Yesterday I noted G. Elliott Morris’s argument that extremely poor consumer sentiment in the U.S. is no mystery once you look properly at what Americans mean when they talk about prices and inflation. In short, just because prices stopped going up in the second half of Joe Biden’s presidency didn’t mean the public stopped being mad about them going up (and staying up) in the first half of his term. I’m pretty certain that this explains a lot about what sank Biden’s presidency and the dynamics of the 2024 election. But does it explain what’s happening now? When I wrote yesterday’s post, TPM Reader SB agreed, but argued that it went beyond that — that the still-declining consumer sentiment, the extremely sour public mood goes beyond the post-COVID inflation shock. It’s also about extreme wealth inequality, SB argued. Then, this morning, Paul Krugman began what he says will be a series of posts on his Substack in which he argues that while he agrees with the “excess price” framework, he’s not sure it’s a sufficient explanation.

Krugman didn’t really get into what exactly he thinks it is. As I said, he said he’ll address it in a series of posts. But the gist is that there’s a larger politico-economic explanation that goes beyond how long people stay mad about prices. Krugman says he thinks the deepening sense of economic gloom is driven by the fact that the public was upset about inflation, voted to move in a direction and then had the new guy do basically everything he could to stoke more inflation into the economy and generally whipsaw the economy in 20 different directions for a series of bizarre and obscure ideological fascinations.

The U.S. and Iran both announced this morning that the Strait of Hormuz is now fully open for the duration of the current ceasefire between Israel and Hezbollah. While the news is positive on the surface for global commerce and the global energy-economic crisis, few developments better illustrate the situation Donald Trump and Benjamin Netanyahu have gotten the U.S., the global economy and Israel into. What we see now is that the health of the global economy is, going forward, subject to fighting between Hezbollah and Israel. In a way Iran has always had a tacit or latent hold on the Strait of Hormuz. Simple geography tells you that. But it was only when Trump forced the matter that Iran learned how comparatively easy a lever that was to pull. They didn’t have to sink any oil tankers and even seriously damage one. They just had to issue threats and do some drone harassment. Maritime insurance markets would take care of the rest. There’s no way not to see this as a massive strategic win for Iran.

In the middle years of the Biden administration there was an idea that right-wing dominance of the media ecosystem, or simply social media breaking people’s brains, had blinded people to the fact that inflation was actually coming down fast. Indeed, by the time the 2024 election came around, inflation had come down dramatically and was close to what economists consider optimal — between 2% and 4%. (For all the ribbing economists took about predicting the COVID inflation would be “transitory” by any historical metric, it was.) Yet most people refused to believe that inflation had, in fact, been subdued. And “affordability” continues to be the political buzzword of the day going into the 2026 midterm elections. But this always struck me as a basic failure of analysis, imagining that the public at large and economists mean the same thing by inflation. They don’t. That should be obvious. And it probably is obvious to most of us. But a lot of us, including myself for at least part of the time, failed to draw out the proper conclusions.