“…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
“…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
“Unintended Consequences 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
“…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
“Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
“…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
“Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
“Unintended Consequences 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
“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
“Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
“…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
Research and data on political institutions, elections, public opinion, polarization, governance, and the economic consequences of policy choices. Coverage emphasizes evidence that helps separate durable trends from daily political noise.
AI Summary.US consumer prices rose 3.7% year over year in September, up from 3.4% in August and above economists' 3.6% forecast, with core prices excluding food and energy up 2.6%. Prices rose faster than average hourly earnings, which increased 3%, meaning many Americans' real incomes are falling.
Konrad PutzierWall Street Journal
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Inflation accelerated in September, rising to 3.7% annualized from August’s 3.4%. Real average hourly earnings fell .7% year over year.
Is inflation accelerating faster than wages, cutting real incomes?
Core argument: U.S. consumer prices rose 3.7% in September from a year earlier, the Labor Department said, up from August’s 3.4% and above the 3.6% expected by economists surveyed by The Wall Street Journal.
Consumer prices were up 3.7% in September from a year earlier, the Labor Department said Wednesday, hotter than August’s gain of 3.4%. That was above the 3.6% rise expected by economists surveyed by The Wall Street Journal. Core prices excluding food and energy rose 2.6%, above forecasts for a 2.5% increase. Month over month, core prices rose by 0.3%, surprising economists who had expected a 0.2% increase. High prices have been a political flashpoint for Americans, who have grown fed up with five years of inflation. Prices rose much faster in September than average hourly earnings, which increased 3% from a year earlier. That means many Americans are seeing their real incomes fall.
Takeaways by Macro Roundup® AI
U.S. consumer prices rose 3.7% in September from a year earlier, the Labor Department said, up from August’s 3.4% and above the 3.6% expected by economists surveyed by The Wall Street Journal.
Core prices excluding food and energy rose 2.6% year over year in September, above forecasts of 2.5%, and 0.3% month over month against expectations of 0.2%.
September prices rose much faster than average hourly earnings, which increased 3% from a year earlier, meaning many Americans are seeing real incomes fall.
Related Articles:
Do Voters Punish Inflation or Pay Cuts? Inflation and Real Wages in U.S. Elections— An analysis of U.S. counties estimates that where wages grew faster than prices, voters supported the incumbent party more, while counties with larger real wage losses than average shifted more toward the opposition. A one-standard-deviation larger real wage loss is associated with shifts of roughly 0.10 and 0.19 percentage points in vote share and margin.
Sticky Wage Norms and the Real Wage Cost of Unexpected Inflation— Firms set nominal wage increases by round-number rules—about 42% of increases below 6% fell within 0.01 percentage points of a whole or half number—and these rules rose only from about 2.7% to 3.5% as inflation peaked near 7%, contributing to falling real wages for job stayers.
The Cost of Money is Part of the Cost of Living: New Evidence on the Consumer Sentiment Anomaly— Variation in the University of Michigan consumer sentiment index that inflation and unemployment cannot explain is strongly correlated with growth in consumer borrowing costs, such as mortgage and car loan rates. The authors estimate that including interest payments and homeownership costs in the consumer price index would raise measured inflation from 3% to 9%.
AI Summary.In Spain, immigrant households work less, earn less, pay less in taxes, and are more likely to use social assistance than native households at every level of education. Non-EU-origin households are almost three times as likely to receive social assistance, with 6% of highly educated non-EU households receiving it versus 4.4% of all native households.
Nicholas EberstadtAmerican Enterprise Institute
Date Posted:
Eberstadt argues immigration at scale may not postpone the crisis of the European welfare state. In Spain, non-EU immigrant households are ~3x more likely to receive social assistance than natives at every education level, and draw larger amounts when they do.
Do immigrant households in Spain use more social assistance than natives?
Core argument: At every educational level, non-EU-origin households in Spain are almost three times as likely as native Spanish households to receive government social assistance, and average social assistance follows the same pattern.
Spain’s immigrants work less, earn less, pay less in taxes, and use more social assistance benefits. Maybe the nostrum that mass immigration is helping postpone the crisis of the European welfare state needs to be examined more carefully. Immigrant households are much more likely to utilize social program benefits than Spanish nationals, regardless of educational attainment. At every educational level, non-EU-origin households are almost three times as likely to be taking government social assistance as native Spaniards; so too average social assistance. Hardly less noteworthy: The incidence of social assistance, and average benefits per household, for high-education non-EU households (6%) is higher than for native Spanish households of all educational backgrounds (4.4%) even though most Spanish natives lack higher education.
Takeaways by Macro Roundup® AI
At every educational level, non-EU-origin households in Spain are almost three times as likely as native Spanish households to receive government social assistance, and average social assistance follows the same pattern.
High-education non-EU households in Spain take social assistance at a 6% rate, above the 4.4% rate for native Spanish households of all educational backgrounds, even though most Spanish natives lack higher education.
Spain’s immigrants work less, earn less, pay less in taxes, and use more social assistance benefits, which invites closer examination of the claim that mass immigration is helping postpone the crisis of the European welfare state.
Related Articles:
Depopulation Globally and in the Asia-Pacific: The Shape of Things to Come— Population aging and fertility below replacement levels are connected to a revolution in family structure in which families grow smaller, fewer people marry, and voluntary childlessness becomes common across countries. As a result, families become less able to bear the demands that may be placed on them.
Quo Vadis, Hispania? Part One— Official Spanish data show births exceeded deaths by barely 200,000 over the first quarter of the 21st century—less than 0.5% of Spain's population at the start—while immigration accounted for 98% of the country's population growth, the largest increase of any European Union member. Deaths have exceeded births since 2015.
Quo Vadis Hispania? Part Two— Spain's first- and second-generation immigrant population totals at least 12mm—nearly 9.5mm immigrants and over 2.5mm descendants—out of a population of roughly 49mm. The authors estimate over a third of Spain's under-40 population and nearly two-fifths of children under 5 are immigrants or the children of immigrants.
AI Summary.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.
Paul KrugmanKrugman Wonks Out
Date Posted:
The sharp rise in the price of credit default swaps on French government debt implies a 1.2% of default over the next 5 years, which Krugman thinks “is too low” and cautions “France may have crossed the line from too big to fail to too big to save.”
Does France retire earlier than other wealthy countries despite longer lifespans?
Core argument: France’s official retirement age for full benefits was 62 in 2023, compared with 67 in both Denmark and the United States, and its average actual retirement age was the lowest in Western Europe.
France does stand out, even among fiscally troubled nations, in one main way: its persistent inability to get realistic about retirement. The official French retirement age — the age at which workers can collect full benefits — was only 62 in 2023. By comparison, the retirement age in Denmark was 67 (which is also the age in the U.S.). The average actual age of retirement, which is always lower than the statutory age because some people choose to accept reduced benefits, was lower in France than anywhere else in Western Europe. You don’t have to be a conservative to see France’s early retirement as unsustainable, especially given that French life expectancy at age 65 is about 87 years of age, 2 years longer than in the US. France’s reliance on the euro means that it’s all too easy to see how this loss of confidence could turn into an ugly crisis.
Takeaways by Macro Roundup® AI
France’s official retirement age for full benefits was 62 in 2023, compared with 67 in both Denmark and the United States, and its average actual retirement age was the lowest in Western Europe.
French life expectancy at age 65 is about 87, two years longer than in the United States, a gap that strengthens the case that France’s early retirement is unsustainable.
France’s reliance on the euro makes it easy to see how a loss of confidence could turn into an ugly crisis.
Related Articles:
France’s Marine Le Pen Pledges To Rein In Public Spending— France's National Rally party, historically a champion of big-state spending, has pledged to clean up the country's degraded public finances alongside tax cuts it describes as a fully financed "competitiveness shock." The party also proposed lowering the retirement age from 62 to 60 for those who start working young, estimating €15bn–€20bn in pension savings from correcting "unjust or inefficient" measures.
France is the Biggest Loser in the Global Rates Reset— French government borrowing costs now exceed the country's nominal income growth by about 2 percentage points, the most unfavorable gap between borrowing costs and growth in the rich world. By contrast, Spanish and Greek bond yields remain about 2 percentage points below their income growth rates.
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.
AI Summary.US consumer prices have risen almost 29% over the past six years, about 3x the pace of the prior six years, and on average prices have risen faster than wages over that period.
Owen Tucker-SmithWall Street Journal
Date Posted:
Is Database:
Database
Inflation outpaced real year-over-year average hourly earnings growth in the 5 months through August.
Have prices risen faster than wages over the past six years?
Core argument: U.S. consumer prices, as measured by the consumer-price index, have risen almost 29% over the past six years, about three times the pace of the preceding six years.
Overall prices, as measured by the consumer-price index, have risen almost 29% in the past six years. During the six years before that, prices crept up at a third of that pace. Over the past six years, prices have, on average, risen faster than wages. The trend has been pronounced recently: In both July and August, inflation outpaced average hourly wage growth.
Takeaways by Macro Roundup® AI
U.S. consumer prices, as measured by the consumer-price index, have risen almost 29% over the past six years, about three times the pace of the preceding six years.
Prices have on average risen faster than wages over the past six years, with inflation outpacing average hourly wage growth in both July and August.
Related Articles:
Sticky Wage Norms and the Real Wage Cost of Unexpected Inflation— Firms set nominal wage increases by round-number rules—about 42% of increases below 6% fell within 0.01 percentage points of a whole or half number—and these rules rose only from about 2.7% to 3.5% as inflation peaked near 7%, contributing to falling real wages for job stayers.
Do Voters Punish Inflation or Pay Cuts? Inflation and Real Wages in U.S. Elections— An analysis of U.S. counties estimates that where wages grew faster than prices, voters supported the incumbent party more, while counties with larger real wage losses than average shifted more toward the opposition. A one-standard-deviation larger real wage loss is associated with shifts of roughly 0.10 and 0.19 percentage points in vote share and margin.
The Cost of Money is Part of the Cost of Living: New Evidence on the Consumer Sentiment Anomaly— Variation in the University of Michigan consumer sentiment index that inflation and unemployment cannot explain is strongly correlated with growth in consumer borrowing costs, such as mortgage and car loan rates. The authors estimate that including interest payments and homeownership costs in the consumer price index would raise measured inflation from 3% to 9%.
AI Summary.Analysis of English genealogical records and marriage registries estimates that the underlying correlation in social status across generations is close to 0.8, with status correlation detectable even among relatives nine generations apart. The authors find this persistence unchanged over four centuries, concluding that policies aimed at raising social mobility have not altered it.
Gregory ClarkSouthern Denmark University
Date Posted:
Is Database:
Database
Clark estimates that the intergenerational correlation of relative socioeconomic status in England remained ~0.8 btw 1600 and 2026. The pattern of correlations across near and distant relatives fits a model of genetic inheritance with strong assortative mating.
How persistent is social status across generations in England?
Core argument: Drawing on a genealogical database of 436,185 English people spanning 1600–2026 and records of about 1.7 million English marriages from 1837–2022, the authors estimate the underlying intergenerational correlation in social status at close to 0.8, higher than conventional measures indicate.
A large genealogical database of [436,185] English people 1600-2026, as well as detailed records of [~1.7mn marriages] in England 1837-2022, [reveals] social status is much more persistent across generations than conventionally measured. The [inferred] underlying correlation in status across generations is close to 0.8, implying that even relatives as distant as nine generations apart still show correlation in social status. [Ratios of correlations among siblings, parents, aunts/uncles and cousins cancel common measurement-error attenuation: raw parent-child correlations average .39, versus .77 for inferred underlying persistence. Independently, surnames selected as elite by 1858-87 wealth yield a per-generation status persistent coefficient of b=.82 for occupational status and .80 for house value]. The strength of status persistence remains unchanged 1600-2026.
Takeaways by Macro Roundup® AI
Drawing on a genealogical database of 436,185 English people spanning 1600–2026 and records of about 1.7 million English marriages from 1837–2022, the authors estimate the underlying intergenerational correlation in social status at close to 0.8, higher than conventional measures indicate.
The estimated correlation in social status implies that relatives as distant as nine generations apart still show correlated status, with the strength of persistence unchanged from 1600 to 2026.
The authors argue that the Industrial Revolution, the Demographic Transition, the emancipation of women, universal voting, and the modern welfare state have not increased English social mobility rates, and that resources poured into raising mobility have achieved nothing.
Related Articles:
The Inheritance Of Social Status: England, 1600 to 2022— Using a genealogical database of 422,374 English people with rarer surnames, the authors find social status persists strongly even among distant relatives, with status correlations declining by a constant factor of 0.79 per step in the lineage across all status measures and eras studied. The authors argue this constancy suggests social interventions have modest effects.
The Myth of Nordic Mobility: Social Mobility Rates in Modern Denmark and Sweden— Correcting for measurement error by using relative rather than absolute correlations among relatives, the authors estimate that educational intergenerational mobility in Denmark and Sweden is much lower than conventionally measured, with parent-child and sibling correlations much higher. They argue Nordic education spending and income compression have at best modestly reduced families' role in children's educational outcomes.
For Whom the Bell Curve Tolls: A Lineage of 400,000 English Individuals 1750-2020 Shows Genetics Determines Most Social Outcomes— A study of 402,000 English individuals across 1750–2020 estimates an intergenerational occupational status correlation of 0.88 and a genetic correlation between spouses of 0.76, which the authors interpret as a strong genetic basis for the persistence of social status. The authors argue that highly assortative mating around status genetics limits what policy can do to raise social mobility.
AI Summary.France's National Rally party, historically a champion of big-state spending, has pledged to clean up the country's degraded public finances alongside tax cuts it describes as a fully financed "competitiveness shock." The party also proposed lowering the retirement age from 62 to 60 for those who start working young, estimating €15bn–€20bn in pension savings from correcting "unjust or inefficient" measures.
Leila Abboud, Sarah White and Ian SmithFinancial Times
Date Posted:
Marine Le Pen has proposed a referendum that would cap national debt at 60% of GDP and reduce the public deficit by .5pp annually to reach “close to a balanced budget.” At the same time she has also proposed to reduce the retirement age from 62 to 60.
Is a populist party shifting toward fiscal restraint and tax cuts?
Core argument: Marine Le Pen’s Rassemblement National estimates it could save €15bn–€20bn on pensions spending by correcting what it calls “unjust or inefficient measures” in the current system, helping fund its plans.
Long a champion of big-state spending to protect the working class, Le Pen in recent months has swung behind the idea that France needs a major clean-up of its degraded public finances. Her party, Rassemblement National (RN), also pledged tax cuts on Tuesday in what it said would be a fully financed “competitiveness shock” from 2027. Allianz chief economist Ludovic Subran called the proposals “voodoo economics.” “The RN now presents itself as the party of fiscal rectitude, but the route to its targets is unclear. The savings figures are disputed,” he said. Delivering the announced savings would be impossible unless the RN reversed tack to lower the retirement age.
Takeaways by Macro Roundup® AI
Marine Le Pen’s Rassemblement National estimates it could save €15bn–€20bn on pensions spending by correcting what it calls “unjust or inefficient measures” in the current system, helping fund its plans.
Rassemblement National pledged tax cuts as part of what it said would be a fully financed “competitiveness shock” from 2027, alongside lowering the retirement age from 62 to 60 for those who begin working at a young age.
Le Pen, long a champion of big-state spending to protect the working class, has swung behind the idea that France needs a major clean-up of its degraded public finances.
Related Articles:
France is the Biggest Loser in the Global Rates Reset— French government borrowing costs now exceed the country's nominal income growth by about 2 percentage points, the most unfavorable gap between borrowing costs and growth in the rich world. By contrast, Spanish and Greek bond yields remain about 2 percentage points below their income growth rates.
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.
Soaring Yields Find Europe’s Weak Spot— A rapid rise in long-term US Treasury yields has highlighted vulnerabilities elsewhere, notably France, where risks are elevated. Because France is in the euro zone, any crisis there would extend to the currency area, and European stocks have sold off alongside a weakening euro.
AI Summary.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.
Hanno LustigThe Two Cents
Date Posted:
France has signaled that pensioners are the senior claimants on government revenues. In 2026, private investors must absorb net bond issuance equal to 7.5% of GDP, after years when ECB purchases exceeded issuance.
Why has France's borrowing cost gap with Germany widened?
Core argument: The French OAT-Bund 10-year spread exceeded 140 basis points in mid-2025, up from 40–50 basis points between 2022 and June 2024, which Lustig attributes to political decisions prioritizing pensioners over bondholders.
France’s 10-year spread over Germany has risen above 140bp, from 40–50bp before mid-2024. France has repeatedly signaled that pensioners are senior claimants on government revenues: pension reforms have been weakened or reversed, while governments trying to restrain pension spending have fallen. The minimum retirement age is now 62 years and 9 months, and French over-65s have higher average incomes than the working-age population. Meanwhile, ECB purchases exceeded French net bond issuance in five years from 2015–22, so private investors were net sellers of French bonds; in 2026 they must absorb net issuance equal to 7.5% of GDP. The 10-year (r-g) gap has swung from −3.9pp in October 2020 to +1.9pp. French insurers and pension funds’ share of negotiable government debt has fallen from about 25% in 2014 to under 11%, while nonresidents’ share has risen to 57.5%.
Takeaways by Macro Roundup® AI
The French OAT-Bund 10-year spread exceeded 140 basis points in mid-2025, up from 40–50 basis points between 2022 and June 2024, which Lustig attributes to political decisions prioritizing pensioners over bondholders.
France’s legal minimum retirement age remains frozen at 62 years and 9 months for men — the lowest in the Eurozone except Bulgaria — after Prime Minister Lecornu suspended the 2023 pension reform, and French over-65s hold higher average incomes than the working-age population.
French insurers and pension funds’ share of France’s negotiable state debt fell from about 25% in 2014 to under 11%, non-residents hold 57.5% of OATs, and private investors are projected to absorb 7.5% of GDP in net issuance in 2026.
Related Articles:
Soaring Yields Find Europe’s Weak Spot— A rapid rise in long-term US Treasury yields has highlighted vulnerabilities elsewhere, notably France, where risks are elevated. Because France is in the euro zone, any crisis there would extend to the currency area, and European stocks have sold off alongside a weakening euro.
France Seeks To Rein In Pensions And State Salaries In 2027— France plans to narrow its budget deficit to 5% of GDP by cutting state spending, capping increases to pensions and civil servant salaries, and raising taxes. Deteriorating public finances have left France borrowing at higher interest rates than Italy and Greece, with 10-year bond yields reaching their highest since 2002.
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%.
AI Summary.French government borrowing costs now exceed the country's nominal income growth by about 2 percentage points, the most unfavorable gap between borrowing costs and growth in the rich world. By contrast, Spanish and Greek bond yields remain about 2 percentage points below their income growth rates.
Matthew KleinThe Overshoot
Date Posted:
The change in a country’s interest rate, Klein argues, should be measured against the change in nominal income growth. By that metric, France has moved from “core Europe” into the periphery – while Italy, Spain and especially Greece have moved in the opposite direction.
Do French borrowing costs now exceed its income growth?
Core argument: France’s borrowing costs exceeded its nominal income growth rate by about 2pp as of 2026Q2, and by roughly 3pp at current yields, the most unfavorable such spread in the rich world.
The problem for France is that its bond yields are surging even as its nominal income growth has slowed relative to the 2017-2019 pace, to the point that, almost uniquely among rich countries, borrowing costs there now substantially exceed growth rates. In fact, the spread between French sovereign borrowing costs and French growth rates is now the most unfavorable anywhere in the rich world. The French economy was not quite growing by 2% a year in euro terms as of 2026Q2, which was even worse than the anemic 3% yearly average nominal growth rate recorded in 2017Q1-2019Q4. As of 2026Q2, France’s cost of borrowing was therefore about 2pp higher than its income growth rate. (At current yields, the penalty is more like 3pp.) By contrast, Spanish and Greek bond yields are still about 2pp lower than their income growth rates.
Takeaways by Macro Roundup® AI
France’s borrowing costs exceeded its nominal income growth rate by about 2pp as of 2026Q2, and by roughly 3pp at current yields, the most unfavorable such spread in the rich world.
French nominal growth was running just under 2% a year in euro terms as of 2026Q2, below the 3% yearly average recorded in 2017Q1–2019Q4, even as French bond yields surged.
Spanish and Greek bond yields remain about 2pp below their nominal income growth rates, in contrast to France’s unfavorable gap.
Related Articles:
Soaring Yields Find Europe’s Weak Spot— A rapid rise in long-term US Treasury yields has highlighted vulnerabilities elsewhere, notably France, where risks are elevated. Because France is in the euro zone, any crisis there would extend to the currency area, and European stocks have sold off alongside a weakening euro.
France Seeks To Rein In Pensions And State Salaries In 2027— France plans to narrow its budget deficit to 5% of GDP by cutting state spending, capping increases to pensions and civil servant salaries, and raising taxes. Deteriorating public finances have left France borrowing at higher interest rates than Italy and Greece, with 10-year bond yields reaching their highest since 2002.
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%.
