May Day.
A once-unthinkable threshold.
1. The U.S. national debt now exceeds 100% of gross domestic product, crossing a once-unthinkable threshold, on the way toward breaking the record set in the wake of World War II. As of March 31, the country’s publicly held debt was $31.265 trillion, while GDP over the preceding year was $31.216 trillion, according to data released Thursday. That puts the ratio at 100.2%, compared with 99.5% when the last fiscal year ended Sept. 30. That figure will likely climb for the foreseeable future because the federal government is running historically large annual deficits of nearly 6% of GDP, which add to the debt. The government is spending $1.33 for every dollar it collects in revenue, and the budget deficit this year is projected at $1.9 trillion. That is little changed from 2025 as Republicans’ tax cuts kick in before their spending cuts take effect. The final tally will depend on Iran war spending, tariff refunds and the strength of the economy. (Source: wsj.com)
2. U.S. economic growth picked up in the first quarter as businesses invested heavily in artificial intelligence, rebounding from a fourth quarter dented by a government shutdown. At the same time, the economy didn’t expand as fast as economists expected, weighed down by softer consumer spending growth. The Commerce Department said U.S. gross domestic product—the value of all goods and services produced across the economy—rose at a seasonally and inflation adjusted 2% annual rate in the first quarter. (Source: wsj.com)
3. Oil prices hit a fresh wartime peak yesterday, surging to a four-year high above $120 a barrel, before pulling back in volatile trading on concerns that the war in Iran could escalate, leading to a longer disruption of fuel supplies from the Middle East. The average price of regular gasoline in the United States has followed oil higher, hitting $4.30 a gallon on Thursday, up 27 cents in a week, according to data from the AAA motor club. After the Federal Reserve held interest rates steady on Wednesday, Jerome H. Powell, the central bank’s chair, said that policymakers needed to be “very cautious” about their next steps, given the significant uncertainty about the economic outlook. (Source: nytimes.com)
4. A key inflation measure jumped in March as gas prices soared, the latest sign that the Iran war is pushing up the cost of living and delaying any interest rate cuts by the Federal Reserve. An inflation gauge monitored by the Fed rose 0.7% in March from February, up sharply from the previous month, the Commerce Department said Thursday. Compared with a year ago, prices rose 3.5%, the biggest increase in almost three years. At the same time, Thursday’s report showed that Americans’ incomes — wages, business income, and government benefits — increased 0.6%, a solid increase but slower than the rate of inflation, for the second straight month. (Source: apnews.com)
5. Iran’s Supreme Leader Mojtaba Khamenei yesterday declared Iran will retain control over shipping through the Strait of Hormuz and maintain its nuclear and missile capabilities, which supports ISW-CTP’s assessment that the Iranian regime is unlikely to make meaningful concessions in its next proposal to the United States. Some Iranian officials who have advocated for a “pragmatist” approach toward negotiations may be aligning themselves behind Vahidi’s redlines, which Mojtaba publicly endorsed in his April 30 statement. Foreign Affairs Minister Abbas Araghchi has reportedly been acting in “full coordination” with Vahidi and following Vahidi’s “instructions” over the past two weeks. (Source: understandingwar.org)
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