Edward Conard

Top Ten New York Times Bestselling Author

  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, April 2, 2026

AI Summary. An analysis classifying $4.4tn of $7tn in federal spending by age finds retirees aged 65 and older receive $2.7tn, 38.6% of total outlays and 61.9% of age-assignable spending, versus $1.2tn for working-age adults and $449bn for those under 26. Social Security and Medicare account for 80% of age-assignable spending on older adults.

Kent Smetters University of Pennsylvania
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In 2025, of the 62.5% of Federal spending that is age-assignable on a per-capita basis, US retirees aged 65+ were given $43,700, working-age adults 26–64 got $7,300, and children and young adults got $4,300.

How is federal spending distributed across age groups?

Core argument: Retirees aged 65 and older receive $2.7 trillion of federal spending in fiscal 2025, equal to 38.6% of total outlays and 61.9% of age-assignable spending, versus $1.2 trillion for working-age adults aged 26–64.

We trace spending items within 52 general spending categories, totalling $7T for the 2025 Fiscal Year. We are able to classify a total of $4.4T across three broad age categories and assign the remaining $2.6T to an all-ages residual. Retirees (adults age 65 and older) receive $2.7T, equal to 38.6% of total federal outlays and 61.9% of age-assignable spending. Working-age adults (ages 26-64) receive $1.2T (27.9% of age-assignable), and children and young adults (under age 26) receive $449B (10.3%). The dominance of the retiree category reflects two programs above all others: Social Security and Medicare. Social Security directs $1.3T to retirees, and Medicare sends $835B. Together, they account for 80% of all age-assignable spending on older adults. But the retiree total extends beyond these two entitlements. Federal employee retirement benefits ($169B), housing assistance for older households, Medicaid long-term-care spending, and VA medical care all contribute, making the federal budget more retiree-focused than a Social Security–only lens would suggest.

Takeaways by Macro Roundup® AI

  1. Retirees aged 65 and older receive $2.7 trillion of federal spending in fiscal 2025, equal to 38.6% of total outlays and 61.9% of age-assignable spending, versus $1.2 trillion for working-age adults aged 26–64.
  2. Children and young adults under age 26 receive $449 billion, or 10.3% of age-assignable federal spending, out of $4.4 trillion classified by age within a $7 trillion budget, with $2.6 trillion assigned to an all-ages residual.
  3. Social Security directs $1.3 trillion and Medicare $835 billion to retirees, together 80% of age-assignable spending on older adults, with federal employee retirement benefits ($169 billion), housing assistance, Medicaid long-term care, and VA medical care contributing further.

Related Articles:

  • The Great “Transfer”-mation — Government transfers rose from 8.2% of Americans' total personal income in 1970 to 17.6% in 2022, making them the third largest income source after work and investments. The share of U.S. counties drawing a quarter or more of personal income from transfers rose from under 1% in 1970 to 53% in 2022.
  • France and Britain Are In Thrall To Pensioners — French pensioners receive larger government payments than in any other western country and begin receiving them several years earlier, leaving over-65s with higher average incomes than the working-age population — a situation without precedent internationally or in France's own history. Proposals to raise the retirement age or delay pension increases have triggered nationwide protests and government collapses.
  • The Budgetary Impact of the Abandonment of Federalism — Federal spending on activities originally regarded as state, local, or private-sector responsibilities is estimated to have risen from 2% of GDP in 1950 to 14% in 2019, exceeding the entire growth in federal spending over that period and reaching two-thirds of all federal outlays. Aid to individuals accounts for 80% of that increase, grants to states the remaining 20%.

AI Summary. US registered nurses earn a median annual wage of $93,600 versus $49,500 for all occupations, while nurses with advanced degrees, such as nurse practitioners, earn $132,050, according to the Labor Department. The Labor Department projects advanced-degree nursing employment will grow 35% over a decade, against 3% for all occupations and 5% for registered nurses.

Jeanne Whalen Wall Street Journal
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The median annual wage for a nurse in 2024 was $93,600; those with an advanced degree earned $132,050. The Labor Department forecasts that employment of nurses with advanced degrees will increase 35% btw 2024 and 2034 relative to job growth of 3%.

Is nursing one of the highest-paying, fastest-growing career paths?

Core argument: The median annual wage for U.S. registered nurses is $93,600, compared with $49,500 across all occupations, according to the Labor Department.

The median annual wage for registered nurses in the U.S. is $93,600, compared with $49,500 for all occupations, according to the Labor Department. For nurse practitioners and others with advanced degrees, it is $132,050. The Labor Department projects that employment of advanced-degree nurses will increase by 35% from 2024 to 2034, eclipsing the expected 3% growth across all occupations. Registered-nurse employment is projected to rise 5% over that period.

Takeaways by Macro Roundup® AI

  1. The median annual wage for U.S. registered nurses is $93,600, compared with $49,500 across all occupations, according to the Labor Department.
  2. Nurse practitioners and other nurses with advanced degrees have a median annual wage of $132,050, according to the Labor Department.
  3. The Labor Department projects employment of advanced-degree nurses will rise 35% from 2024 to 2034, against 5% for registered nurses and 3% across all occupations.

Related Articles:

  • Has the United States Bent the Health Care Cost Curve? — The authors estimate that a slowdown in US health care spending reflects technology-associated changes in health and site of care (21% of the slowdown, double that in Medicare), more elastic long-run supply (6%), market changes reducing and making demand more elastic (11–27%), improved population health (7%), and slower price growth net of upcoding (24%).
  • Sick as a Dog — US healthcare stocks tracked technology-sector returns from 1989 to 2019 with lower volatility (15% vs 24%), but have since stagnated as technology advanced. Major pharmaceutical firms trade at forward price-to-earnings ratios of 8x–9x, biotech carries one of the market's largest valuation discounts, and 80% of biotech initial public offerings since 2018 have collapsed.
  • Saved by Medicaid: New Evidence on Health Insurance and Mortality from the Universe of Low-Income Adults — Using linked Census and tax records for 37m low-income adults, the authors estimate that state Medicaid expansions raised enrollment by 12 percentage points and cut mortality among low-income adults by 2.5%, implying a 21% reduction in the mortality hazard of new enrollees. They estimate direct budgetary costs of $5.4m per life saved and $179,000 per life-year saved.

AI Summary. The US Energy Information Administration reports that 83% of liquefied natural gas and 84% of crude oil shipped through the Strait of Hormuz was bound for Asia. Asian governments including Thailand, Vietnam, Indonesia, and Pakistan are urging fuel conservation through remote work, carpooling, cycling, and reduced air conditioning use.

Sam Fleming, Adam Shaw, Joseph Cotterill, Amy Borrett, et al. Financial Times
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Governments, largely in Asia, have introduced fuel-conservation measures in response to the energy shock. Prior energy shocks lead to permanent shifts in spending patterns, suggesting this shock might speed electrification.

Are Asian economies most exposed to energy supply disruptions?

Core argument: The US Energy Information Administration reports that 83% of liquefied natural gas and 84% of crude oil shipped through the Strait of Hormuz in 2024 was bound for Asia, leaving Asian economies at the sharp end of the crisis.

Asian economies are at the sharp end of the crisis. According to the US Energy Information Administration, 83% of liquefied natural gas and 84% of crude oil shipped through the Strait of Hormuz in 2024 was bound for Asia. Thailand is encouraging remote work for civil servants and asking residents to reduce usage of air conditioning. Vietnam is promoting cycling and carpooling. Indonesia, south-east Asia’s largest economy, has asked civil servants to work from home once a week and has urged the public to use liquefied petroleum gas and other fuel wisely. Pakistan recently kicked off its domestic cricket league with matches in empty stadiums, as many in the cash-strapped country attempt to conserve fuel.

Takeaways by Macro Roundup® AI

  1. The US Energy Information Administration reports that 83% of liquefied natural gas and 84% of crude oil shipped through the Strait of Hormuz in 2024 was bound for Asia, leaving Asian economies at the sharp end of the crisis.
  2. Thailand is encouraging remote work for civil servants and reduced air conditioning use, Vietnam is promoting cycling and carpooling, and Indonesia has asked civil servants to work from home once a week and urged the public to use fuel wisely.
  3. Pakistan opened its domestic cricket league with matches in empty stadiums as many in the cash-strapped country attempt to conserve fuel.

Related Articles:

  • Oil Flash Note — Persian Gulf oil cargoes reach Asia in about 10–20 days, Europe and Africa in 20–35 days, and the US Gulf Coast in 35–45 days, so a supply disruption unfolds as a rolling shock moving westward. Asia feels the squeeze first, with Europe affected more by rising costs and competition than outright shortages.
  • The Oil Market Is Moving Into Demand Destruction Mode — The author estimates the oil market needs to destroy at least 8m barrels a day of demand, more than the combined consumption of Germany, France, the UK, Italy, and Spain. Because the US, Canada, Europe, Japan, and China make up nearly 55% of use, the burden would fall on Africa, Latin America, and much of Asia.
  • Fighting Words: The Energy Transition in 2026 — Estimates based on primary energy overstate how much electricity is needed to replace oil in passenger cars, since electric motors convert 80%-90% of electricity into motion versus about 18% for gasoline cars. Measuring useful final energy net of waste heat avoids this "primary energy fallacy": the US consumed 45 exajoules of useful final energy versus 95 exajoules of primary energy.

AI Summary. Sovereign credit ratings in the war-zone countries have not changed, but market-based measures of default risk have risen across much of the Middle East, with larger increases in Qatar, the United Arab Emirates and Turkey than in Saudi Arabia and Kuwait. The United States has also seen its default-risk spread surge, and global sovereign spreads rose about 12%.

Aswath Damodaran Musings on Markets
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CDS spreads across the Middle East have risen in response to the war. Damodaran notes going forward, petrodollars will be redirected from the AI buildout and “Premier League clubs” to “building pipelines and securing the flow of oil.”

Are markets pricing more sovereign default risk than credit ratings show?

Core argument: Global sovereign credit default swap spreads rose about 12% in the first quarter of 2026, with Middle Eastern spreads climbing as war worries mounted, even though no country in the war zone has seen a sovereign rating change.

None of the countries in the war zone have seen their sovereign rating change (yet), these countries have market estimates of sovereign default risk in the form of sovereign CDS spreads, I looked at the movement in those spreads during the course of the month. Not surprisingly, market measures of default risk are more sensitive to war effects, and have risen for much of the Middle East, as worries have mounted, with bigger increases in Qatar, the UAE and Turkey than in Saudi Arabia and Kuwait. The United States has also seen a surge in its sovereign CDS spread, and the global sovereign CDS spreads have risen about 12% in the first quarter of 2026. Using these sovereign CDS spreads as measures of default spreads for this part of the world may yield more realistic equity risk premiums.

Takeaways by Macro Roundup® AI

  1. Global sovereign credit default swap spreads rose about 12% in the first quarter of 2026, with Middle Eastern spreads climbing as war worries mounted, even though no country in the war zone has seen a sovereign rating change.
  2. Sovereign CDS spreads rose more in Qatar, the UAE and Turkey than in Saudi Arabia and Kuwait, and the United States also saw a surge in its sovereign CDS spread.
  3. Using sovereign CDS spreads as default spread measures for the Middle East may yield more realistic equity risk premiums, since market measures of default risk are more sensitive to war effects than ratings.

Related Articles:

  • Testing Resilience — Inflation across the G20 is projected to run 1.2 percentage points higher than previously expected at 4% before easing to 2.7% the following year, while core inflation in G20 advanced economies is anticipated to weaken from 2.6% to 2.3%. These projections assume energy market disruption moderates, with oil, gas and fertiliser prices declining gradually.
  • Saudi Arabia’s Hurdles at Home are Reshaping the Mideast Financial Order — Saudi Arabia is running a deep budget deficit and has become the largest sovereign bond issuer in emerging markets, with more than $14bn of deals, as it funds an economic transformation plan expected to cost $2tn. The United Arab Emirates and Qatar have pledged larger US investment commitments relative to their economies and have more fiscal headroom.
  • Pandora’s Bog: The Global Energy Shock of 2026 — Gulf liquefied natural gas is only 3% of global gas consumption, but because commodity prices are set at the margin, its loss pushes gas import prices higher in Europe and Asia as China, Korea, India and Pakistan seek replacement supplies on the spot market. Undamaged Qatari facilities would need 3-4 months to reach full loading.

AI Summary. The Trump administration is preparing a $1.5tn defence spending request to Congress for next year, alongside a Pentagon request for an extra $200bn to fund the war in Iran. Research from the Royal United Services Institute estimates US and coalition forces expended more than 11,200 munitions costing about $26bn in the first 16 days.

Sylvia Pfeifer, Christian Davies and Steff Chávez Financial Times
Date Posted:

The Trump administration is expected to request $1.5T in defense spending for 2027, a 56% increase from 2025. The US just approved $16B in defence sales to Gulf states, largely from RTX, Lockheed, and Northrop Grumman.

Does wartime munitions use concentrate revenue gains among large defense manufacturers?

Core argument: US and coalition forces expended more than 11,200 munitions at an estimated $26bn in the first 16 days of the Iran war, according to research published by the Royal United Services Institute.

In Washington, the Trump administration is putting the finishing touches to a request to Congress later this week for $1.5tn in defence spending for next year. The Pentagon has asked the White House to submit a request to Congress for an extra $200bn to help fund the war in Iran at the same time. In the first 16 days, the US, together with coalition forces, burned through more than 11,200 munitions at an estimated cost of $26bn, according to research published by the Royal United Services Institute. Among these were more than 1,200 RTX Patriot missile-defence systems, hundreds of its long-range Tomahawk missiles and more than 300 Lockheed-built Thaad interceptors. RTX, Lockheed and fellow defence major Northrop Grumman are expected to be the biggest beneficiaries of the $16.5bn worth of foreign military sales to Gulf states that have been approved by the US State Department since the start of the war.

Takeaways by Macro Roundup® AI

  1. US and coalition forces expended more than 11,200 munitions at an estimated $26bn in the first 16 days of the Iran war, according to research published by the Royal United Services Institute.
  2. The Trump administration is finalizing a request to Congress for $1.5tn in defence spending for next year, while the Pentagon has asked the White House to seek an extra $200bn to fund the war in Iran.
  3. RTX, Lockheed Martin and Northrop Grumman are expected to be the biggest beneficiaries of $16.5bn of foreign military sales to Gulf states approved by the US State Department since the start of the war.

Related Articles:

  • Are Government Bonds Safe in Times of War and Pandemic? — Government bonds severely underperform in wartime, in absolute terms and relative to equities, housing, and economic growth, unlike in financial crises when bonds tend to outperform stocks. The U.S. and U.K. reduced war-driven debt-to-GDP ratios without explicit default, using surprise inflation and financial repression that shifted fiscal burdens onto bondholders.
  • The Cold War and the U.S. Labor Market — The authors estimate that declining U.S. military procurement spending from the 1950s to the 1990s explains roughly 18–30% of the decline in manufacturing employment and just under 10% of the rise in top-decile income inequality. They argue Cold War procurement raised demand for manufacturing workers and helped sustain tight labor markets for low-skill workers.
  • The Intellectual Spoils of War? Defense RD, Productivity and International Spillovers — The authors estimate that a 10% increase in government-financed R&D, largely defense, is associated with a 4.3% rise in privately funded R&D across OECD countries, indicating "crowding in" rather than "crowding out." They also find international spillovers raise private R&D abroad, though the overall effect on US productivity growth is modest.

Monday, April 6, 2026

AI Summary. The Federal Reserve's Distribution of Financial Accounts defines "private business" narrowly as proprietor's equity in noncorporate, nonfinancial businesses, excluding S-corporations, other private corporations, and private equity and hedge fund partnerships, which are lumped into "corporate equities." The Survey of Consumer Finances instead shows private business is roughly 45–50% of top 0.1% wealth.

Owen Zidar and Eric Zwick The Everywhere Millionaire
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Zidar and Zwick find SCF data show ownership share in private businesses make up between 45–50% of top 0.1% American wealth, and ~80% of US households worth $30mm+ are business owners.

Does official wealth data overstate how much the ultrarich own public stocks?

Core argument: The Survey of Consumer Finances shows private business at roughly 45–50% of top 0.1% wealth, far more than the Federal Reserve's Distribution of Financial Accounts "private business" label implies.

“Private businesses” make up a declining and now-modest share of top 0.1% wealth in the Federal Reserve’s Distribution of Financial Accounts (DFA), with corporate equities dominating portfolios at the very top. The misleading implication is that the rich are primarily stockholders. In fact, they are not. The issue, we learned, is that the DFA’s “private business” category is much narrower than what most people mean by the term. It covers only proprietor’s equity in noncorporate businesses — partnerships and sole proprietorships. Not S-corporations. Not other private corporations. Not financial partnerships like private equity or hedge funds. Just noncorporate, nonfinancial businesses. Private corporations are valued separately, but the Fed can’t distinguish households’ holdings of private corporate equity from their holdings of publicly traded stocks. They’re all lumped together into “corporate equities.” The Survey of Consumer Finances (SCF) tells a different story about what the top 0.1% actually owns. Private business shows up as roughly 45 to 50% of top wealth — far larger than the DFA’s “private business” label suggests. About 80% of households worth $30 million or more are business owners.

Takeaways by Macro Roundup® AI

  1. The Survey of Consumer Finances shows private business at roughly 45–50% of top 0.1% wealth, far more than the Federal Reserve's Distribution of Financial Accounts "private business" label implies.
  2. The Distribution of Financial Accounts' "private business" category covers only proprietor's equity in noncorporate, nonfinancial partnerships and sole proprietorships, excluding S-corporations, other private corporations, and private equity and hedge fund partnerships.
  3. The Federal Reserve cannot distinguish households' private corporate equity from publicly traded stocks, lumping both into "corporate equities," which makes the top 0.1% appear to be primarily stockholders.

Related Articles:

  • Top Wealth in America: New Estimates and Implications for Taxing the Rich — New estimates put the top 0.1%'s share of US wealth at 15%, up from 12.9% over a 15-year span, a smaller concentration than some earlier estimates but still leaving the top 1% holding nearly as much wealth as the bottom 90%. Pass-through business and public equity dominate top-end wealth, while pension and housing wealth dominate for the bottom 90%.
  • They’re Rich but Not Famous—and They’re Suddenly Everywhere — An analysis of Federal Reserve data estimates about 430,000 U.S. households are worth $30m or more, including roughly 74,000 worth at least $100m, with growth in the number of very rich households outpacing overall population growth over recent decades. Nearly 72% of the top 0.1%'s wealth consists of corporate equities, mutual fund shares, and private businesses.
  • Capitalists in the Twenty-First Century — Most income at the top of the US distribution is non-wage income, primarily profits from closely-held, mid-market firms in skill-intensive industries owned by working-age individuals. The authors find private business profit falls by three-quarters after an owner retires or dies prematurely, indicating most top earners are "working rich" deriving income from human capital.

AI Summary. A slowdown in U.S. wage growth stems entirely from a sharp deceleration in the "private education and health services" sector, which employs one in four private-payroll workers and has historically tracked economy-wide wage trends. The slowdown would imply wage growth is no longer running faster than the pre-pandemic norm, a benign signal for inflation.

Matt Klein The Overshoot
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The last six months saw US wages rise at their pre-pandemic rate of ~3% annually, down from the mid-2023 to mid-2025 rate of 4.1%, but the deceleration is primarily driven by near-zero wage growth in healthcare.

What is driving the slowdown in private-sector wage growth?

Core argument: The U.S. wage growth slowdown is entirely a function of a sharp deceleration within "private education and health services," a sector whose wage growth has, until now, tended to behave like the rest of the economy on average, unlike other industries.

The deceleration is notable for several reasons: It would imply that wage growth is no longer running faster than the pre pandemic-norm, which could have benign implications for the inflation outlook. It is an abrupt slowdown after years of stability, which could potentially reflect the lagged impact of job market weakening. It is entirely a function of a sharp slowdown within the “private education and health services” sector—which is odd, because, until now, wage growth in this category has tended to behave just like the rest of the economy, on average, which cannot be said for other industries. One in four workers on private payrolls are currently employed within the “private education and health services” sector, which corresponds to industries 61 and 62 within the North American Industry Classification System (NAICS). About two-thirds of those workers are in the healthcare sector (mostly hospitals, nursing homes, and physicians’ offices) and the remaining one-third are split roughly evenly between private education and “social assistance”, which includes child care. This has, historically, been the single sector of the economy that is most representative of underlying wage trends. [Further], the share of private employment in health and education has increased by more than 2pp since early 2023, which is unprecedented outside of a downturn.

Takeaways by Macro Roundup® AI

  1. The U.S. wage growth slowdown is entirely a function of a sharp deceleration within "private education and health services," a sector whose wage growth has, until now, tended to behave like the rest of the economy on average, unlike other industries.
  2. Private education and health services employs one in four private-payroll workers, with about two-thirds in healthcare — mostly hospitals, nursing homes, and physicians' offices — and the remaining third split roughly evenly between private education and social assistance, which includes child care.
  3. The share of private employment in health and education has risen by more than 2 percentage points since early 2023, a gain unprecedented outside of a downturn, and the wage deceleration would imply growth is no longer running faster than the pre-pandemic norm.

Related Articles:

  • The Fed is Misreading the Inflation Risks — The author argues the Federal Reserve is wrong to attribute excess inflation mostly to goods prices driven by tariffs, since services make up the bulk of economic activity. Prices of services businesses buy as production inputs have been accelerating, as has consumer services inflation excluding imputed prices, housing, and utilities.
  • Inflation Is Down, But Americans Still Feel an Affordability Squeeze — Average US weekly pay has risen 31% over six years, outpacing prices, but inflation erased most of those gains. Grocery prices are up about 30% since early 2020, a young married couple now needs 70% of annual household income for an average down payment versus 58% in 2019.
  • How Does Immigration Shape Average Labor Productivity? Evidence from the CPS — A worker-quality index built from US household survey data stayed within 1% of its starting level despite a shift toward more immigrant workers, while official nonfarm business productivity rose 8.2%. Lower predicted wages among Central American arrivals were offset by European and Asian immigrants, whose predicted wages exceed the US-born average by about 20%.

AI Summary. The US is not insulated from market effects of a Strait of Hormuz closure: while US natural gas prices have declined this year, most other hydrocarbon and refined product prices have risen materially, with US crude oil, wholesale gasoline, naphtha, shipping fuel and some petrochemical increases exceeding those in Europe and Asia.

Michael Cembalest J.P. Morgan
Date Posted:

US energy independence partially offset war effects. Natural gas prices have declined year to date, but jet fuel prices have risen by ~68% of the global increase, and price growth in US crude and wholesale gasoline exceeds the mean non-US increase.

Is the US insulated from global oil price shocks?

Core argument: US crude oil, wholesale gasoline, naphtha, shipping fuel and certain petrochemical prices have risen more this year than comparable prices in Europe and Asia, undercutting the notion that the US is insulated from a closure of the Strait of Hormuz.

The notion that the US is insulated from market consequences of the Strait of Hormuz being closed is mostly false. While US natural gas prices have actually declined this year, most other hydrocarbon-related fuels and refined product prices have increased materially. In some instances, US price increases are even higher than increases elsewhere in the world. For example: US crude oil, wholesale gasoline, naphtha, shipping fuel and certain petrochemical price increases this year are even higher than price increases in Europe and Asia. And even though the US is a net exporter of jet fuel, US jet fuel prices have risen by around two thirds of international increases.

Takeaways by Macro Roundup® AI

  1. US crude oil, wholesale gasoline, naphtha, shipping fuel and certain petrochemical prices have risen more this year than comparable prices in Europe and Asia, undercutting the notion that the US is insulated from a closure of the Strait of Hormuz.
  2. US jet fuel prices have risen by roughly two-thirds of the international increase even though the US is a net exporter of jet fuel.
  3. US natural gas prices have declined this year, while most other hydrocarbon-related fuels and refined product prices have increased materially.

Related Articles:

  • Oil Flash Note — Persian Gulf oil cargoes reach Asia in about 10–20 days, Europe and Africa in 20–35 days, and the US Gulf Coast in 35–45 days, so a supply disruption unfolds as a rolling shock moving westward. Asia feels the squeeze first, with Europe affected more by rising costs and competition than outright shortages.
  • The Oil Market Is Moving Into Demand Destruction Mode — The author estimates the oil market needs to destroy at least 8m barrels a day of demand, more than the combined consumption of Germany, France, the UK, Italy, and Spain. Because the US, Canada, Europe, Japan, and China make up nearly 55% of use, the burden would fall on Africa, Latin America, and much of Asia.
  • Fighting Words: The Energy Transition in 2026 — Estimates based on primary energy overstate how much electricity is needed to replace oil in passenger cars, since electric motors convert 80%-90% of electricity into motion versus about 18% for gasoline cars. Measuring useful final energy net of waste heat avoids this "primary energy fallacy": the US consumed 45 exajoules of useful final energy versus 95 exajoules of primary energy.

AI Summary. An analysis of country- and product-specific oil markets identifies pockets of potential extreme tightness if the Strait of Hormuz remains effectively closed, with critically low supplies of the petrochemical feedstocks naphtha and liquefied petroleum gas in Asia and cross-product scarcity in multiple Asian countries.

Yulia Zhestkova Grigsby, Alexandra Paulus and Daan Struyven Goldman Sachs
Date Posted:

A GS analysis finds Western Europe has ~109 days of crude and refined products stocks, relative to ~144 days in Japan and 70 days in ROK. Emerging markets in Asia and South Asia still have several weeks worth of stocks.

Does a blocked oil shipping route create petrochemical feedstock shortages in Asia?

Core argument: A country-product-specific analysis of oil markets identifies critically low supplies of the petrochemical feedstocks naphtha and LPG in Asia, with cross-product scarcity appearing in multiple Asian countries in April.

As the last tankers that crossed the Strait of Hormuz before the war are reaching their destination, concerns about potential oil shortages are rising. We analyze country-product-specific oil markets, identify pockets of potential extreme tightness, and discuss the potential evolution of near-term shortages if the Strait of Hormuz remains effectively closed for longer. Our three-way analysis highlights already critically low supplies of petrochemical feedstocks – naphtha and LPG – in Asia, with cross-product scarcity in multiple Asian countries in April.

Takeaways by Macro Roundup® AI

  1. A country-product-specific analysis of oil markets identifies critically low supplies of the petrochemical feedstocks naphtha and LPG in Asia, with cross-product scarcity appearing in multiple Asian countries in April.
  2. The last tankers that transited the Strait of Hormuz before the war are reaching their destinations, raising concerns about oil shortages if the Strait remains effectively closed for longer.
  3. The analysis identifies pockets of potential extreme tightness by country and product and discusses how near-term shortages could evolve under a prolonged closure of the Strait of Hormuz.

Related Articles:

  • The Global Wave Of Energy Rationing — The US Energy Information Administration reports that 83% of liquefied natural gas and 84% of crude oil shipped through the Strait of Hormuz was bound for Asia. Asian governments including Thailand, Vietnam, Indonesia, and Pakistan are urging fuel conservation through remote work, carpooling, cycling, and reduced air conditioning use.
  • Oil Flash Note — Persian Gulf oil cargoes reach Asia in about 10–20 days, Europe and Africa in 20–35 days, and the US Gulf Coast in 35–45 days, so a supply disruption unfolds as a rolling shock moving westward. Asia feels the squeeze first, with Europe affected more by rising costs and competition than outright shortages.
  • You Can’t Print Molecules — Rebuilding after a disruption to a key shipping strait would require governments to finance defense, strategic reserves, domestic energy production, and infrastructure at the same time that inflation expectations are raising funding costs. The author argues capital will rotate out of asset-light sectors that thrived on open sea lanes and cheap energy into asset-heavy physical ones.

AI Summary. About two-thirds of US stockpiles of the stealthy JASSM missile family — including the extended-range version, which flies more than 600 miles to strike targets beyond enemy air defenses — have been committed to the conflict with Iran, though committing them does not mean all will be used.

Gerry Doyle Bloomberg
Date Posted:

The Iran War is depleting the US JASSM-ER cruise missile stock; over 1,000 have been used in the Iran campaign so far and Pacific inventories are being moved to CENTCOM, leaving only 425 out of a prewar inventory of ~2,300 for a China contingency.

Does committing most long-range missiles to one war create strategic vulnerability?

Core argument: About two-thirds of US stockpiles of the JASSM family — the JASSM-ER, which flies more than 600 miles, and the roughly 250-mile JASSM — have been committed to the Iran war, though that does not mean all will be used.

The JASSM-ER, or Joint Air-to-Surface Missile-Extended Range, can fly more than 600 miles and was designed to hit targets at safer distances to avoid an enemy’s air defenses. Along with the shorter-range JASSM — which has a range of about 250 miles, about two-thirds of US stockpiles have been committed to the Iran war. Lockheed Martin’s scheduled production rate for 2026 is 396 of the longer-range version, although as many as 860 can be manufactured if the line, which also produces the LRASM anti-ship missile, is fully geared toward JASSMs. Committing so many JASSM-ERs to the Iran war does not mean they will all be used.

Takeaways by Macro Roundup® AI

  1. About two-thirds of US stockpiles of the JASSM family — the JASSM-ER, which flies more than 600 miles, and the roughly 250-mile JASSM — have been committed to the Iran war, though that does not mean all will be used.
  2. Lockheed Martin's scheduled 2026 production rate for the longer-range JASSM-ER is 396 missiles, with as many as 860 possible if the line, which also builds the LRASM anti-ship missile, is fully geared toward JASSMs.
  3. The JASSM-ER, with a range exceeding 600 miles, was designed to strike targets from safer distances to avoid an enemy's air defenses.

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  • U.S. Races to Accomplish Iran Mission Before Munitions Run Out — The Pentagon is working to maintain sufficient stocks of Thaad, Patriot, and Standard Missile interceptors being used to defend against Iranian missiles and drones, with Thaad systems deployed to Israel, Jordan, South Korea, and Guam. Patriots intercept lower-flying threats, while SM-3s can hit ballistic missiles above the atmosphere.
  • Japan, U.S. Form Working Group For Joint Missile Production — Japan and the United States agreed to create working groups on joint missile production, ship and aircraft repair, and supply chain resiliency as part of a defense industry cooperation forum. U.S. officials say Japan's engineering, industrial, and manufacturing capacity is a significant addition for the U.S. defense industrial base.

AI Summary. A large and rising share of China's economy operates under soft budget constraints, where firms retain access to credit regardless of balance sheets or profit expectations. Because nonproductive investment consuming more value than it creates can distort reported GDP, China's growth figures may diverge from underlying value creation more than in other large economies.

Michael Pettis China Financial Markets
Date Posted:

As China lacks “hard” budget constraints, continued access to credit ensures that value-reducing investment persists without the discipline of bankruptcy. Thus, Pettis argues, China’s GDP measures are inflated by “the deferral of lost recognition.”

Does reported growth measure real value creation without hard budget constraints?

Core argument: A large and rising share of China's economy operates under soft budget constraints, in which domestic economic entities can expect continued access to credit regardless of their balance sheets and profit expectations.

GDP [is intended to] measure the total monetary value of goods and services produced, but real value creation is hard to capture. A large and rising share of the Chinese economy instead operates under soft budget constraints. [That means] the relationship between reported GDP and the underlying economy can differ significantly compared to other large economies. What is a hard budget constraint? It is a disciplinary mechanism within capitalist economies that effectively prevents economic entities from consistently misusing resources. Economic entities operate under hard budget constraints when they must stay within strict loss parameters. They can only spend what they earn or borrow credibly, and if losses cannot be financed, they eventually go bankrupt. In China, however, where a large and rising share of the economy operates under soft budget constraints, many domestic economic entities can expect continued access to credit no matter what the condition of their balance sheets and profit expectations. Nonproductive investment—projects producing less value than the resources they consume—can distort GDP. [Thus] the GDP growth target in a soft-budget system can tell us more about the sustainability of the financial structure than it does about the creation of real economic value.

Takeaways by Macro Roundup® AI

  1. A large and rising share of China's economy operates under soft budget constraints, in which domestic economic entities can expect continued access to credit regardless of their balance sheets and profit expectations.
  2. Nonproductive investment—projects producing less value than the resources they consume—can distort GDP, so the relationship between reported GDP and the underlying economy in China can differ significantly from other large economies.
  3. In a soft-budget system, a GDP growth target can tell more about the sustainability of the financial structure than about the creation of real economic value.

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  • China’s Economy: Rightsizing 2025, Looking Ahead to 2026 — The authors argue China's official growth figures are inconsistent with ten consecutive quarters of deflation, estimating that real GDP is around 11% below official levels, with most of the adjustment in investment. That would imply a drop of roughly 9 percentage points in China's share of global investment, helping explain its export surge.