“…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
“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
“…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
“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 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
“A full-throated defense of economic dynamism.” - The Wall Street Journal
“…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
“Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times

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What’s Behind the Declining Trend Unemployment Rate?

Andreas Hornstein, Marianna Kudlyak, Greeshma Avaradi and Taerin Kim Federal Reserve Bank of San Francisco

Date Posted:: August 26, 2026
Is Database:: Database

Hornstein et al find that about half of the ~3pp drop in the trend unemployment rate since 1976 is due to compositional change in the work force towards lower unemployment “types ” – in particular, older and more educated workers.

We find that the trend unemployment rate declined from 7.8% in 1976 to 4.8% in 2024 [Figure 1]. Roughly half of that decline reflects compositional change. Figure 2 separates the estimated cumulative change in the annual unemployment trend since 1976 into its components. The total decline was about 3.3 percentage points by 2024. Changes in workforce composition account for a little more than half of that decline. Rising educational attainment is the single largest compositional force, lowering the trend about 1pp. Figure 4 plots estimated education shares for entering cohorts of women, and these patterns are similar for male cohorts (not shown). The figure shows a steady long-run fall in the share of new female cohorts with less than high school education and a steady rise in the share with some college or a college degree. [Returning to Figure 2], changes in group-specific LFP rate trends contribute only ~0.3 pp. The remaining decline, a bit under 1pp, comes from lower group-specific trend unemployment.

Takeaways by Macro Roundup^® AI

The U.S. trend unemployment rate fell 3.3 percentage points—from 7.8% in 1976 to 4.8% in 2024—with rising educational attainment alone accounting for 1.0 percentage point of that structural decline.
Workforce compositional shifts explain slightly more than half of the 3.3-percentage-point decline in trend unemployment since 1976, making demographic change the dominant driver over the period.
Group-specific labor force participation trends contributed only 0.3 percentage points to the trend unemployment decline, while lower group-specific unemployment rates drove the remaining approximately 1.0 percentage point reduction.

On Europe’s Economy, Let’s Ditch The Lazy Stereotypes

Chris Giles Financial Times

Date Posted:: September 10, 2026
Is Database:: Database
Is Important:: Important

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.

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

Prime-age adults (25–54) and older workers (55–64) both achieve higher employment rates in Europe than in the U.S., refuting the premise that generous welfare systems suppress labor force participation.
The U.S. records a higher share of young people (15–24) not in education, employment, or training than Europe, indicating that lower U.S. youth employment reflects weaker human capital investment, not stronger labor markets.
Within Europe, higher-welfare northern economies consistently outperform lower-welfare southern ones on employment rates, though intra-Eurozone convergence is underway, led by rapid gains in Spain.

The Jobs Apocalypse Is Postponed. An AI Jobs Boom Is Here

Economist Staff The Economist

Date Posted:: September 9, 2026
Is Database:: Database
Is Important:: Important

The Economist estimates that so far the AI boom has created ~1mm new jobs in the US, exceeding their estimate of ~200,000 layoffs attributed to AI since mid-2023.

[We] tracked five industries at the heart of the data-centre build-out, from electrical contracting to equipment manufacturing. Since 2023 employment in them has risen by roughly 320,000 more than broader construction and manufacturing trends would suggest. Not all of those jobs owe their existence to AI—grid upgrades and other factory building matters too. [We also] tracked employment in professional occupations closest to the AI boom—engineers, software developers, mathematicians and data scientists—and compared their growth since 2022 with professional employment overall. These roles have added roughly 730,000 jobs above trend in recent years. AI will not have created every single one of them. But it has almost certainly created quite a few.

Takeaways by Macro Roundup^® AI

AI-linked demand has generated roughly 730,000 above-trend jobs in engineering, software development, and data science since 2022, substantially outpacing near-term displacement effects.
Data-centre construction has added approximately 320,000 above-trend jobs across electrical contracting and equipment manufacturing since 2023, with grid upgrades and broader factory-building contributing alongside AI demand.

Americans Without College Degrees Are Having One of the Best Job Markets in Years

Theo Francis and Ray Smith Wall Street Journal

Date Posted:: September 8, 2026
Is Database:: Database

In 2026, the 12-month moving-average unemployment for college-educated 22–34-year-olds is above its post-2003 mean, while the rate for non-college peers is historically low. Prime-age college grads still have lower unemployment than those with no degree.

The unemployment rate for workers ages 22 to 34 who never graduated from college has rarely been lower in the past two decades. To gauge how the job market has shifted for each cohort, [Gad Levanon, Burning Glass’s chief economist] compared current unemployment rates for the different groups with their own range of unemployment rates since 2003. The analysis included data through July. By that measure, the job market looks much better for blue-collar workers, including those in construction and on manufacturing lines, and manual-service workers. It is [however] still easier to find a job with a college degree. The unemployment rate for degree-holders in their prime working years—ages 25 to 54—averaged 2.7% for the 12 months ending in July - well below the 3.6% rate for workers with just some college education, and 4.7% for people with a high-school diploma only.

Takeaways by Macro Roundup^® AI

Non-college workers ages 22–34 are experiencing one of their strongest job markets in two decades, with unemployment rates near historic lows relative to their own 2003–present range, outperforming their college-educated peers on that relative measure.
On an absolute basis, a college degree still confers a significant labor-market advantage: prime-age degree-holders averaged 2.7% unemployment versus 3.6% for some-college workers and 4.7% for high-school-only workers over the 12 months ending July.

College Grads Struggle to Find Jobs. Non-Grads Are Giving Up

Justin Fox Bloomberg

Date Posted:: August 25, 2026
Is Database:: Database

Labor force participation is rising for American college graduates aged 25–29, and is now at 89.4% – above its pre-pandemic level. Participation among non-college members of that age cohort is falling; at 78.7%, it is now below its pre-pandemic level.

The narrowing of [the unemployment gap btw college and non-college workers] in recent years has lent support to narratives that college diplomas are losing their value amid the rise of large language models, the purported return of blue-collar work, and other job market changes. But while it may well be that diplomas have lost value, the recent shrinking of the young-adult education-unemployment gap seems to be driven mainly by a different phenomenon. Growing numbers of young adults without college degrees simply aren’t trying to find work and thus aren’t counted in unemployment calculations. The employment-population ratio for young college grads is not far off from where it was just before the pandemic and seems as if it might be headed upward again after a sharp drop in 2023 and 2024, for non-grads it is 1.7 percentage points lower than before the pandemic and clearly trending downward.

Takeaways by Macro Roundup^® AI

The narrowing education-unemployment gap among young adults reflects labor force withdrawal by non-degree holders—not diminished diploma value—as workers who stop seeking jobs are excluded from unemployment calculations.
Young adults without college degrees carry an employment-population ratio 1.7 percentage points below pre-pandemic levels and trending downward, while college graduates have nearly recovered to pre-pandemic parity.

The Big Exceptions To The American Manufacturing Jobs Decline

Jiaxin (Jason) He Agglomerations

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

The US has lost 300,000 manufacturing jobs since their recent peak in Q2 2023. Two subsectors have seen strong job growth: aerospace manufacturing added 43,000 jobs, and electrical equipment, cable and battery manufacturing added 36,200.

Aerospace leads all manufacturing industries in job growth since 2023. Last year it also posted the largest nominal trade surplus of any manufacturing industry, at $116.7 billion. Driving the growth has been strong commercial and passenger airline demand, including a record-high order backlog. Boeing, the world’s leading airplane manufacturer, returned to profitability and high delivery volumes in 2025. The employment surge in the electrical components subsector tells a different story. It owes its strength to two industries: electrical equipment manufacturing and batteries, wires, cables, and miscellaneous electrical components. These are among the industries that bore the brunt of the China Shock and suffered acute decline in the 2000s. Green energy and electric vehicles likely contributed to their initial recovery, raising demand for batteries and electrical infrastructure. But their continued growth even after the cancellation of EV subsidies in 2025 points to a different, potent, and entirely unsurprising driver: Artificial Intelligence. AI’s manufacturing footprint runs the length of the supply chain. Dedicated data centers more than doubled their real consumption of electrical equipment and components from 2019 to 2024.

Takeaways by Macro Roundup^® AI

Aerospace posted a $116.7 billion trade surplus—the largest of any U.S. manufacturing industry—while leading all sectors in job growth since 2023, driven by record commercial airline order backlogs and Boeing's return to profitability and high delivery volumes.

The Labor Market Explains Why Inflation Won’t Go Away

Torsten Sløk Apollo

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

US unemployment has been under the Fed’s 4.5% estimate of the non-accelerating inflation rate of unemployment (NAIRU) for 57 months. Sløk argues “persistent tightness is a key reason inflation has remained elevated.”

With the Fed estimating the non-accelerating inflation rate of unemployment (NAIRU) at below 4.5%, and unemployment having stayed at or below that level for 57 months, tied for the longest such streak on record, the labor market has been operating in excess-demand territory for an unusually long time. That persistent tightness is a key reason inflation has remained elevated: when unemployment runs below NAIRU, wages and prices face sustained upward pressure. Prior episodes of sub-4.5% unemployment were typically far shorter. The current one is one of the longest on record, which helps explain why the ongoing inflation overshoot since 2021 has been so stubborn. The bottom line is that a strong economy is the reason why inflation has been high, and only by keeping rates higher for longer can the Fed cool inflation down towards the FOMC’s 2% inflation target.

Hornstein et al find that about half of the ~3pp drop in the trend unemployment rate since 1976 is due to compositional change in the work force towards lower unemployment “types ” – in particular, older and more educated workers.

Is rising education driving down structural unemployment?

Takeaways by Macro Roundup® AI

Related Articles:

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.

Does European welfare actually discourage work?

Takeaways by Macro Roundup® AI

Related Articles:

The Economist estimates that so far the AI boom has created ~1mm new jobs in the US, exceeding their estimate of ~200,000 layoffs attributed to AI since mid-2023.

Is artificial intelligence creating a genuine employment boom or temporary hiring surge?

Takeaways by Macro Roundup® AI

Related Articles:

In 2026, the 12-month moving-average unemployment for college-educated 22–34-year-olds is above its post-2003 mean, while the rate for non-college peers is historically low. Prime-age college grads still have lower unemployment than those with no degree.

Is the job market finally tightening for workers without degrees?

Takeaways by Macro Roundup® AI

Related Articles:

Labor force participation is rising for American college graduates aged 25–29, and is now at 89.4% – above its pre-pandemic level. Participation among non-college members of that age cohort is falling; at 78.7%, it is now below its pre-pandemic level.

Are non-graduates disappearing from the job market?

Takeaways by Macro Roundup® AI

Related Articles:

The US has lost 300,000 manufacturing jobs since their recent peak in Q2 2023. Two subsectors have seen strong job growth: aerospace manufacturing added 43,000 jobs, and electrical equipment, cable and battery manufacturing added 36,200.

Are aerospace and electrical components bucking the broader manufacturing decline?

Takeaways by Macro Roundup® AI

Related Articles:

US unemployment has been under the Fed’s 4.5% estimate of the non-accelerating inflation rate of unemployment (NAIRU) for 57 months. Sløk argues “persistent tightness is a key reason inflation has remained elevated.”

Does tight labor demand explain persistent inflation pressure?

Related Articles:

Takeaways by Macro Roundup^® AI

Takeaways by Macro Roundup^® AI

Takeaways by Macro Roundup^® AI

Takeaways by Macro Roundup^® AI

Takeaways by Macro Roundup^® AI

Takeaways by Macro Roundup^® AI