18 years.

Related Articles:

  • 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.
  • A Visualization of Europe’s Non-Bubbly Economy — The Draghi report notes that no European Union company with a market capitalization above €100bn was founded from scratch in the past fifty years, while all six US companies valued above €1tn were. The 13 EU companies founded in that period and worth at least $10bn total about $400bn, versus nearly $30tn for their US counterparts.
  • The Economics of Inequality in High-Wage Economies — Information technology created investment opportunities exceeding the supply of properly trained talent, while trade with low-wage economies, low-skilled immigration, trade deficits, and aging demographics eased constraints on low-skilled labor and risk-averse savings. The author argues this framework, rather than rising cronyism, explains high returns to success, slowing productivity growth, and low interest rates.

AI Summary. The EU economy was somewhat larger than the US in 2008 ($16.2tn versus $14.7tn), but by 2022 the US had grown to $25tn while the EU and UK combined reached only $19.8tn. The dollar's status as the world's reserve currency allows the US to finance its ambitions without unsettling markets.

Gideon Rachman Financial Times
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In 2008, the EU economy was 10% larger than the US economy. Today, the US economy is 1/3 larger than the EU and the UK. The US is 50% larger than the EU net the UK. @gideonrachman

In 2008, the EU economy was 10% larger than the US economy. Today, the US economy is 1/3 larger than the EU and the UK. ...

Is Europe's economy falling further behind America's?

Core argument: The US economy grew from $14.7tn in 2008 to $25tn by 2022, while the EU's $16.2tn economy in 2008 reached only $19.8tn combined with the UK by 2022, according to Jeremy Shapiro and Jana Puglierin of the European Council on Foreign Relations.

In 2008, the EU and the US economies were roughly the same size. But since the global financial crisis, their economic fortunes have dramatically diverged. As Jeremy Shapiro and Jana Puglierin of the European Council on Foreign Relations point out: “In 2008 the EU’s economy was somewhat larger than America’s: $16.2tn versus $14.7tn. By 2022, the US economy had grown to $25tn, whereas the EU and the UK together had only reached $19.8tn.” The dollar’s status as the world’s reserve currency gives the Americans the ability to finance their ambitions, without spooking the markets. As one European industrialist puts it: “They can just swipe the credit card.”

Takeaways by Macro Roundup® AI

  1. The US economy grew from $14.7tn in 2008 to $25tn by 2022, while the EU's $16.2tn economy in 2008 reached only $19.8tn combined with the UK by 2022, according to Jeremy Shapiro and Jana Puglierin of the European Council on Foreign Relations.
  2. The EU's economy was somewhat larger than America's in 2008, but the two economies diverged after the global financial crisis.
  3. The dollar's status as the world's reserve currency lets the US finance its ambitions without spooking markets, which one European industrialist describes as the ability to "just swipe the credit card.".

AI Summary. The US produced $25.5tn in GDP, about 25% of the world total—roughly its 1990 share—while China's share stands at 18%; the US share of the G7's nominal GDP rose from 40% in 1990 to 58%. Income per person is now about 30% above western Europe and 54% above Japan, adjusted for purchasing power.

Economist Staff The Economist
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Growth in the US has outpaced growth in other advanced peer economies. In 1990, the US accounted for 40% of the nominal GDP of the G7, today it accounts for 58%. @TheEconomist

Has the US maintained its share of global output since 1990?

Core argument: America's $25.5trn of GDP last year was 25% of the world total, nearly the same share as in 1990, while China's share now stands at 18%.

America’s $25.5trn in GDP last year represented 25% of the world’s total—almost the same share as it had in 1990. On that measure China’s share is now 18%. In 1990 America accounted for 40% of the nominal GDP of the G7, a group of the world’s seven biggest advanced economies, including Japan and Germany. Today it accounts for 58%. In PPP terms the increase was smaller, but still significant: from 43% of the G7‘s GDP in 1990 to 51% now. America’s outperformance has translated into wealth for its people. Income per person in America was 24% higher than in western Europe in 1990 in PPP terms; today it is about 30% higher. It was 17% higher than in Japan in 1990; today it is 54% higher. America’s labour-force participation rate has been falling this century, largely because of men dropping out of the workforce. But this American oddity is not large enough to make up for the country’s advantage in raw numbers. Even with lower participation, the past three decades have seen America’s labour force grow by 30%. In Europe the number is 13%, in Japan, just 7%. America’s working-age population—those between 25 and 64—rose from 127m in 1990 to 175m in 2022, an increase of 38%. Contrast that with western Europe, where the working-age population rose just 9% during that period, from 94m to 102m.

Takeaways by Macro Roundup® AI

  1. America's $25.5trn of GDP last year was 25% of the world total, nearly the same share as in 1990, while China's share now stands at 18%.
  2. America's share of G7 nominal GDP rose from 40% in 1990 to 58% today, and from 43% to 51% in purchasing-power-parity terms.
  3. America's working-age population aged 25 to 64 rose 38%, from 127m in 1990 to 175m in 2022, against a 9% rise in western Europe, from 94m to 102m.