In 30 seconds: US jobless claims remain historically low and productivity growth is solid, but labor's share of output has hit a record low since 1947, unit labor costs are moderating, and short-term inflation expectations ticked up to 3.6% amid ongoing Middle East conflict disruptions. The ongoing US-Iran war has closed the Strait of Hormuz, causing record drawdowns in US refined petroleum stocks, a spike in gas prices to $4.56/gallon, and significant oil market volatility, while Japan and other nations scramble to secure alternative energy supplies. Beijing has invoked a 2021 blocking statute to shield Chinese oil refineries from US sanctions, marking the first use of the law and signaling a more assertive Chinese posture against US economic pressure, even as Chinese firms increasingly rely on overseas revenue. Norway's central bank raised rates by 25 basis points for the first time since 2023, citing persistent inflation, surprising markets and serving as a potential forward indicator for ECB policy direction.
The four-week average for initial jobless claims sits at 203,250. Continuing claims came in at 1.766 million, also undershooting the 1.800 million estimate and down from a prior 1.776 million. At the state level, initial jobless claims in CA rose 2,500 on the week, with initial jobless claims in MI adding 1,800, while initial jobless claims in RI fell 1,800. April job cut announcements were up 20.9% year-over-year, versus a 78.0% year-over-year change in March. The productivity picture is more interesting. Nonfarm labor productivity grew 0.8% at an annualized rate in Q1, down from 1.6% in Q4. But the year-over-year figure accelerated to 2.9%, up 0.4 percentage points, now exceeding its 2010-2019 range. Output rose 1.5% while hours worked increased just 0.7%. Compensation grew 3.1%, but unit labor costs ran only 2.3% on a quarterly basis and 1.2% year-over-year. That is not much of an inflationary impulse from the labor side. Unit non-labor costs, however, have been climbing more rapidly of late. The structural story is starker. Labor's share of output fell to 54.1% in Q1 2026, the lowest since 1947. Businesses remain intensely focused on efficiency in a high-cost, high-rate environment, and AI is only beginning to play a growing role. On the inflation expectations front, a consumer survey showed one-year-ahead median expectations ticking up 0.2 percentage points to 3.6% in April. Median inflation expectations (three-year-ahead): 3.1%.
More than 2 months into the US-Iran war, the Strait of Hormuz remains closed, and the assessment is blunt: Iran can close the Strait of Hormuz and keep it closed – there is no returning to the status quo ante. The question now is what "normal" looks like on the other side. The physical market is telling you plenty. US distillate inventories alone have fallen by more than 18 million barrels since the war began. Brent sits around $100 a barrel, down 17% from its March 31 high. US crude, meanwhile, hit $97 per barrel intraday highs. At the pump, the damage is less abstract. US gasoline has surged 53% over the last 10 weeks, from $2.98 to $4.56 per gallon — the highest since July 2022 and the largest spike over any 10-week period in the past 30 years. Natural gas closed at $2.79, up 2.3% on the day. There will be no jet fuel shortage in the West. It will be an issue in emerging markets. Japan, less sanguine, dispatched a senior minister to meet the ADNOC CEO, carrying a personal letter from the Prime Minister containing five proposals. The market reaction to more than 2 months of Iran War has been, by most accounts, shockingly calm. The dollar has remained range-bound for almost a year despite a 10-week war with major energy and other supply disruptions. Even Whirlpool results are poor, blamed on the Iran war. The war, it seems, is everywhere and nowhere at once. The argument is that the US needs to grow energy networks, invest in infrastructure that avoids the strait, expand domestic crude reserves, and support renewables. US gas prices: $4.56 per gallon.
The same Eurasia Group analysis driving the Iran War Closes Strait of Hormuz, Disrupts Oil Markets section is also a factor in China Deploys Blocking Law to Counter US Sanctions.
Every jurisdiction has a blocking statute on the books somewhere, the legal equivalent of a fire extinguisher behind glass. The interesting part is when someone actually breaks the glass. It marks the first invocation of a 2021 law, the first time China deployed a blocking measure aimed at protecting its firms from foreign laws it deems unjustified. The signal matters more than the immediate scope. Which makes sense: if you have a statute designed for precisely this situation and you have never used it, using it is a statement. The statement is "we are willing to create a direct legal conflict between our domestic order and yours." That is not a tariff. It is a different kind of escalation, one that forces companies to choose which sovereign's instructions to follow, which is the sort of choice companies would very much prefer not to make. Combined overseas revenue at mainland-listed companies hit almost CNY12.4 trillion, or roughly USD1.8 trillion, surpassing CNY12 trillion for the first time. Overseas revenue as a share of total income at Chinese mainland-listed businesses reached nearly 17%. Total revenue at mainland-listed companies grew just 2% year-over-year, at a time when growth in the domestic market has slowed. You can see the tension.
Most central banks spent the last year trying to figure out when to cut. Norway decided to go the other way. The country's central bank raised its policy rate by 25 basis points, bringing it to 4.25%, its first hike since 2023. The move caught markets off guard. The Norway hike was characterized as more of a market surprise and a partial forward indicator for the ECB. That second part is the interesting bit. The Norway move could serve as a partial forward indicator for the ECB, according to one observer. Norway just filed a dissenting opinion. So you hike, and you wait, and you see whether the clouds break or thicken.
Here is what it costs to borrow money right now.
30-year fixed mortgage: 6.37%, up 7 bp on the week
15-year fixed mortgage: 5.72%, up 1.42% on the week
Auto loan rate (60-month): 7.52%, up 4.16% on the quarter
Credit card rate: 21.00%, up 0.14% on the quarter
Prime rate: 6.75%, flat on the day