Lyn Alden delivered an absolutely masterful letter this month, offering deep insights on U.S. trade, deficits, and their impact on asset prices.

Many people assume that the trade deficit works like this: Americans send slips of paper to the rest of the world, and the rest of the world sends us real good and services. That sounds like a pretty sweet deal for Americans, right? The problem is that this common description misses the next step. What does the rest of the world do with that paper (or more realistically, electronic digits) that they receive?

The answer is that they buy American assets, including stocks, bonds, private equity, and real estate. Stocks and bonds represent the bulk of what they buy. As a result, over time foreigners own a larger and larger share of US stocks in particular. So, in practice we are not selling worthless papers for real goods and services. We are selling stakes in our valuable appreciating capital assets to buy depreciating goods and services.

That asset accumulation by the wealthier parts of the foreign sector is what gives them a lot of ammo to hurt US markets when they run into dollar shortages. They’ve got a big stockpile of assets that they can sell to get dollars, and they own increasing shares of our companies’ dividend payments and voting rights.

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Labor conditions for recent college graduates have “deteriorated noticeably” in the past few months, and the unemployment rate now stands at an unusually high 5.8 percent. Even newly minted M.B.A.s from elite programs are struggling to find work. Law-school applications are surging—an ominous echo of when young people used graduate school to bunker down during the great financial crisis. What’s going on? I see three plausible explanations, and each might be a little bit true:

1. The labor market for young people never fully recovered from the coronavirus pandemic—or even, arguably, from the Great Recession.
2. College doesn’t confer the same labor advantages that it did 15 years ago.
3. There are early signs that artificial intelligence is starting to transform the economy.

When you think from first principles about what generative AI can do, and what jobs it can replace, it’s the kind of things that young college grads have done” in white-collar firms. They read and synthesize information and data. They produce reports and presentations.

Today’s college graduates are entering an economy that is relatively worse for young college grads than any month on record, going back at least four decades.

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More on the World Happiness Report for 2025 from a reporter who went to see what was happening in Finland, the country that has ranked highest in happiness for 8 consecutive years.

The first World Happiness Report, summarizing the state of its research, drew a distinction between two concepts: “affective happiness” and “evaluative happiness.” Affective happiness captures emotions, immediate responses to events, whether we are experiencing joy or sadness at one moment or another. Evaluative happiness is a more contemplative or systemic matter, mapping a person’s overall appraisal of life and whether they are satisfied with theirs. Affective happiness is the realm of laughter, fun, picnics, parties, sex. Evaluative happiness is tied to good health, sufficient income, social cohesion, safety.

A crude synonym for evaluative happiness — and so much of this research flounders on the crudeness of synonyms! — would be “contentment.” That is what the Cantril Ladder measures, and it should surprise no one that the Nordic countries, with their long life expectancies, highly redistributive tax regimens, functional governance, low corruption and shared norms land at the top of the charts. The type of happiness that tourists go to Finland to find isn’t even the sort of happiness the country is accused of possessing.

A second area of confusion is that the two concepts of happiness, affective and evaluative, can operate independent of each other. A woman in the midst of extruding a baby might suffer from labor pains (low affective happiness) but feel profoundly satisfied or purposeful (high evaluative happiness). The “happiest country in the world” label seems to imprint on the American mind as a never-ending carousel of delights, but in Finland’s February chill, the reality is more modest.

At home in Brooklyn, the library is papered with reminders to “Please keep your voice down.” In contradistinction, the signs at Oodi said, “Please let others work in peace!” The two commands are almost — but meaningfully not — synonymous. The Brooklyn version is a plea for self-control. The Finnish version is a request to acknowledge the existence of other people. You see the difference.

A friend called and I rambled about my sorrow at watching the Finnish children rove and play, and told her about how mothers of all ages gathered spontaneously in the library to chat or rest or idly massage their feet. I explained that one of these mothers had placed her baby, a child of no more than 9 months, in a highchair at a library cafe table and handed him a vegetable purée to consider, then left for 20 minutes to fetch books. When the mother returned she told me, “every few years there’s a crisis where a baby is stolen but then it is returned or found 15 minutes later. Nothing severe.”

All government buildings in Finland have a sauna on-site. Nationwide, there is more than one sauna for every two Finns. In Finland, sauna is not a means to an end. It will not make a person richer or more attractive or more focused. The point is not to sweat out “toxins,” though that may occur — I’m not a scientist. The point seems to be the act itself: sitting in nude serenity among family, friends and strangers, safe in the bone-deep sense of trust that such an idyll both requires and reinforces.

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The internet has caused a Cambrian explosion of creative expression by allowing artists to execute and distribute their visions with unprecedented ease. More than 500 scripted TV shows get made every year; streaming services reportedly add about 100,000 songs every day. We have podcasts that cater to every niche passion and video games of novelistic sophistication. Technology companies like to say that they’ve democratized the arts, enabling exciting collisions of ideas from unlikely talents. Yet no one seems very happy about the results.

The problem is particularly acute in music. In 2024, new releases accounted for a little more than a quarter of the albums consumed in the U.S.; every year, a greater and greater percentage of the albums streamed online is “catalog music,” meaning it is at least 18 months old. Hoping to remonetize the classics, record labels and private-equity firms have spent billions of dollars to acquire artists’ publishing rights. 

Music is turning into a rights-management business. There are vested interests now that don’t want new music to flourish. The private-equity funds just want you to listen to the same songs over and over again, because they own them. The ultimate effect, he thinks, is to discourage true, daring artistry. If Bach were alive today, he’d spend a few weeks trying to break into the L.A. music scene and say, ‘Ah, I’ll be a hedge-fund manager instead.’

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Morgan Housel put together a list of questions we should probably be asking ourselves, like:

• Who do I envy that is actually less happy than I am?
• How much have things outside of my control contributed to things I take credit for?
• Which of my strongest beliefs are formed on second-hand information vs. first-hand experience?
• If I could not compare myself to anyone else, how would I define a good life?
• Which future memory am I creating right now, and will I be proud to own it?
• What kind of lifestyle would I live if no one other than my immediate family could see it?
• How much of what I do is internal benchmark (makes me happy) vs. external benchmark (I think it changes what other people think of me)?

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The Global Flourishing Study, based on a survey undertaken by a consortium of institutions including my Harvard colleagues at the Human Flourishing Program. This survey also uses self-reporting, but it collects much more comprehensive data on well-being, in about half a dozen distinct dimensions and in 22 countries, from more than 200,000 individuals whom it follows over five years.

What does it show? A decline in the happiness of young people, and although young people’s emotional and psychological distress is more pronounced in wealthy, industrialized nations such as the United States, it is occurring across the world.

Scholars have long noted that happiness tends to follow a U-shape across the lifespan: Self-reported happiness declines gradually in young and middle adulthood, then turns upward later in life, starting around age 50.

But that has changed. The flourishing scores don’t fall from early adulthood, because they now start low; they stay low until they start to rise at the expected age later in life.

That’s the bad news, which is plenty bad. But there is some good news. The flourishing survey discovers one notable exception to this global pattern: a more traditional U-shaped curve among those young people who have more friends and intimate social relationships.

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This week, U.S. GDP data for the first quarter of 2025 (January through March) was released. The data showed that the U.S. economy shrank at an annualized rate of 0.3%, but almost every economics journalist and columnist reported that this decline was due to a surge of imports, as American companies rushed to stock up on foreign-made goods ahead of Trump’s tariffs. This is incorrect.

GDP is a measurement of everything produced within a country’s borders. Imports are produced outside a country’s borders. So imports don’t add to or subtract from GDP. Imports simply aren’t counted in GDP at all.

Suppose an American buys a TV made in China for $1000. Remember that GDP can be calculated as the sum of consumption, investment, government purchases, and net exports:

GDP = Consumption + Investment + Government Purchases + Net Exports

When the American buys the $1000 TV from China, U.S. consumption goes up by $1000. And U.S. net exports go down by $1000, since “net exports” means exports minus imports. The increase in consumption exactly cancels out the fall in net exports. So the total contribution of the imported TV to U.S. GDP is zero.

Let’s take another example, which is more like what actually happened in Q1. Suppose an American company, Best Buy, decides to buy a Chinese TV and put it in a warehouse, because it knows that tariffs are coming soon. That purchase counts as inventory investment. So investment goes up by $1000. And just like in the previous example, net exports go down by $1000. The two cancel out, and the total contribution of the imported TV to U.S. GDP is zero.

Here’s a simple analogy: Does putting on shoes make you lose weight? No, it doesn’t. And yet when you weigh yourself with your shoes on at the doctor’s office, and you want to know your actual body weight, you subtract the weight of your shoes afterwards. Imports are to GDP what shoes are to your weight on the scale at the doctor’s office — just something superfluous that gets added in for the sake of measurement convenience, and which has to be netted out again later to get the true number.

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Horror movies are having a good year: