Financial FAQs
“From the preceding month, the PCE price index for January increased 0.3 percent. Excluding food and energy, the PCE price index increased 0.4 percent. Excluding food and energy, the PCE price index increased 3.1 percent from one year ago.” BEA.gov
FREDBrentcrude
Oil prices spiked again on Thursday morning (to $94.35 per barrel) per the above graph on Brent crude oil prices, after Iran’s new leader said the crucial Strait of Hormuz should remain closed and that Iran will continue attacks on its Gulf neighbors,.
And the Fed’s favored inflation index, the Personal Consumption Expenditures core rate of inflation, which omits food and energy, rose by 0.4%. The core rate rose 3.1% in the 12 months ended in January, up from 3.0% in the prior month. It’s the highest rate in almost two years and decidedly not what the Fed wanted to see.
So, this is causing all the financial market indexes to plunge once again as it’s becoming increasingly obvious that Trump has no good reason for attacking Iran that is now morphing into another Gulf War.
“The war in the Middle East is creating the largest supply disruption in the history of the global oil market,” said the IEA in its March report released on Thursday that was cited by MarketWatch. Disruptions in the Strait of Hormuz have caused Gulf countries to cut total oil production by at least 10 million barrels per day, the energy body added.
So 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, I said last week.
I’m not the only one bringing up the similarities to 1970’s stagflation. Nobel economist Joseph Stigliz, a Clinton economic advisor who won the Nobel prize for economics in 2001, said in a podcast interview with Jack Farley of “Monetary Matters” released on Wednesday, that “We are facing a risk of stagflation with prices going up because of tariffs and war while growth is slowing.” The 92,000 nonfarm payrolls contraction in February was evidence for the slump in economic activity, he said.
And it’s beginning to show up in slower GDP growth. Real gross domestic product (GDP) barely increased at an annual rate of 0.7 percent in the fourth quarter of 2025, revised downward from 1.4 percent, according to the second estimate released today by the U.S. Bureau of Economic Analysis. In the third quarter, real GDP increased 4.4 percent.
Oil prices had spiked earlier in June 2025 to $80 per barrel because of the short-lived Israel-U.S. strikes on Iran’s military and nuclear facilities. That should have been a warning of the potential economic damage from a longer war.
The other shoe to drop will be job creation. We are already in a stagnant job market with the loss of -92,000 jobs in February that basically erased the +126,000 job gain in January. Further losses are being hinted at by other indicators, such as the government’s JOLTS report that has shown no net growth in new hires for months.
It’s becoming more obvious that President Trump’s seeming incoherence over the reasons for his new Gulf war is hiding the real reason he started another Gulf War that he blurted out recently:
“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.
The sad truth is that Trump and his oil buddies are profiteering from a war that Americans, and much of the world, will end up paying for.
Harlan Green © 2026
Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen
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