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In a primetime address to the nation Wednesday night, President Donald Trump cast the U.S. effort in Iran as a show of strength. But he left the timeline of the war’s end conspicuously fuzzy, pledging the U.S. would hit Iran “extremely hard” in the coming weeks. Markets didn’t love that ambiguity. Investors recoiled out of fears of an endless quagmire. But Trump tried to quell fears by downplaying the stakes in the Strait of Hormuz, insisting the U.S. doesn’t depend on the critical trade choke point. “The United States imports almost no oil through the Hormuz Strait and won’t be taking any in the future,” he said. “We don’t need it. We haven’t needed it, and we don’t need it.”

But as Nobel laureate Paul Krugman highlighted in a recent Substack post titled “$4 Gasoline Is Less Than Half the Story,” and as many other experts have also emphasized, the strait is essential to not only oil, but trade of some of the world’s most vital resources. Diesel, jet fuel, fertilizer, and plastics are all resources that pass through the Strait of Hormuz—and the war has everyone from oil execs to airline leaders to farmers bracing for fallout from its impacts.

“Less than half of U.S. consumption of petroleum products was gasoline,” Krugman wrote. “Add in soaring costs for fertilizer and feedstocks for plastic, and the surge in gas prices, even though it dominates headlines, is well under half of the economic story.” Those inputs are crucial for everything from the food on your grocery shelves to the shopping bags that carry them.

The impact of rising gas prices isn’t just in the headlines; it’s flashing in giant digits at more than 150,000 gas stations nationwide, where prices have steadily climbed past $4 a gallon. While Trump claims the U.S. isn’t reliant on the Strait of Hormuz, roughly a fifth of the world’s oil and natural gas supply passes through it daily. And so do other resources critical to the American consumer. The U.S. is a top producer of gasoline. But even ignoring the reality of skyrocketing gas prices, a prolonged closure of the Strait of Hormuz could hurt Americans’ pocketbooks in many other ways, according to Krugman.

Even as the U.S. produces more oil than it consumes, it remains tethered to global energy markets where prices are set at the margin. That means disruptions in the Strait of Hormuz ripple through diesel, petrochemicals, and fertilizer markets, disrupting everything from shipping costs to food production. 

More than half the battle—petrochemicals, diesel, and fertilizer

The price of polyethylene (PE), the most commonly produced plastic, has shot up about 30% since the start of the war. That’s largely because about 84% of Middle East polyethylene capacity relies on the Strait of Hormuz for waterborne exports, according to a note from Harrison Jacoby, director of PE at ICIS. While the U.S. is a major exporter of PE, the rising price could mean higher costs for Americans. The commodity can be found in everything from your shopping bags and milk jugs to detergent bottles and your kid’s toys. Dow CEO Jim Fitterling recently warned petrochemical shortages could fuel inflation through the rest of the year.

Diesel prices have climbed by approximately $1.70 per gallon, roughly 70% more than the increase in gas prices. That raises the cost of shipping and doing business, according to Krugman. At the same time, jet fuel prices have climbed, and fertilizer costs have soared because the Middle East is a major producer of the natural gas feedstocks required to manufacture them. The price of urea, a critical component in fertilizer, has spiked as the war disrupts these essential supply chains. 

But experts say that food prices would have to remain elevated for several months before consumers see a marked uptick in grocery prices. “If we’re talking just a few weeks, very likely you’re not going to see this show up in your grocery receipts,” David Ortega, an agricultural economist and professor at Michigan State University, told Fortune in a recent interview. “But if we’re talking a month or more, a few months, then it’s a different story.”

The biggest loser: American consumers

These rising costs are passed on to consumers through the prices of food and goods. And because of it, Krugman said, that puts Trump’s desire for a Fed rate cut further out of reach. 

“The diesel/jet fuel/plastics shock will lead, other things equal, to a more hawkish Fed—and an elevated risk of recession,” he wrote.

Trump didn’t make mention of commodities other than oil and gas during his speech. To reassure the country on that end, the president highlighted the U.S.’s dominant role in global oil production. But even with the U.S.’s vast domestic oil industry—and Venezuelan oil and gas reserves, which Trump said the U.S. is discussing receiving “millions of barrels” from—Krugman highlights that there’s no way American families could benefit from any gains in production. 

“We don’t have any mechanism in place to capture and redistribute those windfall gains,” he said. “So ordinary U.S. families will bear the full brunt of the global oil shock even though America is a net oil exporter.”

This story was originally featured on Fortune.com

Budget hawks in Washington have their eyes trained on April 3, when the White House is scheduled to release its fiscal year 2027 budget request, centering on a significant “historic” defense spending increase to $1.5 trillion. The national debt crossed $39 trillion just weeks ago and is alarming figures as varied as Elon Musk and Jerome Powell.

Musk, the world’s richest man and, briefly, an advisor to the White House who was involved with the Department of Government Efficiency before departing in 2025, put it bluntly at a conference appearance last September: “If you look at our national debt, which is insanely high, the interest payments exceed the Defense Department budget—and they keep rising.” His conclusion: “If AI and robots don’t solve our national debt, we’re toast.”

President Donald Trump’s response to this situation is to fix the fact that interest payments exceed military budgets by taking out more debt to boost the military budget, according to a top watchdog calculation.

The Committee for a Responsible Federal Budget (CRFB), a nonpartisan fiscal watchdog, estimated Monday boosting the defense budget by the expected amount would increase total defense discretionary spending by $5.8 trillion from FY 2027 through 2036, and add $6.9 trillion to the national debt once interest costs are factored in. The group noted the projection was revised upward from an earlier estimate owing to an additional year in the budget window and higher prevailing interest rates.

The proposal, which Trump first floated on Truth Social in January, would represent “by far the largest year-over-year increase in defense spending in the post-WWII era,” the CRFB said. The group noted that the request “should be fully offset by other proposals in his budget” and called on lawmakers to reduce other spending, raise revenue, or enact some combination of the two if they wish to accommodate the president’s ask.

On Monday, no less an authority than Federal Reserve Chair Jerome Powell chimed in with similar comments. In a moderated discussion before roughly 400 Harvard economics students, Powell said that while he doesn’t consider the nation’s $39 trillion debt load to be immediately dangerous, its trajectory demands urgent action.

“The level of the debt is not unsustainable,” Powell said, “but the path is not sustainable. It will not end well if we don’t do something fairly soon.”

Powell drew a sharp distinction between the stock of debt and its rate of growth.

“What’s clear is that our debt is growing much faster; the federal government debt is growing substantially faster than our economy,” he said. “And that ratio is going up. And in the long run, that’s kind of the definition of unsustainable.”

The numbers behind Powell’s concern are stark. Net interest payments on the national debt are now projected to exceed $1 trillion in fiscal year 2026—nearly triple the $345 billion the government paid in 2020. In just the first three months of the current fiscal year, interest payments reached $270 billion, already surpassing the nation’s defense spending during the same period. The Congressional Budget Office projects debt held by the public will surge from 101% of GDP today to 120% of GDP by 2036, eclipsing the post–World War II record.

Powell put the ball in Congress’s hands, as to how to solve this issue.

“We don’t have to pay the debt down,” he said. “We just need to have primary balance and begin to have the economy actually growing more quickly than the debt.”

He also acknowledged his warnings about the debt, consistent for roughly a decade serving at the top of the central bank, have historically gone unheeded in Washington: “I pretty much limit myself to those high-level points,” he said, “which essentially everyone ignores.”

Whether Congress will heed the CRFB’s call to offset the defense buildup remains to be seen. But the fiscal arithmetic is unforgiving: Layering nearly $7 trillion in additional debt on top of a $39 trillion base, with interest rates higher than they were just a few years ago, narrows the margin for error considerably—and makes the path Powell warned about much steeper.

This story was originally featured on Fortune.com

Just this week, two very different global institutions made the same telling decision. Apollo Global Management, one of the world’s largest investment firms, and FC Barcelona, one of the most recognized sports brands, both announced moves away from New York City in search of more favorable operating environments.

For decades, states like New York and California were the unquestioned centers of economic ambition. If you wanted to build a company, scale a financial institution or anchor a global brand, those were the places to be. That assumption is beginning to change.

The issue is not any single policy. It is the cumulative effect: layers of regulation, rising costs, complex compliance requirements and permitting timelines that introduce uncertainty into basic business decisions. These systems were often built with sound intent. But over time, they have made it harder for companies to move with speed and clarity. At a moment when flexibility and execution matter more than ever, that friction carries a real cost.

In Florida, a different pattern is emerging. I lead the Florida Council of 100, a nonprofit that brings together the state’s top business executives, and our Q1 2026 CEO Economic Outlook Index shows that executives in the state remain significantly more optimistic than their national peers. More important than sentiment, however, is behavior. Across industries, companies are increasing capital investment in facilities, technology and infrastructure. These are long-term decisions. Capital investment reflects where leaders expect opportunity to exist over the next decade, not just the next quarter.

Right now, many of them are choosing Florida. From financial services and technology to healthcare, logistics and advanced manufacturing, companies are expanding their footprint in the state. Those investments extend beyond individual firms. They support construction, strengthen supply chains, and create jobs that ripple across local economies.

In South Florida, particularly along the Gold Coast corridor from West Palm Beach through Miami, investment expectations remain among the strongest in the state. The region continues to attract capital and talent, supported by a business environment that allows companies to operate with greater speed and predictability.

Rather than being the product of any one decision, this trend reflects a broader alignment within Florida between policy and private-sector decision-making. The focus there remains on execution: how quickly a project can move forward, how predictable an investment environment is and how much time companies spend building rather than navigating systems.

Even as expectations moderate in some areas, the overall outlook remains strong. Florida CEOs continue to project growth in both sales and hiring and remain far more confident than their national counterparts. Only 9% expect employment to decline in the next six months, compared with 32% nationally. That gap reflects more than optimism. It reflects a different view of where growth will occur and which environments are best positioned to support it.

The Florida Council of 100 brings together many of the executives making these decisions in real time. When this group signals confidence, it is not theoretical. It reflects capital being deployed and companies choosing where to expand.

Economic leadership is not disappearing from legacy markets. But it is becoming more distributed, shaped by the environments where companies can operate most effectively. Apollo and FC Barcelona made that calculation this week. They won’t be the last.

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

This story was originally featured on Fortune.com

The conflict in the Middle East has sent gasoline prices in the U.S. soaring to their highest level in four years. That’s bad news for everybody, but the domestic consequences of the war are likely to ripple unevenly, and in the process undermine one of the country’s primary engines of economic growth.

Iran’s effective blockade of the Strait of Hormuz has starved the global economy of around 20% of the oil supply it is accustomed to, and Americans are witnessing the effect every time they go past a gas station. Average gasoline prices in the U.S. hit $4 a gallon on Tuesday, the first time that threshold has been crossed since 2022. 

And expensive gas is for some households a huge concern. When gasoline prices spike, they drain real disposable income that would otherwise flow into the broader economy, forcing some families into making hard choices about where to put their money. By hurting lower-income households’ spending power and leaving the finances of the wealthy relatively insulated, the war in Iran could add even more fuel to the country’s growing K-shaped economy, according to a Moody’s Analytics report published this week.

“While household consumption remains the primary driver of U.S. economic growth, the ongoing Middle East conflict and resulting surge in oil prices are testing its resilience,” the report’s authors wrote. “If the conflict is prolonged, the shock would even more meaningfully reduce household purchasing power and weigh on spending.”

The critical role spending plays

The U.S. economy is massively reliant on Americans being willing to spend money. At the end of last year, consumer spending accounted for 68% of GDP, according to the Federal Reserve. It’s why spending data is considered a critical economic indicator, and why markets are so closely attuned to releases detailing monthly retail spending and consumer confidence.

But spending’s outsize role could turn into a dangerously lopsided dependence. Analysts at Moody’s, including Mark Zandi, the firm’s chief economist, have repeatedly sounded the alarm that the bulk of spending comes from a relatively small share of consumers, specifically wealthy ones. 

In a report last year, Zandi wrote that the U.S. economy is “largely powered by the well-to-do,” finding that only the top 20% of the country’s income distribution has spent enough to outpace inflation in recent years. By another metric, the 10% of Americans with the highest incomes accounted for nearly half of all consumer spending last year.

Moody’s has framed the divergence as evidence of a K-shaped economy, one where the highest-income earners are doing better than ever and seeing their wealth grow, while low- and middle-income groups deal with stagnating wages and rising affordability concerns. 

The problem of pricey gas

More expensive fuel could accelerate that trend. Low- and middle-income earners spend larger shares of their wealth on essentials including transportation, food, and housing, meaning their ability to spend in the economy gets squeezed faster when prices for the basics rise.

“Higher gasoline and utility costs act like a tax on households by reducing real disposable income,” Moody’s analysts wrote in the recent report. “As consumers spend more on essential goods and services, they will curb spending elsewhere.” 

This effective tax arrives at a particularly precarious moment for many Americans, just as real wage gains are beginning to flatten and households are drawing down their savings to near-historic lows, according to Moody’s. Real wages declined 0.3% for low-income workers last year, according to the Economic Policy Institute, a reversal from post-pandemic trends when low- and middle-wage gains were prominent.

A pricier fuel tax has already had a significant impact on household finances. In the month since the war began, Americans may have paid an extra $8.4 billion on gasoline, according to an analysis published Thursday by Democratic members of the Joint Economic Committee, a standing congressional body. 

While the committee did not break down the cost burden by income group, the amount Americans pay at the pump is likely to leave a bigger dent in their overall budget the less they earn. Households in the lowest fifth of incomes spent 18.3% of their wages on gasoline in 2021, more than double the average of 7.7%, according to an analysis by the American Council for an Energy-Efficient Economy, an advocacy group.

Higher-for-longer gas prices could also hurt wealthier Americans eventually. The Moody’s analysts warned that more expensive fuel will likely “erode some of the boost to household purchasing power” high-income groups would have had from fatter tax refunds this year. 

Tax provisions in Donald Trump’s One Big Beautiful Bill Act last year paved the way for larger than usual refunds, primarily benefiting the wealthiest Americans. A recent analysis from Oxford Economics, a consultancy, projected returns this year to rise by $60 billion, but a prolonged period of high gasoline prices will be enough to “almost exactly” offset all of those returns this year.

This story was originally featured on Fortune.com

Mercor, a startup that provides training data to major AI companies, confirmed that it was the victim of a security breach that may have exposed sensitive company and user data.

The three-year old startup, which is valued at $10 billion, recruits experts in fields ranging from medicine to law to literature, to help provide data the improves the capabilities of AI modes. Its customers include Anthropic, OpenAI , and Meta.

According to unconfirmed reports circulating online, datasets used by some of Mercor’s customers and information about those customers’ secretive AI projects may have been compromised in the breach.

The incident was linked to a supply chain attack involving LiteLLM, a widely used open-source library for connecting applications to AI services.

The company confirmed to Fortune it was “one of thousands of companies” affected by the supply chain attack on LiteLLM, which has been linked to a hacking group called TeamPCP. Mercor spokesperson Heidi Hagberg said that the company had “moved promptly” to contain and remediate the incident and said a third-party forensics investigation was underway.

“The privacy and security of our customers and contractors is foundational to everything we do at Mercor,” Hagberg said. “We will continue to communicate with our customers and contractors directly as appropriate and devote the resources necessary to resolving the matter as soon as possible.”

Mercor is widely-considered one of Silicon Valley’s hottest startups, having raised a $350 million in a Series C round led by venture capital firm Felicis Ventures last October. 

The TeamPCP hacking group planted malicious code inside LiteLLM, a tool used by developers to plug their applications into AI services from companies including OpenAI and Anthropic, that is typically downloaded millions of times per day, according to security firm Snyk. The code was designed to harvest credentials and spread widely across the industry before it was identified and removed within hours of discovery.

Lapsus$, a notorious extortion hacking gang, later claimed it had targeted Mercor and accessed its data. It’s not immediately clear how the gang obtained the data, and Mercor did not respond to specific questions from Fortune about the hacking group’s claims. TeamPCP is thought to have recently begun collaborating with Lapsus$ as well as other groups that specialize in ransomware and extortion, according to security researchers from the cybersecurity firm Wiz quoted in a story in Infosecurity Magazine.

TeamPCP is known for engineering so-called “supply chain attacks,” in which malware is planted inside code bases or software libraries that are widely used by programmers when writing their own code. Lapsus$, by contrast, is an older hacking group, known for social engineering and phishing attacks that focus on stealing user login credentials and then using those credentials to gain access to and steal sensitive data.

Lapsus$ has published samples of allegedly stolen data on its leak site, according to TechCrunch, including what appeared to be Slack data, internal ticketing information, and two videos purportedly showing conversations between Mercor’s AI systems and contractors on its platform. Lapsus$ claims to have obtained as much as four terabytes of data in total, including source code and database records. A single terabyte is approximately as much data as in 1,000 hours of video or 1,000 copies of the Encyclopedia Britannica.

Mercor may be an early indicator of a coming wave of extortion attempts stemming from the supply chain attack. TeamPCP has publicly stated its intention to partner with ransomware and extortion groups to target affected companies at scale, according to cybersecurity trade publication Cybernews. If true, that strategy would mirror campaigns carried out in the past by hacking groups.

In 2023, an attack from the Cl0p ransomware gang that exploited a vulnerability in MOVEit, a widely used file transfer tool, breached hundreds of organizations simultaneously, ultimately affecting nearly 100 million individuals across government agencies, financial institutions, and healthcare providers. Extortion attempts from that campaign dragged on for months.

This story was originally featured on Fortune.com