Platypus Economics with Justin Wolfers
@platypuseconomics
“He failed to understand the interconnectedness of the world economy.” That was true in the trade war, and it’s true now.
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A gas tax holiday talks about 18.4¢ while ignoring the $1.50 problem. That's politics, not policy. And half of it likely goes straight to oil company profits. Congress knows this. Some just hope you don't.
Even if Middle East tensions ease, futures markets are signaling oil prices will stay elevated for months — maybe years. That's the "Iran tax." And it's not going away anytime soon, regardless of what the White House says about prices coming down.
"If we don't have immigration and population growth, the number of people who can pay off that debt just went down." That's the key mechanism.
Consumer sentiment is near a 75-year low. But increasingly, these surveys may be measuring partisanship as much as economics. In other words, they may be asking “Do you like the president?” as much as “Do you like the economy?”
Think of an oil shock like a stone tossed in a pond. First splash: gasoline. Then the ripples: airfares, delivery costs, packaging, groceries, construction materials. The ripples are real. Just give them a moment to spread.
"If what you want is rate cuts, here's the thing you don't do. You don't go and bomb a country in the Middle East upsetting global energy markets and pushing prices up across the board."
Opportunity cost is Econ 101 with real stakes: the cost of a choice is not just dollars spent, but what you gave up. For war, that means not only destruction, but all the prosperity that never gets a chance to exist.
A 60-year low in sentiment is a big deal because the baseline is already tough: this survey has lived through recessions, inflation, wars, and financial crises. And yet this is worse. Read the full analysis on Substack: https://newsletter.platypuseconomics.com/p/consumer-sentiment-hits-a-record
Two things can be true at once: the U.S. is more energy independent than in the 1970s, and an energy shock can still raise inflation. Independence isn’t immunity.
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