Edward Conard

Top Ten New York Times Bestselling Author

  • “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
  • “…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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “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 comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “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 very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, August 11, 2026

AI Summary. Across countries and over time, higher public debt burdens are associated with lower relative returns on government bonds, the opposite of standard risk-premium predictions. The authors estimate financial repression—making banks captive bond buyers and loading them with low-return reserves—contributed 90.7 percentage points of GDP to Britain's postwar debt reduction, versus 20.3 from surprise inflation.

Marijn Bolhuis, Jakree Koosakul, Neil Shenai, and Jie Yang International Monetary Fund
Date Posted:

Historically, sovereign yields fell relative to private returns as debt rose, driven by liquidity and portfolio rules creating captive buyers for government liabilities. Peaking in WWII, such financial repression may return as debt rises.

How do governments reduce high public debt burdens without inflation or surpluses?

Core argument: Financial repression contributed an estimated 90.7 percentage points of GDP to Britain's debt reduction in 1945–55, versus 20.3 points from surprise inflation and 3.9 points from primary surpluses.

Across countries and over time, higher public debt burdens are associated with lower relative returns on government bonds—the opposite of what standard risk premium models would predict (Figure 1a). At postwar peaks, relative yields fell to about −4% in Britain as debt neared 250% of GDP and −3% in the US; Japan later repeated the pattern (Figures 1b–d). Fiscal repression makes banks captive bond buyers; monetary repression places low-return reserves on their balance sheets (Table 1). Both indicators peaked after WWII, fell with liberalisation, and rose after the GFC (Figure 4). Repression contributed an estimated 90.7 percentage points of GDP to British debt reduction in 1945–55, versus 20.3 from surprise inflation and 3.9 from primary surpluses (Table 3; Figure 11). Cumulative savings averaged 9.8 points of GDP across advanced economies in 2008–20 (Table 3).

Takeaways by Macro Roundup® AI

  1. Financial repression contributed an estimated 90.7 percentage points of GDP to Britain's debt reduction in 1945–55, versus 20.3 points from surprise inflation and 3.9 points from primary surpluses.
  2. Higher public debt burdens are associated with lower relative returns on government bonds across countries and over time, the opposite of standard risk premium predictions, with postwar relative yields falling to about −4% in Britain as debt neared 250% of GDP and −3% in the US.
  3. Fiscal repression makes banks captive buyers of government bonds while monetary repression places low-return reserves on bank balance sheets; both indicators peaked after WWII, fell with liberalisation, and rose after the global financial crisis, with cumulative savings averaging 9.8 points of GDP across advanced economies in 2008–20.

Related Articles:

  • The United States Capital Structure — Because Social Security and Medicare benefits are politically untouchable, retirees effectively hold the most senior claim on US government resources while Treasury bondholders hold the riskiest one. On this argument, bondholders absorb adverse fiscal shocks through surprise inflation, financial repression, or both.
  • The Global Fiscal Train Wreck — Ten-year forward yields ten years ahead have risen across major advanced economies, not just the US, a global theme the author attributes to the debt buildup during the pandemic. The author argues economies have begun shifting from a good to a bad debt equilibrium, which he sees behind the rally in precious metals prices tied to a "debasement trade.
  • Fiscal Dominance and the Return of Zero-Interest Bank Reserve Requirements — Fiscal dominance requires governments to fund deficits at the margin with non-interest-bearing debt, and the revenue from inflation taxation—both expected and unexpected—is limited. The authors argue a US fiscal dominance episode could end the payment of interest on bank reserves and restore requirements that banks hold large zero-interest reserves against deposits.

AI Summary. The yen resumed its slide past 159 per dollar, erasing half the gain from the first coordinated US-Japan currency intervention since 1998. The move highlights the limits of intervention while the forces behind the yen's decline remain intact, including wide Japan-US interest-rate differentials, concerns over Japan's fiscal outlook, and geopolitical uncertainty.

Daniel Flatley and Anya Andrianova Bloomberg
Date Posted:

As the impact of the recent intervention recedes, Bloomberg reports on an analysis projecting that if the yen again depreciates back or beyond 160 per dollar, US and/or Japanese intervention will resume.

Can currency intervention reverse a falling yen when underlying pressures persist?

Core argument: The yen fell as much as 1% Monday to past 159 per dollar, erasing half the rally from the July 31 US-Japan intervention, which had lifted the currency near 155.

Japan’s currency slid as much as 1% Monday to past 159 per dollar, wiping out half the rally triggered by the July 31 US-Japan intervention. The exercise, the first coordinated effort since 1998, had lifted the currency near 155 before the retreat resumed. The currency moves highlight the limits of that mechanism in changing the yen’s broader trajectory when the forces behind its decline remain largely intact. Those forces include wide interest-rate differentials between Japan and the US, concerns over Japan’s fiscal outlook, and geopolitical uncertainty. The yen’s retreat on Monday came alongside a rise in the price of oil amid continuing tensions over Iran. Japan imports most of its energy, leaving it vulnerable to higher prices.

Takeaways by Macro Roundup® AI

  1. The yen fell as much as 1% Monday to past 159 per dollar, erasing half the rally from the July 31 US-Japan intervention, which had lifted the currency near 155.
  2. The July 31 operation was the first coordinated US-Japan currency intervention since 1998, and the yen's renewed retreat highlights the mechanism's limits while wide Japan-US interest-rate differentials, Japanese fiscal concerns, and geopolitical uncertainty remain largely intact.
  3. The yen's Monday decline coincided with rising oil prices amid continuing tensions over Iran, leaving Japan, which imports most of its energy, vulnerable to higher prices.

Related Articles:

  • The Carry Trade That Can’t Be Unwound — Japan's consolidated public sector has liabilities of 255% of GDP, with asset purchases having shortened their duration and bank reserves at the Bank of Japan — floating-rate liabilities — worth 75.5% of GDP, down from 90.7%. Its largely unhedged 56%-of-GDP position in foreign securities and 50%-of-GDP equity holdings would take losses if the yen appreciates and real rates climb.
  • The Global Fiscal Train Wreck — Ten-year forward yields ten years ahead have risen across major advanced economies, not just the US, a global theme the author attributes to the debt buildup during the pandemic. The author argues economies have begun shifting from a good to a bad debt equilibrium, which he sees behind the rally in precious metals prices tied to a "debasement trade.
  • Yen Intervention = US Self-Preservation — Japan's two traditional options for supporting a weak yen — much higher Japanese interest rates or large sales of dollars and US Treasuries — would both pressure US yields, as Japan holds about $1tn of Treasuries. US willingness to back Japan via its exchange stabilization fund and the Federal Reserve's international repo facility suggests officials see that risk.

AI Summary. Bank of America data show spending and wage growth have largely converged across income groups, narrowing the previously wide gap between higher- and lower-income households, though the top 5% of earners continue to outpace the rest. After-tax wage growth reached 5.2% year-over-year for lower-income and 4.2% for middle-income households.

David Michael Tinsley, Joe Wadford, Liz Everett Krisberg, Vanessa Cook, et al. Bank of America
Date Posted:
Is Database:
Database

Over the last two years, after-tax wage growth for the top 5% has outpaced the rest of the distribution. BofA internal data show after-tax wage growth for the lowest income tercile has surpassed that of the top 5% for the first time since December 2024.

Is the spending and wage gap between income groups narrowing?

Core argument: After-tax wage growth reached 5.2% YoY for lower-income households and 4.2% YoY for middle-income households in July, which the Consumer Checkpoint analysis views as one factor behind the narrowing spending growth gap across income cohorts.

We have discussed the “K-shaped” divide between higher- and lower-income households’ spending and wage growth. But since May, our data has shown a significant narrowing in this gap. As of July, spending and wage growth have largely converged across income cohorts, with the exception of the top 5% of earners, who continue to outpace the rest. A similar dynamic was evident in discretionary spending. In our view, one factor behind the narrowing spending growth gap is stronger after-tax wage growth. For lower- and middle-income households, after-tax wage growth rose to 5.2% YoY and 4.2% YoY, respectively, in July.

Takeaways by Macro Roundup® AI

  1. After-tax wage growth reached 5.2% YoY for lower-income households and 4.2% YoY for middle-income households in July, which the Consumer Checkpoint analysis views as one factor behind the narrowing spending growth gap across income cohorts.
  2. Data since May show a significant narrowing of the "K-shaped" divide in spending and wage growth, which had largely converged across income cohorts as of July.
  3. The top 5% of earners continue to outpace other income cohorts in spending and wage growth, with a similar pattern evident in discretionary spending.

Related Articles:

  • What the World Cup Revealed About America — About 73m US households hold retirement accounts, mostly defined-contribution plans whose balances have risen $6.7tn, and 45m households account for nearly $15tn in annual outlays, close to 3x Germany's economy and 70% of China's GDP. This group's spending has sustained faster growth than comparably wealthy economies.
  • K-Shaped Economy? — Available spending data does not support the narrative of a bifurcated "K-shaped" consumer economy: surveys show households earning under $50,000 reported spending growth of 5%, versus 4.6% for those earning over $100,000. Government data show the top income decile's share of aggregate spending at 22.8%, down from 23.4% a year earlier.
  • The Record Divide Between Corporate Profits and Worker Pay — Labor's share of gross domestic income fell to 51%, the lowest since records began in 1947, while profits' share rose to 12.1%, the highest since 1950. Inflation-adjusted hourly wages are up 3% since the end of 2019, compared with a 50% rise in profits.

AI Summary. Free cash flow at large technology companies is deteriorating rapidly as data-center spending absorbs it, even as the rest of the corporate sector generates more cash. Across the S&P 500, earnings per share have risen much faster than free cash flow over a protracted stretch, raising questions about how quickly artificial-intelligence capital spending will turn into profits.

John Authers Bloomberg
Date Posted:

As the Mag 7’s free cash flow has turned negative, that of the S&P 500 net the Mag 7 has ticked up since the start of the year.

Is data-center spending eroding big tech's free cash flow?

Core argument: Tech companies' free cash flow is deteriorating at an unprecedented pace as data centre spending consumes it, even as the rest of the corporate sector generates more cash.

Questions are mounting over how quickly the capex ploughing into AI will translate into profitability, but tech’s earnings growth is still impressive — it’s just that the cost of that investment is increasingly hard to ignore. Their free cash flow is deteriorating at an unprecedented pace as spending on data centres gobbles it up, even as the rest of the corporate sector generates more cash. The numbers for the overall S&P 500, as shown by Bloomberg’s Graph Fundamentals function, confirm a protracted run in which earnings per share have risen much faster than free cash flow. This started after companies had made big pandemic cost cuts and then went into overdrive after the arrival of ChatGPT.

Takeaways by Macro Roundup® AI

  1. Tech companies' free cash flow is deteriorating at an unprecedented pace as data centre spending consumes it, even as the rest of the corporate sector generates more cash.
  2. S&P 500 earnings per share have risen much faster than free cash flow in a protracted run, as shown by Bloomberg's Graph Fundamentals function.
  3. The divergence between S&P 500 earnings per share and free cash flow began after companies made big pandemic cost cuts and went into overdrive after the arrival of ChatGPT.

Related Articles:

  • The Buyers of AI Are Still Waiting for the Payoff — Companies in the S&P 500 outside the technology sector are spending heavily on artificial intelligence without showing gains in profit margins, with health care margins halved since 2015, consumer staples near 6%, and consumer discretionary near 8%. So far the artificial intelligence capital spending boom appears in sellers' margins rather than buyers'.
  • 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.
  • A Slower AI Payoff Would Be Everyone’s Problem — If artificial intelligence profits arrive later than expected, committed capital spending and depreciation would still hit on schedule, squeezing margins, stretching balance sheets toward more debt and possible ratings downgrades, and repricing equities. Because a handful of large technology firms dominate the indices, the author argues the damage would spread to chips, power, data centers and the broader market.

AI Summary. Anthropic, an artificial-intelligence company valued at $965bn, faces investors taking a more critical look at its business as it approaches a public listing. Company executives have played down Chinese competition, arguing that most users want the most capable models available and that Chinese systems trail top models by at least a few months.

Berber Jin, Corrie Driebusch and Kate Clark Wall Street Journal
Date Posted:

Anthropic is meeting with investors ahead of a planned IPO in September or early October. The firm has downplayed the potential impact of Chinese competition, arguing “most users want the most intelligent AI systems available at any given time.”

Does Chinese competition threaten a leading AI company's valuation?

Core argument: Anthropic, valued at $965 billion, faces fresh challenges ahead of its planned IPO that are leading investors to take a more critical look at its business.

The $965 billion artificial-intelligence juggernaut is staring down a host of fresh challenges that are leading investors to take a more critical look at the company’s business. Company executives have played down the impact of Chinese competition in meetings, telling investors that Anthropic is hyperfocused on offering cutting-edge AI models, the people said. Chief Executive Dario Amodei and other top U.S. AI leaders have publicly said that most users want the most intelligent AI systems available at any given time, suggesting that Chinese systems are less of a threat since their capabilities generally trail those of top AI models by at least a few months.

Takeaways by Macro Roundup® AI

  1. Anthropic, valued at $965 billion, faces fresh challenges ahead of its planned IPO that are leading investors to take a more critical look at its business.
  2. Anthropic executives have played down the impact of Chinese competition in investor meetings, saying the company is hyperfocused on offering cutting-edge AI models.
  3. Anthropic Chief Executive Dario Amodei and other top U.S. AI leaders have publicly said most users want the most intelligent AI systems available at any given time, with Chinese systems' capabilities generally trailing top AI models by at least a few months.

Related Articles:

  • They’re Shooting at Everyone!: The Yossarian Effect in Capital Markets — A concentrated set of highly correlated assets financed with 3-4x leverage meant a large move in one part of the market forced selling elsewhere. Funds holding no idle cash sold liquid winners such as semiconductors and other artificial intelligence names to fund SpaceX purchases, with index inclusion triggering further forced reallocation.
  • 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.
  • OpenAI Leans Toward Waiting Until Next Year for I.P.O. — OpenAI is leaning toward delaying its initial public offering until next year, according to people involved in the company's deliberations. Advisers have cautioned that retail investor enthusiasm may be limited, following a decline in SpaceX's stock after its public offering and choppy markets in which technology stocks have dragged down indexes.

Wednesday, August 12, 2026

AI Summary. About 30% of Chinese industrial companies are unprofitable "zombies" kept alive by subsidies far larger than those elsewhere, rather than exiting amid falling industrial producer prices. Countries with large increases in manufactured imports from China also saw slowdowns in domestic manufacturing, including declining manufacturing shares of output across most of Southeast Asia.

Michael Cembalest J.P. Morgan
Date Posted:

Cembalest notes according to Chinese data, ~30% of Chinese industrial companies are “unprofitable zombies” that survive due to broad-based subsidies; for example, 58% of new Chinese bank loans are extended at or under its prime rate of 3%.

Do Chinese subsidies keep unprofitable firms alive and shrink other countries' manufacturing?

Core argument: Roughly 30% of Chinese industrial companies are unprofitable zombies sustained by a broad-based subsidy approach that dwarfs the rest of the world, despite prolonged negative industrial producer prices that would normally force competition and capacity cuts.

Normally, a prolonged period of negative industrial producer prices would lead to competition and reduced capacity. Not in China, however; instead, ~30% of Chinese industrial companies are unprofitable zombies that survive due to a broad-based subsidy approach that dwarfs the rest of the world. Countries that experienced large increases in manufactured imports from China also experienced slowdowns in domestic manufacturing. From 2021 to 2024, as Chinese imports to the ASEAN region increased, every ASEAN country except for Brunei, Cambodia, and Laos experienced a decline in their manufacturing share of GDP.

Takeaways by Macro Roundup® AI

  1. Roughly 30% of Chinese industrial companies are unprofitable zombies sustained by a broad-based subsidy approach that dwarfs the rest of the world, despite prolonged negative industrial producer prices that would normally force competition and capacity cuts.
  2. From 2021 to 2024, as Chinese imports into the ASEAN region rose, every ASEAN country except Brunei, Cambodia, and Laos saw its manufacturing share of GDP decline.
  3. Countries that experienced large increases in manufactured imports from China also experienced slowdowns in domestic manufacturing.

Related Articles:

  • China’s Next-Generation Industrial Policy — China's export growth is concentrated in upstream, higher-tech goods: exports of intermediate inputs rose 26% and capital goods 32% between 2021 and 2024, while consumption goods exports were broadly flat. This shift embeds China deeper in global production systems and aligns with its long-running import substitution strategy of localizing entire value chains.
  • Sticking with What Works: Raising GDP Forecast on China’s Manufacturing Push — Stronger Chinese growth driven by export-oriented manufacturing may not produce net positive spillovers: for every 1pp export-driven boost to China's GDP, other economies may see a 0.1–0.3pp drag, with high-tech producers such as Europe and Japan facing greater pressure. Cheaper Chinese goods continue to exert a disinflationary impulse.
  • Europe Has No Choice But To Intervene On Trade — Manufacturing competitiveness is argued to stem largely from lower labor costs relative to productivity, so policies that raise the household share of income weaken competitiveness while countries that suppress wages gain at trade partners' expense. The author argues Europe must therefore intervene in its external accounts to offset foreign trade intervention rather than cut wages and welfare.

AI Summary. China's "flexible employment" — a loosely defined official category spanning part-time work, self-employment, and new work forms — is estimated at 320mn people, up from 280mn a year earlier, with more than 53mn working as food delivery or ridesharing drivers. Analysts argue this reflects broad labour-market weakness, as low aggregate demand weakens workers' bargaining power.

Thomas Hale and William Langley Financial Times
Date Posted:

There are ~320mm “flexible workers” in China including ~53mm food delivery or rideshare drivers whose ranks have grown by ~10mm in the last two years. Flexible work is serving as a “shock absorber” in the face of broad-based labor market weakness.

Is China's rising flexible employment a sign of labor market weakness?

Core argument: The China New Employment Forms Research Center estimates flexible employment in China will reach 320mm this year, up from 280mm last year; the official figure stood at 200mm in 2021, covering part-time work, self-employment and "new forms of employment.".

Flexible employment, an official term that is vaguely defined, implies a broader scope than gig work. It stood at 200mm in 2021 [including] part-time work and self-employment as well as “new forms of employment.” More than 53mm people as of 2025 work as food delivery or ridesharing drivers in China, up 10mm in two years, estimates the China New Employment Forms Research Center. [They] estimate that flexible employment will hit 320mm this year, up from 280mm last year. Andrew Batson, China research director at Gavekal, suggests flexible employment and gig work are “more of a symptom of broad-based labour market weakness in China than a totally independent development…Because aggregate demand is low, the bargaining power of workers is weaker, and they have to accept more underemployment and less favourable working conditions."

Takeaways by Macro Roundup® AI

  1. The China New Employment Forms Research Center estimates flexible employment in China will reach 320mm this year, up from 280mm last year; the official figure stood at 200mm in 2021, covering part-time work, self-employment and "new forms of employment.".
  2. More than 53mm people in China work as food delivery or ridesharing drivers as of 2025, up 10mm in two years, according to the China New Employment Forms Research Center.
  3. Andrew Batson, China research director at Gavekal, argues flexible employment and gig work are more a symptom of broad-based labour market weakness in China, where low aggregate demand weakens workers' bargaining power and forces them to accept more underemployment and less favourable conditions.

Related Articles:

  • China’s Youth Unemployment Rate Edges Down In May As Economic Strains Persist — China's urban jobless rate for 16-to-24-year-olds excluding students fell to 15.6% from 16.3%, above the 14.9% recorded a year earlier, while the overall urban unemployment rate edged down to 5.1% from 5.2%. A record 12.7m students, about 4% more than the prior year, are expected to graduate over the summer.
  • Chinese Student High-Flyers Set Sights On Police and Military Academies — High-achieving Chinese high school graduates are increasingly applying to police and military academies and other schools offering a clear path to public-sector jobs, pushing required entrance-exam scores up. Some programs now demand more than 650 points out of 750, rivaling the least competitive courses at China's most prestigious universities.
  • China Says Hostile Foreign Forces Are Driving Its Youth to Slack Off — China's Ministry of State Security attributes youth disillusionment to ideological infiltration by foreign anti-China hostile forces, calling young people the primary targets of such efforts. Millions of young Chinese have embraced a "lying flat" mindset, rejecting pressure to overwork or leaving work entirely in an economy with limited well-paying jobs.

AI Summary. US consumer prices excluding food and energy rose 0.2% from the prior month and 2.5% from a year earlier, while overall consumer prices rose 0.1% on the month and 3.4% on the year, according to the Bureau of Labor Statistics. The subdued underlying inflation likely eases pressure on the Federal Reserve to raise interest rates.

Mark Niquette Bloomberg
Date Posted:

The annual underlying inflation rate was subdued in July. Headline and core CPI are up 3.4% and 2.5% y/y, respectively.

Is subdued core inflation easing pressure on the Fed to raise rates?

Core argument: US core CPI, excluding food and energy, rose 0.2% in July from the prior month and 2.5% from a year earlier, matching the slowest annual pace since March 2021, according to Bureau of Labor Statistics data.

Underlying US inflation was subdued in July, likely easing pressure on the Federal Reserve to raise interest rates. The consumer price index, excluding often-volatile food and energy categories, increased 0.2% from a month earlier, according to Bureau of Labor Statistics data out Wednesday. On an annual basis, it advanced 2.5%, matching the slowest pace since March 2021. Overall, consumer prices rose 0.1% from the prior month and 3.4% from a year earlier.

Takeaways by Macro Roundup® AI

  1. US core CPI, excluding food and energy, rose 0.2% in July from the prior month and 2.5% from a year earlier, matching the slowest annual pace since March 2021, according to Bureau of Labor Statistics data.
  2. Overall US consumer prices increased 0.1% in July from the prior month and 3.4% from a year earlier, according to the Bureau of Labor Statistics.
  3. Subdued underlying US inflation in July likely eases pressure on the Federal Reserve to raise interest rates.

Related Articles:

  • U.S. Inflation Is Not Really Slowing — A monthly slowdown in U.S. consumer price inflation excluding energy is likely a fluke, reflecting a recurring post-pandemic pattern of summer slowdowns and unusually large price declines in a few categories such as motor vehicle insurance, phone bills, and jewelry. Wage growth and producer prices suggest underlying inflation running about 1–1.5 percentage points faster per year than before the pandemic.
  • If Anyone Needs an Intervention, It’s the BOJ — A Federal Reserve press conference that offered no forward guidance left the market's projected path for interest rates barely changed, since investors form their own view from the data. But the 30-year inflation-protected Treasury yield has only been higher for a few days at the worst of the 2008 crisis, suggesting possible damage to the Federal Reserve's credibility.
  • Inflation and Debt — Congressional Budget Office long-term projections show sustained primary deficits of 2% of GDP driving the debt-to-GDP ratio steadily higher, a path the agency itself labels unsustainable. Closing a 2% of GDP fiscal gap is economically straightforward for a growing country at peace, but inflation or default would not resolve the problem, since prospective deficits still require continued borrowing.

AI Summary. Bloomberg Economics estimates the US has likely fired more than half its most advanced Patriot PAC-3 MSE interceptors and about 40% of its Terminal High Altitude Area Defense interceptors, with stocks of Precision Strike Missiles likely exhausted. The authors argue the US is not out of missiles but is running low on the right ones.

Magdalena Del Valle Bloomberg
Date Posted:

A Bloomberg analysis finds the US likely consumed > half of its most advanced Patriot variant, ~40% of THAAD stocks and “likely exhausted” its magazine of new Precision Strike Missiles, a key long-range standoff missile in the Iran War.

Are US stocks of advanced interceptors and strike missiles running low?

Core argument: Bloomberg Economics estimates the US has likely fired more than half of its most advanced Patriot variant, the PAC-3 MSE, and about 40% of its Terminal High Altitude Area Defense interceptors.

[A Bloomberg analysis] found the US has likely fired more than half of its most advanced Patriot variant — the PAC-3 MSE — and about 40% of its Terminal High Altitude Area Defense interceptors. The Pentagon also burned through various types of long distance, so-called stand-off strike missiles with numbers of Precision Strike Missiles “likely exhausted,” as commanders tried to keep US troops out of harm’s way. “The US isn’t out of missiles, but it is running low on the right ones. And the choices that remain all come at a cost” [wrote Bloomberg Economics defense lead Becca Wasser and Courtney McBride].

Takeaways by Macro Roundup® AI

  1. Bloomberg Economics estimates the US has likely fired more than half of its most advanced Patriot variant, the PAC-3 MSE, and about 40% of its Terminal High Altitude Area Defense interceptors.
  2. Bloomberg Economics finds the Pentagon burned through various long-distance stand-off strike missiles, with numbers of Precision Strike Missiles "likely exhausted," as commanders sought to keep US troops out of harm's way.
  3. Bloomberg Economics defense lead Becca Wasser and Courtney McBride write that the US "isn't out of missiles, but it is running low on the right ones," with the remaining choices all coming at a cost.

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.
  • America’s Fight Back Against China Starts In Los Angeles—In Flip-Flops — El Segundo, California has developed a self-reinforcing entrepreneurial cluster of defense and hardware startups founded by former employees of SpaceX, Palantir and Anduril who cashed in stock options to launch their own firms. One of them, drone maker Neros, says it has America's highest drone production rate and has worked to remove Chinese technology, including circuit boards, from its products.