Global Macro Update Archive

For months now we’ve been writing about angst across the economy. Depending on the writer or the economic report, Americans are described as workers, labor, youth, baby boomers, Gen Xers, Millennials, consumers, the elite, MAGA, liberals, centrists, etc.

It is a distinctly American trait to create environments where entrepreneurs thrive, hard work leads to a better life, and a combination of determination, capital, and talent delivers new technologies, businesses, and wealth.

I feel like I’ve stepped into the future, or onto a Sci-Fi movie set. Today is my third day in China, where I’m on a tour of technology companies. “Wow” is the word I find myself continuously saying.

What happens if Elon Musk is right, and robots eventually build the robots that build almost everything else?

This week gave us another glimpse of our AI-powered future. AI personal agents are becoming a thing you need to understand, if not use.

After raising the Federal Funds Rate by 25 basis points, Chairman Warsh said labor is “in good shape.” With unemployment at 4.1%, rising job openings and weekly hours, and claims consistent with full employment, he noted the economy was operating “largely…consistent with full employment.”

The Federal Reserve raised interest rates this week, in part to reset consumer expectations on inflation. Their work is likely not done, as there is a negative surprise coming for many consumers, especially in rural America.

It won’t be news to you that the stock market is experiencing a bit of a rotation.  That happens constantly.  One or more sectors will dominate for quarters or even years, only to be replaced by other sectors as rates, geopolitics, and the economy send signals to investors.

For the past six weeks, we’ve walked through the forces creating America’s K-shaped economy, housing, healthcare, education, wages, incentives, and the political consequences when enough people decide the system is not working for them.

The quote above, often attributed to Churchill, is debated. What isn't debated is a much older phrase, one that predates him by centuries: don't shoot the messenger.

The truth about the runaway costs of healthcare turns out to be a little more complex than any single source we've named. Hospitals, insurers, private equity, administrators, pharmaceutical companies… pull the thread on any one and we land in the same overextended, bloated, extractive system.

This week we continue our series on the major causes of our K-shaped economy. To recap, three big components of the economy are growing in cost more quickly than the rate of inflation or wage growth, and have for decades. We've covered two. First housing, then higher education. Now we look at the biggest and perhaps messiest of the three: healthcare.