Inflation just hit a 3-year high, real wages are going backwards, and the Iran war’s official cost just jumped $4 billion in two weeks
The big picture The April Consumer Price Index report dropped this morning. Year-over-year inflation hit 3.8%, the highest level since May 2023, with energy prices accounting for 40% of the gain. Real wages fell 0.3% on the year, meaning that for the first time since 2023, prices are rising faster than what Americans earn. Meanwhile, Pentagon Comptroller Jules Hurst told the Senate today that the Iran war’s cost has jumped from $25 billion to $29 billion in the last two weeks alone, and Defense Secretary Pete Hegseth is now publicly contradicting his own testimony from seven days ago on whether U.S. munitions stockpiles are depleted.
Why it matters The political fight over Iran will continue. BUT the part of this story now affecting every American household is the part that can be measured. Gas is up nearly 50% since the war began. Beef is up 14.8% on the year. Airline fares are up 20.7%. Jet fuel is up 60% since the war started. And one of the most circulated economic analyses on the current situation is now openly comparing it to the start of the 1970s stagflation crisis. The exact phrase: “The Great Inflation was not the initial surge. It was the failure to prevent the second one.”
The numbers The Bureau of Labor Statistics reported CPI rose 3.8% year over year in April, up from 3.3% in March and 2.4% in February. Monthly inflation was 0.6%. Energy prices accounted for more than 40% of the headline gain, with gasoline up 28.4% year over year and jet fuel up an estimated 60% since the start of the war, per Argus. Food at home rose 0.7% in April, the largest single-month grocery jump since August 2022. Beef alone is up 14.8% annually. Airline fares are up 20.7%. Real average hourly wages slipped 0.5% in April and are down 0.3% on the year.
Why this could get worse The energy shock has not yet fully transmitted through to other prices. Citigroup told its clients this week that energy costs are not expected to feed into broader core goods prices for “at least a few more months.” NBC reporting on the data quoted KPMG chief economist Diane Swonk saying the effects could continue “well into 2027,” even if the Strait of Hormuz reopened tomorrow. Bank of America has revised its forecast and now does not expect the Federal Reserve to be able to cut interest rates until the second half of 2027. There is also a technical caveat worth flagging — last fall’s 43-day government shutdown disrupted BLS data collection, meaning the 3.8% figure may itself be slightly understated.
The Iran war’s running price tag Pentagon Comptroller Jules Hurst, testifying alongside Defense Secretary Pete Hegseth at a Senate Armed Services hearing today to defend the Pentagon’s record $1.5 trillion FY2027 budget request, said the running cost estimate for the Iran war has risen from $25 billion at the end of April to $29 billion now. He said the increase reflects “updated repair and replacement of equipment costs and also just general operational costs to keep people in theater,” and that the number is subject to change depending on what comes next.
Where the war actually stands Trump rejected Iran’s latest counter-proposal as “totally unacceptable” Sunday and described the ceasefire as on “massive life support.” Today, he said the situation will be resolved on his timeline, “100% we get the nuclear dust” — referring to Iran’s roughly 1,000 pounds of uranium currently enriched to 60%. Iran’s parliamentary national security spokesperson responded today that if the U.S. or Israel attacks Iran again, the regime will consider enriching that uranium to 90% — weapons grade. A Revolutionary Guard Corps naval officer also said Iran has expanded its operational definition of the Strait of Hormuz into “a vast operational area.” Hegseth’s response to Iran’s positioning: “Ultimately we control the strait, because nothing’s going in that we don’t allow to go in.” Both sides cannot be simultaneously correct.
The Hegseth contradiction worth noting Hegseth told the Senate hearing today that concerns about U.S. munitions depletion have been “foolishly and unhelpfully overstated” — directly contradicting his own testimony seven days earlier, when he acknowledged it would take “months, and years” to replenish stockpiles depending on the weapon system. Per CNN and CSIS reporting, U.S. stockpiles of Precision Strike Missiles, THAAD, and Patriot systems are estimated to be 45-50% depleted. Hegseth has opened a second Pentagon investigation into Sen. Mark Kelly over the Senator’s public comments on the same subject. Kelly’s response remains the cleanest line of the back-and-forth: “That’s not classified, it’s a quote from you.”
By the numbers
3.8% — April CPI year over year, highest since May 2023
0.6% — April month over month
28.4% — gas prices year over year
~50% — gas prices since the war began (Feb 28)
60% — jet fuel since the war began
20.7% — airline fares year over year
14.8% — beef prices year over year
0.7% — food-at-home monthly increase (largest since August 2022)
-0.3% — real average hourly wage growth (going backwards)
$29 billion — Pentagon’s running war cost (up from $25B two weeks ago)
$4 billion — cost increase in two weeks
$1.5 trillion — Pentagon’s record FY2027 budget request
1,000 pounds — Iran’s stockpile of 60%-enriched uranium
90% — weapons-grade threshold Iran threatens to cross
H2 2027 — when Bank of America projects the Fed will be able to cut rates
The bottom line The macro picture is straightforward and brutal. Prices are climbing. Real wages are losing ground. The war’s cost is rising. The Pentagon is asking for record money. Iran is openly threatening to escalate. The Defense Secretary is contradicting his own prior testimony. And the historical comparison economists are reaching for is not 1990s, not 2008, but the late 1970s. We are not there yet. Whether we get there depends on how long this war lasts and how it ends. That is the part that voters can actually affect.
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