When Iran shut the Strait of Hormuz in early March, cutting back the global oil supply, it was easy to imagine domestic economic damage along the lines of 1970s oil shocks.

The big picture: It hasn't happened, and that reflects a central shift in how the U.S. fits into global energy markets. Turns out, when you produce your own energy, an oil shock doesn't hurt the way it used to.

• That, in a nutshell, is the takeaway of new Dallas Federal Reserve Bank research that quantifies how small the GDP hit has been and how much more severe the pain would have been in decades past.

Stunning stat: If a disruption to Middle East oil supply equivalent to what occurred this year had taken place in 1980, it would have caused U.S. GDP growth to decline by 5.6 percentage points, the Dallas Fed researchers find, implying a severe recession.

• Yet in 2026, it reduces growth only by 0.3 percentage point, a barely noticeable blip.
• That's better than in the rest of the world, which would see a hit to growth of 1.7 percentage points.

Flashback: In past moments of energy strain, the U.S. was a large net importer of oil, and the economy used more oil for each dollar of GDP.

• That's how oil price shocks caused by developments in the Middle East in 1973 (the Yom Kippur War and ensuing oil embargo), the Iranian Revolution (1979) and the Persian Gulf War (1991) all led or contributed to recessions.
• Now, the shale gas revolution and shift toward renewables means that the U.S. exports more oil than it imports, and the economy is more energy efficient.

State of play: When global oil prices rise, American consumers and energy-intensive industries take it on the chin. But simultaneously, energy producers up and down the oil patch experience rising economic output that partly offsets the hit in the GDP accounting.

• And because of more efficient vehicles, home appliances and industrial machinery, a given oil price rise is relatively less painful than it would have been in an earlier era.

What they're saying: Dallas Fed economists Lutz Kilian, Michael D. Plante and Alexander W. Richter wrote that they "traced this decline in sensitivity mainly to a combination of two structural changes:"

1. The U.S. becoming a net oil exporter in the wake of the shale gas revolution.
2. The decline in the "U.S. oil expenditure share."

Of note: In 1980, the U.S. and other countries were similarly vulnerable to oil shocks, the economists wrote in a working paper out this week, but now the U.S. is less so.

• "This asymmetry reflects the structural transformation of the U.S. oil sector, which has insulated the U.S. from foreign oil supply disruptions."

Reality check: Just because higher oil prices don't hit GDP the way they once did doesn't mean they're painless for American citizens. The rise in prices affects everyone differently.

• Somebody who works in a service industry and drives a lot may face a budget squeeze — and it's little consolation to them that oil drillers are making more money and paying their workers more.

In a speech in New York last night, Bessent said that a long-running bet on cheaper goods and deeper economic integration making America richer and safer had failed.

Why it matters: The speech set a framework for President Trump's economic policies since his second term, including tariffs and calls for reshoring.

• But it also suggests that those policies may be part of a broader rethinking of globalization that extends well beyond one administration.
• If that's right, investors betting on a return to the old globalization playbook may be waiting a long time.

What they're saying: "The nation that depends on its adversaries for critical inputs is not truly sovereign. And the nation that reduces its economics to consumption is not truly prosperous," Bessent told the Economic Club of New York.

• Policymakers incorrectly assumed that "low prices would compensate for lost capacity," he added.

The big picture: Bessent argued that America got cheaper goods and more efficient supply chains, but became too dependent on foreign countries in the process.

• He said the answer is an economic strategy that puts greater weight on domestic production, supply chain resilience and national security.

The intrigue: The underlying concern is strikingly similar to one that emerged under former President Biden, a sign of bipartisan skepticism about the more globalist view that defined pre-pandemic times.

• Then-national security adviser Jake Sullivan said in 2023 that policymakers wrongly assumed "markets always allocate capital productively and efficiently" and that supply chains were resilient.
• Bessent echoed that belief yesterday, arguing that the U.S. assumed "supply chains would function in every crisis." He called for diversification away from "dangerous concentrations" so America is never "at the mercy of a foreign chokepoint abroad."

Yes, but: Trumponomics puts more explicit emphasis on international reciprocity — a theme in step with the wide-ranging tariffs to address what Trump perceives as unfairness toward America.

• U.S. economic "partnership now carries expectations," Bessent said.
• "The United States possesses many tools at its disposal to remedy practices that distort trade and undermine reciprocity. We will always seek to use those tools judiciously — but we will never hesitate to use them decisively."

Of note: This morning on CNBC, Bessent praised Federal Reserve chairman Kevin Warsh's efforts to get rid of forward guidance.

• He said that Trump "has said both in public and privately that he has every confidence in Kevin Warsh."