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CIO Macro Trends: Ceasefire, Cease Nothing: Record-Low Confidence Meets a Shock Still in Motion

ekiser on April 14, 2026

The week brought a tentative ceasefire between the US/Israel and Iran and data confirming that the economic damage was already in motion before any diplomat sat down. From record-low consumer sentiment to the hottest Consumer Price Index (CPI) print in four years, the numbers tell a story of an economy absorbing a geopolitical shock with diminishing buffers and rising uncertainty.

Executive Summary

  • The University of Michigan’s consumer sentiment index plunged to 47.6, the lowest reading in the survey’s nearly 75-year history. Year-ahead inflation expectations surged to 4.8% from 3.8%, the largest single-month jump since April 2025.
  • Headline CPI rose 0.9% month-over-month in March, the largest gain since June 2022, driven by gasoline prices that surged more than 20%. Core CPI rose just 0.2%, below the 0.3% consensus, with broad disinflationary trends intact.
  • Consumer spending rose only 0.1% in real terms in February; Oxford Economics Q1 tracking estimate is just 0.7% annualized. Tax refunds up 14% year-over-year are providing a temporary buffer.
  • Equipment spending was tracking 9.7% annualized growth in Q1 prior to the war, but the geopolitical risk index has jumped three standard deviations, threatening to drag equipment investment by roughly 2%.
  • Institute for Supply Management (ISM) nonmanufacturing new orders rose to 60.6, the strongest reading in nearly four years, but the prices index surged 7.7 points to 70.7, the fastest pace since 2022.
  • The fiscal year 2026 deficit forecast has been revised to $2.3 trillion, with International Emergency Economic Powers Act (IEEPA) tariff refunds exceeding $160 billion due by midyear.
  • The ceasefire does not warrant changes to the baseline forecast; oil is expected to average above $100 in Q2.

Sentiment Hits Rock Bottom — And the Floor May Not Hold
The University of Michigan’s consumer sentiment index fell to 47.6 from 53.3 in the April preliminary release, the lowest reading in the survey’s nearly 75-year history. The decline was pervasive, with all demographic groups and all five index components posting setbacks as consumers expressed major concerns over high gas prices and weaker asset values. Notably, the ceasefire was announced just after the survey period for the preliminary results closed; if it holds and translates into lower pump prices and an equity market recovery, the final April reading could see an upward revision. Year-ahead inflation expectations shot up to 4.8% from 3.8%, the largest one-month increase since April 2025, driven by gasoline prices that have skyrocketed since the onset of the war. Long-run expectations rose more modestly to 3.4% from 3.2%, consistent with analysis that long-run expectations track core rather than headline inflation.

  • Key Takeaway: If long-run inflation expectations remain anchored, the Fed retains room to focus on downside labor market risks, but the ceasefire’s durability will determine whether that anchor holds.

CPI — Hot on the Outside, Cool at the Core
The headline CPI surged 0.9% in March, the largest monthly gain since June 2022, as the US/Israel-Iran war left its fingerprints on the data. Retail gasoline averaged $3.70 per gallon, up from $2.93 the prior month, with the CPI for gasoline surging more than 20%. Yet beneath the headline noise, core CPI rose just 0.2%, a tenth below consensus, and the broad disinflationary trends across major core categories remained intact.

The ISM nonmanufacturing prices index reinforced the inflationary pressure on the services side, surging 7.7 points to 70.7, the fastest pace of expansion since 2022, as Middle East transportation disruptions bled into domestic supply chains with the supplier deliveries index rising to 56.2.

April will be uglier still. Pump prices are expected to average above $4 per gallon, contributing at least 0.2 percentage points to the headline, while a statistical quirk from last year’s government shutdown will add roughly 0.1 percentage point via the shelter category. Oxford Economics’ provisional Personal Consumption Expenditures (PCE) nowcast shows headline rising 0.5% and core just 0.1%, a gap reflecting gasoline’s much lower weight in the Fed’s preferred measure and a reminder that this is not 2022. Supply chains are not yet flashing red, the labor market is not overheating and One Big Beautiful Bill Act (OBBBA) stimulus is skewed toward lower marginal propensity to consume households.

  • Key Takeaway: Two consecutive hot headline prints will test patience, but the core message that underlying disinflationary trends remain intact should give the Fed room to act on employment rather than react to oil.

The Consumer — Weakening Before the War Even Hit
The February income and spending data revealed a consumer already losing momentum before the first missile was fired. Personal income contracted 0.1% in nominal terms, largely on one-off hits to dividends and transfer payments. Spending rose 0.5% nominally but just 0.1% in real terms, a tepid rebound from January’s weather-driven stall. Oxford Economics’ nowcast puts Q1 consumer spending at just 0.7% annualized, with a similarly weak gain forecast for Q2 as the drag from the energy shock builds.

If the war were to re-escalate and equity markets came under additional pressure, spending could decline outright in Q2. A partial offset comes from an unusually strong tax refund season. Cumulative refund issuance is up 14% year-over-year, with aggregate refunds expected to finish 19% higher than last year and the average refund reaching $3,813, up 21%.

Consumer credit rose $9.5 billion in February, but revolving credit growth slowed to just 1.8% year-over-year as higher energy prices and weaker spending weigh on demand for credit.

  • Key Takeaway: The consumer entered this shock with less momentum than the headline labor market would suggest, and the energy tax on real incomes has not fully hit yet.

Equipment Spending — Pre-War Strength, Post-War Questions
Headline durable goods orders fell 1.4% in February, dragged by volatile transportation components. But core orders, nondefense capital goods excluding aircraft, rose 0.6%, resuming the strong growth pattern from the second half of 2025. Equipment spending was tracking 9.7% annualized growth in Q1, with shipments up 1.3% in February and capital goods imports buoying estimates of at least a 0.5 percentage point contribution to Q1 GDP growth.

The geopolitical risk index has jumped three standard deviations since the outbreak of the war, which historically translates to a roughly 2% drag on the level of real equipment spending at peak impact. Two structural tailwinds will cushion the blow: the AI buildout continues to drive demand for computers and electronics, and investment incentives under the OBBBA support durable goods spending across categories.

  • Key Takeaway: Business investment entered the geopolitical storm with genuine momentum. The question is whether ceasefire uncertainty freezes the capex pipeline before those structural tailwinds can sustain it.

The Fiscal Reckoning — And the Ceasefire Caveat
The cumulative budget deficit for the first half of FY2026 stands at $1.17 trillion, and the second half will deteriorate markedly as OBBBA tax cuts fully kick in, tariff revenue base effects fade and IEEPA tariff refunds exceeding $160 billion begin flowing to importers by midyear.

FY2026 deficit forecasts are upward. Defense spending is up 3.2% year-over-year on a fiscal year-to-date basis, with interest on the debt up 6%. House Republicans are weighing supplemental defense funding tied to the war that could push the deficit wider still.

The ceasefire, for its part, does not warrant changes to the baseline forecast: the Strait of Hormuz is expected to remain near zero throughput until May, and oil is forecast to be above $100 in Q2.

On the labor front, initial claims rose to 219,000 last week but the four-week moving average held at 209,500, down 6.3% year-over-year; continued claims fell to 1.794 million, the lowest since May 2024.[1] The labor market remains stable, but the war has increased downside risks, and it is too soon to assume the ceasefire will hold.

  • Key Takeaway: The fiscal trajectory was already unsustainable before the war. A prolonged conflict and supplemental defense spending would accelerate the reckoning.

Final Thoughts
The ceasefire is a geopolitical comma, not a period. Markets have priced out the extreme left tail, but the economic damage (record-low confidence, hot headline inflation, weakening consumer spending) is already in the data and will persist regardless of what happens at the negotiating table. The Federal Open Market Committee (FOMC) minutes confirmed what the data have been indicating: upside risks to inflation are colliding with downside risks to employment, and the Fed is likely to prioritize the latter with two rate cuts this year.

The path forward depends less on the ceasefire’s durability than on whether the damage already inflicted — to confidence, to real incomes, to business investment plans — proves self-reinforcing. The labor market has been the last domino standing, and claims data suggest it remains upright for now. But the energy shock operates with a lag, and the consumer entered this episode with less cushion than the headline numbers suggested. If the war re-escalates, the question shifts from how slow growth will be to whether it turns negative. The old playbook of mean-reverting geopolitical risk is obsolete. This is a world where every shock leaves a scar.

Oxford Financial Group, Ltd. is a SEC-registered investment adviser. Registration does not imply a certain level of skill or training. The information provided is for general informational purposes only and should not be considered investment, tax, or legal advice. Opinions are those of the author and are subject to change based on market, regulatory or economic conditions. Forward-looking statements are opinions and/or estimates and are not guarantees of future results. Data and opinions are based on sources believed to be reliable, including unaffiliated third parties such as Oxford Economics, but their accuracy cannot be guaranteed. Past performance is not indicative of future results. See important disclosures and disclaimers at https://ofgltd.com/home/disclaimers. OFG-2604-23.

Business Transfer Planning – A Tale of Two Sellers

ekiser on April 10, 2026

For many business owners considering a sale of their business, maximizing enterprise value becomes a singular focus and the proverbial finish line. Beyond the finish line, however, is the looming reality of the tax haircut this enhanced wealth may face when it passes to heirs.

CIO Macro Trends — First Quarter 2026 in Review

ekiser on April 7, 2026

Three Acts, One Shock and an Economy That Ran Out of Margin

The first quarter of 2026 opened as a Goldilocks story — above-trend growth, cooling inflation, a patient Fed and an AI-driven productivity renaissance — and ended with oil above $100 a barrel, consumer sentiment approaching recessionary territory and a geopolitical supply shock rewriting the macro regime in real time. In ninety days, the narrative traveled from “soft landing at cruising altitude” to “holding pattern in a fog bank.”

The defining analytical challenge for Q2 is whether the structural tailwinds that characterized January and February can outrun the lagged consequences the oil shock has already set in motion. Because, if there is one lesson from Q1, it is that the distance between “manageable tail risk” and “regime change” can collapse in a single weekend.

Executive Summary

  • Growth proved resilient but the trajectory reversed sharply. The quarter opened with Q4 Gross Domestic Product (GDP) tracking near 2% and 2026 growth projected at 2.8%; ISM composites reached their highest levels since mid-2022 by early March. By quarter-end, the GDP forecasts had been cut a full percentage point with the full-year growth forecast revised down to 2.4%.

  • The “jobless expansion” evolved from curiosity to vulnerability. A “low-hire, low-fire” equilibrium persisted throughout the quarter, with initial claims near historical lows. But benchmark revisions revealed prior job growth had been overstated by 71,000 per month, and by March, VAR models projected the oil shock could reduce monthly hiring by 60,000 in Q4.

  • Inflation made a round trip. January Consumer Price Index (CPI) surprised to the downside and disinflation appeared firmly on track; by March, Producer Price Index (PPI) had surged to 3.4% year-over-year, its highest since February 2025, import prices posted their largest monthly gain since March 2022 and headline Personal Consumption Expenditures (PCE) was projected to spike to 3.7% in Q2.

  • Consumer bifurcation deepened into consumer fragility. Sentiment deteriorated from 56.4 in January to 53.3 by late March, approaching recessionary territory. The savings rate hit multi-year lows, equity markets shed more than 4% and the consumption forecast was slashed to 1.9% for 2026, the weakest since 2013 outside the pandemic.

  • AI investment and energy infrastructure emerged as structural bright spots. Capital goods imports rose 27.5% year-over-year while all other imports fell. Data center construction expanded 31.3% year-over-year and mining capex intentions ran consistent with 20%-plus growth as West Texas Intermediate (WTI) stood well above breakeven. In energy and AI related capital expenditures we saw two sectors where geopolitical disruption seemed to accelerate rather than dampened spending.

From Goldilocks to Oil Shock — A Quarter in Three Acts
The quarter opened with quiet optimism: Oxford Economics estimated Q4 GDP growth tracking closer to 2% annualized, the labor market was settled into a stable “low-hire, low-fire” equilibrium, and headline CPI had closed 2025 at 2.7%, suggesting disinflation was firmly on track.

The consumer was bifurcated but spending. The top 20% of households drove a near-record share of discretionary consumption while the bottom 80% fell further behind, but the aggregate picture held. By mid-February, the outlook had actually brightened. ISM manufacturing jumped to 52.6, the first expansion reading in nearly a year. Services accelerated to their strongest composite pace since July 2022, and the Supreme Court’s tariff ruling dropped the effective tariff rate from 12.7% to 8.3%.

Then, on February 28th, everything changed. The US/Israel-Iran war closed the Strait of Hormuz to commercial shipping, oil prices surged above $100 per barrel, and the International Energy Agency coordinated a release of 400 million barrels from strategic reserves, a historically large drawdown that markets interpreted less as relief than as confirmation of the conflict’s expected duration. In a single weekend, the dominant macro question shifted from “how fast does inflation reach target?” to “how deep does the damage go before it shows up in the data?”

  • Key Takeaway: Q1 was a quarter of three acts — quiet confidence, productive rotation and geopolitical regime change — and the speed of the transition is itself a reminder that supply shocks do not announce themselves on a schedule the market can price in advance.

The Productivity Renaissance — And Its Limits
The most consequential quiet story of Q1 was the economy’s productivity performance. Nonfarm productivity grew 2.2% annually since 2019, roughly double the pace of the prior decade. This was a trend confirmed by preliminary Q4 data showing 2.8% annualized growth, until the final revision marked that figure down to 1.8%.

The Employment Cost Index reinforced the narrative, with Q4 wages rising just 3.4% year-over-year, the slowest since Q2 2021 and a pace consistent with the Fed’s 2% inflation target given trend productivity. Unit labor costs rose 4.4% in Q4, a number that in a prior cycle would have triggered Fed alarm, but the productivity backdrop allowed us to conclude that labor was not the primary inflationary driver, preserving the intellectual foundation for the Fed’s patient stance.

AI-driven capital deepening boosted GDP by an estimated 0.1 percentage points in 2025 and is projected to contribute 0.4 percentage points in 2026, a structural tailwind that operated quietly beneath the quarter’s headline drama. The productivity buffer is real, but thin: any erosion in Q1 2026 data would crack the analytical foundation on which the Fed’s June and September rate cut projections depend.

  • Key Takeaway: Productivity was the quarter’s most important macro variable precisely because it was the least discussed. It gave the Fed its permission slip for patience, blunted the wage-price spiral narrative and raised the economy’s speed limit at precisely the moment it was needed most.

The K-Shaped Consumer — From Bifurcation to Fragility
The consumer narrative underwent the quarter’s most dramatic transformation. In January, the University of Michigan sentiment index improved to 56.4, year-ahead inflation expectations eased to 4.0% and Oxford Economics projected consumption growth near 3%, all suggesting the consumer was resilient if unevenly so. The structural bifurcation, however, was already pronounced: the top 20% of households were spending a near-record share on discretionary goods, equities comprised a record 47% of household financial assets and the personal savings rate had fallen to 3.5%, with nearly 60% of Q3 consumption growth financed by drawing down savings rather than income.

By late March, the picture had deteriorated materially: The University of Michigan Consumer Sentiment Index fell to 53.3, year-ahead inflation expectations surged to 3.8%, the largest single-month increase since April 2025 and long-run expectations reached 3.2%. Full-year consumption growth was cut to 1.9%, the weakest since 2013 outside the pandemic. Equity markets shed more than 4% over the final three weeks of the quarter, reversing the wealth-effect engine that had been driving upper-income spending. The consumer did not break in Q1, but the architecture of resilience — thin savings, equity dependence, confidence disconnected from spending — revealed itself as fragility disguised as stamina.

  • Key Takeaway: The quarter’s consumer story is a cautionary tale about wealth-dependent consumption: when the asset prices that sustain spending become the channel through which shocks transmit, the same households carrying the economy become its point of maximum vulnerability.

The AI Economy — Structural Tailwind Through the Storm
If there was a single investment theme that traversed the entire quarter without interruption, it was AI-driven capital formation. Trade data revealed a striking divergence: over the past year, imports of capital goods — computers, semiconductors and related equipment — rose 27.5%, while all other imports declined 17.4%. This was not broad-based demand overheating but targeted capital deepening, and by quarter-end the investment pipeline showed no signs of deceleration. Capital goods imports were up 25% year-over-year in the most recent data, and data center construction was expanding 31.3% year-over-year, the one category of investment that remained effectively rate-insensitive throughout the quarter.

The AI build-out also created its own inflationary micro-narrative: a Dynamic Random-Access Memory (DRAM) semiconductor shortage pushed electronic components producer prices 17.8% higher year-over-year by February, a feature of excess demand rather than a warning sign. Alongside AI, defense spending emerged as a second structural pillar. The One Big Beautiful Bill Act continued to support capital formation, and the Iran conflict arguably accelerated rather than dampened the defense investment thesis. The AI and defense themes stand apart from the rest of the macro landscape: they are the two sectors where geopolitical disruption and elevated uncertainty have functioned as accelerants rather than headwinds.

  • Key Takeaway: AI infrastructure and defense do not appear to be cyclical recovery trades, but rather, structural reallocation themes. At least through Q1, they carry a momentum that neither oil shocks nor policy uncertainty have been able to interrupt.

The Oil Shock — Anatomy and Lagged Consequences
The February 28 onset of the US/Israel-Iran conflict was the quarter’s defining inflection point, and its consequences will dominate the macro landscape well into the second half of 2026. The immediate transmission was swift: 

  • February import prices rose 1.3% month-over-month, the largest gain since March 2022, driven by fuel imports surging 3.8% and nonfuel imports rising 1.1%.

  • The February PPI rose to 3.4% year-over-year, its highest since February 2025, and critically, none of those prints captured the full March shock.

  • Oxford Economists project headline CPI will average 3.3% in 2026, an increase of 0.8 percentage points from the pre-war baseline, with PCE inflation spiking to 3.7% in Q2 before settling at a core rate of 2.8% for the full year.

But the inflation channel is only the beginning. Oxford Economics’ VAR model projects that the current level of policy uncertainty, up 20% in Q1, could reduce monthly hiring by approximately 60,000 by Q4. This is a drag operating on a 5-to-12-month lag that means the labor market’s current calm is a pre-storm reading, not an all-clear. The nonlinear framework is the most sobering piece of the analysis: when oil prices move more than 20% above their prior three-year peak, as they have, real consumption historically declines by more than 1% over the subsequent six quarters, a magnitude comparable to the consumption impact of the 1973 Arab oil embargo.

  • Key Takeaway: The oil shock’s most dangerous feature is its lag structure. The inflation hit arrives first, the consumption drag follows and the employment impact comes last, which means every current high-frequency indicator could be understating the damage already in motion.

Final Thoughts
The first quarter of 2026 will be remembered as the quarter in which the US economy lost its margin for error. Through January and February, the expansion rested on genuinely constructive foundations: productivity was rising, AI investment was reshaping the capital stock, inflation was cooling and the Fed had the luxury of patience. That foundation has not crumbled as the structural tailwinds are real and remain intact. However, the oil shock has imposed a stress test that the economy must now pass with far less room for disappointment.

GDP growth has been revised down to 2.4% from 2.8%, the S&P 500’s correction trajectory is tracking the 1973 Arab oil embargo analog with uncomfortable precision, and the consumption outlook has deteriorated faster than the hard data currently reflects. Simultaneously, there are pockets where capital is accelerating into the shock rather than retreating from it. With WTI over $100 per barrel, standing well above the mid-sixties production breakeven level, mining-related capex is running consistent with more than 20% year-over-year growth, and data center construction expanding is at 31.3% year-over-year.

The quarter’s central lesson is that an economy built on narrow pillars can look remarkably strong until the ground shifts, and the ground shifted on February 28. The question for Q2 is not whether the lagged damage arrives, but whether the structural tailwinds that defined the first two months of the year can absorb it. As we wrote at the start of the quarter: the economy is stronger than it feels, less balanced than it looks and more resilient than the headlines suggest. Two out of three still hold. The balance is what changed.

Oxford Financial Group, Ltd. is a SEC-registered investment adviser. Registration does not imply a certain level of skill or training. The information provided is for general informational purposes only and should not be considered investment, tax, or legal advice. Opinions are those of the author and are subject to change based on market, regulatory or economic conditions. Forward-looking statements are opinions and/or estimates and are not guarantees of future results. Data and opinions are based on sources believed to be reliable, including unaffiliated third parties such as Oxford Economics, but their accuracy cannot be guaranteed. Past performance is not indicative of future results. See important disclosures and disclaimers at https://ofgltd.com/home/disclaimers. OFG-2604-7

CIO Macro Trends – Tick, Tock: The Oil Shock’s Lagged Damage Is Just Getting Started

ekiser on March 30, 2026

Four weeks into the US/Israel-Iran conflict, the US economy is caught in a peculiar temporal illusion: the hard data still looks resilient, the soft data has already cracked and the real damage is queuing up like aircraft in a holding pattern, visible on the radar, not yet on the runway. The oil shock does not announce itself on arrival; it operates on a 5- to 12-month lag, which means the labor market’s surface calm and the Fed’s studied equanimity are not reassurance, rather their turning is simply a matter of when, not if.

Executive Summary

  • Consumer sentiment has broken; spending is next. UMich sentiment fell to just above recessionary territory with year-ahead inflation expectations surging and long-run expectations at levels that historically compromise Fed credibility. 2026 consumption growth may end up the slowest since 2013 outside the pandemic.
  • Import prices posted their largest monthly gain since March 2022. The month-over-month surge reflects three converging vectors: energy costs, dollar weakness and AI-related capital goods, together engineering a second quarter headline PCE spike and a rising full-year core PCE.
  • Construction spending contracted and the GDP Nowcast was sharply revised. January construction fell, prompting some economists to cut their GDP projections, although energy infrastructure and AI data center construction are providing meaningful positive offsets.
  • Productivity was revised lower but remains the economy’s analytical buffer. Fourth quarter nonfarm productivity was cut, yet the trend since 2019 continues to suppress wage-driven inflation and gives the Fed its narrowest possible intellectual justification for patience.
  • The labor market is running on borrowed time. Initial claims remain historically low, but economists project that policy uncertainty alone could reduce monthly hiring by the end of the year, a signal that the jobs data has not yet processed what the rest of the economy may already know.

Sentiment Breaks, Spending Next?

The University of Michigan’s final March sentiment reading came in at 53.3, a level that has historically separated soft landings from harder outcomes. Year-ahead inflation expectations jumped to 3.8%, marking the largest single-month increase since April 2025, while long-run expectations reached 3.2%, a threshold that historically places the Fed in an analytically untenable position, forced to choose between credibility and growth. 

The sentiment damage is not evenly distributed: middle- and high-income households, those most exposed to the equity correction now underway, drove the drop. Assuming that real disposable income growth from higher gas prices slow overall consumption growth, this will actually be felt most by lower income households given a larger share of their overall spending goes towards filling up at the pump. Oxford Economics now projects full-year 2026 consumption growth at just 1.9%, the weakest pace since 2013, excluding the pandemic, with meaningful downside risk if oil prices remain elevated through the summer. The distance between broken sentiment and broken spending has historically been measured in months, not years, and the clock is already running.


  • Key Takeaway: When near-term and long-run inflation expectations move in tandem at these levels, the Fed’s credibility erodes precisely when monetary flexibility is most needed.

Import Prices — Three Vectors, One Direction
The weekly data makes clear we are still too early to see the full hit from higher energy prices in March, but February’s import price report offered a preview of where the transmission is heading. February import prices rose 1.3% month-over-month, the largest monthly gain since March 2022, driven by three distinct but mutually reinforcing vectors. Energy-related imports surged 3.8%, reflecting Hormuz disruption now embedded in every cargo manifest; nonfuel imports rose 1.1%, with industrial supplies up 9.6% year-over-year and AI-related capital goods up 3.9% year-over-year. The dollar’s depreciation is acting as an independent multiplier, systematically converting every percentage point of foreign price pressure into domestic inflation at a more efficient rate than in prior cycles. Consumer goods prices, which had provided rare deflationary relief, have now turned positive, closing the last escape valve on which the Fed was quietly relying. Oxford Economics projects Personal Consumption Expenditures (PCE) inflation of 3.7% in Q2 2026 and core PCE at 2.8% for the full year, with two Fed rate cuts penciled in for June and September, a calendar that will require meaningful data cooperation to hold.


  • Key Takeaway: The import price vector is no longer a single-source story; it is a three-headed inflationary transmission (energy, dollar and AI capex).

Construction and the Uncertainty Tax
January construction spending declined 0.3%, a modest headline that nevertheless landed with strategic weight. Oxford Economics immediately revised its GDP Nowcast from 3.7% to 2.8% annualized, a full percentage point haircut reflecting not just the construction miss but the broader uncertainty tax now embedded in capital allocation decisions. Residential investment, still burdened by the compounding pressures of rate sensitivity and oil-shock affordability erosion, has been cut to a 2.0% forecast for 2026, while nonresidential structures are now projected at 3.6%, down from a prior 4.2%. 

Against this backdrop, two sectors are quietly defying gravity: with West Texas Intermediate (WTI) crude at $95 per barrel standing 44% above the $66 production breakeven, drilling-related capex intentions are running consistent with more than 20% year-over-year growth in capital spending, one of the most decisive positive signals in the construction data. Data center construction tells an equally compelling counter-narrative, expanding 31.3% year-over-year as AI infrastructure build-out remains effectively rate-insensitive in the current environment. The divergence between uncertainty-constrained and structurally-driven capital formation is itself a portfolio signal worth heeding.


  • Key Takeaway: The construction contraction is not monolithic: energy infrastructure and AI-capital expenditures are the two categories where capital commitment is actually accelerating, despite broader construction spending declining.

Productivity — The Economy’s Quiet Buffer
Fourth quarter 2025 nonfarm productivity was revised down to 1.8% from a preliminary 2.8%. Although a meaningful reduction, it nevertheless preserves the more strategically important data point: the economy’s underlying productivity trend since 2019 remains approximately 2.2% per annum, well ahead of the 1.5% from the prior cycle. 

Unit labor costs rose 4.4% in the fourth quarter — a reading that in an earlier cycle would have triggered immediate Fed concern — but the productivity backdrop indicates that labor is not now the primary inflationary driver. That inference carries significant strategic weight: it means the Fed retains a narrow analytical justification for focusing on import-driven and energy-driven inflation rather than a wage-price spiral, narrowly preserving the case for the June and September cuts many are expecting. The productivity buffer is real but thin; if Q1 2025 data shows further erosion, the intellectual foundation supporting the current Fed patience narrative begins to crack, and the rate path will need to be repriced accordingly.


  • Key Takeaway: Productivity is the Fed’s permission slip for patience with the explicit caveat that any first quarter 2026 productivity disappointment would warrant a refreshed look.

Labor Market — The Clock Is Ticking
Initial jobless claims for the week ending March 21 came in at 210,000, a reading that on its face suggests an economy with no visible stress in its labor market and therein lies the strategic danger. Continued claims fell to 1.819 million, the lowest reading since May 2024, and the four-week moving average sits at 210,500, a portrait of labor market tightness that has led some observers to dismiss the oil shock narrative as manageable. That view should be taken with a bit of caution, however, as the oil shock employment transmission mechanism operates on a 5-to-12-month lag, meaning the stress already set in motion will not appear in any high-frequency indicator for months. An estimated quantification by Oxford Economics is sobering. Oxford Economics’ VAR model projects that the current level of policy uncertainty, up 20% in the first quarter of 2026, could reduce monthly hiring by approximately 60,000 by the fourth quarter of 2026, a drag sufficient to move the unemployment rate meaningfully without appearing in any data the Fed will see before September. The labor market’s current calm is a pre-storm reading, not an all-clear signal.


  • Key Takeaway: The 5- to12-month employment lag is the most underappreciated risk in the current consensus view, with the potential for a meaningful end-of-year deterioration in the data.

Final Thoughts: Lagged Reality Versus Current Perception
The defining analytical challenge of this moment is not the data we have, it is the data that is already in motion but has not yet registered. Oil price spikes can cause nonlinear reactions. When oil prices move more than 20% above their prior three-year peak, as they have, real consumption historically declines by over 1% over the subsequent six quarters. The portfolio implications are direct: the combination of a productivity-buffered but inflation-pressured Fed, a consumption outlook deteriorating faster than the hard data reflects, and an energy sector that is simultaneously the source of the shock and its primary beneficiary is a reminder of why true portfolio diversification matters. The clock is ticking. The question is not whether the lagged damage arrives, but whether portfolios are built to weather it when it does.

Oxford Financial Group, Ltd. is a SEC-registered investment adviser. Registration does not imply a certain level of skill or training. The information provided is for general informational purposes only and should not be considered investment, tax, or legal advice. Opinions are those of the author and are subject to change based on market, regulatory or economic conditions. Forward-looking statements are opinions and/or estimates and are not guarantees of future results. Data and opinions are based on sources believed to be reliable, including unaffiliated third parties such as Oxford Economics, but their accuracy cannot be guaranteed. Past performance is not indicative of future results. See important disclosures and disclaimers at https://ofgltd.com/home/disclaimersOFG-2603-50

Family Office Structures and Deductibility

ekiser on March 25, 2026

When families experience significant financial success, whether from the sale of a business or years of disciplined investing, they often begin considering how to best manage that wealth for both the current and future generations.

CIO Macro Trends – Strait Jacket: Oil Shock, Frozen Housing and a Fed on the Fence

ekiser on March 23, 2026

Three weeks into the US/Israel-Iran war, the economic data is telling two very different stories — one of an economy that was performing admirably before February 28, and one now bracing for a supply shock not seen in years. Somewhere between the Strait of Hormuz and the Fed’s meeting room, the macro regime has shifted meaningfully; and the difference between “temporary shock” and “regime change” is a fine line to walk. As the saying goes in energy markets: when the Strait of Hormuz sneezes, the rest of the economy catches a cold.

Executive Summary

  • The US/Israel-Iran war is the defining macro event. Now in its third week with no off-ramp visible, the conflict has disrupted oil flows through the Strait of Hormuz, pushing prices above $100/barrel and triggering a historic Strategic Petroleum Reserve (SPR) release that may do more to signal duration than dampen prices.
  • Inflation is re-accelerating. Producer Price Index (PPI) hit its highest level since February 2025, and the real pain has not yet registered. The oil spike in March will push the next report higher still. Headline Consumer Price Index (CPI) is now expected to average 3.3% in 2026, up 0.8 percentage points from the pre-war baseline.
  • The consumer is in a squeeze. Real incomes are compressing, savings buffers are historically thin and equity markets have shed more than 4% over three weeks, precisely when wealth effects matter most. At the same time, new home sales collapsed in January, mortgage rates have climbed back to 6.22% and the long-awaited recovery is further delayed.
  • The labor market is in fragile equilibrium, and the Fed is on hold, for now. Initial claims are healthy, but the “no-hire, no-fire” dynamic is increasingly vulnerable to geopolitical uncertainty. Two cuts remain the baseline of many (June and September), but financial markets are pricing a 40% chance of a rate hike, a divergence worth watching.
  • AI investment and defense spending are the islands of stability in an otherwise turbulent investment outlook, with both themes structurally intact and arguably strengthening.
  • The Oil Shock: It is Not the Size of the Strait, It is What Flows Through It

Industrial production was performing well prior to the outbreak of the US/Israel-Iran war, rising to its highest level since summer 2019, a strong baseline that now reads like a prewar artifact. Oil prices have surged above $100 per barrel, with global prices running more than 40% above year-ago levels in March. The International Energy Agency (IEA) coordinated a release of 400 million barrels from strategic reserves, with the US contributing 172 million barrels from the Strategic Petroleum Reserve, a historically large drawdown representing 42% of available reserves. Context matters, however: roughly 20 million barrels per day previously flowed through the now-closed Strait of Hormuz, and the IEA release falls well short of replacing that disruption. Markets may interpret the announcement as a signal the war is becoming more protracted, sending prices higher in response. For portfolios, the energy trade is not subtle: commodities, energy equities and real assets are the near-term beneficiaries of a supply shock with no clear resolution timeline.

  • Key Takeaway: The oil shock is structural in its immediate impact and duration-dependent in its severity, energy assets seem to offer upside, but the real portfolio risk lies in what higher oil does downstream to consumers, manufacturers and the Fed’s optionality.

Inflation Reignites: The Pre-War Data Was Already Telling a Story
The February PPI rose a stronger-than-expected 0.7%, pushing PPI inflation to 3.4% year-over-year its highest reading since February 2025. Food prices surged 2.4% and energy 2.3%, while core PPI reached 3.9% year-over-year. Critically, none of this captures the March oil shock: with global oil prices now more than 40% above year-ago levels, the next PPI report is very likely to be worse, particularly in food, energy and transportation categories. Trade services prices remain elevated at 5.1% year-over-year as tariff volatility continues to complicate the policy landscape. A second inflation vector, the AI-driven DRAM semiconductor shortage, pushed electronic components producer prices 17.8% higher year-over-year in February. With Oxford Economics Personal Consumption Expenditures (PCE) nowcast pointing to headline PCE inflation reaching 3.5% in Q2, the window for Fed cuts has narrowed, though it has not closed. Think of it as the Fed standing in front of an open refrigerator: the house is on fire, but the cold air feels nice for now.

  • Key Takeaway: Inflation is not one problem but three: an oil shock, an AI-driven supply constraint and persistent trade-related price pressures.

The Consumer Under Pressure: Thin Buffers, Thick Headwinds
The American consumer entered this crisis in decent shape, but decent is doing a lot of heavy lifting right now. With personal savings rates already at historically low levels, those buffers are thin, and higher energy prices at the pump will force difficult household trade-offs. Equity markets have shed more than 4% over the past three weeks, eroding the wealth-effect tailwind that higher-income households have relied upon as an engine of spending. With stocks now a bigger driver of consumption than housing, equity weakness matters more than it once did. The housing channel compounds the picture: new home sales plunged to 587,000 Seasonally Adjusted Annual Rate (SAAR) in January, well below consensus expectations and down 11.3% year-over-year, as winter weather and rising mortgage costs collided. The Iran war has already pushed mortgage rates up by more than 20 basis points, with the 30-year rate back to 6.22%. The inventory of completed new homes for sale remains at levels last seen in July 2009, capping the upside for housing starts until that supply is absorbed.

  • Key Takeaway: The consumer is caught in a price-and-savings squeeze, with housing as an additional drag.

Labor and the Fed: Threading the Needle on a No-Hire, No-Fire Economy
Initial jobless claims fell to 205,000 in the week ended March 14, the lowest since the start of the year, with the four-week moving average declining to 210,750 and tracking 8.2% below year-ago levels. On the surface, this is a healthy labor market. But as Fed Chair Powell acknowledged, it is not a “comfortable balance.” The no-hire, no-fire dynamic, low layoffs paired with weak hiring, leaves the economy peculiarly vulnerable to uncertainty that discourages businesses from adding headcount. The Iran war is expected to keep unemployment elevated for longer, delaying the labor market improvement that would otherwise support consumer spending. For many, the baseline remains two Fed rate cuts in 2026 (June and September) with the Fed expected to look through this oil-driven inflation shock and focus on downside labor risks. Yet financial markets are currently pricing a 40% chance of a rate hike by year-end, a meaningful divergence that deserves respect as a tail risk. If inflation expectations de-anchor, or if the war proves more protracted than the baseline assumes, the Fed’s calculus shifts quickly.

  • Key Takeaway: The Fed is threading a needle between an oil-driven inflation spike and a labor market that was already fragile before the war.

AI and Defense: The Structural Bright Spots in an Uncertain Landscape
Amid the turbulence, two investment themes remain structurally intact and, arguably, strengthening. The AI capital expenditure cycle shows no signs of abatement: Q1 source data confirm no sudden stop in AI investment, with the race to build out data center capacity carrying a momentum that geopolitical headwinds will not easily interrupt. The Dynamic Random-Access Memory (DRAM) semiconductor shortage — a byproduct of surging AI demand — is pushing electronic components producer prices 17.8% above year-ago levels, a feature of excess demand rather than a warning sign. The second pillar of stability is defense: last year’s Republican legislation boosted federal spending on national defense, which is now feeding into production of defense and space equipment. The One Big Beautiful Bill Act continues to support broader capital formation by raising the after-tax return on investment, though near-term uncertainty is causing most businesses outside AI and mining to defer decisions until the geopolitical picture clarifies. If the last decade was defined by smartphones and streaming, this one may well be defined by GPUs, gigawatts and guided munitions.

  • Key Takeaway: AI infrastructure and defense represent two of the most durable structural investment themes available, and unlike most sectors, they are among the few where geopolitical disruption may actually accelerate spending rather than dampen it.

CIO View: The Strait Is Narrow, but the Shadow Is Long
The macro regime has shifted materially in three weeks. What began as a “steady growth with manageable inflation” environment has become an oil supply shock with layered consequences — for consumers, manufacturers, the housing market and the Federal Reserve’s room to maneuver. The base case — a short war, a partial reopening of the Strait of Hormuz by May and a consumer spending rebound in the second half of 2026 — is coherent but carries meaningful execution risk, particularly given that hostilities have escalated beyond initial expectations. GDP growth has been revised down 0.4 percentage points to 2.4% for 2026, with consumer spending bearing the primary burden of adjustment. The diplomatic calendar is now the most important “data point” of the coming weeks because the market has learned, yet again, that the Strait of Hormuz is a very small body of water with an outsized influence on everything downstream.

Oxford Financial Group, Ltd. is a SEC-registered investment adviser. Registration does not imply a certain level of skill or training. The information provided is for general informational purposes only and should not be considered investment, tax, or legal advice. Opinions are those of the author and are subject to change based on market, regulatory or economic conditions. Forward-looking statements are opinions and/or estimates and are not guarantees of future results. Data and opinions are based on sources believed to be reliable, including unaffiliated third parties such as Oxford Economics, but their accuracy cannot be guaranteed. Past performance is not indicative of future results. See important disclosures and disclaimers at https://ofgltd.com/home/disclaimersOFG-2603-44

CIO Macro Trends – Algorithms and the American Consumer: When Geopolitics Meets the AI Economy

ekiser on March 17, 2026

If the macro economy were a movie this week, the plot would feature three protagonists: geopolitics, artificial intelligence and the American consumer. The twist is that each storyline is pulling the economy in a slightly different direction. Oil prices are rising because of the Iran conflict, AI investment continues to surge and the consumer (despite grumbling loudly) keeps spending. In other words, the macro picture remains resilient… but the margin for error is getting thinner. As economists often say: the economy can absorb shocks, just not an unlimited subscription to them.

Executive Summary

  • Energy is the new macro shock. The conflict with Iran is pushing oil and gasoline prices higher, creating a near-term inflation bump and a drag on consumer purchasing power.
  • The consumer remains resilient… for now. Spending and incomes entered the shock from a position of strength, although higher fuel costs will disproportionately impact lower-income households.
  • The AI investment cycle continues. Demand for computers, semiconductors and data-center infrastructure remains a major driver of business investment and trade flows.
  • Labor markets remain stable but softening. Hiring remains weak, though layoffs remain low, maintaining a “low-hire, low-fire” equilibrium.
  • The Fed likely stays on hold. Policymakers appear inclined to look through the temporary inflation spike from energy and focus instead on potential labor-market weakness.

The Energy Shock Returns
The dominant macro development this week is the growing economic impact of the US–Iran conflict and the resulting energy shock. Oil supply disruptions tied to the conflict are already pushing gasoline prices higher, which economists estimate could add 0.3–0.5 percentage points to CPI in March alone. Gasoline prices have already jumped from roughly $3 per gallon last month to about $3.65, with projections suggesting prices could approach $4 per gallon in the near term.

From a macro perspective, the impact is straightforward:

  • Higher energy prices boost inflation.
  • Higher gasoline costs reduce real disposable income.
  • Reduced real income slows consumption growth.

In fact, economists warn that oil prices above $100 per barrel could meaningfully weaken consumer spending growth this year, potentially offsetting the fiscal stimulus from larger tax refunds. This places the Federal Reserve in a difficult position: inflation rises while growth slows (throw in high unemployment and you would have “stagflation”), an economic situation sometimes described as the macro equivalent of being asked to drive with one foot on the brake and the other on the gas.

  • Key Takeaway: Energy shocks do not typically cause recessions on their own, but they often determine how resilient the economy is to everything else.

The Consumer: Complaining Loudly, Spending Anyway
Despite rising pessimism in surveys, the U.S. consumer remains surprisingly resilient. Consumer sentiment declined in March from 56.6 to 55.5, reflecting growing pessimism about personal finances and the economic outlook. That said, sentiment and spending have become increasingly disconnected in recent years. Economists still expect consumption growth of roughly 2.4% in 2026, supported by income growth and tax refunds.

Indeed, the latest income and spending data suggest the consumer entered the energy shock on relatively solid footing:

  • Personal income rose 0.4% in January.
  • Consumer spending also rose 0.4%, driven primarily by services spending.

Another important cushion comes from tax refunds. Aggregate refunds issued so far this year total $160.8 billion, roughly 11% higher than the same period last year. But the consumer story is increasingly bifurcated. Higher-income households, who account for most consumption, remain supported by income growth and financial wealth. Meanwhile, lower-income households are more exposed to rising gasoline prices, which represent a larger share of their spending.

  • Key Takeaway: The U.S. consumer is still carrying the economy, but the weight of that responsibility is increasingly concentrated among higher-income households.

The AI Economy: Quietly Driving Trade and Investment
While geopolitics dominates headlines, a quieter but equally powerful macro trend continues to unfold: the AI investment cycle. Trade data reveals that demand for AI-related capital goods, including computers, semiconductors and related equipment, is reshaping global trade patterns.

In January:

  • The U.S. trade deficit narrowed to $54 billion from $70 billion.
  • Exports rose sharply, while imports declined overall.

Yet beneath the headline numbers lies a striking divergence: over the past year, imports of capital goods, which include computers, semiconductors and accessories have risen 25%, while all other imports have fallen 31%.

Similarly, business investment data shows the AI build-out continuing to support orders for computers and electronic products even as other categories soften. Business equipment investment is currently tracking around 3.2% annualized growth in Q1, reflecting steady, but moderating, capital spending. In short, the AI infrastructure cycle, data centers, chips, servers and power infrastructure, is becoming one of the most important drivers of capital investment in the US economy. Or put differently: if the last decade was defined by smartphones and streaming, this one may be defined by GPUs and gigawatts.

  • Key Takeaway: AI investment is becoming a structural growth driver for the U.S. economy, reshaping trade flows and sustaining business investment.

Labor Markets: The “Low-Hire, Low-Fire” Economy
The labor market remains stable, but it is gradually cooling. Recent data suggests hiring remains subdued while layoffs remain low. This is the dynamic we have previously described as a “low-hire, low-fire” balance. Jobless claims have continued to trend modestly lower in recent months, and layoffs have declined slightly according to the Job Openings and Labor Turnover Survey. However, revisions to employment data suggest job growth may have been weaker than previously reported. Administrative employment data indicates employment was only 123,000 higher year-over-year in September 2025, suggesting potential downward revisions to payroll estimates. Meanwhile, structural factors, particularly slower labor force growth tied to tighter immigration policy and demographics, may help keep unemployment relatively stable even with modest job creation.

  • Key Takeaway: The labor market is not collapsing, but it is gradually cooling, which helps explain why the Federal Reserve is watching employment risks more closely than inflation spikes.

Inflation and the Fed: A Pause in a Storm
For the Federal Reserve, the current environment is unusually complicated. The energy shock will likely push headline inflation higher in the near term, but underlying inflation pressures appear more contained than during the 2022 energy shock. Housing disinflation, improved supply chains and stronger productivity growth all suggest that the broader inflation backdrop is less concerning than in previous cycles. As a result, policymakers are likely to remain on hold while monitoring the balance between inflation and labor-market risks. In other words, the Fed appears prepared to “look through” the oil-driven inflation spike unless it begins to feed into inflation expectations or wage growth.

  • Key Takeaway: The Fed’s reaction function is shifting from inflation fear to labor-market vigilance.

Final Thoughts: The Economy Is Resilient, But Not Invincible
The macro landscape today is defined by a fascinating tension between cyclical shocks and structural growth.

On one side:

  • Geopolitical risk is pushing energy prices higher.
  • Consumer sentiment is deteriorating.
  • Business uncertainty is rising.

On the other:

  • AI investment remains robust.
  • The consumer remains resilient.
  • The labor market remains stable.

The result is an economy that continues to grow, but with less margin for error. As investors, the key lesson is that economic expansions rarely end because of one shock alone. They end when multiple pressures compound at the same time. For now, the U.S. economy appears capable of absorbing the energy shock. But if oil prices remain elevated, sentiment continues to weaken and investment slows, the macro story could shift from resilience to vulnerability more quickly than markets expect. In short, the expansion remains intact, but geopolitics has made the path forward more precarious.

Oxford Financial Group, Ltd. is a SEC-registered investment adviser. Registration does not imply a certain level of skill or training. The information provided is for general informational purposes only and should not be considered investment, tax, or legal advice. Opinions are those of the author and are subject to change based on market, regulatory or economic conditions. Forward-looking statements are opinions and/or estimates and are not guarantees of future results. Data and opinions are based on sources believed to be reliable, including unaffiliated third parties such as Oxford Economics, but their accuracy cannot be guaranteed. Past performance is not indicative of future results. See important disclosures and disclaimers at https://ofgltd.com/home/disclaimers. OFG-2603-25

Grantor Trusts: Substitutions Can Be Powerful

ekiser on March 12, 2026

Grantor trusts are a powerful estate planning tool often used in strategies that have evolved over time. Originally, rules governing trust income taxation allowed grantors to shift the tax burden to a trust or its beneficiaries, who were usually in lower income tax brackets. Today, the strategy is often reversed. Due to several factors—including compressed graduated tax rates for trust income and the essential rule that a grantor paying the trust’s income taxes does not result in a taxable gift—it is now often more advantageous to shift the income tax burden back to the grantor. It is crucial to distinguish between the two tax treatments:

  • For estate tax purposes, the assets in an irrevocable trust are held outside the grantor’s taxable estate, regardless of whether the trust is structured as a grantor trust or a non-grantor trust.
  • The designation as a grantor or non-grantor trust determines who is responsible for paying annual income taxes generated by trust assets—the grantor or the trust itself. This status is determined by specific powers and rights reserved by the grantor or held by other parties, as outlined by the Internal Revenue Code (IRC).

Estate Tax vs. Income Tax: The Step-Up in Basis

A core principle in planning with irrevocable trusts is that the assets placed inside them are generally excluded from the grantor’s taxable estate for estate tax purposes, and any future growth of these assets within the trust is also free from estate tax. However, this exclusion comes with a significant income tax consequence: assets in an irrevocable trust do not receive a step-up in cost basis at the grantor’s death under IRC Section 1014. Essentially, you save on estate taxes at the expense of potentially incurring future capital gains taxes on the asset’s appreciation.

  • Scenario 1: If an individual owns an asset worth $10 with a $1 basis, it is included in their estate. At death, the basis steps up to $10, allowing heirs to sell without incurring capital gains tax.
  • Scenario 2: If an irrevocable trust owns the same $10 asset, it is excluded from the taxable estate for estate tax purposes. However, its basis does not step up at death, and the trust or its beneficiary pays capital gains tax on the $9 of appreciation. If the capital gains tax is lower than the estate tax, this trade-off may be beneficial.
  • Result: Using an irrevocable trust excludes the asset and its growth from estate tax, but forfeits the powerful income tax benefit of the stepped-up basis at death.

The Power to Substitute Assets

A key provision creating grantor trust status is the power to substitute assets of equal value, as outlined in IRC Section 675(4)(c). This power provides extensive flexibility in asset location, which is a fundamental part of tax planning.

  • Scenario: If an irrevocable trust holds a highly appreciated asset (valued at $10 with a $1 basis), and the grantor owns $10 in high-basis assets (like cash), using the power of substitution, the trustee can swap the appreciated asset for the high-basis assets.
  • Result: The net value of the grantor’s estate and the trust remains unchanged, keeping assets shielded from estate taxes through the trust. Upon the grantor’s death, the high-basis assets (now cash) are in the trust, and the formerly low-basis asset (now back in the estate) receives a step-up in basis to $10, eliminating the income tax burden on its appreciation when sold by heirs. This strategy preserves estate tax exclusion while mitigating future capital gains taxes.

Charitable Giving Flexibility

The power to substitute assets also provides key advantages for charitable giving within irrevocable trust planning.

  • Scenario 1: If a trust directly donates an appreciated asset to charity, the grantor receives favorable tax benefits (an income tax deduction and avoidance of capital gains tax). However, this reduces trust assets, impacting the original goal of shielding wealth from estate tax.
  • Scenario 2: By using the power of substitution, the grantor exchanges $10 of cash from their estate for the $10 of appreciated assets in the trust, preserving the trust’s value and estate tax benefits. The appreciated asset now in the estate is then donated to charity.
  • Result: This approach preserves the trust’s value, keeps those funds outside the grantor’s taxable estate, and allows the grantor to receive a potential income tax deduction while avoiding capital gains tax.

Managing Liquidity

Asset location is also important for managing liquidity.

  • Scenario: If the trust holds liquid assets but the grantor needs liquidity for expenses, taxes, or other reasons, the power to substitute allows swapping liquid trust assets for illiquid personal assets.
  • Result: This exchange offers greater control and flexibility over liquid capital’s location without changing the value of the trust or estate.

Ongoing Planning with Irrevocable Trusts

  • Scenario 1: Grantor Retained Annuity Trusts (GRATs) are estate planning tools for transferring wealth gift-tax free to heirs. The grantor receives an annuity and interest, with any appreciation above the IRS “hurdle rate” passing to heirs tax free. If the asset appreciates less than the hurdle rate or declines in value, the grantor simply receives all assets back, and nothing is left for heirs.
  • Scenario 2: If an asset in a GRAT drops from $10 to $5 in value, a successful outcome would require the asset to more than double in value. By substituting the depressed asset with cash and starting a new GRAT, any recovery above the hurdle rate can lead to success.
  • Result: Using the power of substitution allows the grantor to “lock in” the first GRAT’s loss, use the depreciated asset in a new GRAT at a lower starting value, and benefit from any subsequent gains, increasing the odds of a successful transfer.

Conclusion

Irrevocable trusts are powerful estate planning instruments, but their full benefits require careful structuring and active management. The power of substitution is a key feature that allows assets to be swapped between a trust and personal estate, offering continuous planning opportunities, especially regarding liquidity, income taxation, charitable planning, and optimizing asset placement. Success with these strategies often depends on an experienced advisor who can adapt to changes in tax law, market conditions, and family needs, ultimately helping to position families for greater wealth transfer outcomes. Oxford can support these conversations with your family’s tax and legal advisors.

Oxford Financial Group, Ltd. (“Oxford”) is a Registered Investment Advisor (“RIA”) with the U.S. Securities and Exchange Commission (“SEC”) and is headquartered in Carmel, Indiana. Registration with the SEC does not imply a certain level of skill or training. Additional information about Oxford, including our Form ADV and Privacy Policy, is available upon request by calling 800.722.2289 or emailing info@ofgltd.com. The content of this presentation is intended for educational and illustrative purposes only. It should not be construed as investment, tax, or legal advice, nor as a recommendation or offer to buy or sell any security or investment product. Tax and legal counsel should be engaged before taking any action. This material has been prepared using original sources believed to be reliable, but no representation is made as to its accuracy or completeness. The views expressed are those of Oxford as of the date of the presentation and are subject to change based on market, regulatory or economic conditions, which may not occur as anticipated. For full disclosures and disclaimers, please visit https://ofgltd.com/home/disclaimers. OFG-2601-11

CIO Macro Trends –Resilient Growth, Rising Productivity and Geopolitical Noise

ekiser on March 9, 2026

Markets spent much of this week digesting the geopolitical escalation in the Middle East while simultaneously parsing a steady stream of U.S. economic data. Between winter storms, geopolitical tensions and a confusing jobs report, the headlines looked messy. But beneath the noise, the macro story remains surprisingly stable: growth is holding up, productivity is improving and the Federal Reserve still has the luxury of patience. A reminder that while geopolitics can rattle markets, the global economy has become surprisingly resilient to shocks that once triggered recessions.

Executive Summary

  • Economic momentum remains intact despite noisy data. Institute for Supply Management (ISM) surveys point to the strongest broad-based expansion since mid-2022.
  • The labor market is stabilizing, even though February’s payroll report looked weak at first glance.
  • Productivity growth is accelerating, potentially raising the economy’s long-term growth potential.
  • Consumer spending faces short-term headwinds from higher gasoline prices and equity volatility but remains fundamentally supported.
  • Markets are reacting to geopolitics more than fundamentals, with the Iran conflict likely to have only a modest macro impact if contained.

Growth Signals Flash Green: Manufacturing and Services Rebound
The most encouraging development this week came from the ISM surveys, which show the US economy entering 2026 with renewed momentum. The ISM manufacturing index held in expansion territory at 52.4 in February, supported by strong new orders and rising backlogs. Equally important, the services sector accelerated even further. The ISM non-manufacturing index rose to 56.1, pushing the combined composite index to its highest level since July 2022.

The details matter here. Demand indicators in both surveys point to continued strength:

  • Manufacturing new orders remained elevated at 53.5, while backlogs rose to 56.6, indicating a growing pipeline of activity.
  • In the services sector, new orders jumped to 58.6 and backlogs rose to 55.9, the first expansion reading in a year.

The ISM services report shows the composite index climbing back above 55, historically consistent with solid GDP growth. Looking ahead, Oxford Economics expects US GDP growth of about 2.8% in 2026, supported by fiscal policy, lower interest rates, strong household spending and AI-related investment.

Of course, there is a catch: the price components in manufacturing surged. The ISM prices index jumped 11.5 points to 70.5, driven partly by tariffs and rising commodity costs. In other words, demand is strong, but supply chains and geopolitics are keeping inflation risk in the conversation.

  • Key Takeaway: The US economy appears to be reaccelerating early in 2026, with both manufacturing and services expanding simultaneously for the first time in years.

Labor Market Noise vs. Reality
At first glance, February’s employment data looked ugly. Non-farm payrolls fell by 92,000, well below expectations. However, one should be cautious when reading too much into the headline as several temporary factors distorted the numbers:

  • A 31,000-worker healthcare strike temporarily reduced employment and
  • Severe winter weather impacted several sectors.

When averaged across recent months, job growth remains roughly in line with the pace needed to stabilize unemployment. Over the past three months, private sector employment has averaged gains of about 18,000 jobs per month. Meanwhile, other labor indicators paint a similarly stable picture. Initial jobless claims remain low at 213,000, signaling limited layoffs. Although the unemployment rate edged up slightly to 4.4%, participation rates remain healthy.

One interesting nuance: hiring appears to be shifting toward smaller businesses. Firms with fewer than fifty employees added 60,000 jobs in February, accounting for most of the private payroll increase in the ADP report. However, small businesses are also the most sensitive to uncertainty and geopolitics and tariffs may weigh on hiring intentions.

  • Key Takeaway: The labor market is not necessarily weakening, rather it is normalizing after an unusually strong post-pandemic expansion.

Productivity: The Quiet Macro Story
While most investors obsess over inflation prints and payroll numbers, the most important data point of the week may have been productivity. US productivity rose 2.8% annualized in Q4, continuing the strong gains seen over the past year. Even more impressive, productivity has grown 2.2% annually since 2019, one of the strongest performances of the past four business cycles.

Output per hour has trended upward across industries. Several forces are driving this trend:

  • Technology adoption and AI;
  • Efficiency improvements following pandemic-era disruptions; and
  • Structural labor shortages pushing firms to automate.

Interestingly, this productivity surge occurred even as hours worked declined slightly, meaning firms produced more output with fewer labor inputs. This has two important implications:

  1. It raises the economy’s potential growth rate.
  2. It may lead to a “job-light” expansion, where output grows faster than employment.

In other words, productivity may be doing the heavy lifting that once required a large expansion in the workforce.

  • Key Takeaway: Rising productivity could allow the US economy to grow faster without reigniting inflation — a rare macro “free lunch.”

Consumers: Weather, Gasoline and Wealth Effects
The consumer story this week was less straightforward. Retail sales declined 0.2% in January, but the drop appears largely weather-related as severe winter storms disrupted in-person spending. Auto sales illustrate the pattern clearly. Sales rebounded to 15.75 million annualized in February, a 6% increase from January after storms subsided.

However, several headwinds are emerging:

  • The Iran conflict has pushed gasoline prices higher, potentially adding up to 0.3 percentage points to inflation this year.
  • A 75-cent increase in gasoline prices could cost consumers about $70 billion annually, roughly 0.4% of total spending.
  • The stock market has stalled, which may dampen spending by wealthier households.

That said, there are also tailwinds:

  • Tax refunds this year are expected to be around 20% larger than last year, supporting discretionary spending.
  • Lower interest rates and improving vehicle affordability should boost auto sales later in the year.

If anything, this looks less like a consumer slowdown and more like a weather-related pause.

  • Key Takeaway: Consumer spending remains resilient, though higher energy prices and equity volatility could temporarily slow momentum.

Markets and the Iran Conflict
Markets spent the week reacting to geopolitical headlines rather than macro fundamentals. The strikes involving Iran have pushed oil prices higher and introduced volatility across financial markets; however, the economic impact may be relatively limited.

Oxford Economics estimates that temporarily higher energy prices would:

  • Reduce global GDP growth by only 0.1 percentage points this year.
  • Increase US inflation by roughly 0.3–0.4 percentage points in 2026.

Treasury yields remain stuck in narrow ranges:

  • The two-year yield has traded between roughly 3.4% and 3.65% since September.
  • The 10-year yield has been largely confined to a 4.0–4.2% range.

Equities have been volatile but remain close to record highs. The S&P 500 recently dipped to around 6,710 before rebounding above 6,800, still within the tight range that has prevailed since late 2025.

The likely outcome is that if the conflict is contained, markets will return to their prior trajectory.

  • Key Takeaway: Markets are reacting to geopolitics, but the underlying economic fundamentals remain largely unchanged.

Final Thoughts: A Noisy Data Week
This week’s macro data had something for everyone:

  • A weak jobs report
  • Strong ISM surveys
  • Rising productivity
  • Volatile markets
  • And gasoline prices seem determined to remind consumers that geopolitics still matters.

But when you step back, the broader picture looks surprisingly stable. Growth is holding up, the labor market is cooling but not cracking and productivity improvements are quietly raising the economy’s speed limit. Put differently: the macro environment feels a bit like March weather in the Midwest, occasionally stormy, but not enough to cancel spring.

And if the economy keeps producing more with fewer workers, investors may soon discover the rarest of macro phenomena: an expansion where productivity does the heavy lifting while inflation takes the day off. Now that would be an efficiency gain even an economist could love.

Oxford Financial Group, Ltd. is a SEC-registered investment adviser. Registration does not imply a certain level of skill or training. The information provided is for general informational purposes only and should not be considered investment, tax, or legal advice. Opinions are those of the author and are subject to change based on market, regulatory or economic conditions. Forward-looking statements are opinions and/or estimates and are not guarantees of future results. Data and opinions are based on sources believed to be reliable, including unaffiliated third parties such as Oxford Economics, but their accuracy cannot be guaranteed. Past performance is not indicative of future results. See important disclosures and disclaimers at https://ofgltd.com/home/disclaimers. OFG-2603-14

At the Edge of the Strait: Geopolitics, Oil and Market Risk

ekiser on March 4, 2026

Geography rarely changes. But when geopolitics collides with geography, markets rediscover how much maps still matter. This past weekend delivered precisely that collision.

U.S. and Israeli forces struck more than 2,0001 targets across Iran, including missile facilities, air defense systems and senior military leadership. Iran retaliated with waves of missiles and drones targeting Israel and several Persian Gulf states. Iran attacked oil tankers in the Gulf, one vessel was seen ablaze off Oman’s coast. The U.S. reported sinking multiple Iranian naval assets. Hezbollah launched rockets from Lebanon. Gulf infrastructure, including refinery facilities, faced drone threats.

Most consequentially for markets, transit through the Strait of Hormuz, through which roughly one-fifth to one-quarter of global seaborne oil and a significant portion of LNG flows pass2, became hazardous. Shipping slowed dramatically as insurers withdrew coverage and vessel operators imposed self-restrictions.

The Strait was not formally closed. But it did not need to be.

A Big Move, But Not a Panic
Oil has responded swiftly. Brent crude has posted one of its larger daily gains in decades, yet even this surge ranks only 38th since 19903. That context matters. We have seen larger moves during the Gulf War, the Global Financial Crisis and COVID. This is meaningful volatility, but not yet systemic rupture. Importantly, the Strait does not need to be formally “closed” to matter. Even partial interference (e.g., harassment of vessels, insurance withdrawals, rerouting) can reduce effective supply and raise prices. At the same time, a full and sustained blockade would be extraordinarily difficult to maintain against international naval response. Markets appear to understand this nuance. They seem to be pricing in risk, not apocalypse.

A Framework for What Comes Next
As a reminder, at Oxford we do not try to predict macro, geopolitical or market events. Rather, we build diversified portfolios with the aim of weathering different economic events and compounding wealth over long horizons. Given that backdrop, I find it helpful to think in terms of four potential paths, each with distinct implications for inflation, policy and portfolios.

Contained Conflict, Persistent Risk Premium
In this path, military activity continues but shipping through Hormuz remains hazardous rather than halted. Traffic slows, insurance costs rise and some flows are rerouted, but global energy supply is impaired only modestly. Oil likely trades with an embedded geopolitical premium, elevated relative to fundamentals but short of a full supply shock. Global growth absorbs the impact. Inflation edges higher, but not enough to derail central bank trajectories. This is the “higher-for-longer uncertainty” outcome. Markets grind, but they do not break.

This likely results in elevated volatility, modest pressure on duration and energy equities & commodity-linked assets outperforming on the margin. Diversification still works.

Short, Sharp Supply Shock
Here, disruption intensifies abruptly, whether through a temporary effective closure of the Strait or direct damage to infrastructure, leading to a sharp spike in prices. Given that roughly 20–25% of seaborne oil transits Hormuz, even a brief interruption can produce outsized price reactions. History suggests such spikes can be dramatic, but also self-correcting as strategic reserves, rerouting, and international coordination respond. Inflation expectations would jump. Bond yields would likely rise initially. Equities would reprice growth risk. Nevertheless, if disruption proves short-lived, markets would likely retrace much of the move, leaving scars, not structural damage.

Here we would most likely see tactical drawdowns and perhaps some potential opportunity in oversold risk assets. Careful liquidity management becomes paramount.

Structural Fragmentation in the Region
The conflict is not only about shipping lanes. It is also about political succession and regional alignment. With Iran’s leadership structure under strain, the range of political outcomes widens. A prolonged period of instability, whether hardline continuity or messy internal fragmentation, could entrench a higher structural risk premium in oil. That would not necessarily mean $140 oil; however, it could mean a persistent $10–20 premium embedded for years. In this environment, energy markets become structurally tighter and more sensitive to shocks. Inflation becomes more supply-driven and less cyclical.

With this prolonged period of uncertainty, real assets gain relative appeal. The equity market leadership broadens beyond rate-sensitive growth sectors. Geopolitical risk becomes a more durable factor in capital allocation.

Rapid De-escalation and Rebalancing
The least dramatic, but most economically powerful path is diplomatic containment. If tensions de-escalate and energy flows normalize, much of the current geopolitical premium could unwind. Oil would gravitate back toward levels dictated by global supply-demand fundamentals. Inflation pressure would ease. Central banks would regain policy flexibility. Ironically, this scenario could produce as much volatility as escalation, just in the opposite direction.

This is the scenario where we are most likely to see a relief rally in risk assets, duration benefits, and energy-linked positions retrace.

The Inflation and Policy Lens
The key macro question is second-order effects. An extreme and sustained supply shock could lift global inflation materially. But the global economy today is less oil-intensive than in the 1970s, and inflation expectations are better anchored. That reduces (though does not eliminate) the risk of stagflationary dynamics. The United States is also now a net energy exporter, dampening the domestic growth drag relative to prior oil crises. In other words, higher oil prices hurt but they do not automatically recreate the 1970s.

Signal vs. Noise
The Strait of Hormuz is the world’s narrowest wide place. When tensions rise there, headlines amplify. Markets move quickly. But the distribution of outcomes still matters more than any single day’s candle on a chart. Even after this week’s surge, oil’s daily move, while large, does not rank among the most extreme in modern history. Shipping remains risky, not definitively halted. The difference between disruption and closure is the difference between volatility and systemic shock.

As investors, our task is not to predict every missile launch. It is to assess probability, calibrate exposure and ensure portfolios are built for a range of geopolitical weather conditions. Storm clouds deserve attention. They do not always become hurricanes. And in markets, as in navigation, it is usually the narrow passages that demand the steadiest hand.

1NYT – The War Expands – First Page, Second Paragraph, First Sentence.
2CE Commodities Update – Strait of Hormuz Primer (Mar. 2026) – First Page, Second Bullet Point.
3DB – CoTD – Only the 38th Largest Oil Spike since 1990

Oxford Financial Group, Ltd. is a SEC-registered investment adviser. Registration does not imply a certain level of skill or training. The information provided is for general informational purposes only and should not be considered investment, tax, or legal advice. Opinions are those of the author and are subject to change based on market, regulatory or economic conditions. Forward-looking statements are opinions and/or estimates and are not guarantees of future results. Data and opinions are based on sources believed to be reliable, including unaffiliated third parties such as Commodities Update, The New York Times and Deutsche Bank Research, but their accuracy cannot be guaranteed. Past performance is not indicative of future results. See important disclosures and disclaimers at https://ofgltd.com/home/disclaimers. OFG-2603-5