Edward Conard

Top Ten New York Times Bestselling Author

  • “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 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 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 full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…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
  • “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 fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…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 very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

AI Summary. U.S. diesel prices have reached a record $6.06 per gallon, surpassing the previous record of $5.82 set after Russia's invasion of Ukraine. Diesel's central role in freight, agriculture, and food transport is feeding producer price inflation at a critical harvest season, squeezing farm margins on fuel and fertilizer costs.

Stephanie Findlay and Jamie Smyth Financial Times
Date Posted:

US retail diesel prices have climbed to an all-time nominal high of $6.06 per gallon. The previous nominal high in January 2022 would be $6.54 in current dollars.

Does diesel supply shock threaten farm profitability during harvest season?

Core argument: U.S. diesel prices hit a record $6.06/gallon, surpassing the prior peak of $5.82 set after Russia’s 2022 Ukraine invasion, as an Iran-driven supply shock tightens global fuel markets.

The diesel pump price has surged this year and rose to $6.06 on Friday, motorist group AAA said, above the previous record high of $5.82 in 2022 following Russia’s full-scale invasion of Ukraine. Diesel’s critical role in the transport supply chain is also feeding into surging producer prices, which can stoke inflationary pressures at a time when Americans increasingly feel squeezed by affordability. The jump in diesel comes ahead of the autumn high season, where the fuel is used to power agricultural equipment to harvest and transport crops. Grain farmers in America’s Corn Belt have said they are facing a crisis with rising fuel and fertiliser prices eating into profits.

Takeaways by Macro Roundup® AI

  1. U.S. diesel prices hit a record $6.06/gallon, surpassing the prior peak of $5.82 set after Russia’s 2022 Ukraine invasion, as an Iran-driven supply shock tightens global fuel markets.
  2. Diesel’s central role in freight and logistics transmits the price surge directly into producer prices, amplifying inflationary pressure on an already cost-squeezed American consumer.
  3. The price spike arrives ahead of the autumn harvest season, compounding input-cost pressure on Corn Belt grain farmers already facing a profit squeeze from elevated fuel and fertilizer costs.

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  • US Diesel Prices Soar To Record High — U.S. diesel prices have reached a record $5.85 per gallon, surpassing the previous record set after Russia's invasion of Ukraine. Prices face further upward pressure from harvest season demand, early winter heating needs, and planned refinery maintenance, with transportation and agriculture accounting for the majority of diesel consumption.
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AI Summary. Persistent inflation has raised the implied probability of a Federal Reserve rate increase to ~90%, up from ~70%. Rising oil prices above $99/barrel add further upward pressure on inflation, complicating the rate decision.

Justin Lahart and Matt Grossman Wall Street Journal
Date Posted:

The implied likelihood of a September rate hike increased from 70% to 85% because the rate of inflation didn’t decline in August, headline and core CPI are 3.4% and 2.4% y/y, respectively.

Does persistent inflation force the Fed to raise rates sooner?

Core argument: A firm August inflation reading lifted Fed rate-hike odds to ~90% from ~70%, with three July dissenters already on record favoring tighter policy and others signaling they would join them.

The August inflation reading has big implications for a Fed that has been sharply divided over whether it should raise rates at its policy-setting meeting next week. At the Fed’s last meeting, in July, three officials dissented in favor of raising rates, and others have since said they could join them if inflation doesn’t improve. Interest-rate futures imply there is now about a 85% chance that the central bank will increase its target range on overnight rates by a quarter point. Prior to the report, the chances were about 70%. Further complicating the Fed decision, oil prices have surged this month, with crude lately fetching over $99 a barrel in Friday New York trading, versus $85.76 at the end of August.

Takeaways by Macro Roundup® AI

  1. A firm August inflation reading lifted Fed rate-hike odds to ~90% from ~70%, with three July dissenters already on record favoring tighter policy and others signaling they would join them.
  2. Crude oil’s surge past $99/barrel from $85.76 at end-August adds a fresh inflationary impulse that complicates the Fed’s rate decision by threatening to entrench elevated price pressures.

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AI Summary. Firms' wage-setting norms are sticky, rising only from 2.7% to 3.5% even as inflation peaked near 7%, causing real wages for workers who stayed in their jobs to fall systematically. By the time inflation subsided, the median firm's wage rule had converged to ~3%, roughly matching inflation.

Erik Hurst, Christina Patterson, Nela Richardson, and Ye Liv Wang University of Chicago
Date Posted:
Is Database:
Database

ADP microdata from 2016–25 suggest firms set wages according to “wage norms” ~ invariant to inflation. The 2020–21 inflation surge mechanically reduced real wages. By the end of 2025, 34% of incumbent workers’ real wages were lower than in 2020.

Do sticky wage norms systematically reduce real wages during inflation spikes?

Core argument: Firm-level modal wage rules peaked at 3.5% in 2022–2023 against roughly 7% inflation, meaning nominal rigidity systematically eroded real wages for job stayers throughout the inflationary episode.

Roughly 42% of all nominal wage increases below 6% were within 0.01 percentage points of a whole or half number [Figure 6]. Figure 9 plots the employment-weighted average modal wage change across firms (solid line) alongside inflation rate (dashed line) from 2016 through 2025. In the pre-pandemic period, firm-level wage rules were relatively stable at a median of 2.7%, modestly above the rate of inflation. Beginning in 2021, inflation rose sharply, peaking at approximately seven percent in 2022. The average modal wage change also rose, reaching a peak of 3.5% in 2022 and 2023. By 2025, the median firm had a wage rule granting increases of three percent, roughly in line with inflation. The stickiness of firms’ wage rules in the face of inflationary pressure contributed to the systematic fall in real wages for job stayers. Evidence from Belgium [which has strong wage indexation], suggests that declining real wages, rather than inflation itself, helps explain the persistence of depressed consumer sentiment during the 2021–2024 period.

Takeaways by Macro Roundup® AI

  1. Firm-level modal wage rules peaked at 3.5% in 2022–2023 against roughly 7% inflation, meaning nominal rigidity systematically eroded real wages for job stayers throughout the inflationary episode.
  2. The median firm’s modal wage increase converged to 3% by 2025—matching inflation rather than exceeding it—marking a reversal from the pre-pandemic norm of 2.7% modestly above price growth.

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AI Summary. Japan's era as a reliable source of cheap borrowing is ending as interest rates rise, unwinding decades of low-rate financial assumptions.

John Authers Bloomberg
Date Posted:

Authers pictures Japan exiting its ultra-low rate regime that helped drive the real effective yen to ~ half its 1990 level. Higher yields should curb yen carry, raise demand for Japanese assets, and force the “world …to do without Japanese funding.”

Is Japan's cheap money era finally coming to an end?

Core argument: Japan’s decades-long role as the world’s low-cost funding source is unwinding as rising interest rates erode the carry-trade economics that made yen borrowing the default strategy across global markets.

For decades, finance has treated Japan as the exception to all rules. While the rest of the world surged and collapsed, Japan trudged on with minimal interest rates and sluggish growth — a safe place to borrow money cheap, through any number of elaborate trades. Last week’s news that Norway’s Norges Fund, one of the biggest sovereign wealth pools, was reallocating its fixed income portfolio in a way that likely shifts from Treasuries to Japanese bonds prompted speculation that more international money would move back to Tokyo and its newly competitive yields. Overnight rates are now forecast to go up by a full percentage point over the next 12 months, to 1.9%, following a shift in perception of the economy.

Takeaways by Macro Roundup® AI

  1. Japan’s decades-long role as the world’s low-cost funding source is unwinding as rising interest rates erode the carry-trade economics that made yen borrowing the default strategy across global markets.
  2. The shift in Japan’s monetary regime forces investors to reprice risk across asset classes that were structured around the assumption of perpetually near-zero Japanese rates.

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AI Summary. U.S. diesel prices have reached a record $5.85 per gallon, surpassing the previous record set after Russia's invasion of Ukraine. Prices face further upward pressure from harvest season demand, early winter heating needs, and planned refinery maintenance, with transportation and agriculture accounting for the majority of diesel consumption.

Malcolm Moore Financial Times
Date Posted:

US retail diesel prices have climbed to an all-time nominal high of $5.85 per gallon. The previous nominal high in January 2022 would be $6.54 in current dollars.

Are record diesel prices threatening transportation and agriculture costs?

Core argument: With roughly 75% of U.S. diesel consumed by transportation and trucking, the record price feeds directly into goods costs across virtually every supply chain in the economy.

[Diesel] pump prices hit an average of $5.85 a gallon for the first time ever on Friday, according to the American Automobile Association, eclipsing the previous record level that was reached in the aftermath of Russia’s full-scale invasion of Ukraine in 2022. From October, diesel is likely to be squeezed further by the harvest season, early winter heating demand and planned maintenance by US refineries. About three-quarters of diesel in the US is used for transportation and trucking goods, and the fuel is also essential for agriculture, powering much of the farm equipment used in the upcoming harvest season.

Takeaways by Macro Roundup® AI

    1. With roughly 75% of U.S. diesel consumed by transportation and trucking, the record price feeds directly into goods costs across virtually every supply chain in the economy.
    2. Harvest-season demand, early winter heating requirements, and planned refinery maintenance converging in October point to further diesel price increases beyond the record level already reached.

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AI Summary. Wholesale diesel prices jumped ~7% to $4.71/gallon following U.S. air strikes on Iran, threatening higher costs for American industry, agriculture, and consumers. The White House convened major refiners — including Chevron, Valero, and Marathon Petroleum — to pressure the industry to contain fuel price inflation.

Stephanie Findlay, Claire Jones and Jamie Smyth Financial Times
Date Posted:

Wholesale diesel for sale in New York harbor has risen ~7% to $4.71, largely reflecting a record-high “crack” spread, the premium of diesel over crude. US refinery utilisation had been at or above 95% for 12 consecutive weeks, the longest streak since 2000.

Does refinery pressure work when geopolitical shocks drive diesel prices up?

Core argument: Wholesale diesel at New York harbour surged nearly 7% to $4.71/gallon following U.S. air strikes on Iran, with pass-through to consumer fuel costs arriving months before congressional elections—prompting the White House to summon major refiners including Marathon Petroleum, Chevron, and Valero.

Wholesale diesel for sale in New York harbour jumped almost 7% to $4.71 a gallon after the US president ordered extensive air strikes on Iran. Diesel powers American industry and agriculture and the wholesale contract’s price surge will translate into higher consumer costs just months ahead of congressional elections. Trump on Tuesday held talks with industry in the White House to press them to beat back the fuel price inflation. Marathon Petroleum, Phillips 66, Chevron, Delek US Holdings, PBF Energy and Valero Energy were among the companies summoned to Washington, according to people with knowledge of the event.

Takeaways by Macro Roundup® AI

  1. Wholesale diesel at New York harbour surged nearly 7% to $4.71/gallon following U.S. air strikes on Iran, with pass-through to consumer fuel costs arriving months before congressional elections—prompting the White House to summon major refiners including Marathon Petroleum, Chevron, and Valero.

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AI Summary. Higher interest rates remain low relative to nominal income and spending growth of ~7% annually, making current rate levels benign rather than restrictive. Elevated rates help reallocate spending away from consumption and housing toward productive investment, or attract foreign capital to fund that shift.

Matt Klein The Overshoot
Date Posted:

Klein argues that, far from indicating a panic-driven bond sell-off, higher bond yields are a necessary concomitant of persistent 7% growth in nominal income, which in turn reflects continued high inflation and robust real spending.

Are higher bond yields actually constraining economic growth?

Core argument: U.S. nominal incomes and spending are rising ~7% annually, making current interest rates benign relative to growth and inflation expectations rather than genuinely restrictive.

Rates are still low relative to reasonable expectations of inflation and growth. Incomes and spending are currently rising about 7% a year in dollar terms. But unless there are loads of unused workers, machines, and raw materials just lying around, the only way to spend relatively more on essential machinery, equipment, and nonresidential construction is if someone spends relatively less on consumer goods, services, and housing. Higher interest rates can help to the extent that they can discourage those lower-priority activities and/or encourage people in the rest of the world to accept promises of goods and services in the future in exchange for actual goods and services today. In this context, the current level of interest rates looks downright benign.

Takeaways by Macro Roundup® AI

  1. U.S. nominal incomes and spending are rising ~7% annually, making current interest rates benign relative to growth and inflation expectations rather than genuinely restrictive.
  2. Reallocating spending toward machinery, equipment, and nonresidential construction requires crowding out consumer goods, services, and housing — a structural shift higher interest rates actively facilitate.
  3. Foreign capital inflows — overseas actors exchanging current goods for future claims — provide an additional channel to fund domestic investment beyond rate-driven suppression of domestic demand.

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AI Summary. Japan's 10-year government bond yield has reached 3% for the first time in roughly three decades, doubling within a year as the country's debt market exits its near-zero-rate era. The rapid rise is reverberating through Japan's economy and global financial markets.

John Cheng Bloomberg
Date Posted:

Japan’s 10-year government bond yield rose 6bp to hit 3% for the first time since 1996.

Is Japan's debt crisis finally forcing an end to ultra-low rates?

Core argument: Japan’s 10-year government bond yield reached 3% for the first time since 1996, doubling within a single year and marking a decisive break from the near-zero rate regime that defined Japanese monetary policy for decades.

Japan’s 10-year government bond yield touched 3% for the first time this century, an important milestone for a debt market that is returning to normality after benchmark borrowing costs languished near zero for years. The yield rose as much as six basis points to 3% on Tuesday, the highest since 1996. It was half this level around this time last year, underscoring the speed of the change, which is reverberating through Japan’s economy and global financial markets.

Takeaways by Macro Roundup® AI

  1. Japan’s 10-year government bond yield reached 3% for the first time since 1996, doubling within a single year and marking a decisive break from the near-zero rate regime that defined Japanese monetary policy for decades.
  2. Japan’s 10-year yield has risen approximately 150 basis points in roughly 12 months, a normalization pace rapid enough to transmit material stress across Japan’s domestic economy and global financial markets.

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