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


Wednesday, August 26, 2026

AI Summary. US Treasuries have outperformed equivalent-maturity interest-rate swaps, narrowing the 30-year swap spread to its tightest level in months and compressing the 10-year gap to around 38 basis points, a gauge of investors' willingness to hold government bonds. Pimco argues that buybacks may technically lower long-end yields, but structural US budget deficits requiring heavy Treasury issuance are not changing.

Greg Ritchie and Elizabeth Stanton Bloomberg
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Modest compression of the spreads between Treasury yields and synthetic “swap” securities (~5.5bp for the 30 year and ~3bp for the 10 year) suggest Bessent’s Treasury purchase program has had a degree of success at lowering long-term government yields.

Do Treasury buybacks lower long-term yields despite ongoing deficits?

Core argument: Treasuries have outperformed equivalent-maturity swaps since Bessent's announcement, narrowing the 30-year swap spread to its smallest since February, with the 10-year swap spread three basis points smaller at around 38 basis points.

Since Bessent’s announcement, Treasuries have outperformed equivalent-maturity swaps, narrowing the 30-year spread to the smallest since February. Swaps are popular with some investors as an alternative to owning bonds; the gap between [swap rates] and US government yields [gauges] how willing [investors] are to hold Treasuries instead. The 10-year swap spread has compressed too, with the gap three basis points smaller at around 38 basis points. Still, the recent drop has only dented a years-long rise in long-term US government borrowing costs. The 10-year US yield inched up 3bp to 4.66% after touching 4.75% last week. “While conducting buybacks at the long end of the yield curve may technically decrease yields, higher structural US budget deficits, which [require] a significant supply of Treasuries to finance the US debt, [are] not changing anytime soon,” said Libby Cantrill, head of public policy at Pimco.

Takeaways by Macro Roundup® AI

  1. Treasuries have outperformed equivalent-maturity swaps since Bessent's announcement, narrowing the 30-year swap spread to its smallest since February, with the 10-year swap spread three basis points smaller at around 38 basis points.
  2. The 10-year US yield rose three basis points to 4.66% after touching 4.75%, and the recent decline has only dented a years-long rise in long-term US government borrowing costs.
  3. Pimco head of public policy Libby Cantrill said that while buybacks at the long end of the yield curve may technically decrease yields, higher structural US budget deficits requiring significant Treasury supply are not changing anytime soon.

Related Articles:

  • Let the Bond Market Speak — The long-term Treasury yield is the most important price in the world, and markets aggregate information no committee possesses. The author argues the Treasury's larger buyback operations were not justified as liquidity support, since trading was orderly, volatility contained, and there were no failed auctions or forced unwinds indicating dysfunction.
  • US 30-Year Bonds Erase Gains From Treasury’s Buyback Surprise — US Treasuries erased nearly all gains that followed the Treasury Department's surprise decision to increase buybacks of longer-dated bonds, with the 30-year yield rising above 5.27% and the 10-year touching 4.71%. The reversal signals the move has done little to ease concern about surging government debt.
  • America’s Risky Debt: What Markets See That Policymakers Don’t — Two market-based measures suggest the safety premium investors pay to hold US Treasuries has compressed toward zero and at times reversed: the spread between top-rated corporate bonds and Treasuries after stripping out default risk, and the gap between currency-hedged foreign G10 government yields and Treasury yields at the same maturity, where longer-maturity comparisons now favor foreign bonds.

AI Summary. The trend unemployment rate is estimated to have fallen from 7.8% in 1976 to 4.8% in 2024, a decline of about 3.3 percentage points, with a little more than half attributed to changes in workforce composition. Rising educational attainment is the largest compositional factor, lowering the trend by about 1 percentage point.

Andreas Hornstein, Marianna Kudlyak, Greeshma Avaradi and Taerin Kim Federal Reserve Bank of San Francisco
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Hornstein et al find that about half of the ~3pp drop in the trend unemployment rate since 1976 is due to compositional change in the work force towards lower unemployment “types ” – in particular, older and more educated workers.

Why has the trend unemployment rate declined over recent decades?

Core argument: The estimated trend unemployment rate fell from 7.8% in 1976 to 4.8% in 2024, a decline of about 3.3 percentage points, with changes in workforce composition accounting for a little more than half of it.

We find that the trend unemployment rate declined from 7.8% in 1976 to 4.8% in 2024 [Figure 1]. Roughly half of that decline reflects compositional change. Figure 2 separates the estimated cumulative change in the annual unemployment trend since 1976 into its components. The total decline was about 3.3 percentage points by 2024. Changes in workforce composition account for a little more than half of that decline. Rising educational attainment is the single largest compositional force, lowering the trend about 1pp. Figure 4 plots estimated education shares for entering cohorts of women, and these patterns are similar for male cohorts (not shown). The figure shows a steady long-run fall in the share of new female cohorts with less than high school education and a steady rise in the share with some college or a college degree. [Returning to Figure 2], changes in group-specific LFP rate trends contribute only ~0.3 pp. The remaining decline, a bit under 1pp, comes from lower group-specific trend unemployment.

Takeaways by Macro Roundup® AI

  1. The estimated trend unemployment rate fell from 7.8% in 1976 to 4.8% in 2024, a decline of about 3.3 percentage points, with changes in workforce composition accounting for a little more than half of it.
  2. Rising educational attainment is the single largest compositional force in the decomposition, lowering the trend unemployment rate by about 1 percentage point.
  3. Changes in group-specific labor force participation rate trends contribute about 0.3 percentage point of the decline, while lower group-specific trend unemployment accounts for a bit under 1 percentage point.

Related Articles:

  • Global Views: They’re Not Hiking — Estimated underlying trend job growth slowed to about 5k, below the estimated 50k breakeven pace, so similar readings would likely reverse part of the unemployment rate's decline from 4.5% to 4.1%. The authors argue that decline reflects lower labor force participation rather than higher employment, with wage growth still weak.
  • Labor Force Participation Is High If You Measure It Right — The headline labor force participation rate — the share of people 16 and older working or looking for work — is a limited gauge of labor market health because participation varies greatly by age. Aging baby boomers and the addition of nearly 1.7m Americans 65 and older to population estimates add distortion.

AI Summary. Spain's first- and second-generation immigrant population totals at least 12mm—nearly 9.5mm immigrants and over 2.5mm descendants—out of a population of roughly 49mm. The authors estimate over a third of Spain's under-40 population and nearly two-fifths of children under 5 are immigrants or the children of immigrants.

Nicholas Eberstadt American Enterprise Institute
Date Posted:

Spain’s population of first and second generation immigrants from Latin America (~5.7mm), and Morocco or other African countries (~2.4mm), accounts for nearly one sixth of Spain’s population. There are ~37mm native Spaniards.

How large is Spain's first- and second-generation immigrant population?

Core argument: Spain's first- and second-generation immigrant population totals at least 12 million—almost 9.5 million immigrants and over 2.5 million descendants—out of a population of roughly 49 million at the start of 2025.

Spain’s first and second-generation immigrant population comprises at least 12 million—almost 9.5 million immigrants and over 2.5 million of their descendants. [Spain’s population was ~49mm at the starts of 2025.] Over a third of Spain’s under 40 population are now first or second generation immigrants. And our numbers suggest that nearly two-fifths of Spain’s children under 5 are the children of immigrants, or immigrants themselves. Since our method misses second-generation immigrants not living with their parents, the absolute and relative size of Spain’s mass migration population is likely somewhat greater than we estimate.

Takeaways by Macro Roundup® AI

  1. Spain's first- and second-generation immigrant population totals at least 12 million—almost 9.5 million immigrants and over 2.5 million descendants—out of a population of roughly 49 million at the start of 2025.
  2. Over a third of Spain's under-40 population are first- or second-generation immigrants, and the estimates suggest nearly two-fifths of children under 5 are immigrants or the children of immigrants.
  3. Because the estimating method misses second-generation immigrants not living with their parents, Spain's mass migration population is likely somewhat larger in both absolute and relative terms than the figures indicate.

Related Articles:

  • Quo Vadis, Hispania? Part One — Official Spanish data show births exceeded deaths by barely 200,000 over the first quarter of the 21st century—less than 0.5% of Spain's population at the start—while immigration accounted for 98% of the country's population growth, the largest increase of any European Union member. Deaths have exceeded births since 2015.
  • Four Ways Europe’s Big Immigration Experiment Has Changed Spain — Spain has been the world's fastest-growing large advanced economy and, by Financial Times analysis, accounted for one in four of the 11.1mn jobs added across the European Union, with roughly 70% going to immigrants according to the think-tank Funcas. Spain's fertility rate of 1.1 births per woman is the EU's lowest after Malta.
  • Depopulation Globally and in the Asia-Pacific: The Shape of Things to Come — Population aging and fertility below replacement levels are connected to a revolution in family structure in which families grow smaller, fewer people marry, and voluntary childlessness becomes common across countries. As a result, families become less able to bear the demands that may be placed on them.

AI Summary. The US Department of Defense's budget documents indicate low-cost munitions will reach scale before most advanced systems, with multi-year agreements projected to raise PAC-3 MSE interceptor capacity 233% to 2,000 per year, THAAD interceptors 317% to 400, and Precision Strike Missile output fourfold to about 550.

Jerry McGinn and A.J. Dilts Center for Strategic and International Studies
Date Posted:

Lower cost munitions (under $600,000 per unit) will potentially start to arrive at scale over the next 18 to 24 months as production of higher quality exquisite systems ramps up. Capex of major defense contractors has risen 31% y/y as of Q2 as they expand production capacity.

How fast can defense munitions production capacity expand?

Core argument: Under framework agreements with Lockheed Martin of up to seven years, the DOD anticipates raising PAC-3 MSE interceptor capacity by 233%, from roughly 600 to 2,000 per year by 2030, and THAAD output by 317%, from 96 to 400 annually.

DOD budget documents confirm that low-cost systems will arrive at scale before most exquisite systems, as illustrated in Figure 2. Across framework agreements with Lockheed Martin of up to seven years, the DOD anticipates growing the production capacity of PAC-3 MSE interceptors by 233%, from roughly 600 to 2,000 interceptors per year by 2030; THAAD interceptor output capacity by 317%, from 96 to 400 units annually; and annual Precision Strike Missile production capacity fourfold to roughly 550 missiles. Backed by a DOD procurement commitment of up to seven years, RTX also plans to raise annual production of the Tomahawk missile to more than 1,000, the Advanced Medium-Range Air-to-Air Missile to over 1,900, and the Standard Missile 6 (SM-6) to over 500.

Takeaways by Macro Roundup® AI

  1. Under framework agreements with Lockheed Martin of up to seven years, the DOD anticipates raising PAC-3 MSE interceptor capacity by 233%, from roughly 600 to 2,000 per year by 2030, and THAAD output by 317%, from 96 to 400 annually.
  2. Backed by a DOD procurement commitment of up to seven years, RTX plans to lift annual production of the Tomahawk to more than 1,000 missiles, the Advanced Medium-Range Air-to-Air Missile to over 1,900, and the SM-6 to over 500.
  3. DOD budget documents indicate low-cost systems will arrive at scale before most exquisite systems, with annual Precision Strike Missile production capacity set to grow fourfold to roughly 550 missiles.

Related Articles:

  • 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.
  • 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.

Thursday, August 27, 2026

AI Summary. US saving-investment data show that non-financial corporations remain net savers, unlike the early-2000s information technology boom when they flipped to net borrowers and their capital spending accounted for the entire current account deficit. Government dissaving through the budget deficit, not the artificial intelligence buildout, is absorbing national resources.

Robin Brooks Robin Brooks Substack
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Brooks argues, “The AI buildout isn’t why government bond yields are rising,” noting the US non-financial corporate sector was a net saver as of Q1 2026, which suggests government deficit spending is driving up long yields.

Is the AI buildout or the budget deficit absorbing national saving?

Core argument: US non-financial corporates remained net savers in the saving-investment balance data through the first quarter of this year, unlike the AI capex buildout narrative would suggest.

The chart shows quarterly data for the US saving-investment balance going back to 1990. This is an identity that apportions the current account balance into net saving in various sectors of the economy. Households tend to be net savers, as is the financial sector and non-financial corporates. The government tends to be a net borrower. The last time we had a lot of excitement about technological innovation and higher productivity growth was in the “IT bubble” of the early 2000s, which saw non-financial corporates flip from being net savers to borrowers, i.e. the capex buildout at the time was very large and - for a few years - accounted for the entire current account deficit. Nothing like that’s happening now. It’s government dissaving, i.e. the budget deficit, that’s eating up resources, while the non-financial corporate sector stayed a net saver in data through the first quarter of this year.

Takeaways by Macro Roundup® AI

  1. US non-financial corporates remained net savers in the saving-investment balance data through the first quarter of this year, unlike the AI capex buildout narrative would suggest.
  2. Government dissaving, that is the budget deficit, is the sector absorbing resources in the US saving-investment balance, which apportions the current account balance into net saving by sector.
  3. During the early-2000s "IT bubble," US non-financial corporates flipped from net savers to net borrowers, and for a few years that capex buildout accounted for the entire US current account deficit.

Related Articles:

  • AI Is Driving Up Treasury Yields: ‘It Just Touches Everything’ — Investment-grade companies have sold nearly $1.5tn of bonds, up 36% from a year earlier, and some investors have sold US Treasuries to buy higher-yielding corporate debt. Bank of America economists estimate the surge in corporate-debt sales, along with more mortgage-backed securities issuance, pushed 10-year rates up by about 0.3 percentage point.
  • The Other US Capex Question — Business investment outside artificial intelligence has been weak, contributing just 1.54% to total capital expenditure growth. The author argues AI investment is not crowding out other projects, since the spread between return on capital and cost of capital has stayed positive and US nonfinancial corporations' capital spending is below their gross savings.
  • Corporate America Is Minting Money—and Not Just in Tech and Finance — Earnings per share for S&P 500 companies are estimated to grow more than 13% year over year for a sixth straight quarter, with sales growth and improving margins accompanying the gains. Share buybacks are contributing less to earnings growth than in many quarters, with the gap between earnings-per-share and net income growth just under 1 percentage point.

AI Summary. Ten-year real yields equal the average expected overnight rate over the next decade plus a term premium, and fiscal credibility or debt sustainability concerns would show up as a higher term premium. With the term premium and inflation expectations contained, the increase in bond yields reflects higher expected long-term overnight rates.

Stephen Miran Financial Times
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Citing a stable term premium, Miran argues the rise in the 10-year Treasury yield most likely reflects investors “marking up their expectations for long-run economic growth, not becoming concerned over central bank or fiscal credibility.”

Do rising bond yields signal worries about debt sustainability?

Core argument: The term premium on ten-year Treasuries has been stable and sits only a hair lower than at the end of last year, whereas fiscal credibility or debt sustainability concerns would show up as an increased term premium.

Ten-year real yields are equal to the average expected overnight yield over the next ten years, plus a risk premium that investors demand for locking up their money for ten years. This term premium reflects the fact that realised overnight rates might deviate from expected overnight rates. If the market saw fiscal credibility or debt sustainability problems, this would show up in an increased term premium. But the term premium has also been stable and is only a hair lower since the end of last year. With term premium and inflation expectations contained, the recent increase in bond yields is therefore almost entirely due to higher expected overnight rates over the long term.

Takeaways by Macro Roundup® AI

  1. The term premium on ten-year Treasuries has been stable and sits only a hair lower than at the end of last year, whereas fiscal credibility or debt sustainability concerns would show up as an increased term premium.
  2. With term premium and inflation expectations contained, the increase in bond yields is almost entirely attributable to higher expected overnight rates over the long term.
  3. Ten-year real yields equal the average expected overnight yield over the next ten years plus a term premium investors demand for locking up money, reflecting that realised overnight rates might deviate from expectations.

Related Articles:

  • Let the Bond Market Speak — The long-term Treasury yield is the most important price in the world, and markets aggregate information no committee possesses. The author argues the Treasury's larger buyback operations were not justified as liquidity support, since trading was orderly, volatility contained, and there were no failed auctions or forced unwinds indicating dysfunction.
  • What Are US Treasury Markets Really Telling Us? Part I — Comparing US Treasury yields to AAA corporate bonds combined with credit default swap insurance creates a synthetic Treasury, and the resulting spread — the convenience yield investors give up for safety and liquidity — has disappeared, suggesting investors are indifferent between the two on safety and liquidity. The author argues this is bad news for US taxpayers.
  • America’s Risky Debt: What Markets See That Policymakers Don’t — Two market-based measures suggest the safety premium investors pay to hold US Treasuries has compressed toward zero and at times reversed: the spread between top-rated corporate bonds and Treasuries after stripping out default risk, and the gap between currency-hedged foreign G10 government yields and Treasury yields at the same maturity, where longer-maturity comparisons now favor foreign bonds.

AI Summary. A survey finds more than half of young men gamble, with 23% doing so daily, and 43% watch pornography daily or several times a week. 42% say the statement "I am inclined to think that I am a failure" describes them very or somewhat well, a view more common among daily gamblers (66%) and daily pornography viewers (63%).

Joseph Davis, Michael Toscano and Ken Burchfiel Institute For Family Studies
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An ISF survey of 2,000 American men aged 18–29 found 23% reported gambling daily and 27% watch pornography daily. 66% of the men who gambled daily reported feeling like a failure, as well as 63% of the men who watch pornography daily.

Do daily gambling and pornography use correlate with young men's self-perceived failure?

Core argument: More than half of young men surveyed gamble, with 23% gambling daily, 12% more than several times a week, and 21% at least some of the time.

More than half of young men in our survey are now gamblers. Nearly 1 in 4 (23%) report that they gamble daily, plus 12% doing so more than several times a week, and a further 21% at least some of the time. 43% of young men say they watch pornography daily (27%) or several times a week (16%), with another 26% about weekly or less. More than 4 in 10 young men (42%) believe that the statement “all in all, I am inclined to think that I am a failure” describes them “very well” (15%) or “somewhat well” (27%). Those who view pornography (63%) and gamble (66%) every day—along with day trading and playing fantasy sports—are significantly more inclined to see themselves as a failure.

Takeaways by Macro Roundup® AI

  1. More than half of young men surveyed gamble, with 23% gambling daily, 12% more than several times a week, and 21% at least some of the time.
  2. 43% of young men report watching pornography daily (27%) or several times a week (16%), and daily pornography viewers (63%) and daily gamblers (66%) are significantly more inclined to see themselves as failures.

Related Articles:

  • The Case for Prohibiting Vice — A record 62m Americans used marijuana in a single year, 17m of them daily or near daily, while half of American men now hold sports-betting accounts, up from almost zero seven years earlier. The author argues vice and addiction undermine citizens' capacity for free action, justifying state regulation beyond individual-harm criteria.
  • Americans Increasingly See Legal Sports Betting As A Bad Thing For Society and Sports — Survey data show 43% of U.S. adults say legalized sports betting is a bad thing for society, up from 34% three years earlier, and 40% say it is bad for sports, up from 33%. The largest shift came among men under 30, 47% of whom now call it bad for society versus 22% earlier.
  • Life Under Two: Debt, Deficits, and the AI Discontinuity — The United States averaged annual GDP growth above 3% for decades, but 2% or less is now more likely. Over ten years, the author estimates that gap amounts to a $3.36tn larger economy, $3.7tn more tax revenue, and 6m more jobs, shifting public psychology from abundance toward scarcity.

AI Summary. China has developed hypersonic glide vehicles capable of launching air-to-air weapons to threaten high-value aircraft such as command-and-control planes thousands of miles away. A glide vehicle from a DF-17 missile could travel about 1,500 miles, while the DF-27 missile has a maximum range of about 5,000 miles.

Gerry Doyle Bloomberg
Date Posted:

The Chinese military has developed hypersonic glide vehicles that can launch air-to-air weapons, which would allow them to hit high-value targets from thousands of miles away.

Can hypersonic glide vehicles threaten aircraft thousands of miles away?

Core argument: China's DF-27 missile has a maximum range of about 5,000 miles, putting Hawaii within reach, while a hypersonic glide vehicle deployed from a DF-17 could travel about 1,500 miles, just short of the distance from China to Guam.

The Chinese military has developed hypersonic glide vehicles that can launch air-to-air weapons, an advancement meant to threaten high-value targets such as command-and-control aircraft thousands of miles away. A hypersonic glide vehicle deployed from a DF-17 missile could travel about 1,500 miles, just short of the distance from China to Guam. The DF-27 missile has a maximum range of about 5,000 miles, putting Hawaii in range.

Takeaways by Macro Roundup® AI

  1. China's DF-27 missile has a maximum range of about 5,000 miles, putting Hawaii within reach, while a hypersonic glide vehicle deployed from a DF-17 could travel about 1,500 miles, just short of the distance from China to Guam.
  2. The Chinese military has developed hypersonic glide vehicles capable of launching air-to-air weapons, an advancement meant to threaten high-value targets such as command-and-control aircraft thousands of miles away.

Related Articles:

  • How Quickly Can the DOD Rebuild and Recast the Munitions Industrial Base? — The US Department of Defense's budget documents indicate low-cost munitions will reach scale before most advanced systems, with multi-year agreements projected to raise PAC-3 MSE interceptor capacity 233% to 2,000 per year, THAAD interceptors 317% to 400, and Precision Strike Missile output fourfold to about 550.
  • 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.
  • Trump Invokes Cold War-Era Law to Boost Munitions Production — The U.S. has invoked the Defense Production Act to expand munitions output amid doubts that American weapons makers can meet increased demand. U.S. officials say more than 1,000 long-range Tomahawk missiles and 1,500–2,000 air-defense interceptors have been fired in the war with Iran, and replacing those stockpiles could take up to six years.

AI Summary. The US Navy is testing an air-to-air missile capable of striking targets more than 290 miles away, farther than any other known weapon of its type. Analysts suggest such range may be most valuable for fleet air defense, countering bombers that launch long-range anti-ship cruise missiles.

Gerry Doyle Bloomberg
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The US Navy is testing a new air to air missile that can hit targets at least 290 miles away. A defense analysis suggests the system is likely intended for “fleet air defense, not air to air combat.”

Is a longer-range air-to-air missile most useful for defending ships?

Core argument: The US Navy is testing an air-to-air missile able to hit targets more than 290 miles away, considerably farther than any other known weapon of that type.

The US Navy is testing a new air-to-air missile that can hit targets more than 290 miles away, considerably farther than any other known weapon of that type. Such weapons came into sharp focus last year when Pakistan said it used long-range Chinese-made missiles — with a reported range of about 300 kilometers — to down Indian fighter jets. Although missiles with that range can be used to hit high-value aircraft such as command planes or tankers, they might be more valuable for defending ships, said Peter Layton, a former Royal Australian Air Force officer “I think it’s meant to counter Chinese bombers firing long range anti ship cruise missiles,” Layton said. “Fleet air defense, not air-to-air combat.”

Takeaways by Macro Roundup® AI

  1. The US Navy is testing an air-to-air missile able to hit targets more than 290 miles away, considerably farther than any other known weapon of that type.
  2. Pakistan said it used long-range Chinese-made missiles, with a reported range of about 300 kilometers, to down Indian fighter jets.
  3. Former Royal Australian Air Force officer Peter Layton said he thinks the missile is meant to counter Chinese bombers firing long-range anti-ship cruise missiles, serving fleet air defense rather than air-to-air combat.

Related Articles:

  • 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.
  • Defense Spending: Macroeconomic Consequences and Trade-Offs — Peacetime defense spending booms—when the two-year average of defense outlays rises 1pp of GDP—are followed by sizable increases in real GDP, government consumption, investment, and the capital stock, with a short-lived rise in inflation. Imports accelerate while exports are broadly unchanged, widening current account and trade deficits.
  • 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.