The Overshoot

The Midterms’ Message for the Fed: Hike

Incumbents have gotten brutalized in two back-to-back U.S. elections despite benign economic conditions. Surveys imply that voters’ prioritization of…

Nov 12 • Matthew C. Klein

10

1

The Changing Shape of the U.S. AI Capex Boom

The labs are becoming hyperscalers, imports are continuing to surge, and investment further up the supply chain is rising in response to the tight…

Nov 3 • Matthew C. Klein

49

2

October 2026

U.S. Inflation Not Getting (Much) Worse, or Better, but Consumers are Fine

Things are not quite as bad as some headlines imply, although also not great. Plus: inside the retail sales and inventory revisions!

Oct 22 • Matthew C. Klein

28

Found: America’s Missing Interest Income

For years I have argued that the official numbers on net interest payments by U.S. businesses were grossly understated. The latest revisions have…

Oct 9 • Matthew C. Klein

34

3

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

63

1

10

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

49

1

7

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

37

4

4

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

81

3

10

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

39

5

5

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

55

1

1

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

57

5

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

40

5

6