Inflation rose in February at a rate of 2.4 percent.
(The Washington Post, Andrew Ackerman, March 12, 2026).
The February inflation report shows an annual increase of 2.4%, stable compared to January, offering temporary relief to American households, but the data do not include the surge in oil prices caused by the conflict with Iran.
The rise in energy and transportation costs risks pushing inflation higher in the coming months, complicating the Federal Reserve’s efforts to bring prices back to the 2% target and increasing political pressure on the Trump administration, which had promised to fight inflation.
The International Energy Agency announced a record release of 400 million barrels from emergency reserves to counter the crude oil spike, but prices remain high and could translate into an average gasoline cost above $4 per gallon.
February CPI report offers temporary relief.
“Inflation rose in February at a relatively contained annual rate of 2.4%, the same as January, although the US-Israeli military campaign against Iran has already made this figure obsolete.”
Energy price increases overshadow positive data.
“Food and energy prices rose in February and gasoline prices increased after two months of declines […] this is perhaps the least important CPI in years according to Joe Brusuelas, chief economist at RSM.”
Oil shock could add half a point to inflation.
“Oil cost increases alone could add about 0.5-0.6 percentage points to the annual inflation rate in the next report […] investors and policymakers can and must substantially discount the February reading.”
Conflict complicates the Fed’s work.
“From the Fed’s point of view their nightmare is not over […] supply shocks like a jump in energy prices put the central bank in a difficult position because they push inflation higher while slowing economic activity.”
Crude oil prices remain high despite reserve release.
“Brent, the global oil benchmark, rose to nearly $120 per barrel Monday morning, a level that could translate into a national average gasoline price above $4 per gallon […] prices fell to just over $90 Tuesday morning, still much higher than at the end of February.”
The median age of homebuyers is an affront to the American Dream.
(The Washington Post, Terry Schilling and Jon Schweppe, March 12, 2026).
The median age of homebuyers in the United States rose to 59 years in 2025, with first-time buyers averaging 40 years old and a median down payment exceeding $40,000, surpassing the median net worth of those under 35 and making homeownership inaccessible to young families.
The housing shortage, estimated at over 5 million units, must be addressed not only by increasing supply through deregulation but also by stimulating demand through tax incentives for young people, avoiding penalizing seniors who have accumulated real estate wealth.
The authors propose the introduction of Home Savings Accounts, tax-advantaged savings accounts modeled after health HSAs, with pretax annual contributions up to $10,000, tax-free growth, and tax-free withdrawals only for down payments or mortgage reduction, thus facilitating access to homeownership without punitive measures.
Median age of buyers rose to 59 in 2025.
“In 2025 a National Association of Realtors survey revealed that the average homebuyer was 59 years old […] in 2020 the median age was 47, which at the time was already a historic high.”
Median down payment of first-time buyers surpasses under-35 net worth.
“The median down payment on a home in 2025 for first-time buyers exceeded $40,000, surpassing the median net worth of Americans under 35 […] today first-time buyers average 40 years old.”
Proposal of Home Savings Accounts to aid young people.
“Americans could contribute a predetermined amount each year in pretax dollars – say $10,000 – to a dedicated account […] these funds could be invested in stocks, bonds, or other assets with tax-free growth and tax-free withdrawals only for a down payment on a primary residence or to reduce mortgage principal.”
HSA model demonstrates effectiveness of individual savings incentives.
“HSAs, introduced in 2003, have demonstrated effectiveness in incentivizing individual savings […] by mid-2025 total assets grew to $159 billion across 40 million accounts, with a 16% annual increase, while invested assets reached nearly $73 billion, growing 30%.”
Current housing policy rewards investors and penalizes families.
“Policymakers who want to support families and workers must decide: are homes for families or are they another investment vehicle reserved only for the wealthiest? […] our housing policy rewards developers, owners, investors, and speculators and punishes young people trying to start a family and move forward.”
Trump tightens Iran with geoeconomic tools.
(The Wall Street Journal, Josh Lipsky, March 12, 2026).
Trump is using geoeconomic tools to exert pressure on Iran beyond military force, such as the DFC’s political insurance for ships in the Hormuz Strait and the threat of a total trade embargo against Spain for refusing military bases.
The administration has threatened to invoke the Defense Production Act to compel companies like Anthropic to provide AI technologies to the Pentagon, signaling a willingness to mobilize the private sector for national security purposes related to the conflict.
These tools represent a return to historical economic warfare tactics used in the past by the United Kingdom and United States, with possible imitation by other countries such as the United Arab Emirates, which is considering freezing Iranian assets.
DFC insurance for ships in the Hormuz Strait.
“Trump has used the U.S. International Development Finance Corp. to insure ships passing through the Hormuz Strait […] the DFC and its predecessor traditionally operated in political risk insurance in low-income markets, but Trump is changing the equation.”
Threat of total embargo against Spain.
“Trump threatened Spain with a full trade embargo for the government’s refusal to allow the use of Spanish bases as a launch point for attacks […] to pursue an embargo he would likely rely on the International Emergency Economic Powers Act.”
DPA threat against Anthropic for AI technologies.
“Defense Secretary Pete Hegseth told Anthropic CEO Dario Amodei that the government might invoke the Defense Production Act and compel the company to make its artificial intelligence available to the Pentagon for uses deemed necessary and legal.”
Return to historical economic warfare tactics.
“During World War I the United Kingdom used its dominance in global insurance markets to complement naval power and control German imports of everything from food to fertilizers […] Trump operates from an older playbook where tariffs, embargoes, and economic power were much more common.”
UAE considers freezing Iranian assets.
“The United Arab Emirates is considering freezing billions of dollars of Iranian assets […] it would be a radical change in the economic relationship between Iran and the UAE and would put enormous financial pressure on the Tehran regime.”
Strategic exports of American oil.
(The Wall Street Journal, March 12, 2026).
The IEA announced a record release of 400 million barrels from emergency reserves of its 32 members to counter supply disruptions caused by Iran’s closure of the Hormuz Strait, but US crude oil exports are already serving as a strategic reserve for the West.
US crude oil exports, liberalized in 2015 with the repeal of the 1975 embargo, have reached 4 million barrels per day and reduce Europe’s and Asia’s dependence on Russia and the Middle East, providing a stable alternative in times of geopolitical crisis.
Proposals by some Democrats to reintroduce a ban on crude exports ignore the national security and economic stability benefits offered by American oil, which prove crucial precisely during conflicts like the one in Iran.
IEA releases record reserves to mitigate crisis.
“The International Energy Agency said Tuesday that its 32 member countries will release a record 400 million barrels of oil from emergency reserves to mitigate supply disruptions caused by Iran […] reserves exist for this purpose, but do not overlook how US crude exports are also providing a strategic oil reserve for the West.”
Closure of the Hormuz Strait blocks 20% of global oil.
“By closing the Hormuz Strait Iran has blocked about 20% of the global oil supply […] Iran has threatened commercial ships making insurance costs prohibitive for shippers and US officials say Iran has placed mines in the Strait.”
US exports have grown tenfold since 2015.
“Since 2015 US crude exports have increased nearly tenfold reaching four million barrels per day, about 1.8 million supplying refineries in Europe and 1.5 million in Asia and Australia […] US exports have reduced allies’ dependence on Russia and the Middle East.”
2015 liberalization thanks to Paul Ryan.
“Credit goes to former House Speaker Paul Ryan who in 2015 pushed legislation to repeal the US crude oil export embargo imposed in 1975 […] Ryan negotiated with Barack Obama the repeal of the ban in exchange for extending subsidies to renewables.”
Left wants to reintroduce export ban.
“That has not stopped progressives from trying to restore the ban […] Democrats have introduced bills during the Biden years to block crude exports […] US exports perpetuate a cycle of oil dependence according to Oregon Senator Ron Wyden in 2021.”
Fed officials find little comfort in February CPI.
(The Wall Street Journal, Nick Timiraos, March 12, 2026).
The core CPI for February rose only 0.22%, a moderate figure that under normal conditions would favor rate cuts if the labor market weakened, but it offers no real reassurance to Fed officials due to three important limitations.
The report does not yet capture the economic impact of the US-Israel campaign in Iran, with volatile oil prices and the Hormuz Strait closed to commercial traffic, factors that could push inflation higher in the coming months.
Inflation measured by the Fed’s preferred PCE index appears more sustained and the gap with the CPI seems to have widened in February, while statistical corrections related to the October shutdown will vanish in April, artificially raising readings.
Moderate core CPI data but with three significant caveats.
“The core CPI excluding volatile food and energy rose only 0.22%, a relatively mild figure that, in isolation, would remove an obstacle to rate cuts if the labor market worsened.”
Report does not yet include Iranian oil shock.
“The data precede the economic consequences of the US-Israel campaign in Iran […] oil prices remain volatile and the Hormuz Strait is still closed to commercial traffic, a restriction not yet reflected in consumer prices.”
BLS imputation correction will raise inflation in April.
“The favorable data imputations used by the Bureau of Labor Statistics after the October government shutdown will dissolve in April, which could reset measured inflation higher at that point.”
Gap between CPI and PCE likely widened.
“Inflation has been significantly more sustained according to the Fed’s preferred measure, the personal consumption expenditures price index, and that gap appears to have widened again in February based on expectations for the PCE data.”
Fed will maintain wait-and-see stance despite benign data.
“Overall the report is unlikely to alter the wait-and-see posture adopted so far this year by Fed officials […] a single benign CPI reading does not resolve the dilemma when the more important measure appears less encouraging and a severe energy shock is still underway.”
Inflation stable but war represents a threat.
(The Wall Street Journal, Justin Lahart, March 12, 2026).
Annual inflation remained steady at 2.4% in February compared to the previous year, in line with expectations, while core CPI rose 2.5%, offering a moderate figure that under normal conditions would favor a more accommodative monetary policy.
The report provides a snapshot of inflation before the start of the US-Israel war with Iran on February 28, but it is already obsolete due to oil volatility and the closure of the Hormuz Strait, which has not yet been reflected in consumer prices.
The future impact will depend on the duration of the oil price increase, which could add persistent inflationary pressure if prolonged, complicating the Fed’s dilemma between controlling inflation and supporting economic growth.
February data already inconclusive for the Fed.
“The February data is already completely inconsequential […] the report provides a useful snapshot of where consumer prices were headed before the war began.”
PCE inflation more sustained than CPI.
“Inflation has been significantly more sustained according to the Fed’s preferred measure, the personal consumption expenditures price index, and that gap appears to have widened again in February based on expectations for the PCE data.”
Oil increase threatens to push inflation higher.
“As a rough rule of thumb, every additional $10 per barrel adds about 0.2 percentage points to the Department of Labor’s inflation reading […] most bet that oil prices will push inflation higher in March.”
Technical bias will raise readings from April.
“The favorable data imputations used by the Bureau of Labor Statistics after the October government shutdown will vanish in April, which could reset measured inflation higher at that point.”
Persistent effect if oil prices remain high.
“Persistently high oil prices would be harder to absorb […] they would give supply chains time to lock in higher costs, squeezing corporate profit margins already under pressure from tariffs and leading some companies to consider price increases for consumers.”
(Excerpt from the newsletter by Giuseppe Liturri)
