Inflation is back, and it's here through the next presidential election

Plus, why a federal gas tax holiday would have little impact

In today’s edition:

— Cost of Iran war hits as inflation rises to highest level in three years

— Gas tax holiday would be too little, too late for most consumers

— Chasing ‘rain bombs’ to find out how to predict and avoid them

— Spain develops network of climate shelters to combat heat-related deaths this summer

— Nuclear reality check: Vogtle nuke plant in Georgia cost $37 billion and took 15 years to build

Created with TradingView

It took 10 weeks from the start of the Iran war and the spike in global oil prices to filter through the U.S. economy and jack the inflation rate to a three-year high. It will take much longer, most likely through the next presidential election in 2028, for that rate and our prices to subside.

That’s the enduring legacy of the decision to start a war in the Middle East from a president who won election two years ago by claiming he would lower prices and subdue the inflation of his predecessor. It will now define the upcoming midterm election and almost certainly the presidential race.

This week’s consumer inflation report, which said the inflation rate hit 3.8% in April amid rising fuel and food costs, also outstripped wage gains for the first time in three years, which will not be lost on workers already suffering from sky-high commuting costs and rising food prices.

Economists claim past spikes in inflation, at least since the year 2000, have tended to last between one to two years, and often only begin to fade after periods of rising interest rates from the Federal Reserve Board. With oil prices still rising because the Strait of Hormuz remains effectively closed, that slow decline might not begin until later this summer at the earliest.

With six months left until the midterms, it’s a safe bet that the cost of energy will be front and center on voter’s minds as they head to the polls. And those AI data centers behind the rally in U.S. stocks in the past month will be a prime target.

If you have ideas or suggestions for us, contact me directly at
dcallaway@callawayclimateinsights.com.

---

Tuesday’s subscriber insight

Gas tax holiday would come too little, too late for most consumers