United States

Morgan Stanley economists find domestic production increases are largely nominal — driven by higher prices, not real output growth — with steel as a key example where U.S. prices diverged from global peers while total supply didn't rise.

IEPA-based tariffs expire July 24 and will be replaced by more durable Section 301 and 232 authorities, keeping the aggregate effective rate near end-2025 levels — a persistent cost headwind for import-dependent sectors and Fed policy planning.

Seth Carpenter argues both markets and policymakers underappreciate the growth drag — energy prices are squeezing U.S. discretionary spending while Asia faces production rationing, making caution on growth-sensitive assets warranted.

Energy price shocks will hit US consumer spending at the lower income end, crimp Asian production through rationing, and compound Europe's ongoing energy adjustment — a multi-channel drag markets are not reflecting.

Global data center power demand could increase by nearly 130 gigawatts by 2028, with the US potentially unable to meet AI-driven electricity needs, making energy availability a bottleneck and investment opportunity.

For the first time in recorded history, total U.S. payroll employment has flatlined rather than growing or declining — and the economy has shed jobs in alternating months since June 2024, a pattern masked by headline unemployment data.

The U.S. is experiencing its first year of net negative immigration since the Great Depression. Immigrants disproportionately arrive in prime working years with high labor force participation — losing them shrinks the economy directly, not just the labor supply.

Morgan Stanley's US economist warns $150/bbl oil sustained for months would drive significant demand destruction through weak asset markets and hiring pullbacks — not just consumer gasoline pain.

Morgan Stanley's Chief US Economist sees AI-driven CapEx spending and productivity gains as largely orthogonal to the oil shock, with positive structural trends expected to persist into 2026.

Morgan Stanley's Chief US Economist sees the oil shock as orthogonal to AI investment — business spending, productivity gains, and AI-related CapEx remain in place barring oil above $150/bbl.

Above $150/barrel, the shock would extend well beyond consumer gasoline costs — weak asset markets and a hiring pullback would compound the squeeze, crossing the threshold into significant demand destruction.

Gas turbine costs have jumped from ~$1,000/kW to over $2,500/kW, pricing customers out, while geopolitical risk across Hormuz and the Red Sea makes countries question building power grids on LNG at all.

Morgan Stanley expects headline inflation to peak near 3.7% year-over-year from oil pass-through, but core inflation should ease in the second half as tariff-driven goods price pass-through ends by mid-year.

Morgan Stanley's chief US economist argues the oil price shock offsets fiscal stimulus from the One Big Beautiful Bill Act, cutting GDP growth from ~3% to ~2%, but doesn't reach demand-destruction levels — unless oil pushes to $125–150/barrel.

US grid capacity has been flat since the 1990s while data center power demand is surging exponentially. Nuclear is the safest, cleanest baseload source and the only one that can serve always-on industrial and compute workloads at scale.

Despite being the world leader in enrichment during the 1980s, the US completely stopped domestic enrichment and now depends entirely on Russia and Europe. The enrichment step is the single bottleneck constraining both existing reactor fuel supply (~$2-2.5B US market) and the entire advanced reactor industry.

Russia supplies roughly 25% of US enriched uranium imports. A Congressional ban takes full effect January 1, 2028, immediately eliminating that supply with no domestic enrichment capacity to replace it. Utilities will be forced to draw down inventories and scramble for European supply.

Energy consumption per capita has an R-score above 0.8 with GDP per capita across every country on Earth; China's grid has grown to roughly 3x US total energy production since 2010, when both nations were equal.

EM earnings are projected to grow 40% in 2025 and every style factor internationally is beating US equivalents, with EM up 55% and developed ex-US up 48% on a rolling one-year basis.

S&P 500 forward P/E has dropped from 23 to 19 while earnings continue to grow across sectors, with supportive interest rates setting up a post-war resumption of the uptrend.