August 23, 2026

If AI were displacing white-collar work at scale, you would expect to see it first in the Philippines and India, where business process outsourcing (call centers, IT support, back-office processing) accounts for a large share of employment. Instead, the unemployment rate in both countries has continued to trend lower, with the Philippines near 5% and India near 6%, both well below their 2021 levels. The bottom line is that the hard data still show no signs that AI is generating job losses in the economies and industries most exposed to it.

August 22, 2026

Application software is the part of software most exposed to AI disruption, and it is also where lenders have the most money at risk: $146 billion of loans outstanding, mostly rated B- or lower. These are companies that charge based on how many people use their software to run tasks AI can most plausibly automate. Infrastructure, data and security providers, by contrast, get paid more as AI adds computing workloads and more systems to defend.

August 21, 2026

China Shock 1.0 flooded global markets with cheap consumer goods in the 2000s, but China Shock 2.0 represents a sharper acceleration in manufacturing exports where the country now dominates advanced sectors like EVs and semiconductors through industrial policy and overcapacity, see the first chart below. Brad Setser warns that, unlike the first shock, there's nowhere left to move production when China controls the cutting edge, especially as domestic demand is increasingly met by domestic production, leaving massive export surpluses to flood global markets, see the second chart below. For more discussion, see: The Second China Shock - How This Time Is Different with Brad Setser | Markus' Academy | Ep. 165-1