Our Inflation Nation

 Financial FAQs

“The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.9 percent on a seasonally adjusted basis in March, after rising 0.3 percent in February, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.3 percent before seasonal adjustment. BLS.gov

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We knew it was coming. Not just when. The Iran war is in its second month and has already produced the largest supply shock to the global oil market in history, the IEA said last month.

On Tuesday, the head of the group, Fatih Birol, told French newspaper Le Figaro as reported by several news agencies that the current crisis is more severe than the oil shocks of 1973 and 1979, and the 2022 Ukraine-war shock, combined.

And there’s no end in sight as the world’s largest economy is making the supply shortages worse. It’s an incredible reversal of our standing in the world.

The high spike in the CPI inflation graph above is a disheartening picture of what happens when mad kings attempt to control economies and countries that have a chokehold on supply chains needed by the world economies.

This is just the latest mismanagement by the Trump administration—and Republican Party also has allowed, let’s not forget—of the American economy. President Trump wanting to pay for his tax cuts with higher tariffs had already snarled supply chains and caused a second post-COVID inflation round.

The Biden administration had wrestled annual CPI inflation below 3 percent in 2024 from the earlier COVID-19 pandemic spike, where it stood until now.

And Trump apparently thought attacking a country that bordered a waterway through which 20 percent of petroleum supplies and products flowed would not do further damage to the world’s economies.

So what was he thinking? The problem is he doesn’t bother to think things through at all. This is the second spike that has raised the cost of living since the tariff induced inflation. So why would polls show a majority of voters believe Republicans are better at economic growth?

Is it because Trump runs the federal government from Mar-a-Lago, or one of his golf courses (That’s a joke.)?

The all-items consumer index rose the most—3.3 percent for the 12 months ending March, after rising 2.4 percent for the 12 months ending February. It rose 2.6 percent less food and energy over the year. The energy index increased 12.5 percent for the 12 months ending March, as a result of the Iran war.

And American consumers are already feeling it. The University of Michigan survey of consumer sentiment fell to a record low of 47.6 in April from 53.3 in the prior month.

“Consumer sentiment sank about 11% this month, extending a decline that began with the start of the Iran conflict, and is currently about 9% below a year ago. Demographic groups across age, income, and political party all posted setbacks in sentiment, as did every component of the index, reflecting the widespread nature of this month’s fall,” said Survey Director Joanne Hsu

It doesn’t mean consumers will shop more once they receive their Trump tax refunds. But inflation is a growth killer, and countries such as Russia or even Turkey that are experiencing one-man rule have had nothing but double-digit inflation for decades, because their leaders thought they knew better than anyone else how to run their country.

Harlan Green © 2026

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Why Start A War?

 Financial FAQs

“The Producer Price Index for final demand increased 0.7 percent in February, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices moved up 0.5 percent in January and 0.4 percent in December 2025. (See table A.) On an unadjusted basis, the index for final demand rose 3.4 percent for the 12 months ended in February, the largest 12- month advance since increasing 3.4 percent in February 2025.” BLS.gov

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Why start a war when President Trump’s tariffs are already raising the cost of everything? Because “The United States is the largest Oil Producer in the World, by far, so when oil prices go up, we make a lot of money,” Trump said in a post on Truth Social last week.

Who makes a lot of money? Most Americans could be losing a lot of money over the sudden rise in energy prices it is precipitating, but not his family and oil buddies, obviously.

His thoughtless remarks have put him in a bind, which is why he is lashing out at allies and enemies alike because they don’t want to fix the damage it is causing.

Right now it is the boost it has given to wholesale inflation. The Producer Price Index for wholesale goods, imported goods in the main, is climbing again.

And the tariff question is far from settled with the Trump administration required to pay back much of the $1.4 billion in tariffs that were illegal, according to the Supreme Court.

We add to that the resignation of Joe Kent, Trump’s top counter terrorism appointment, who said Trump attacked Iran because Netanyahu told him to, not because of some imminent danger. The former Director of the National Counterterrorism Center said “I cannot in good conscience support the ongoing war in Iran. Iran posed no imminent threat to our nation”.

So with the Strait of Hormuz closed that is choking off 20 percent of the world’s oil supply from going anywhere, the PPI wholesale cost of things is now the highest since February 2025.

This is probably why Fed Chair Powell announcement after Wednesday’s FOMC meeting that there was little chance of more than one rate cut in 2026, and maybe even a rate hike if Trump can’t stop the bombing and find a way to call the bombing campaign a victory. He must also find a way to open the Strait of Hormuz, of course.

The Federal Reserve stuck to its guns that one interest-rate cut this year was likely, but stressed conflict in the Middle East made its forecast uncertain. The Fed voted 11 to 1 to leave its key rate unchanged in the range of 3.5% to 3.75%.

BEA.gov

The Fed Governors also predicted overall GDP growth of 2.4 percent in 2026, even though Q4 2025 Real GDP growth slowed to just 0.7 percent. So I don’t understand the Fed’s optimism over economic growth.

The real culprit behind slowing GDP growth is less consumer spending. Fewer consumers are holding jobs for starters, and essentials like gas and electricity prices are soaring because of the Iran war as well as the tariffs.

So, the Fed wants to lower rates further to encourage more hires but rising inflation is holding them back. And Powell at his press conference said that conditions would have to be much worse for signs of stagflation such as occurred in the 1970s with the OPEC oil embargo.

Powell and the Fed Governors were surprisingly upbeat about our economic future, which is strange when Trump has started a war he never really planned or adequately prepared for.

Harlan Green © 2026

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Stagflation --II?

 Financial FAQs

“The Producer Price Index for final demand increased 0.5 percent in January. Prices for final demand services advanced 0.8 percent, and the index for final demand goods declined 0.3 percent. On an unadjusted basis, the index for final demand rose 2.9 percent for the 12 months ended in January.” BLS.gov

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Why shouldn’t President Trump’s new Gulf War repeat the 1970’s Arab Oil Embargo (OPEC) stagflation—slowing economic growth + higher inflation—that caused several recessions and resulted in the double-digit inflation of the era?

Iran has said it is closing the Gulf of Hormuz. It has been producing three million barrels of oil daily, has 24 percent of Middle East oil reserves and 12 percent of world reserves, and 30 percent of the world’s oil supply goes through the Gulf, according to the U.S. Energy Information Administration.

Though oil is not as important and energy source now as it was then, says Paul Krugman in Substack, it will still cause higher energy prices—maybe 10 percent higher or more, according to the experts—and oil and gas prices are still a major factor in the inflation equation.

The Producer Price Index measures wholesale prices for products and services that go into finished products have been rising throughout last year. So it is the first place economists look to see the direction of inflation.

Wholesale inflation is surging in large part because it measures the import prices of the raw materials, such as auto parts, that have been boosted by Trump’s tariffs.

Defense Department Secretary Hegseth was quick to say in the first press conference that the Iran war wouldn’t be a repeat of the Iraq war that would mire US in another long war.

But the 1970’s era of stagflation was caused by more than scarce oil. Labor unions were stronger then and could lobby for higher wages to pay for the higher prices, which in turn kept inflation rising in a wage-price spiral until it reached an eye-watering 14 percent

And we have a similar labor problem today. Workers can lobby for higher wages today because there are fewer of them in the workforce. Trump is deporting many of the undocumented workers that work in construction and agriculture, and many of the rest of the estimated 11 million are hiding rather than going to work. Also AI, CHAT GBT, and the like are causing more layoffs at major employers such as Amazon, for starters, further shrinking our workforce.

The irony is that the massive investments in building out the AI energy centers is already making electricity more expensive as well as putting more white-collar employees out of work.

This means fewer consumers are shopping when 70 percent of GDP growth is generated by American consumers! So, I see slowing economic growth as well.

A declining workforce pushing for higher wages that faces higher oil, gas and electricity prices will put more pressure on inflation, and could lead to the classic wage-price spiral that was the ultimate cause of 1970’s stagflation. This is while Trump is saying the Iran war could last just weeks?

The DOW Index has plunged more than -1100 points at this writing on fears the war will spread throughout the Middle East and beyond.

So, our stock market’s behavior will probably determine how long our TACO President will want to prolong this war.

Harlan Green © 2026

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

The Return of Stagflation

 The Mortgage Corner

“From the same month one year ago, the PCE price index for June increased 2.6 percent. Excluding food and energy, the PCE price index increased 2.8 percent from one year ago.” BEA.gov

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President Trump hasn’t succeeded in convincing the Federal Reserve to cut interest rates or fired Chairman Jerome Powell just yet. So he fired the head of the Labor Department’s Bureau of Labor Statistics without cause that published the weak July unemployment report instead.

It is heralding another era of stagflation that has destroyed the wealth of too many Americans.

It now looks like he wants to recreate what happened to two other Republican Presidents—manipulating the data to disguise the fact that looming inflation can be a big problem as it was in the stagflation of the 1970s and housing bubble and Great Recession of 2008 that was the worst economic downturn since the Great Depression.

President Nixon first tried it when combatting the looming oil price-inspired inflation from the Arab Oil Embargo by fixing prices to keep them artificially low, then pushed his Fed Chair Arthur Burns to keep interest rates low in the face of slowing economic growth caused by the OPEC embargo.

It resulted in 14 percent inflation in 1980 that caused then Fed Chair Paul Volcker to raise the Fed Funds rate to 20 percent, resulting in two recessions early in President Reagan’s tenure.

President GW Bush also tried it in 2000 by pushing then Fed Chair Alan Greenspan to keep interest rates low to finance his wars on terror. Greenspan held interest rates too low for too long, which resulted in the housing bubble and Great Recession that followed.

And now Trump is looking for a successor to the Senate-vetted BLS official, Dr. Erika McEntarfer, who will manipulate employment statistics for him. The result will be less trusted unemployment reports, masking the effects of historically high tariffs that will again create product shortages and slow economic growth.

The Labor Department’s unemployment report understated what happened in the past three months, as I said last week. The U.S. economy created 73,000 nonfarm payroll jobs, but just 19,000 and 14,000 payroll jobs in revisions to May and June totals when more data came in (see graph).

The change in total nonfarm payroll employment for May was revised down by 125,000, from +144,000 to +19,000, and the change for June was revised down by 133,000, from +147,000 to +14,000, per the BLS.

Trump’s main reason for wanting to manipulate economic facts? He also wants to hide the damage to the employment numbers from what could be the loss of one million immigrants leaving the adult labor force, many of them running for cover because of the Gestapo tactics of Trump’s Homeland Security masked Storm Troopers breaking into homes and businesses to round up as many undocumented immigrants as possible, as I said last Friday.

It’s really the first indication of the immigrant’s importance in our economy, and why most of July’s hiring was in healthcare (55,000) while government employment lost 12.000 jobs and -87,000 jobs this year.

The next economic shoe to drop will be the changing of the guard at the Federal Reserve. Trump could not bully Fed Chair Powell to lower interest rates sooner, but that will soon change when he appoints a new Fed Chairman.

He will want to politicize the Fed as he is doing to the rest of the federal government when Powell steps down next year, so that he can enact more Republican ‘trickle down’ economic policies first initiated by President Reagan: in particular the tax cuts + deregulation that supposedly increases efficiencies and productivity, but instead increased corporate CEO pay to more than 300 times that of their employees while weakening union collective bargaining laws.

The results of ‘trickle-down’ economics have been frightfully obvious for decades. The Reagan-era creation has succeeded in maximizing profits of the owners of capital and corporate CEOs while suppressing incomes of salaried workers via right to work laws and low minimum wages, mostly in the poorest Republican controlled red states.

It’s why economists are now calling this the second Gilded Age. We are seeing the results—higher inflation and slowing economic growth once again unless a majority of Americans can be convinced to stop the steal of the worst robber baron of all.

Harlan Green © 2023

Follow Harlan Green on: https://twitter.com/HarlanGreen