Edward Conard

Top Ten New York Times Bestselling Author

  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…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 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
  • “…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 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
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…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 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
Upside of Inequality Oxford Unintended Consequences

Fiscal Deficits

Analysis of how government borrowing, debt issuance, interest costs, and fiscal sustainability affect growth, inflation, private investment, and financial markets. This archive brings together relevant data, research, and competing interpretations.

AI Summary. Countries that become dependent on increasingly uneconomic investment have found adjustment difficult, as in Japan, where average GDP growth fell from about 5% to under 1% after 1991 and its share of global manufacturing fell by nearly 60%. Rebalancing requires a larger role for consumption, and absent a sharp rise in consumption growth, it occurs through slower production growth.

Michael Pettis China Financial Markets
Date Posted:

Pettis argues that China faces the same dilemma as Japan after 1991: reducing uneconomic investment requires consumption to become a larger source of demand. But raising household income may undermine manufacturing competitiveness, while China’s higher debt limits its ability to cushion the adjustment.

How costly is rebalancing away from dependence on uneconomic investment?

Core argument: Japan’s average GDP growth fell from around 5% in the decade before 1991 to under 1% in the decade after, while its share of global GDP fell by nearly half between 1991 and 2008.

Every country that has become excessively dependent on increasingly uneconomic investment has found it difficult to begin an adjustment that its leaders knew was necessary. Japan in the 1980s, Brazil in the 1970s, and the Soviet Union in the 1960s all faced versions of this problem. The Japanese experience shows how costly that adjustment can be. Rebalancing meant for Japan, and means for China, increasing the role of consumption in driving GDP growth, and if an economy cannot rebalance through a sharp increase in consumption growth – and historical precedents suggest that this is extremely unlikely – it must, almost by definition, rebalance through slower growth in production. This is especially difficult when the international competitiveness of manufacturing depends on the same distribution of income that constrains consumption. Raising the role of consumption, in that case, requires raising household income relative to production, but this automatically reduces the cost advantages on which manufacturing depends.

Takeaways by Macro Roundup® AI

  1. Japan’s average GDP growth fell from around 5% in the decade before 1991 to under 1% in the decade after, while its share of global GDP fell by nearly half between 1991 and 2008.
  2. Japan’s share of global manufacturing fell by nearly 60% over the broader period, illustrating how costly adjustment can be for an economy dependent on increasingly uneconomic investment.
  3. Rebalancing means raising consumption’s role in driving GDP growth, and since historical precedents suggest a sharp increase in consumption growth is extremely unlikely, China would rebalance through slower growth in production.

Related Articles:

  • Two Asian Giants, One Economic Trap — China's combined public and private debt is estimated at about 300% of GDP, and an updated "Japanisation" index indicates China has scored as more Japanised than Japan for the past five years. Analysts attribute the 1.7% yield on 10-year Chinese government bonds to weak credit demand, with investors parking cash in government debt.
  • Why Global Imbalances Matter — Countries running persistent trade surpluses, such as China, Germany and Japan, have built their economies around an excess supply of tradeable goods and services, leaving them dependent on deficit countries to absorb it. That dependence gives deficit countries bargaining power and exposes surplus countries to pressure to expand domestic demand.
  • Is China’s High-Quality Investment Output Economically Viable? — China's technological progress and infrastructure do not refute claims of overinvestment, since overinvestment often produces real physical assets and technological gains yet still counts as overinvestment when it generates less real value than the resources, subsidies, and transfers it consumes. When such losses are capitalized, assets are carried above their real economic value.

AI Summary. Long-term U.S. Treasury yields did not fall during an artificial-intelligence equity sell-off, which the author argues contradicts the view that AI capital spending and hyperscaler debt issuance are the main force pushing yields higher. The author attributes elevated long-term yields instead to a rising fiscal risk premium tied to U.S. public debt growth.

Robin Brooks Robin Brooks Substack
Date Posted:

Brooks notes that while the 2-year and 10-year Treasury yields fell during last week’s AI sell-off, the 10y10y forward yield did not. He argues its failure to do so “further cements the case for the fiscal risk premium,” concluding that long yields are up “because of mounting fiscal stress, not because of AI capex.”

Are elevated long-term yields driven by fiscal strain rather than AI borrowing?

Core argument: Robin Brooks argues that long-term Treasury yields failed to fall during the late-2026 AI equity sell-off, contradicting the view that AI capital expenditure and hyperscaler debt issuance have been the primary force pushing yields higher.

The black line shows daily data from the start of 2026 for the two-year Treasury yield.The blue line is the 10-year yield and the purple line is the 10y10y forward yield. If the AI bubble were a material driver of the rise in long-term yields, the purple line should have fallen this week alongside the blue and black ones. It didn’t and that in my mind further cements the case for the fiscal risk premium. The midterm elections and the AI sell-off that’s ensued have given us the perfect natural experiment to disentangle what’s going on with long-term yields. They’re up because of mounting fiscal stress, not because of AI. Once the war ends - and it will - we’ll be left with all the structural challenges the US and others in the G10 face. The fact that we’re rapidly running out of fiscal space is top of that list.

Takeaways by Macro Roundup® AI

  1. Robin Brooks argues that long-term Treasury yields failed to fall during the late-2026 AI equity sell-off, contradicting the view that AI capital expenditure and hyperscaler debt issuance have been the primary force pushing yields higher.
  2. The November payrolls print of 165,000 jobs beat the Bloomberg consensus of 70,000 by 95,000, or 1.2 standard deviations against a historical standard deviation of 76,000, and the two-year yield rose five basis points, in line with or above the historical regression of yield responses to payrolls surprises.
  3. Brooks concludes that elevated long-term yields reflect mounting fiscal stress rather than AI, noting the 10-year/10-year forward yield did not decline alongside shorter maturities during the sell-off week and that corporate dissaving is “not remotely near where it was in the IT bubble of the early 2000s.”.

Related Articles:

  • Global Bond Sales Smash Record, Fueled by AI Borrowing Binge — Financial firms, companies and governments raised about $6.61tn through broadly syndicated investment-grade and junk-bond sales, up 15% year-over-year to a record. Cloud-computing giants and data-center developers sold almost $368bn of debt, more than 6x the prior year, accounting for roughly a third of the increase in borrowing.
  • Is the AI Buildout Pushing Up Yields? — US saving-investment data show that non-financial corporations remain net savers, unlike the early-2000s information technology boom when they flipped to net borrowers and their capital spending accounted for the entire current account deficit. Government dissaving through the budget deficit, not the artificial intelligence buildout, is absorbing national resources.
  • The Meaning Of Higher Real Yields — US inflation-protected Treasury yields have broken above their post-2008 highs, indicating the real cost of capital is rising, while nominal 20- and 30-year Treasury yields remain within their three-year ranges. The article argues an artificial-intelligence-driven investment boom has raised demand for capital, and that corporate debt-to-equity ratios have fallen and interest coverage has surged since Covid.

AI Summary. US debt held by the public peaked at a record 106.1% of GDP after World War II and fell as a share of the economy through 1974, aided by rapid growth, deficits averaging just 0.4% of GDP, and more tax increases than cuts. The federal deficit was 6.2% of GDP in fiscal 2026.

Justin Fox Bloomberg
Date Posted:

Both growth and fiscal restraint gradually erased the WWII debt burden. Tax increases in 1982–93 helped reverse the large deficits of the 1980s, contributing to surpluses in 1998–2001. In line with this history, growth alone is unlikely to stabilize the current debt trajectory.

Can economic growth alone bring down the national debt?

Core argument: US debt held by the public peaked at a record 106.1% of GDP in fiscal 1946 and fell as a share of GDP through 1974, aided by rapid growth and a fiscal balance averaging -0.4% of GDP from 1947 to 1974.

The Economic Recovery Tax Act of 1981, also known as the Reagan tax cuts, is remembered variously as a budget-busting disaster and the driver of a new era of growth. There’s some truth to both portrayals, but what doesn’t come up nearly enough is that the 1981 tax cuts were followed by tax increases in 1982, 1983, 1984, 1986 (just barely; that year’s Tax Reform Act was supposed to be revenue-neutral), 1987, 1990 and 1993. Thanks in part to the end of the Cold War, Congress was also able to reduce spending growth in the 1990s, with federal outlays falling from 21.7% of GDP in 1991 to 17.7% in 2000 and 2001. The result: four straight years of budget surpluses, and a debt-to-GDP ratio that fell from 47.9% in 1993 to 31.5% in 2001.

Takeaways by Macro Roundup® AI

  1. US debt held by the public peaked at a record 106.1% of GDP in fiscal 1946 and fell as a share of GDP through 1974, aided by rapid growth and a fiscal balance averaging -0.4% of GDP from 1947 to 1974.
  2. The US fiscal balance in fiscal 2026 was -6.2% of GDP, compared with the -0.4% average that accompanied the postwar decline in the debt-to-GDP ratio.
  3. Federal spending tripled in inflation-adjusted terms from 1947 to 1974 and rose from 16.1% to 17.8% of GDP, with revenue rising almost as fast in a period with more tax increases than decreases, according to a 2013 Treasury Department accounting of major tax legislation.

Related Articles:

  • Projections of Deficits and Debt Under Two Scenarios With Higher Interest Rates — The Congressional Budget Office projects that if interest rates run 1.5 percentage points above its economic forecast, deficits would be $6tn larger over 2026–2036, reflecting a $4.9tn rise in net interest costs and $1.1tn in added debt-service costs. Debt held by the public would reach 133.1% of GDP in 2036, 12.9 percentage points above its baseline.
  • The Budget and Economic Outlook: 2026 to 2036 — The Congressional Budget Office projects the federal deficit will grow from $1.9tn (5.8% of GDP) to $3.1tn (6.7%) over a decade, above the 3.8% averaged over the past 50 years, with rising net interest costs driving much of the increase. Federal debt held by the public is projected to rise from 101% to 120% of GDP.
  • 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. Financial firms, companies and governments raised about $6.61tn through broadly syndicated investment-grade and junk-bond sales, up 15% year-over-year to a record. Cloud-computing giants and data-center developers sold almost $368bn of debt, more than 6x the prior year, accounting for roughly a third of the increase in borrowing.

Gerson Freitas Jr. and Ronan Martin Bloomberg
Date Posted:

Bloomberg data shows that global investment-grade and high-yield bond sales, counting only governments’ syndicated deals and not their auctions, have hit a record ~$6.61T year-to-date, up 15%. AI-related issuers account for about a third of the increase.

Is AI borrowing driving global bond sales to a record?

Core argument: Global broadly syndicated investment-grade and junk-bond sales reached about $6.61 trillion so far this year, up 15% from a year earlier and eclipsing 2025’s record with two months still to go, according to data compiled by Bloomberg.

Financial firms, companies and governments have raised a combined ~$6.61 trillion through broadly syndicated investment-grade and junk-bond sales so far this year, up 15% from the same period a year earlier and eclipsing 2025’s record with two months still to go, according to data compiled by Bloomberg. Cloud-computing giants and data-center developers alone sold almost $368 billion in debt, more than six times as much as a year ago, the data shows. The group has accounted for about a third of the increase in borrowing so far this year, outpacing every other non-financial sector and adding twice as much incremental debt as governments.

Takeaways by Macro Roundup® AI

  1. Global broadly syndicated investment-grade and junk-bond sales reached about $6.61 trillion so far this year, up 15% from a year earlier and eclipsing 2025’s record with two months still to go, according to data compiled by Bloomberg.
  2. Cloud-computing giants and data-center developers sold almost $368 billion in debt, more than six times the amount a year earlier, according to data compiled by Bloomberg.
  3. Cloud-computing and data-center borrowers accounted for about a third of this year’s increase in borrowing, outpacing every other non-financial sector and adding twice as much incremental debt as governments.

Related Articles:

  • Wall Street’s AI Debt Machine Is Starting to Choke on Supply — At least 18 data-center financings in the junk-bond and leveraged loan markets carry double-digit yields, and a $5bn syndicated loan for neocloud Volta Infrastructure required steeper discounts and higher interest, pushing its yield above 11%. The average yield on investment-grade technology bonds has risen to about 6%, roughly 1.4 percentage points higher than a year earlier.
  • The Post‑Pandemic Global R* — Using an econometric model extracting the common trend in real interest rates across advanced economies, the authors estimate that the global neutral real interest rate fell about 3.5 percentage points from 1990 to 2019, then rose about 1 percentage point after COVID, leaving global and U.S. estimates near 0.5%.
  • AI Set to be Largest CapEx Cycle Ever … and Soon Majority Externally Financed — Hyperscaler and data-center investment is tracking toward $1.5tn annually by 2030, which in real terms would exceed the 2005-06 housing boom, the 1990s fiber peak, and the 1882 railroad peak combined. External debt and equity are projected to fund close to 90% of the buildout, making it dependent on credit markets.

AI Summary. European Central Bank bond purchases replace private market-rate lending with official lending through the TARGET2 settlement system, leaving Germany with a large creditor balance and Italy and Spain with large debtor balances. The author argues this lets Italy, Spain and France borrow at below-market rates and run looser fiscal policy, while Germany bears the subsidy.

Robin Brooks Robin Brooks Substack
Date Posted:

Brooks argues Le Pen won’t be a “big” disruptor due to fiscal constraints but urges all eyes on Berlin, “The AfD is a different matter. All the stuff being done to cover up debt distress elsewhere is being paid for with German fiscal space. The AfD will shut that down. It’s the only populist movement in Europe that matters.”

How does the central bank's bond buying shift lending costs between countries?

Core argument: ECB quantitative easing replaces private market-rate lending to Italy with official Bundesbank lending to the Banca d’Italia at artificially low rates, producing Germany’s large TARGET2 creditor balance against debtor balances in Italy and Spain.

When the ECB buys Italian debt from a German bank as part of QE, that bond ends up on the Banca d’Italia balance sheet and - what would have been private lending at market interest rates - gets replaced by official lending by the Bundesbank to the Banca d’Italia at artificially low rates. This is why Germany (blue) has a massive creditor balance in the Euro zone, a system called TARGET2, while Italy (pink) and Spain (orange) have big debtor balances. Whenever the ECB does QE, or if it now activates its TPI program to stop contagion to Italy and Spain, Germany’s TARGET2 claim will grow. There’s two basic points to take away from all this. First, for Italy and Spain (and increasingly France), TARGET2 is a way to borrow at subsidized, below-market rates, which underwrites fiscal policy that is therefore looser than otherwise. What populist is going to say no to that? Second, for Germany, TARGET2 is a tax the AfD (and increasingly others) will be unwilling to pay. Why would you give subsidized loans to places running unsustainable pension systems with absurdly low retirement ages? No German political party - populists included - should agree to that.

Takeaways by Macro Roundup® AI

  1. ECB quantitative easing replaces private market-rate lending to Italy with official Bundesbank lending to the Banca d’Italia at artificially low rates, producing Germany’s large TARGET2 creditor balance against debtor balances in Italy and Spain.
  2. TARGET2 lets Italy, Spain, and increasingly France borrow at subsidized below-market rates, underwriting fiscal policy looser than it would otherwise be, which the author argues no populist party would refuse.
  3. Germany’s TARGET2 claim grows whenever the ECB conducts QE or activates its TPI program to stop contagion to Italy and Spain, a cost the author argues the AfD and other German parties will be unwilling to pay.

Related Articles:

  • What a Global Debt Crisis Looks Like — An analysis indexes 10-year government bond yields across countries from the start of the year, cumulating their rise in basis points, and compares each against an equal-weighted average of daily changes in all those yields to show which countries are performing better or worse than average.
  • Global Debt Report 2026 — Gross central government borrowing across OECD countries rose 7% to a record $17tn, about 23% of GDP, and is projected to reach roughly $18tn, or 24% of GDP. The United States and Japan account for close to 80% of the area's refinancing requirements, with the US share rising from 57% to 70%.
  • Are Government Bonds Safe in Times of War and Pandemic? — Government bonds severely underperform in wartime, in absolute terms and relative to equities, housing, and economic growth, unlike in financial crises when bonds tend to outperform stocks. The U.S. and U.K. reduced war-driven debt-to-GDP ratios without explicit default, using surprise inflation and financial repression that shifted fiscal burdens onto bondholders.

AI Summary. A National Bureau of Economic Research paper projects U.S. medical spending, 18% of GDP in 2024, reaching 19%–26% of GDP by 2040, with federal medical spending consuming 45%–61% of federal revenue excluding Social Security contributions. The author argues only the low-spending path is consistent with current tax levels and other commitments.

David Cutler National Bureau of Economic Research
Date Posted:
Is Database:
Database

From 1970 to 2010, growth in US medical spending outpaced GDP growth by ~2.4pp annually. From 2010 to 2024, that growth differential fell to just 0.3pp. If it persists, medical spending reaches only 19% of GDP by 2040; if excess spending growth reverts to 2.4pp, it reaches 26%.

How much federal revenue will medical spending consume by 2040?

Core argument: David Cutler projects U.S. medical spending reaching 26%, 22.3%, or 19% of GDP by 2040 under high, benchmark, and low scenarios, versus 18% in 2024 and 6.9% in 1970.

Figure 1 shows that in 1970, medical care was 6.9% of GDP. In 2024, it was 18%. From 1970 through around 2010; mean medical spending growth exceeded GDP growth by 2.4 pp annually. Since 2010, the growth of medical spending has exceeded the growth of GDP by only 0.3 pp annually. There is no comparable time period with anything like the sustained slowdown in spending growth since 2010. Patient cost-sharing has increased enormously [indirectly reducing overall expenditure via incentives] as shown in Figure 5. An additional role [was] played by the diffusion of cost-reducing technologies. Because they are often less invasive, second-round therapies typically have lower unit prices. [mechanism in Fgure 6]. Finally, there [are] fewer expensive new innovations than in the past. [However], recent data show an uptick in spending growth in 2024, which continued in 2025. Some of this is a result of new technologies— prime examples are GLP-1 medications and new drugs for cancer that are taken on an ongoing basis. To consider a scenario with [a reversion to] more rapid spending increases, I assume that the growth of medical spending above GDP growth after 2024 returns to the average rate realized between 1970 and 2010. This scenario is shown as the High-spending scenario in figure 1, in which medical care in 2040 rises to 26% of GDP.

Takeaways by Macro Roundup® AI

  1. David Cutler projects U.S. medical spending reaching 26%, 22.3%, or 19% of GDP by 2040 under high, benchmark, and low scenarios, versus 18% in 2024 and 6.9% in 1970.
  2. Federal medical spending consumed 45% of “discretionary revenue”—total federal revenue less Social Security contributions—in 2024, up from 13% in 1987, and Cutler projects 61% by 2040 under the high-spending scenario.
  3. Cutler states that only the low-spending scenario is consistent with current tax levels and non-medical spending commitments, attributing the post-2010 slowdown to high-deductible plans, prior authorization, cost-reducing technology, and reduced administrative friction.

Related Articles:

AI Summary. An analysis indexes 10-year government bond yields across countries from the start of the year, cumulating their rise in basis points, and compares each against an equal-weighted average of daily changes in all those yields to show which countries are performing better or worse than average.

Robin Brooks Robin Brooks Substack
Date Posted:

Brooks argues a global debt crisis is underway, pointing to contagion from France driving rising yields in Italy and Spain, and a flight to safety driving down yields in the US, while low-debt safe havens like Germany, Sweden and Switzerland extend their outperformance.

Are government bond yields rising faster in some countries than others?

Core argument: The charts index 10-year government bond yields to 100 on January 1, 2026, and cumulate each country’s rise in basis points, so a reading of 200 means a yield up 100 basis points since the start of 2026.

The blue lines in the charts show how 10-year government bond yields have evolved so far this year. I’ve indexed them to 100 on January 1, 2026, and cumulate the rise in basis points from that day to yesterday. If you’re at 200 as of yesterday, that means your ten year yield is up 100 basis points since the start of 2026. The black line in each chart is the same and is the equal-weighted average of daily changes in all of these yields. I cumulate this up to show who’s better or who’s worse than average.

Takeaways by Macro Roundup® AI

  1. The charts index 10-year government bond yields to 100 on January 1, 2026, and cumulate each country’s rise in basis points, so a reading of 200 means a yield up 100 basis points since the start of 2026.
  2. A black line identical across the charts cumulates the equal-weighted average of daily changes in all the yields shown, serving as the benchmark for which countries are better or worse than average.

Related Articles:

  • What’s the Matter With France? — France's official retirement age for full benefits was 62 in 2023, versus 67 in Denmark and the US, and its average actual retirement age was the lowest in Western Europe while life expectancy at 65 reaches about 87, two years longer than in the US.
  • Global Debt Report 2026 — Gross central government borrowing across OECD countries rose 7% to a record $17tn, about 23% of GDP, and is projected to reach roughly $18tn, or 24% of GDP. The United States and Japan account for close to 80% of the area's refinancing requirements, with the US share rising from 57% to 70%.
  • Are Government Bonds Safe in Times of War and Pandemic? — Government bonds severely underperform in wartime, in absolute terms and relative to equities, housing, and economic growth, unlike in financial crises when bonds tend to outperform stocks. The U.S. and U.K. reduced war-driven debt-to-GDP ratios without explicit default, using surprise inflation and financial repression that shifted fiscal burdens onto bondholders.

AI Summary. French 10-year government bond yields reached 5.0%, a level last recorded in 2002, after climbing from 3.2% in late February, with the gap over German yields widening to nearly 1.6 percentage points. Stress extended to other heavily indebted Eurozone borrowers, with Belgium's spread over Germany returning to 1.0 percentage point.

Ian Smith, Leila Abboud and Laura Dubois Financial Times
Date Posted:

French 10-year yields hit 5%, their highest level since 2002, having more than doubled since February. The spread between French and German 10-year borrowing costs rose to 160bp, the highest level since the Eurozone debt crisis.

Are heavily indebted Eurozone borrowers facing sharply rising bond yields?

Core argument: France’s 10-year bond yield reached 5.0% for the first time since 2002 before settling at 4.97%, up from 3.2% in late February, a move the article attributes to the Iran war stoking inflation and pressuring heavily indebted economies.

France’s long-term borrowing costs have hit 5%, a benchmark last reached in 2002, as investors grow increasingly concerned about the stability of the country’s politics and the state of its public finances. The closely watched gap, or spread, between French 10-year borrowing costs and Germany’s rose to almost 1.6 percentage points on Wednesday, matching the intraday high reached in volatile trading earlier this month. Such a level had previously not been seen since the Eurozone debt crisis more than a decade ago.

Takeaways by Macro Roundup® AI

  1. France’s 10-year bond yield reached 5.0% for the first time since 2002 before settling at 4.97%, up from 3.2% in late February, a move the article attributes to the Iran war stoking inflation and pressuring heavily indebted economies.
  2. The France-Germany 10-year spread widened to nearly 1.6 percentage points, a level not seen since the Eurozone debt crisis, while Belgium’s spread with Germany returned to 1.0 percentage point for the first time since 2013 on a debt load of 108% of GDP.
  3. Jeff Mueller of Morgan Stanley Investment Management said political willingness for fiscal consolidation ahead of France’s election is “very, very low,” and Moody’s is scheduled to issue a ratings decision Friday on France’s Aa3 rating, which carries a negative outlook.

Related Articles:

  • What’s the Matter With France? — France's official retirement age for full benefits was 62 in 2023, versus 67 in Denmark and the US, and its average actual retirement age was the lowest in Western Europe while life expectancy at 65 reaches about 87, two years longer than in the US.
  • The French State Crowded Out By Government Spending — In France, social protection and health rose from 53.1% to 58.7% of total government spending, and are projected to reach 59.7%, while education, defense and public order fell from 15.2% to 13.7% and transport from 5.3% to 3.8%. Public pension spending rose from 12.7% of GDP to 14.8%.
  • Le Boomer Spread — The gap between French and German 10-year government bond yields exceeded 140 basis points, up from 40–50 basis points, which the author attributes to political choices favoring pensioners over bondholders, including a suspended pension reform leaving the minimum retirement age near 62. French over-65s hold higher average incomes than working-age people.