Morning all. This morning we got the third major inflation report, the Producer Price Index, and it increased by 0.5% in March, or 6.2% on an annualized basis.
Let’s review the other inflation data we got in recent days. Last Friday’s Consumer Price Index report recorded a staggering increase of 0.9% in March, or 10.8% annualized:
Last Thursday’s Personal Consumption Index (PCE), even though reporting data from pre-war February (not post-war March like the other two), still came in way too hot at 0.4 for both headline and core. Here are the trend lines for core PCE, inflation without food and energy, the Fed’s favorite inflation gauge. It was trending way above the Fed target prior to the war:
And here we can see the impact of the tariffs and the war on PCE headline reading (including volatile food and energy):
Two points. First, all this data shows that inflation was rising prior to the war, and thus the new rising inflation we’ve seen due to Trump’s policies will not be resolved by an ending of the conflict and a reopening of the Strait of Hormuz. It’s why any serious post-war recovery package must start with the rescinding of all of Trump’s illegal, inflationary, and destructive tariffs.
Second, that Trump took us to war with inflation rising and job and GDP growth slowing makes his failed war look that much more reckless. He’s taken a wrecking ball to an economy that was already suffering under his “more for me and less for all of you” policies.
Here’s what I wrote yesterday about the Congressional GOP’s shocking level of denialism and magical thinking about where we as a nation and they as a political party are now:
From reading the news this morning it’s pretty clear Congressional Republicans are in deep denial about how the ground has shifted in recent weeks. No hearings are planned for Trump’s failed war, Russia and China coming to Iran’s aid, spiraling inflation, a weakening economy, or Trump’s increasingly deranged and unhinged behavior. Instead they are going to try to put lipstick on their unpopular and destructive legislative pig - the big ugly bill; try to pass DHS/ICE/CBP funding without any reforms of ICE; and appear about to double down on the failed and unpopular war that has caused a dangerous global geopolitical and economic crisis, has caused inflation to soar, and is doing even more harm to America’s farmers already suffering under the tariffs, disappearing markets, and rising health care costs and a degraded health care system.
Putting their vulnerable incumbents on the record for all that would be extraordinary political malpractice but it appears to be where Republicans are headed this week.
To save space in our daily email I’ve created a page where I’m now putting all of my current, working economic charts. Bookmark it for handy reference. And note that our latest data shows that in his two terms in office Trump has had both the slowest GDP and job growth of any President since Hoover - any President that is in the last 100 years.
Yes, Trump is a titanic fuck up. Historic. The biggest and baddest there has ever been.
In anticipation of the Spring meetings of the World Bank and International Monetary Fund in Washington this week, the IMF released its World Economic Outlook today that includes early efforts to understand the impact of Trump’s failed war. Here’s the NYT’s coverage of their findings (gift link):
War in the Middle East has upended the world economy, the International Monetary Fund said on Tuesday, warning in a report that disruptions to oil markets could slow growth, fuel inflation and raise the possibility of a global recession.
The sober message came after the global economy had largely weathered a pandemic, Russia’s war in Ukraine and soaring inflation without tipping into a recession. But President Trump’s decision to initiate a war in Iran has stopped the world economy in its tracks.
In its latest World Economic Outlook, the I.M.F. sharply downgraded its growth forecasts, exposing the economic fallout from a geopolitical crisis that has roiled energy prices and injected a new bout of uncertainty into the global economy.
“The global outlook has abruptly darkened following the outbreak of war in the Middle East,” Pierre-Olivier Gourinchas, the I.M.F.’s chief economist, wrote in the report. “The war interrupted what had been a steady growth trajectory.”
And…..
The I.M.F. laid out several scenarios for how the war could play out economically. The most severe case involves disruptions to energy markets that extend into next year. Such a scenario would drag global growth down to 2 percent and send inflation up to 6 percent.
“The downside risks are tremendous,” Mr. Gourinchas said.
Even a more optimistic case, in which the war concludes expeditiously and the Strait of Hormuz reopens, will leave behind economic carnage. The I.M.F. estimates that oil prices will increase by 21.4 percent this year and that energy commodity prices, which the fund had said would decline in 2026, will instead rise by 19 percent this year.
Those higher commodity prices will flow through the economy, the I.M.F. warned. That would raise costs of energy-intensive goods such as steel and cement, erode the purchasing power of consumers and most likely require central banks to raise interest rates.
The I.M.F. expects the economic impact of the war to be more damaging to low-income and developing economies and Persian Gulf energy exporters that are facing infrastructure damage and export disruptions from the war.
Advanced economies, such as the United States, are expected to fare better but not emerge unscathed. The I.M.F. now projects U.S. output to rise to 2.3 percent in 2026. That is an increase from 2.1 percent growth in 2025, but slower than the 2.4 percent growth that the fund projected in January.
The White House projected 3.5 percent gross domestic product growth in 2026 in its latest budget forecasts.
In the United States, the most apparent economic vulnerability appears to be the hit that consumers are feeling from higher gas prices. The national average for a gallon of gas was $4.11 as of Tuesday.
According to the I.M.F. report, the biggest winner from the war thus far appears to be Russia, whose economy is now expected to grow 1.1 percent in 2026, up from 1 percent in 2025.
Higher oil prices and the temporary lifting of U.S. sanctions on some Russian oil sales brightened the outlook for its economy.
Given the volatility of the global events, it is likely that polling is going to be very bouncy here in the US over the next few weeks. New data from the past few days suggest that his failed war and exploding gas prices may be pushing Trump’s approval down even further. Here’s Sunday’s CBS/YouGov poll. 39%-61% job approve/disapprove, the lowest showing for Trump so far in this poll:
His handling of the war continues to drop:
Trump’s now at his lowest level in the daily Civiqs tracking poll:
A new Yale University poll shows dramatic movement towards Democrats with young people and women since the fall:
And democracy and corruption still in the upper tier of issues with inflation and health care:
For time and space reasons our “Let’s Get To Work” section can be found here today, with two exceptions - urging everyone to sign up for our Vote Yes phonebank this Thursday at 530pm (below) and watch my new discussion with Virginia’s inspiring Speaker Don Scott, who is leading the fight in the state to counter Trump’s illicit power grab.
On Thursday we’re hosting our second Hopium Vote Yes phonebank with our partners Network NOVA and Rural GroundGame. We had hundreds of people join us last Thursday night for the first one, made over 50,000 dials, and members of this plucky and patriotic community reached over 5,000 voters in just a few hours. Our goal is to double those numbers this Thursday; and note that when we reach 5,000 voters, or 10,000 this week, we are reaching far, far more than that as each person we contact will contact many others in these critical, closing days.
Sign up for our phonebank this Thursday at 530pm here - let’s blow this one out everyone!
Here’s what Hopium community member John P said about our phonebanks last week:
I did the phonebank for VA last Thursday and am signed up for the one this Thursday. A quick word to my fellow “oh god I could never be a telemarketer” introverts. This ain’t that. You won’t be trying to sell someone something they don’t need or get them to part with money. It’s calling people who are most likely to vote yes anyway, and just encouraging them to vote, giving them information like polling location if they need it, and really just letting them know that another human being really cares about their vote.
Check it out. The folks who put this on are a lot of fun, with good energy, and you’ll start off with an inspiring talk from Simon. Then a really good (I’ve had some phonebank trainings, this one’s top notch) training on what to do, background information, and so on. Then you start making calls, but always with the Zoom call still open in the background so you can get questions answered, report good calls, or get support if you get the rare unhappy call.
For me, it’s really rewarding. I always get people thanking me for volunteering, and a lot of people who plan to vote soon. I usually have at least a few calls where I feel that I helped someone get information they needed, or was able to at least support the idea that their vote mattered. The best part is when I relax a little after the first few calls and I’m just talking to another person on the phone as one human to another. Hope to see you there!!
Keep working hard all. We have a country to save and an election to win, together - Simon
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