The Overshoot

France is the Biggest Loser in the Global Rates Reset

In much of the rich world, the uptick in the cost of capital corresponds to a relatively benign change in (nominal) growth trajectories. This is less…

Oct 3 • Matthew C. Klein

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September 2026

The Fed Finally Gets It

Tariffs, Hormuz, and fiscal policy are not good reasons to hike. The underlying growth trend and the asymmetric sensitivity of private sector spending…

Sep 24 • Matthew C. Klein

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Just Waiting for Disinflation is Not Enough

The Fed staff has been assuming that inflation would eventually return to 2% without anyone having to do anything, and this has infected the thinking of…

Sep 14 • Matthew C. Klein

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Rising Bond Yields Are Good, Actually

The simplest explanation is also the most benign: traders are becoming increasingly confident that the lost decades are over.

Sep 1 • Matthew C. Klein

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August 2026

AI, Productivity, and Rates: Part 2

If new technologies are actually able to boost productivity growth over a sustained period, the 1990s experience suggests that real interest rates are…

Aug 18 • Matthew C. Klein

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AI, Productivity, and Rates: Part I

Even if AI is disinflationary, the cost of capital might need to rise to balance out the higher prospective returns on new investments. But first: is…

Aug 5 • Matthew C. Klein

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July 2026

U.S. Inflation Is Not Really Slowing

Freakish declines in motor vehicle insurance, phone bills, and jewelry are probably not indicative of any change in underlying trends. Plus: more on how…

Jul 20 • Matthew C. Klein

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June 2026

The Win-Win Solution to "China Shock 2.0"

The best way to address the concerns of China's trade partners is to let the Chinese people live better.

Jun 23 • Matthew C. Klein

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The Case for Higher U.S. Rates

Hormuz may be opening up, but the combination of robust growth and stable-to-accelerating underlying inflation suggests that the previous bias to…

Jun 17 • Matthew C. Klein

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Yes, Living Standards Have Grown Slower in Northwest Europe than in the U.S.

But what that means for relative income levels is much less clear.

Jun 3 • Matthew C. Klein

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May 2026

Russia's Underwhelming Oil Revenue Windfall

The latest data show that the increase in energy prices since the start of the conflict with Iran has done relatively little to improve the finances of…

May 15 • Matthew C. Klein

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The U.S. Job Market is (Still) Inflationary

Wage growth is now accelerating slightly, supporting the quickening of "supercore" service price increases. Plus: more on the health care wage slowdown…

May 14 • Matthew C. Klein

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