The Economics President, Continued
Nothing like a war of choice to send indicators in the wrong direction.
Three headlines on the NYT home page at the moment.
1) Mortgage Rates Jump Again as Iran War Effects Ripple Through Housing Market.
The average rate on a 30-year mortgage in the United States hit 6.38 percent, the fourth increase since the war began.
2. The war will push U.S. inflation above 4 percent this year, according to a new forecast..
The war in Iran will lead to a surge in inflation this year, as the closure of the Strait of Hormuz pushes up prices for oil, gas and other commodities, the Organization for Economic Cooperation and Development said on Thursday.
The inflation rate in the United States will average 4.2 percent this year, more than one percentage point higher than the group’s previous forecast, made late last year, the Paris-based organization said. Across the Group of 20 nations, inflation is forecast to average 4 percent this year, 1.2 percentage points higher than previously expected.
3. Oil Prices Go Higher and Global Stocks Fall.
- U.S. gas prices ticked down less than a penny on Thursday to remain around a national average of $3.98 a gallon, according to the AAA motor club. It was the first day the price did not increase since the war began, leaving the cost for drivers up 34 percent in that period.
- Diesel prices have increased even more quickly, rising to $5.38, up 43 percent since the start of the war.
All of this is because Trump launched a war of choice without any notion of what strategic success would look like.
Inflation? Fake news.
Seriously…the only thing Fatso could brag about was the stock market…which really has NOTHING to do with the economy!!
How can there be inflation if the war is won and it’s not even a war but an excursion and it’s all NATO’s fault for not helping and Iran has given us a great gift and SQUIRREL!!1
Real world. Gas at the corner was $3.09 on Feb 2, 2025. I have photos.
It was $3.85 this past Tuesday. I have photos.
That’s about $13.00 per tank for my Outback. Who knows for one of these bigass trucks?
And while most presidents don’t affect gas prices, this is DIRECTLY ATTRIBUTABLE to Fatso.
@Daryl:
I’m certainly not an economist, but it’s always seemed to me that if we continue to shift money into the upper income brackets and manage to avoid a Depression, the stock market will always go up.
And this is just the start.
In the following one to four weeks the last ships to leave the Gulf before February 28 will arrive at their destinations and offload.
Then the real fun begins.
Unless the war has ended, or at minimum the US has secured the Straits of Hormuz.
In addition to global crude and LNG prices going north fast, gasoline aka petrol and diesel will also.
And the other things the Gulf now produces: unlike the 1980’s its no longer just a hydrocarbons exporter.
Nitrate fertilisers, ammonia, urea, sulphur, etylene, aluminium, helium.
The consequences being a massive hit to GCC states economies.
In turn to dollar revenues that get recycled, and thus US Treasury bond demand (though probably offset for a time by “safe haven” effect).
Global inflation to the point of growing “demand destruction” and in due course recession.
@Daryl:
@reid:
This will likely,at least short term, benefit from global money looking for a safe haven, and a bit dubious about US Treasury bonds.
Once energy cost increases start to hit US demand, and the impact of global demand destruction begins to afflict US exports and US overseas financial trading and investments, there is a serious threat of a major “market correction”.
The US may be a little shielded by increased activity in hydrocarbons production and export, and possibly food exports as fetliser shortages hit other countries.
But this will also be linked to US domestic price rises.
With a possible side effect of MAGA demands for US economic autarky, despite that likely being a medium term disaster for the US.
@JohnSF:
Not disagreeing at all but you forgot about the AI bubbble.
Idle question:
Knowing that closure of Hormuz had like a 101.2% probability of happening if Iran were attacked, wouldn’t professional war planners have developed means to deal, or to at least attempt to deal, with such an eventuality?
I admit I can’t see what that would be. In my own not even amateur way, the one thing that comes to mind is seizing Kharg Island right at the start. Of course, this wouldn’t prevent Iran from closing the strait, but their own oil would be cut off as well. I assume they’d still keep traffic from moving out of the Gulf, but then they’d have had to contend with a massive loss of revenue.
Past that, I’ve no clue how the calculus plays out. Whether Iran rides it out for weeks, or months, or caves within a couple of days.
Plainly a war of choice against Iran was always a bad idea. But a necessary war might take place just the same, like one did against Iraq in 1990-91.
BTW, back in 2006 or so, I recall musings that the US had troops and lots of gear and bases on both sides of Iran’s border (Afghanistan and Iraq), and that therefore America should widen the war and take out the Mad Mullah Regime. This was seen as easy to accomplish as taking down Saddam was. The justification was that Iran was working on a nuke.
20 years later, they still don’t have any.