Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…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 must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, July 29, 2026

AI Summary. Regression evidence suggests governments can buy current account surpluses: raising the fiscal balance by $1 tends to raise the current account by about $0.30, while issuing $1 of domestic-currency debt to buy foreign-currency assets raises it by roughly $0.50-$0.60. Combining a fiscal surplus with foreign-currency investment, as Norway and Singapore do, yields about $0.80 per $1.

Joseph Gagnon and Nishtha Agrawal Peterson Institute For International Economics
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Using annual data for 146 countries from 1985 – 2024, Gagnon and Agrawal find that a $1 increase in a country’s cyclically adjusted fiscal deficit is associated with a 22–38¢ increase in its current-account deficit, with most of the estimates ~30¢.

Can governments buy current account surpluses with fiscal and currency policy?

Core argument: Regression results suggest that raising the fiscal balance by $1 tends to raise the current account by about $0.30.

Table 1 presents regression results. The evidence strongly suggests that governments can buy current account surpluses. Raising the fiscal balance by $1 tends to raise the current account by $0.30 [Table 1, first row]. Issuing $1 of domestic currency debt to buy foreign-currency assets (foreign exchange intervention) raises the current account anywhere from $0.20 to $1.00, with a value around $0.50 to $0.60 most plausible [Rows 2 though 5]. NOF is Net Official Flows, and NOS is the stock of net official foreign assets. The most powerful policy, as exemplified by Norway and Singapore, is to run a fiscal surplus and invest the proceeds in foreign-currency assets. In that case, $1 buys a current account surplus of around $0.80 or so. The results are supported by annual panel regressions of current accounts and cross-country stock regressions of cumulated current accounts or stocks of net foreign assets. The estimated effects in the panel regressions may be biased down slightly by incomplete modeling of lagged effects.

Takeaways by Macro Roundup® AI

  1. Regression results suggest that raising the fiscal balance by $1 tends to raise the current account by about $0.30.
  2. Issuing $1 of domestic currency debt to buy foreign-currency assets is estimated to raise the current account by $0.20 to $1.00, with $0.50 to $0.60 most plausible.
  3. Combining a fiscal surplus with investment of the proceeds in foreign-currency assets, as Norway and Singapore do, is estimated to buy a current account surplus of around $0.80 per $1.

Related Articles:

  • Understanding Global Imbalances — The US, China, Germany, and Japan account for roughly two-thirds of global current account imbalances, with the US deficit at 4% of GDP financed by capital inflows into dollar assets. The average duration of a surplus or deficit spell roughly doubled since the 1980s, building large net foreign asset and liability positions.
  • The U.S. Trade Deficit: Myths and Realities — Taxing capital inflows would weaken the dollar but could raise domestic interest rates and depress investment, harming long-term growth, while an interest rate cut absent recession would be inflationary and erode any real depreciation needed to durably improve the trade balance. Fiscal restraint could weaken the dollar and reduce the trade deficit.
  • The Dangerous Triumph Of Neo-Mercantilism — Neo-mercantilism is thriving in both China, which pairs infant-industry promotion with large trade surpluses, and in a United States focused on external deficits and protecting domestic markets. The author argues this will likely fracture the world economy, and that a new multilateral treaty could include a mechanism to combat large structural trade surpluses.

AI Summary. Companies have steadily "de-equitized" through buybacks and cash-funded mergers, supporting share prices, but Barclays projects equity supply could rise for the first time in decades as large cloud computing firms fund capital spending. Their high valuation multiples make equity cheaper than debt, and that re-equitization would weigh on share prices.

John Authers Bloomberg
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Citing Barclays’ research that suggests 2026 will be the first time since 2002-2003, when net US equity issuance will be positive, John Authers argues “re-equitization” will likely weigh on stock prices.

Will rising equity supply from tech capital spending weigh on share prices?

Core argument: Barclays Equities Tactical Strategies projects that 2026 could be the first year in decades when equity supply rises, reversing the "de-equitization" from buybacks and cash-funded mergers and acquisitions that has buoyed the stock market.

The Nasdaq's most recent peak overlapped almost perfectly with the IPO by Elon Musk’s Space Exploration Technologies Inc., the biggest in history. When companies go public, the fear is that the insiders have reason to believe it’s time to sell. By raising the supply of equity, they will tend to bring down share prices. Companies have steadily “de-equitized,” buying back stock and conducting mergers and acquisitions with cash. That has buoyed the stock market. But as Barclays Equities Tactical Strategies shows, 2026 could be the first year in decades when equity supply rises. The hyperscalers need money to fund their capital expenditures, and as Barclays shows, the generous multiples at which their stocks trade make it cheaper to get their financing by raising equity, not debt. That suggests re-equitization, which will make it harder for their share prices to prosper.

Takeaways by Macro Roundup® AI

  1. Barclays Equities Tactical Strategies projects that 2026 could be the first year in decades when equity supply rises, reversing the "de-equitization" from buybacks and cash-funded mergers and acquisitions that has buoyed the stock market.
  2. The Nasdaq's most recent peak overlapped almost perfectly with the initial public offering by Elon Musk's Space Exploration Technologies Inc., the biggest in history, and added equity supply tends to bring down share prices.
  3. Barclays argues that the generous multiples at which hyperscaler stocks trade make equity cheaper than debt for funding their capital expenditures, suggesting re-equitization that will make it harder for their share prices to prosper.

Related Articles:

  • Capital Is Making a Comeback — Tangible investment in property, factories and equipment fell from 12.5% to 8.5% of private gross domestic product, while intangible investment in intellectual property, software and process knowledge rose from about 11.5% to 16.75%. The author argues demand for tangible capital investment will now have to rise.
  • Capital Allocation — Internal financing has been the main source of capital for U.S. corporations, with steady new debt issuance except in recession years, consistent with a stable capital structure. Companies have retired equity on average, and net equity issuance remains negative even after accounting for stock-based compensation.
  • SpaceX and OpenAI Are Ending Wall Street’s Era of Stock Scarcity — JPMorgan projects that share sales will add roughly $1.5tn of stock to the US equity market over the next two years even after buybacks, which would be the strongest net equity issuance since at least the late 1990s. Equity has grown cheaper relative to debt as a funding source.

AI Summary. Markets are weighing whether the trillions committed upfront to AI data centers, chips, and power will generate returns above the cost of capital before those assets depreciate. With the buildout increasingly funded by debt rather than internal cash flow and borrowing spreads widening, financing costs could rise until new data-center spending no longer clears its return hurdle.

Torsten Sløk Apollo
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Noting CDS spreads widening for top AI firms, Sløk comments “the question is whether the all-in yield climbs to a level where the marginal data-center dollar no longer clears its return hurdle, forcing the capex cycle to self-throttle.”

Will AI capital spending earn returns above its cost of capital?

Core argument: With trillions committed up front to data centers, chips, and power, the central market question is whether AI monetization ramps fast enough to clear the cost of capital before those assets depreciate.

The market is asking three fundamental questions: 1) Will the AI capex pay off, and how quickly? With trillions committed to data centers, chips, and power up front, the question is whether AI monetization ramps fast enough to clear the cost of capital before the assets depreciate, or whether it's an overbuild whose ROIC never catches up to its WACC on a massive, front-loaded outlay. 2) How is all of this being financed, and at what spread? Hyperscaler spreads are widening as the buildout is increasingly funded with debt rather than organic free cash flow, and as issuance surges, the question is whether the all-in yield climbs to a level where the marginal data-center dollar no longer clears its return hurdle, forcing the capex cycle to self-throttle. 3) Will there be unlimited demand for compute, or will compute demand peak? The bull case assumes demand is effectively insatiable as inference workloads, agentic systems, and new model generations compound, but the risk is that efficiency gains, model commoditization, or slower-than-expected enterprise adoption cause demand to plateau well below the capacity now being built, leaving the industry with a glut of expensive, rapidly depreciating infrastructure.

Takeaways by Macro Roundup® AI

  1. With trillions committed up front to data centers, chips, and power, the central market question is whether AI monetization ramps fast enough to clear the cost of capital before those assets depreciate.
  2. Hyperscaler spreads are widening as the AI buildout is increasingly funded with debt rather than organic free cash flow, raising the question of whether all-in yields climb until the marginal data-center dollar no longer clears its return hurdle.
  3. The bull case treats compute demand as effectively insatiable across inference workloads, agentic systems, and new model generations, while the risk is that efficiency gains, model commoditization, or slower enterprise adoption leave a glut of rapidly depreciating infrastructure.

Related Articles:

  • The Summer I Turned Pretty — A warning sign in a boom cycle is when companies closest to final demand weaken while capital spending beneficiaries keep thriving, as when telecom operators' shares rolled over while communications equipment stocks kept rising. Semiconductor stock prices and free cash flow are soaring while large cloud providers' shares stagnate and their free cash flow plummets.
  • One Hundred Years in the U.S. Stock Markets — Over a century, U.S. publicly traded stocks generated roughly $91tn in shareholder wealth enhancement, with returns strongly positively skewed and dominated by a relatively small number of high-performing firms. Because most possible outcomes fall below the mean in a skewed distribution, the authors argue financial planning should focus on median outcomes or the full distribution.
  • Competitive Advantage Period: The Neglected Value Driver — Data indicate persistence in returns on invested capital has increased since 2000, with large companies the main beneficiaries; the information technology sector's aggregate return was 19% versus a 10.8% median from 1970 to 2024. Of about 13,800 U.S. public firms listing from 1976 to 2019, 18% survived.

AI Summary. Chinese satellite operators Guowang and Thousand Sails each plan to deploy more than 10,000 satellites, competing with SpaceX's Starlink as China builds low Earth orbit broadband networks with both civilian and military applications. China's automated satellite "gigafactories" have an estimated production capacity of 4,100–5,000 satellites a year, up from 500.

Demetri Sevastopulo and Eva Xiao Financial Times
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A commercial space sector is emerging in China with commercial satellites now making up almost half of China’s launches. Two firms are each planning on deploying constellations to compete with SpaceX’s Starlink.

Does China's satellite manufacturing buildout challenge US dominance in orbit?

Core argument: China's estimated satellite production capacity stands at 4,100–5,000 units a year, up from an annual rate of 500 three years ago, supported by large automated "gigafactories" for satellite manufacturing.

Two companies — Guowang and Thousand Sails — are each planning to deploy more than 10,000 satellites in space, putting them in direct competition with SpaceX’s Starlink constellation. This comes as China is pushing to build low Earth orbit broadband networks with dual civilian and military applications. The country is also creating huge automated “gigafactories” to build satellites and has an estimated capacity for the production of 4,100–5,000 satellites a year, compared to an annual rate of 500 three years ago.

Takeaways by Macro Roundup® AI

  1. China's estimated satellite production capacity stands at 4,100–5,000 units a year, up from an annual rate of 500 three years ago, supported by large automated "gigafactories" for satellite manufacturing.
  2. Two Chinese constellations, Guowang and Thousand Sails, each plan to deploy more than 10,000 satellites, placing them in direct competition with SpaceX's Starlink.
  3. China is pushing to build low Earth orbit broadband networks with dual civilian and military applications.

Related Articles:

  • The Hunt For A New Earth — Advances in rockets, telescopes, satellites, artificial intelligence and robotics, alongside rising public and private space funding in the US and China, are expanding scientists' ability to probe space, with both countries planning crewed Moon landings. PwC projects cumulative lunar economy revenues of $94bn–$127bn over the 25 years to 2050.
  • Rocket Shortage Leaves Europe Defenseless in Space Wars — China, Russia, and the US are investing more than $200bn in military space capabilities, placing hundreds of satellites in orbit over the past five years, while Europe lags due to misaligned interests, limited national budgets, and too few heavy launchers. Europe's Ariane 6 carries about 22,000 kg but is limited to roughly 10 launches a year.
  • Elon Musk’s Starship Heavy Could Revolutionize Warfare — The Starship heavy-lift rocket would make it possible to pre-position conventional munitions in low Earth orbit, with heat shields and inertial guidance, that could be deorbited with little warning to strike anywhere on Earth within minutes. Such a system would allow thousands of simultaneous precise strikes without aircraft or personnel at risk, removing the need to first establish air superiority.

Thursday, July 30, 2026

AI Summary. The 30-year US Treasury yield rose more than 10 basis points to a 19-year high after the Federal Reserve left rates unchanged, while two-year yields fell to 4.23%, 10-year yields rose to 4.66%, and the dollar dropped. Interest-rate swaps priced roughly 60% odds of a rate increase in September.

Michael MacKenzie and Greg Ritchie Bloomberg
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Following the Fed’s 9–3 vote not to raise the funds rate, the 30-year yield climbed more than 14bps to as high as 5.23%, its highest level since 2007, likely reflecting the market’s concern that the Fed’s reluctance to hike puts it behind the curve.

Do long-term Treasury yields rise when the Fed holds rates steady?

Core argument: The US 30-year Treasury yield rose more than 10 basis points to its highest level in 19 years after the Federal Reserve left rates unchanged, while the dollar dropped.

The 30-year yield climbed more than 10 basis points to the highest level in 19 years. Yields on two-year notes — which are most sensitive to changes in the Fed’s policy — declined by six basis points to 4.23%, while 10-year yields were up five basis points to 4.66%. The dollar dropped. Interest-rate swaps reflected a roughly 60% probability that officials led by Chairman Kevin Warsh will boost borrowing costs in September after the decision [down from the previous meeting], even as some officials signaled growing conviction that a hike would be needed to control resurgent inflation. A hike is fully priced in for December.

Takeaways by Macro Roundup® AI

  1. The US 30-year Treasury yield rose more than 10 basis points to its highest level in 19 years after the Federal Reserve left rates unchanged, while the dollar dropped.
  2. Two-year yields, the most sensitive to Fed policy, fell six basis points to 4.23%, while 10-year yields rose five basis points to 4.66%.
  3. Interest-rate swaps reflected a roughly 60% probability of a September hike by officials led by Chairman Kevin Warsh, down from the previous meeting, with a hike fully priced in for December.

Related Articles:

  • The Dangerous Brew That’s Rattling Bond Markets — U.S. inflation has remained above the Federal Reserve's 2% target since 2022 while government borrowing runs high and companies borrow heavily to fund AI build-out. Even so, the 30-year Treasury yield reached a 19-year high of 5.18% while the 10-year yield, at 4.67%, sat below its October 2023 level.
  • 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.
  • Global Debt Report 2026 — Gross central government borrowing across OECD countries rose 7% to a record $17tn, about 23% of GDP, and is projected to reach roughly $18tn, or 24% of GDP. The United States and Japan account for close to 80% of the area's refinancing requirements, with the US share rising from 57% to 70%.

AI Summary. Using observed AI usage data across 321 U.S. occupations, the authors estimate that highly exposed occupations saw a 6.7% decline in real wage growth with no detectable employment effects. The estimated declines are concentrated among the lowest earners, with service workers down 24.3% and the bottom wage quartile down 10.7%, while top earners show no significant effect.

Sania Edlich and Torsten Sløk Apollo
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A difference-in-differences design finds 6.7% slower real-wage growth in AI-exposed occupations since 2023 than in low-exposure ones, with no detectable job loss. The largest effects were for the lowest quartile (-10.7%) and service occupations (-24.3%).

How does AI exposure affect wages across occupational earnings levels?

Core argument: Using observed AI usage data from the Anthropic Economic Index across 321 matched occupations from 2015–2025, the authors estimate that high-exposure occupations saw a 6.7% decline in real wage growth after 2023, with no detectable employment effects.

We examine the wage and employment effects of AI adoption across U.S. occupations using observed usage data from the Anthropic Economic Index rather than the theoretical exposure measures that dominate prior work. Using a difference-in-differences design with occupation and year fixed effects across 321 matched occupations from 2015 to 2025, we find that high-exposure occupations experience a 6.7% decline in real wage growth post-2023 with no detectable employment effects. The effect is concentrated among the lowest earners: service workers face a 24.3% decline and the bottom wage quartile a 10.7% decline, while top earners show no significant effect.Today, 5.8 million workers are affected, but as AI adoption deepens across corporate America, this figure is likely to grow substantially, with significant implications for income inequality and labor market policy in the years ahead. Only 321 of roughly 800 BLS occupations were matched, and the post-2023 period may be partially confounded by post-pandemic labor market dynamics. [Editor’s note: Figure 3 shows both wage and employment growth and decline among high-exposure workers, but the exposure measure combines automated and augmentative use, and thus cannot distinguish substitution from complementarity.]

Takeaways by Macro Roundup® AI

  1. Using observed AI usage data from the Anthropic Economic Index across 321 matched occupations from 2015–2025, the authors estimate that high-exposure occupations saw a 6.7% decline in real wage growth after 2023, with no detectable employment effects.
  2. The estimated wage effects are concentrated among the lowest earners, with service workers facing a 24.3% decline and the bottom wage quartile a 10.7% decline, while top earners show no significant effect.
  3. The authors estimate that 5.8 million workers are affected and expect that figure to grow as AI adoption deepens, while noting that only 321 of roughly 800 BLS occupations were matched and post-2023 results may be partly confounded by post-pandemic labor dynamics.

Related Articles:

  • AI and the Fable of the ATMs — Bank tellers per branch fell steadily as automated teller machines spread, and total teller employment held up only because banking deregulation drove a rise in branch numbers; teller jobs are down nearly 40% from their peak. The author argues invoking this case for AI requires identifying an equivalent offsetting source of labor demand.
  • Looking for the Ladder — The article argues that the hiring downturn in occupations most exposed to generative AI reflects interest-rate sensitivity rather than AI itself, since roughly 38% of workers in the most AI-exposed quintile work in information, finance and insurance, and professional and technical services, versus under 2% in the least-exposed quintile.
  • Technology and the Baby Bust Paradox — Aging populations create structural incentives to automate, and the argument is that demographic change could become one of the strongest long-run drivers of artificial intelligence deployment. Technology-producing economies may benefit twice, offsetting their own labor shortages while exporting automation, robotics, and AI to other aging societies.

AI Summary. Hundreds of major data centers under construction worldwide are set to deliver computing power for artificial intelligence on a scale with no equal in the technology industry's history. The research firm Epoch AI estimates about 20m AI chips are in use today, a figure expected to double roughly every nine months.

Adam Satariano, Paul Mozur, Jacqueline Gu and Cade Metz New York Times
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An Epoch AI analysis forecasts that the number of working H100-equivalent chips will grow from ~20mm today to ~200mm by the end of 2028 as datacenters come online.

How fast is AI computing power set to grow?

Core argument: About 20 million A.I. chips currently sit in data centers worldwide, a figure expected to double roughly every nine months to about 200 million by the end of 2028, 10 times current levels, according to the research firm Epoch AI.

From the American Midwest to the Persian Gulf, hundreds of major data centers now under construction will be turned on in the coming years. They are set to deliver an avalanche of computing power to develop and run A.I. that has no equal in the history of the technology industry, with breakthroughs that once felt revolutionary likely to become increasingly routine. Behind each leap in A.I. are corresponding jumps in computing power. Today, there are about 20 million A.I. chips crammed into the data centers that underpin the technology’s growing abilities and usage worldwide, according to the research firm Epoch AI. That figure is expected to double roughly every nine months, putting the world on pace to have about 200 million of the chips by the end of 2028 — 10 times current levels.

Takeaways by Macro Roundup® AI

  1. About 20 million A.I. chips currently sit in data centers worldwide, a figure expected to double roughly every nine months to about 200 million by the end of 2028, 10 times current levels, according to the research firm Epoch AI.
  2. Hundreds of major data centers under construction from the American Midwest to the Persian Gulf will be turned on in the coming years, delivering computing power for A.I. with no equal in the history of the technology industry.
  3. Each leap in A.I. is backed by a corresponding jump in computing power, with breakthroughs that once felt revolutionary likely to become increasingly routine.

Related Articles:

  • Commoditization, Orchestration, and the New AI Stack — The author argues that as incremental gains from larger AI training runs shrink, the return on additional computing power falls, weakening the case for the training spending that dominates data center demand. Survivors of model commoditization will be those owning the orchestration layer or the applications where outcomes are priced.
  • Chart of the Day: Small Models are Closing the Gap to Frontier AI — Achieving 60% on MMLU, a test of academic reasoning, once required a 540bn-parameter model but was reached by a 3.8bn-parameter model two years later, a 142x reduction in parameters. Models small enough to run on phones or sensors shift inference from data centers to devices, weakening the case for paying cloud providers per token.
  • Semiquincententacles — Leading artificial-intelligence labs are moving to usage-based token pricing on a cost-plus basis that includes total ownership costs, pushing token prices higher and giving some enterprises reason to migrate to cheaper open models. Frontier models remain necessary for cybersecurity, distillation training, agents, and scientific discovery, where maximum performance is required.

AI Summary. An analysis of residential air-conditioning in OECD countries finds that per capita income explains little of the variation, while being European is associated with roughly 50 percentage points lower air-conditioning availability. At US income levels, a country following European patterns would have air-conditioning in fewer than half its homes.

Nicholas Eberstadt American Enterprise Institute
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French and German AC availability is at 1965 and 1963 American levels, respectively. Eberstadt argues the “striking lack of AC nowadays in affluent modern Europe looks very much like some sort of stubborn choice.”

Does income or being European explain home air-conditioning differences?

Core argument: In a chart predicting OECD residential air-conditioning availability from per capita income and European status, being European is associated with a drop of almost 50 percentage points, all else equal.

The chart “predicts” residential AC penetration in OECD today using just two factors: per capita income, and whether or not a country is European. Per capita income turns out to make little difference (no surprise: our analysis leaves out all of the poor world.) But the Europe thing matters, big time. All else equal, an OECD country’s residential AC availability drops by almost 50 percentage points if it happens to be European. Put another way: by the patterns in the chart, a country with America’s present income level would have air-conditioning in fewer than half its homes today if it were on a “European” schedule. With “European” norms, indeed, a country as rich as the US today would have the same limited AC coverage the US reported over half a century ago.

Takeaways by Macro Roundup® AI

  1. In a chart predicting OECD residential air-conditioning availability from per capita income and European status, being European is associated with a drop of almost 50 percentage points, all else equal.
  2. Per capita income makes little difference to residential air-conditioning penetration in the chart, which covers only OECD countries and leaves out the poor world.
  3. By the chart's patterns, a country with America's present income level on a "European" schedule would have air conditioning in fewer than half its homes, matching the limited coverage the United States reported over half a century ago.

Related Articles:

  • Britain and Europe Need to Get Serious About Air Conditioning — European cities face more intense, frequent, and longer heat, with hot nights rising fastest, yet air conditioning remains far less common than in the US: London is seeing as many days requiring cooling as Portland, Oregon, where 79% of households have air conditioning. Extreme heat killed an average 83,000 western Europeans annually versus 20,000 North Americans.
  • 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.
  • The Future of Cooling — Over half of the world's 1.6bn air conditioners are in just two countries, China with 570m units and the United States with 375m, and nearly 70% of all units globally are in residential buildings. Household ownership ranges from about 4% in India and under 10% in Europe to over 90% in the United States and Japan.

AI Summary. The Pentagon has committed over $120bn across weapons deals, including a Patriot missile contract valued at nearly $59bn and a $76.6bn agreement for nine Virginia-class and five Columbia-class nuclear submarines. The military is shifting from annual purchases to multiyear agreements to encourage contractors to invest in new factories and supply chains.

Drew FitzGerald and Marcus Weisgerber Wall Street Journal
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The Pentagon earmarked ~$136B for Patriot missile production as well as 14 new submarines over 7 years. Congress must still provide annual funding for the deals.

Is the Pentagon shifting to multiyear weapons contracts to expand production capacity?

Core argument: General Dynamics Electric Boat and HII Newport News Shipbuilding received a $76.6 billion deal for nine Virginia-class and five Columbia-class nuclear submarines to be delivered by 2038.

A Patriot contract with missile maker Lockheed Martin is now valued at nearly $59 billion, a significant expansion of an order announced in April. General Dynamics Electric Boat and HII Newport News Shipbuilding received a $76.6 billion deal for nine Virginia-class and five Columbia-class nuclear submarines that will be delivered by 2038. Lockheed has another megadeal for missiles on order with the U.S. government—a preliminary $35 billion multiyear contract for Thaad interceptors, a larger munition also capable of thwarting ballistic missiles. Both contracts, which span seven years, reflect the Pentagon’s changing approach to buying missiles. The military has proposed a series of multiyear agreements instead of annual purchases to guarantee a smoother supply of weaponry over time. The effort is designed to motivate contractors to invest in new factories and supply-chain agreements in exchange for a reliable signal of future orders. Congress must still provide annual funding for the deals.

Takeaways by Macro Roundup® AI

  1. General Dynamics Electric Boat and HII Newport News Shipbuilding received a $76.6 billion deal for nine Virginia-class and five Columbia-class nuclear submarines to be delivered by 2038.
  2. Lockheed Martin's Patriot missile contract is now valued at nearly $59 billion, an expansion of an order announced in April, alongside a preliminary $35 billion multiyear contract for Thaad interceptors.
  3. The U.S. military has proposed seven-year multiyear missile agreements in place of annual purchases to motivate contractors to invest in new factories and supply-chain agreements, though Congress must still provide annual funding.

Related Articles:

  • Renewed Iran War Would Test Diminished Interceptor Inventories — Air defense against Iranian missile attacks has achieved high but imperfect interception rates, and the interceptors expended have left Patriot inventories under 1,000 and THAAD inventories at about 250. Diminished stockpiles may force more risk-taking on interceptions and pose a near- to medium-term risk to U.S. readiness for a war with China in the western Pacific.
  • Is the Industrial Base on a Wartime Footing? A Progress Report — About 10,000 new firms have entered the US defense market in two years, and nontraditional companies received over $120bn in contract obligations in fiscal 2025, while munitions contract obligations have risen 330% since fiscal 2010. The Defense Department is signing large-scale multiyear munitions agreements and backing a rare earth supply chain outside Chinese control.
  • Lockheed Seeks European Production for Cheaper Patriot Missile — Lockheed Martin plans to field a lower-cost Patriot missile, the PAC-3 Adapted Capability Effector, priced at less than half the roughly $4mn per-missile cost of its current PAC-3 MSE interceptors, developed and manufactured with US and European industry partners. The company cites soaring military demand for more cost-effective ways to counter drones.