“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
“Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
“Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
“…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
“…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
“…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 comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
“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 fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology

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Saudi Budget Deficit More Than Doubles as War Hurts Oil Finances

Mirette Magdy Bloomberg

Date Posted:: November 3, 2026

Saudi Arabia’s quarterly fiscal deficit more than doubled to $22.4B, up 145% from the prior quarter due to a decline in oil revenue. Spending is expected to rise due to the Saudi campaign against the Houthis and increased infrastructure spending.

Saudi Arabia’s quarterly fiscal deficit more than doubled as the kingdom’s oil revenues tumbled in the face of disruptions from the US-Iran war. The government posted a budget shortfall of 84 billion riyals ($22.4 billion) in the third quarter, up about 145% from the prior period, according to a statement from the Finance Ministry. Oil receipts dropped almost 40% from the prior quarter to about 116 billion riyals. Non-oil revenues fell around 7%, while overall spending dipped by 8%.

Takeaways by Macro Roundup^® AI

Saudi Arabia posted a third-quarter budget deficit of 84 billion riyals ($22.4 billion), up about 145% from the prior quarter, according to a Finance Ministry statement.
Saudi oil receipts fell almost 40% from the prior quarter to about 116 billion riyals amid disruptions from the US-Iran war.
Saudi non-oil revenues declined around 7% while overall government spending dipped 8%.

America Is Making a ‘Freaking Fortune’ In an Energy Crisis

Javier Blas Bloomberg

Date Posted:: November 2, 2026
Is Database:: Database

The price of natural gas in Western Europe and Japan is now a record 12x that of the North American price, as the shale revolution and ample domestic reserves shield North American gas consumers from the fallout of the Iran war.

While European and Asian consumers are now paying north of $30 per million British thermal unit for their gas, US buyers pay around $3 per mBtu. Last week, US gas prices briefly touched a two-year low of $2.5 per mBut — in the middle of an energy crisis. Canadian costs are even lower, at about $1.5 per mBtu. The price difference between gas in Europe and Asia versus North America, reaching now a ratio of 12 times, has never been wider; not during the 2022 gas shock following the Russian invasion of Ukraine, nor in 2011-2012 after the Fukushima nuclear accident. Today, the US is exporting huge amounts of gas as LNG. But even that isn’t enough to fully connect its domestic market to the global one. As such, America is making a double profit: First, it enjoys ultra-low gas prices; second, it’s paid enormous sums for its exports.

Takeaways by Macro Roundup^® AI

European and Asian gas buyers pay north of $30 per mBtu while US buyers pay around $3 and Canadian buyers about $1.5, a gap reaching a ratio of 12 times.
The price gap between European and Asian gas and North American gas has never been wider, exceeding the spreads during the 2022 shock after Russia’s invasion of Ukraine and in 2011–2012 after the Fukushima accident pushed Japan toward gas.
US gas prices briefly touched a two-year low of $2.5 per mBtu, and large LNG exports have not fully connected the domestic market to the global one, leaving America with low domestic prices and large export earnings.

U.S. Economy Less Vulnerable To Geopolitical Oil Price Shocks Than In The Past

Lutz Kilian, Michael Plante and Alexander Richter Federal Reserve Bank of Dallas

Date Posted:: June 25, 2026
Is Database:: Database

Kilian, et al find that the impact of an energy shock on US real GDP growth has fallen to 1/20th of what it would have been in 1980, due both to the declining share of oil in GDP and the US transition from net importer to net exporter.

The 2026 disruption of global oil supplies has been more than twice as large as the peak disruption during the 1973 oil crisis, the largest oil supply shortfall on record before 2026. It has been widely noted that the shale oil revolution has allowed the U.S. to greatly reduce its dependence on imports of crude oil and refined products. Whereas the U.S. economy had been a major net importer of oil and oil products since the 1970s, the U.S. became a net exporter in late 2019, if only by a small margin (Chart 2, panel A). In addition, oil and oil product expenditures as a share of GDP substantially declined from a high near 8% in 1980 to 3% in 2024 (Chart 2, panel B). Reduction of world oil supply [as in the 2026 Iran War] would have caused annualized U.S. real GDP growth to decline by 5.6pp in 1980; the same event today reduces growth by only 0.3pp, one-twentieth of the 1980 decline (Chart 3). Our analysis demonstrates that the US contraction in response to a geopolitical oil supply disruption was similar to that in the rest of the world in 1980. This is no longer the case. A global oil supply disruption of 15% today causes a decline in annualized real GDP growth of 1.7pp in the rest of the world, compared with only 0.3pp in the U.S.—roughly one-sixth of the response in the rest of the world.

Takeaways by Macro Roundup^® AI

A world oil supply reduction of the size seen in the 2026 Iran War would have cut annualized U.S. real GDP growth by 5.6pp in 1980 but reduces it by only 0.3pp today, one-twentieth of the 1980 decline.
A 15% global oil supply disruption today lowers annualized real GDP growth by 1.7pp in the rest of the world versus 0.3pp in the U.S., roughly one-sixth of the response, whereas the contractions were similar in 1980.
The U.S. became a net exporter of oil and oil products in late 2019, by a small margin, after being a major net importer since the 1970s, and oil and oil product expenditures fell from near 8% of GDP in 1980 to 3% in 2024.

Global Market Views: Shortages

Dominic Wilson and Kamakshya Trivedi Goldman Sachs

Date Posted:: May 19, 2026
Is Database:: Database

Goldman estimates the market is now pricing US growth at 2.5%, past their own 2027 forecast of 2.2%. After the Iran-ceasefire relief rally, AI-related equities are quietly taking credit for substantial macro benefits that haven’t been delivered yet.

The Iran ceasefire and the reduction in deep downside tails have allowed the market to look ahead and compress risk premia across a range of assets. That type of narrowing in the distribution is often associated with sharp market gains in situations of fundamental uncertainty, and this has proved to be the case again. Despite oil prices and yields staying elevated, a broad range of assets—including US equities, high carry/commodity FX, and EM—have recovered smartly, and renewed AI optimism has pushed those exposures to new cycle highs. The common element is that shortages—in commodities and the AI supply chain—are driving capital flows. Those tensions mean that even if we avoid the worst tails, we are likely to see volatility rise alongside further equity price increases.

Takeaways by Macro Roundup^® AI

The Iran ceasefire and reduced deep downside tails have let markets compress risk premia across assets, a narrowing of the distribution often associated with sharp gains amid fundamental uncertainty.
US equities, high carry/commodity FX, and emerging markets have recovered despite elevated oil prices and yields, with renewed AI optimism pushing those exposures to new cycle highs.
Shortages in commodities and the AI supply chain are driving capital flows, and those tensions point to rising volatility alongside further equity price increases even if the worst tails are avoided.

This Time is Different (from 2022) — The Impact of Higher Energy Prices on European Manufacturing Industries

Niklas Garnadt Goldman Sachs

Date Posted:: April 23, 2026
Is Database:: Database

Per GS, the current energy shock will lower Europe’s industrial production by ~2%, ½ the ~4% decline that occurred during the 2022 shock. As the current shock is global, also hitting Asia, Europe does not face the competitive disadvantage it did in 2022.

[We] project that higher oil and gas prices [will] lower Euro Area industrial production by almost 2% by end-2027 relative to our pre-conflict baseline, with negative IP growth later this year but a return to positive growth in 2027. This compares to an estimated drag of 4% during the energy crisis of 2022/23. The current price shock is expected to be smaller and less persistent, while the decoupling from Russian pipeline gas that began in 2022/23 has been sustained. The 2022/23 crisis was fundamentally driven by a sharp reduction in Russian pipeline gas supply to Europe and impacted a narrow set of highly gas-intensive industries particularly hard. The current shock is primarily an oil supply one that tends to reduce industrial production more broadly. However, in 2022/23, energy market shifts were largely focused on Europe, leading to major cost disadvantages for energy-intensive industries, particularly relative to China, and a surge in import competition. This time, energy price pressures are more global, with Asia appearing to be affected to a similar (or even greater) extent. European energy-intensive industries therefore look less exposed to competitiveness pressures.

Takeaways by Macro Roundup^® AI

Higher oil and gas prices are projected to lower Euro Area industrial production by almost 2% by end-2027 relative to a pre-conflict baseline, versus an estimated 4% drag during the 2022/23 energy crisis.
The 2022/23 crisis stemmed from a sharp reduction in Russian pipeline gas supply and hit a narrow set of highly gas-intensive industries, while the present shock is primarily an oil supply shock that tends to reduce industrial production more broadly.
Energy price pressures are now more global, with Asia appearing affected to a similar or greater extent, leaving European energy-intensive industries less exposed to competitiveness pressures than in 2022/23, when cost disadvantages relative to China accompanied a surge in import competition.

The Hormuz Blockade Is as Much About China as Iran

Javier Blas Bloomberg

Date Posted:: April 14, 2026
Is Database:: Database
Is Important:: Important

Before the war, Iran was earning ~$100mm a day from oil exports, which rose to ~$175mm during the war, before the blockade. The US “maximum pressure” campaign of 2018–2021 had reduced Iran’s oil revenue to ~$10mm a day without changing Tehran’s behavior.

According to my back-of-the-envelope calculations, Iran was making about $100 million a day selling its crude before the war. Since Feb. 27, that’s risen to around $175 million a day. If the US enforces the blockade, the Iranian economy will suffer an enormous blow on top of the war destruction. But whether that economic hit translates into a softer negotiation approach remains to be seen. Targeting Iranian oil revenue has been tried before — and it failed. In 2020-2021, when Trump launched a maximum pressure campaign of sanctions, Iranian crude exports dropped to fewer than 250,000 daily barrels for several months just as oil prices were depressed due to the impact of the pandemic. Even allowing for some exports slipping under the radar, Iran was earning no more than $10 million a day selling crude — and it still didn’t buckle.

Takeaways by Macro Roundup^® AI

Iran's crude sales earned roughly $100 million a day before the war and have risen to about $175 million a day since Feb. 27, by the author's back-of-the-envelope calculations.
Under Trump's 2020-2021 maximum pressure sanctions campaign, Iranian crude exports fell below 250,000 barrels a day for several months and revenue reached no more than $10 million a day, yet Iran did not buckle.
US enforcement of the Hormuz blockade would deal the Iranian economy an enormous blow on top of war destruction, though whether that translates into a softer negotiating approach remains to be seen.

U.S. Crude Oil Production Rose In 2025, Setting New Record

Naser Ameen Energy Information Administration

Date Posted:: April 1, 2026
Is Database:: Database

American crude production expanded 3% in 2025 to a new record of 13.6mm bpd. The rig count fell 5% in the lower 48 states as productivity improved.

U.S. crude oil production grew by 3%, or 350,000 barrels per day (b/d), in 2025, setting a new annual production record of 13.6 million b/d. Production from the Lower 48 states excluding the Gulf of America (L48) accounted for 11.3 million b/d, or 83% of the total U.S. crude oil production in 2025. The rest of the production came from Federal Gulf of America (GOA) and Alaska. In 2025, the number of active rigs per month in L48 was 5% less than in 2024 and 1% fewer wells were drilled. Despite less rig activity and fewer wells, efficiency improvements that we saw in 2024 continued through 2025 and resulted in a slight increase in crude oil production, with new wells producing 2.9 million b/d of crude oil and wells drilled prior to 2025 producing 8.3 million b/d. Rig and well activity fell in 2025 compared with 2024 because West Texas Intermediate (WTI) crude oil prices fell from $77/barrel (b) in 2024 to $65/b in 2025.

Takeaways by Macro Roundup^® AI

U.S. crude oil production rose 3%, or 350,000 b/d, in 2025 to an annual record of 13.6 million b/d, with the Lower 48 excluding the Gulf of America supplying 11.3 million b/d, or 83% of the total.
Active rigs per month in the Lower 48 excluding the Gulf of America fell 5% in 2025 versus 2024 and 1% fewer wells were drilled, as West Texas Intermediate prices dropped from $77 per barrel to $65 per barrel.
Efficiency improvements continuing from 2024 resulted in a slight increase in U.S. crude oil output in 2025 despite reduced drilling, with new wells producing 2.9 million b/d and wells drilled before 2025 producing 8.3 million b/d.

Saudi Arabia’s quarterly fiscal deficit more than doubled to $22.4B, up 145% from the prior quarter due to a decline in oil revenue. Spending is expected to rise due to the Saudi campaign against the Houthis and increased infrastructure spending.

Does war-driven disruption to oil revenue widen Saudi Arabia's budget deficit?

Takeaways by Macro Roundup® AI

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The price of natural gas in Western Europe and Japan is now a record 12x that of the North American price, as the shale revolution and ample domestic reserves shield North American gas consumers from the fallout of the Iran war.

How wide is the gap between US and overseas gas prices?

Takeaways by Macro Roundup® AI

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Kilian, et al find that the impact of an energy shock on US real GDP growth has fallen to 1/20th of what it would have been in 1980, due both to the declining share of oil in GDP and the US transition from net importer to net exporter.

How much do oil supply shocks still hurt US growth?

Takeaways by Macro Roundup® AI

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Goldman estimates the market is now pricing US growth at 2.5%, past their own 2027 forecast of 2.2%. After the Iran-ceasefire relief rally, AI-related equities are quietly taking credit for substantial macro benefits that haven’t been delivered yet.

Are shortages in commodities and AI supply chains driving markets higher?

Takeaways by Macro Roundup® AI

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Per GS, the current energy shock will lower Europe’s industrial production by ~2%, ½ the ~4% decline that occurred during the 2022 shock. As the current shock is global, also hitting Asia, Europe does not face the competitive disadvantage it did in 2022.

Why does the new energy price shock hurt European manufacturing less?

Takeaways by Macro Roundup® AI

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Before the war, Iran was earning ~$100mm a day from oil exports, which rose to ~$175mm during the war, before the blockade. The US “maximum pressure” campaign of 2018–2021 had reduced Iran’s oil revenue to ~$10mm a day without changing Tehran’s behavior.

Would cutting off oil revenue force Iran to negotiate?

Takeaways by Macro Roundup® AI

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American crude production expanded 3% in 2025 to a new record of 13.6mm bpd. The rig count fell 5% in the lower 48 states as productivity improved.

Did US crude output hit a record despite fewer rigs?

Takeaways by Macro Roundup® AI

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