If the IRGC’s goal was to restart the war between Iran and the United States, it has arguably succeeded.

If the IRGC’s goal was to showcase American weakness, it has failed.

For the IRGC, the outcome of today’s tit-for-tat ceasefire violations can be summarized thus: FAFO.

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The day began with reports of an Iranian drone attack on the Al Rekayyat, a Qatari LNG carrier.

The Al Rekayyat was struck in the early hours of Tuesday, according to people familiar with the matter, who asked not to be named due to the sensitivity of the issue. An alert from security consultancy EOS Risk Group confirmed the attack about 8 nautical miles (15 kilometers) east of Limah, Oman, and a subsequent fire, classifying it as either a drone or missile strike.

That was one of a number of ships targeted by Iran, presumably for deviating from the shipping lanes Iran fatuously (and illegally) demand ships use when transiting the Strait of Hormuz.

The earlier strikes by Iran were on tankers that were allegedly trying to travel the strait by a route Iran has warned against, CBS News reported. While Iran did not claim the attacks, but state media said at least one ship ignored warnings.

Was Iran testing US resolve? Did the IRGC expect the Trump Administration would fold under the latest threats against shipping transiting the Strait of Hormuz?

If that was the case, the IRGC is almost certainly facing some disappointment tonight.

Response number one was the Treasury Department revoking Iran’s license (really sanctions waiver) to sell oil internationally, according to US officials.

“As President Trump and the administration have repeatedly affirmed, the MOU in effect with Iran is entirely performance-based,” the official said.

“Iran will only reap benefits if they exhibit good behavior,” they said. “Iran’s actions in the Strait were wholly unacceptable to the United States and will be met with consequences.”

Targeting civilian ships is hardly behavior one associates with wanting to sustain a ceasefire or reach a lasting peace deal. If anything, it signifies that Iran wants more conflict.

If Iran wants more conflict, US Central Command is ready to give Iran more conflict, according to CENTCOM’s social media postings on X:

U.S. Central Command forces have begun launching a series of powerful strikes against Iran to impose heavy costs for targeting and attacking commercial shipping crewed by innocent civilians in an international waterway. The U.S. strikes are in response to Iranian attacks on three commercial vessels that were transiting the Strait of Hormuz. Iran’s demonstrated aggression was unwarranted, dangerous, and a clear violation of the ceasefire.

Iranian state media has confirmed the strikes, most of which are concentrated around Iran’s coastline near the Strait. The port city of Sirik, Qeshm Island, as well as Bandar Abbas, were all reported being hit.

Iranian media reported explosions early Wednesday local time in the southern port city of Sirik, on Qeshm Island, and in Bandar Abbas. The reports said strikes hit a commercial pier in Sirik and fishing piers in both Sirik and Bandar Abbas.

A U.S. official told Reuters that strikes targeted Iranian air defense systems, coastal surveillance systems, surface-to-air missiles, anti-ship cruise missiles and drone launch sites.

The incidents were only the latest threat to the ceasefire agreement the U.S. and Iran struck last month, pausing the conflict that started in February with U.S. and Israeli strikes across the Islamic Republic. In a potentially major blow to that agreement, Washington moved on Tuesday to withdraw a key concession that had allowed Iran to sell oil on international markets.

Iran is back under oil sanctions. The US is attacking Iranian targets.

These are not events which suggest the ceasefire is at all still in effect.

Oil markets are coming to that same conclusion. The announcement of new US strikes in Iran caused a quick surge in the price of both Brent Crude and West Texas Intermediate this afternoon, for both September and October delivery.

All of this was easily predictable before the first drone struck the Al Rekayyat. Even if President Trump were desperate for any sort of deal with Iran, he has put out too much bluster with too much swagger to back down over three ships lawfully transiting a recognized international waterway.

Either the IRGC-dominated Khamenei regime believed President Trump would not dare respond for fear of a spike in gasoline prices with the mid-term elections right around the corner or the regime anticipated that Iran could absorb a likely “proportional” response to the tanker attacks. In either scenario, the Khamenei regime guessed wrong.

According to US officials, the latest series of strikes are meant to be “punishment, not proportional”. That characterization gained credibility when Iranian state media reported explosions on Kharg Island, Iran’s main oil export terminal handling more than 90% of the country’s petroleum export loadings.

Whether the US considers the ceasefire still in effect or not is unclear, although CENTCOM has indicated that it has completed this round of air strikes.

Update:

President Trump has declared the ceasefire over.

“As far as I’m concerned, it’s over,” Trump told reporters in Ankara before a NATO summit.

“I don’t want to deal with them anymore. They’re scum... they’re sick people, they’re led by sick people, and they’re vicious, violent people.”

Trump said he would allow US negotiators to continue talks if they wished but signaled he no longer believed diplomacy would succeed.

“They want to negotiate. They’re good people... but they have to come back to me,” he said. “As far as I’m concerned, it’s just a waste of time dealing with them, they’re liars.”

Iran is back under sanctions. Iranian infrastructures near Bandar Abbas, Qeshm Island, and Kharg Island have been hit. How this outcome aids the IRGC is unclear.

If the Khamenei regime did not anticipate a response like this from the United States, it has not been paying attention at all to Donald Trump.

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There is no dispute to be had that Roberts’ ruling is contrary to the Constitution. There is thus no dispute to be had that Roberts ruling is void on its face.

When I say that Roberts’ ruling is void on its face I mean exactly that. Just as an act of Congress which violates the Constitution is automatically void, just as a Presidential order which violates the Constitution is automatically void, a Supreme Court ruling which violates the Constitution must also be automatically void.

This has to be true, or the Constitution is not the supreme law of the land.

John Roberts’ ruling on birthright citizenship is in every respect repugnant to the Constitution of the United States. By virtue of that same Constitution, John Roberts’ ruling must be regarded as null, void, and having no legal effect.

I am no radical for saying this. Quite the contrary, doctrines of nullification are no stranger to our nation’s political history. In the early days of the Republic, many understood them to be quite Constitutional.

Nullification is indeed Constitutional, and John Roberts going off the rails on the crazy train over birthright citizenship is merely the latest reason we need to bring that understanding back into our political discourse.

If the United States Constitution is to endure as a governing document, Roberts’ ruling must not stand. If the United States is to endure, Roberts’ ruling must be nullified.

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Legal Scholars Agree: Roberts Ruling Is Wrong

I am far from alone in treating Roberts’ arrant nonsense with contemnation.

In his dissent2, Justice Clarence Thomas repeatedly called Roberts’ out for his mis-statements and mischaracterizations of both the history and extant case law on birthright citizenship.

In his separate dissent3, Justice Samuel Alito called Roberts’ ruling “a serious mistake.”

NYU Law Professor Richard Epstein assessed Roberts’ ruling as “contrary to history.”

Claremont Institute Senior Fellow John Eastman panned Roberts’ ruling because it “answers the wrong question.”

I am quite clearly far from alone in being unimpressed by John Roberts’ 194 pages of jurisprudential slop.

Yet John Roberts wrote for the majority of the Supreme Court. His ruling is the Supreme Court’s ruling on the case. The Supreme Court has spoken, and has said in no uncertain terms that birthright citizenship is a Constitutional mandate.

Only the Supreme Court got it wrong. That is my conclusion, obviously. It is also Justice Thomas’ conclusion, Justice Alito’s conclusion, and the conclusion of a number of legal scholars as well.

At a minimum, a decent respect for our Constitution demands that we acknowledge the possibility (really the certainty) that the Supreme Court got it wrong.

The Court Is Not The Arbiter Of What Is Constitutional

In the modern understanding of Supreme Court rulings, the Court is charged with deciding what is and is not Constitutional.

As is so often the case with modern understandings of all things Constitution, this view is simply not true.

Nowhere in Article III of the Constitution will you find a grant of such plenary authority over the Constitution to the Supreme Court. Section 1 of Article III establishes that there will be Supreme Court, along with as many inferior courts as Congress deems necessary.

Section 2 defines the scope of federal court jursidiction:

The judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority;--to all Cases affecting Ambassadors, other public Ministers and Consuls;--to all Cases of admiralty and maritime Jurisdiction;--to Controversies to which the United States shall be a Party

Nowhere is the Court tasked with policing Constitutional construction.

How is it that the Court comes to rule which laws are unconstitutional? The answer to that is the process of “judicial review”, which was understood by the Founding Fathers to be inherently part of “the judicial Power.”

We know that to be the case because Alexander Hamilton, writing in Federalist 784, clearly articulated that the courts would declare all unconstitutional acts void in arguing the essential independence of the judiciary:

The complete independence of the courts of justice is peculiarly essential in a limited Constitution. By a limited Constitution, I understand one which contains certain specified exceptions to the legislative authority; such, for instance, as that it shall pass no bills of attainder, no ex-post-facto laws, and the like. Limitations of this kind can be preserved in practice no other way than through the medium of courts of justice, whose duty it must be to declare all acts contrary to the manifest tenor of the Constitution void. Without this, all the reservations of particular rights or privileges would amount to nothing.

However, even Hamilton was aware that it is possible for judges to get the law wrong, and for judges to impose their own ideas upon the law rather than merely interpreting the law. For Hamilton, this was yet a further reason for giving judges lifetime appointments, so as to put them beyond all political influences.

It can be of no weight to say that the courts, on the pretense of a repugnancy, may substitute their own pleasure to the constitutional intentions of the legislature. This might as well happen in the case of two contradictory statutes; or it might as well happen in every adjudication upon any single statute. The courts must declare the sense of the law; and if they should be disposed to exercise WILL instead of JUDGMENT, the consequence would equally be the substitution of their pleasure to that of the legislative body. The observation, if it prove any thing, would prove that there ought to be no judges distinct from that body.

If, then, the courts of justice are to be considered as the bulwarks of a limited Constitution against legislative encroachments, this consideration will afford a strong argument for the permanent tenure of judicial offices, since nothing will contribute so much as this to that independent spirit in the judges which must be essential to the faithful performance of so arduous a duty.

Yet even within this argument, we see an important distinction emerge: in Hamilton’s apprehension of the judiciary, the task of declaring a law unconstitutional is a task of acknowledgement. A law is unconstitutional because it runs contrary to the manifest tenor of the Constitution. A law which cannot be reconciled to the Constitution is from the very outset unconstitutional, and never enjoys any operative effect.

Chief Justice John Marshall would reiterate this understanding of judicial review in Marbury v Madison5:

It is emphatically the duty of the Judicial Department to say what the law is. Those who apply the rule to particular cases must, of necessity, expound and interpret the rule. If two laws conflict with each other, the Court must decide on the operation of each.

If courts are to regard the Constitution, and the Constitution is superior to any ordinary act of the legislature, the Constitution, and not such ordinary act, must govern the case to which they both apply.

As Marshall elucidated, the judicial Power is inherently one of interpretation. The role of the jurist is to adjudicate a body of facts in light of applicable law.

What both Hamilton and Marshall explicitly understood, however, is that interpreting the law was never an exercise of authority. At no point did Hamilton or Marshall ever construe the doctrines of judicial review to mean that the Supreme Court unilaterally or arbitrarily decided which laws were Constitutional and which laws were not. Rather, both men understood judicial review to be an exercise of identification, that if a particular statute could not be reconciled to the Constitution, the statute necessarily had to give way.

That the Constitution explicitly declares it is to be the supreme Law of the Land in Article VI confirms that this is how judicial review is meant to proceed.

What happens if a judge gets that law wrong?

Quis Custodiet Ipsos Custodes?

As the poet Juvenal quipped rather pithily, “quis custodiet ipsos custodes?”6—”who watches the watchers?”.

Alexander Hamilton, again writing in Federalist 78, was concerned with the courts watching the Congress. In part this was because he viewed the judiciary, being tasked solely with interpreting the law, as being the least dangerous branch of government.

Whoever attentively considers the different departments of power must perceive, that, in a government in which they are separated from each other, the judiciary, from the nature of its functions, will always be the least dangerous to the political rights of the Constitution; because it will be least in a capacity to annoy or injure them. The Executive not only dispenses the honors, but holds the sword of the community. The legislature not only commands the purse, but prescribes the rules by which the duties and rights of every citizen are to be regulated. The judiciary, on the contrary, has no influence over either the sword or the purse; no direction either of the strength or of the wealth of the society; and can take no active resolution whatever. It may truly be said to have neither FORCE nor WILL, but merely judgment; and must ultimately depend upon the aid of the executive arm even for the efficacy of its judgments.

In Hamilton’s view, the courts are always dependent on at least the Executive to implement whatever rulings they make. Without the cooperation of the other branches of government, the courts are powerless to convert their ruling into acts of governance.

Consequently, Hamilton never seriously addressed the possibility of the Supreme Court getting the law wrong. In his view, the inevitable tensions among the tripartite branches of the federal government were sufficient safeguard against judicial error.

Not every one of the Founding Fathers was so sanguine about the judicial Power. Indeed, Thomas Jefferson and James Madison regarded the capacity to declare laws unconstitutional as being a competency of the several states. It was from this apprehension of Constitutional law that we get the Kentucky7 and Virginia8 Resolutions of 1798.

The Kentucky and Virginia Resolutions were a response to the Alien and Sedition Acts of 1798—controversial laws restricting anti-government speech and the movements of foreign nationals within the United States passed in anticipation of war with France9. The state legislatures of both Kentucky and Virginia considered the laws to be an egregious and unconstitutional overreach by the federal government, and passed resolutions declaring the laws to be unconstitutional.

Thomas Jefferson, in his draft of the Kentucky Resolution, argued that, as the United States was a compact among the several states, and that no government could ever be the arbiter of its own actions, the several states were empowered to decide when the federal government had gone too far with its authority.

_Resolved_, That the several States composing the United States of America, are not united on the principle of unlimited submission to their General Government; but that, by a compact under the style and title of a Constitution for the United States, and of amendments thereto, they constituted a General Government for special purposes, -- delegated to that government certain definite powers, reserving, each State to itself, the residuary mass of right to their own self-government; and that whensoever the General Government assumes undelegated powers, its acts are unauthoritative, void, and of no force; that to this compact each State acceded as a State, and is an integral party, its co-States forming, as to itself, the other party: that the government created by this compact was not made the exclusive or final judge of the extent of the powers delegated to itself; since that would have made its discretion, and not the Constitution, the measure of its powers; but that, as in all other cases of compact among powers having no common judge, each party has an equal right to judge for itself, as well of infractions as of the mode and measure of redress.

James Madison, in authoring the Virginia Resolution, not only argued that the states were empowered to call Constitutional balls and strikes, but had an affirmative duty to do exactly that:

That this assembly most solemnly declares a warm attachment to the Union of the States, to maintain which it pledges all its powers; and that for this end, it is their duty to watch over and oppose every infraction of those principles which constitute the only basis of that Union, because a faithful observance of them, can alone secure it’s existence and the public happiness.

That this Assembly doth explicitly and peremptorily declare, that it views the powers of the federal government, as resulting from the compact, to which the states are parties; as limited by the plain sense and intention of the instrument constituting the compact; as no further valid that they are authorized by the grants enumerated in that compact; and that in case of a deliberate, palpable, and dangerous exercise of other powers, not granted by the said compact, the states who are parties thereto, have the right, and are in duty bound, to interpose for arresting the progress of the evil, and for maintaining within their respective limits, the authorities, rights and liberties appertaining to them.

Both resolutions passed their respective legislative bodies, although the resolutions gained little traction with other states.

While Jefferson’s rhetoric was more explicit in articulating a nullfication doctrine, common to both resolutions was the same apprehension of laws in conflict with the Constitution articulated by Alexander Hamilton in Federalist 78: A law which conflicted with the Constitution was from the outset operatively null and void.

As with the mechanics of judicial review, state nullification of unconstitutional federal law is not an arbitrary exercise of a state power, but an acknowledgement of a pre-existing conflict between a federal law and the United States Constitution, and that such conflict automatically renders the law null and void from the outset.

Chief Justice John Marshall would restate this same thesis in Marbury v Madison, in his conclusion that the Judiciary Act of 1789 was unconstitutional in its construction, and so denied William Marbury the means of redress he sought (and to which even John Marshall acknowledged he was entitled).

Certainly all those who have framed written Constitutions contemplate them as forming the fundamental and paramount law of the nation, and consequently the theory of every such government must be that an act of the Legislature repugnant to the Constitution is void.

While Marshall aligned with the Hamiltonian view of the judicial Power in Federalist 78 by acknowledging judicial review of laws as inherent to the judicial Power, he continued the sense of Constitutional construction articulated by Hamilton and restated by Jefferson and Madison that within the judicial Power, judicial review was a declaratory exercise rather than an authoritative one (what Hamilton would distinguish as an exercise of “judgement” rather than “will”). What renders a law unconstitutional is its conflict with the Constitution, not any decision either by a state or by the courts.

During the Nullification Crisis of 1832, a Constitutional crisis arising from the controversial Tariff of 1828 (known in the southern states especially as the “Tariff of Abominations”)10, South Carolina’s favorite son (and Andrew Jackson’s Vice President) John Calhoun would resurrect the concept of state nullification in his 1828 treatise "South Carolina Exposition and Protest.”11 While keeping the earlier apprehension of Constitutional construction that conflict with the Constitution invalidated legislation, Calhoun articulated a particular case where the judicial Power might prove inadequate in adjudicating such conflict:

The courts by their own decisions cannot look into the motives of legislators—they are obliged to take acts by their titles and professed objects, and if they be constitutional they cannot interpose their power, however grossly the acts may violate the constitution.

Calhoun’s proposition was that judicial review, while an acknowledged part of the judicial Power, did not invalidate state review. Calhoun argued specifically that the competency of a state to declare a law unconstitutional was of the same inferential nature as the competency of the courts.

It is objected in the first place, that the rights of the state, to interpose, rests on mere inference without any express provision in the constitution, and that it is not to be supposed if the constitution contemplated the exercise of a power of such high importance, that it would have been left to inference alone. In answer, the committee would ask those, who raise the objection, if the power of the Supreme Court to declare a law unconstitutional, is not among the very highest and most important, that can be exercised by any department of the government, and where they can find any express provision to justify its exercise? Like the power in question, it also rests on mere inference, but an inference so clear, that no express provision could render it more certain. The simple facts, that the Judges must decide according to Law, and that the Constitution is paramount to the Law, imposes a necessity on the Court to declare the latter void, whenever it comes into conflict with the former; so from the fact, that the sovereign power is divided, and that the states hold their portion in the same sovereign capacity with the general government, by like necessity, then is the right of judging of the infraction of their sovereignty, as well as of the remedy. The deduction in the one case is not clearer than the other; but if we refer to the nature of our constitution, the right of the state stands on stronger grounds than that of the court.

When the Court failed to identify an actual Constitutional conflict and appropriately declare the conflicting laws null and void, it fell to the states to take up that task and do what the Court either would not or could not do.

What this history demonstrates is that doctrines of nullification were mainstream political opinions at the founding of the Republic. Only later do we see a presumption that the Supreme Court is necessarily the final word in adjudicating a law’s constitutionality—a presumption for which there is zero basis within the text of the Constitution.

Who watches the Constitutional watchers? It is broadly understood that the Judiciary watches the Legislative and Executive Branches in this regard, but who watches the Judiciary?

The Supreme Court Can Be Wrong

What Calhoun stated bluntly is a reality we are seeing played out time and again in the modern era: The Supreme Court can be wrong about whether a law is Constitutional or no.

Even John Roberts concedes that the Supreme Court is sometimes wrong. He has little choice in this regard, as his judicial thesis in Trump v Barbara is predicated on the erroneous nature of the juridical monstrosity of Dred Scott v Sandford, which he aptly (and correctly) described as the Court overruling common law.

The Court had overruled the common law, but the people—eventually—would overrule the Court. It took more than a decade—and the addition of names such as Antietam, Gettysburg, and Chancellorsville to our national canon—but Douglass’s vision of “our common humanity” would be fulfilled.

Nor is Roberts alone in this. Justice Samuel Alito, in 2022’s Dobbs v Jackson12, took the 1973 Supreme Court ruling in Roe v Wade to the proverbial woodshed, describing its reasoning as “ranging from the constitutionally irrelevant…to the plainly incorrect.”

Even the Supreme Court does not defend Supreme Court rulings as inviolable and beyond dispute. The Court has gotten it wrong in the past, and, we must presume, will continue to get it wrong in the future.

The unquestioned reality of Supreme Court imperfection in this regard begs an obvious question: what should the nation do when the Court is in error?

A moment’s thought is all that is needed to realize that acquiescence to an erroneous Court decision is not a viable option. When the Court gets it wrong, what the nation dare not do is remain silent about that error. As the late Justice Antonin Scalia noted in his concurrence in United States v Irvine13, “qui tacet, consentire videtur” (“He who remains silent seems to consent”) is established common law doctrine; if we are silent about John Roberts’ juridical execrescence we are consenting to Roberts imposing his false view of the Constitution and its Fourteenth Amendment.

As silence is not an option in the face of judicial error, speaking out becomes essential civic duty. My calling John Roberts’ unconstitutional ruling unconstitutional, and necessarily null, void, and of no operative effect, is no more than must be done.

Declarations Are Necessary But Insufficient

By itself, my statement will achieve little if any practical effect. I am one man and my platform far too small to steer public opinion to any discernible degree. Me pointing out that the Roberts ruling, being in conflict with the plain text of the Fourteenth Amendment and clearly unconstitutional, is necessarily null and void, is a necessary civic step but, on its own, woefully insufficient.

Yet the more people who do acknowledge that Roberts’ ruling is in violation of the Constitution, the more practical effect it can have. While likely still insufficient, the more who acknowledge that Roberts’ ruling is necessarily null and void, the better. Public opinion is very much a shaping force in public policy.

Several Republicans in Congress have already begun to push for a Constitutional Amendment to reverse Roberts’ unconstitutional ruling. Senator Rand Paul had even taken the pre-emptive step this past April of introducing just such an amendment, against the possibility of the Court ruling erroneously as it has. Building public opinion against Roberts’ unconstitutional view of birthright citizenship can only help strengthen such efforts. Given the Sisyphean task of getting any Constitutional Amendment through the Congress and completely ratified, such efforts need all the support they can get.

There are more controversial steps some can take which may prompt a quicker resolution. President Trump could take the unprecedented step of making a Presidential Proclamation stating that John Roberts’ ruling is unconstitutional and therefore void.

That has never been done before, which means we cannot predict with certainty how such a move would play out either among the electorate, within Congress, or before the Supreme Court.

What we can predict is that such a move would force every political actor in Washington to one side or the other. No Congressman, no Senator, no jurist would have the luxury of remaining neutral or silent. They would either have to declare for President Trump’s view of the matter, or John Roberts. Given that several members of both Houses of Congress have already expressed opposition to Roberts’ view of the Fourteenth Amendment, just the nature of politics in the information age will compel at least some of them to support Trump in such a maneuver. They might not like it, and most may not like Donald Trump, but it would be difficult to repudiate Trump without repudiating their own positions on birthright citizenship.

Similarly, state legislatures might reawaken and reassert state power by passing resolutions calling the Roberts ruling unconstitutional, null, and void. We have not seen this done since South Carolina’s Ordinance of Nullification in 183214, during the aforementioned Nullification Crisis.

A slew of states passing a similar resolution nullifying the Roberts ruling would produce a new nullification crisis, but would that not be the point? States calling out as erroneous a Supreme Court ruling would be in every respect a Constitutional crisis (neither the South Carolina Ordinance of Nullification nor the earlier Kentucky and Virginia Resolutions were ever adjudicated as to their Constitutionality), but surely it will take a Constitutional crisis to achieve a Constitutional correction.

One thing is certain: State resolutions nullifying Roberts’ ruling are not at all likely to trigger the emphatic pushback South Carolina received in 1832, when Andrew Jackson threatened to respond with military force if the state did not back down15. Under the circumstances, we could anticipate President Trump welcoming such state action, which would only further heighten Constitutional tensions.

If a Presidential Proclamation would catalyze a Constitutional crisis over birthright citizenship, state resolutions against the Roberts’ ruling are likely only slightly less explosive. That they would be highly controversial is perhaps the best argument for enacting them.

States Still Matter

There is a prevailing school of thought in American jurisprudence that diminishes the role of the states in the Constitutional system. While Jefferson and Madison viewed the Constitution as a compact among the several states, early Supreme Court decisions such as McCulloch v Maryland16 rejected that view, with Chief Justice Marshall arguing the Constitution is an expression of the will of the people.

From these conventions the Constitution derives its whole authority. The government proceeds directly from the people; is “ordained and established” in the name of the people, and is declared to be ordained, “in order to form a more perfect union, establish justice, insure domestic tranquillity, and secure the blessings of liberty to themselves and to their posterity.”

Justice Joseph Story, in Martin v Hunter’s Lessee17, similarly panned the role of the states in the formation of the Union.

The Constitution of the United States was ordained and established not by the States in their sovereign capacities, but emphatically, as the preamble of the Constitution declares, by “the people of the United States.” There can be no doubt that it was competent to the people to invest the general government with all the powers which they might deem proper and necessary, to extend or restrain these powers according to their own good pleasure, and to give them a paramount and supreme authority.

However, what this formulation overlooks is that state governments are themselves an expression of the same American people who ordained and established the Constitution of the United States.

We only have to review the preambles of state constitutions such as that of the Commonwealth of Massachusetts18.

We, therefore, the people of Massachusetts, acknowledging, with grateful hearts, the goodness of the great Legislator of the universe, in affording us, in the course of His providence, an opportunity, deliberately and peaceably, without fraud, violence or surprise, of entering into an original, explicit, and solemn compact with each other; and of forming a new constitution of civil government, for ourselves and posterity; and devoutly imploring His direction in so interesting a design, do agree upon, ordain and establish the following Declaration of Rights, and Frame of Government, as the Constitution of the Commonwealth of Massachusetts.

The presumption necessarily must be that, when a state government speaks, it is speaking on behalf of the people of that state, who are also people of the United States. If a state government takes the Supreme Court to task for a ruling, it is in effect saying “that is not the Constitutional compact our citizens have made.” If the people of a state wish to convey that message to the Court and to the country, it is fitting the state government stand as the messenger.

Earlier I said that, while Marshall was correct that the role of the courts is to say what the law is, it is not the role of the courts to say what the law is not. Permit me to elaborate further: The courts, through the judicial power, resolve to reconcile all government acts (particularly acts of the legislature) to the Constitution, declaring all irreconcilable acts unconstitutional. To say what the law is, the courts must necessarily eject from adjudication all such unconstitutional laws.

It is not the role of the courts to say whether a law pushes the compact among the people of the United States that is the operative agreement codified by the United States Constitution beyond the boundaries to which the people have agreed. The people necessarily retain that competency, and the Constitution even alludes to their retaining that competency through the Ninth and Tenth Amendments, reserving all unenumerated rights and powers to the people or the states, respectively.

If the courts, finding no irreconcilable conflict, declare a law constitutional which pushes the compact of We The People beyond boundaries acceptable to We The People, it is the right and duty of We The People to push back.

The several states are no less an expression of the will of the American people than is the government of the United States. “We The People” are the final authority within the several states just as we are within the United States. Our consent to be governed is as applicable to state government as it is to the national government. If a state challenges the national government, that is no more than the people of the state clarifying the terms of their continuation of the Constitutional compact that is the United States.

States still matter especially when Constitutional questions arise. State legislatures are still a vehicle for the people of the several states to make their wishes known.

State repudiation of the Roberts’ ruling would be substantive and absolutely could not be ignored. That alone makes state action appealing: state action will compel national reaction, which is exactly what is needed to correct the gross error of the Roberts ruling.

The Battle Cannot Be Avoided

While such obviously combative measures as Presidential Proclamations and state resolutions denouncing the Roberts ruling as an unconstitutional monstrosity are surely and reflexively unappealing to most people, they are in all probability unavoidable.

John Roberts setting aside the Constitution to impose his own views on birthright citizenship—to do the very thing Alexander Hamilton believed could not happen in an independent judiciary—is but the latest in a growing train of judicial abuses and usurpations.

Roberts himself has contributed before to this train, with his incomprehensible ruling on President Trump’s “Liberation Day” tariffs earlier this year.

Late last month U.S. District Judge Denise Casper peremptorily overturned President Trump’s election security Executive Order. Surely “We The People” are entitled to have the utmost protections afforded to our elections, that we may have confidence in their outcome. Too often we have reason to suspect fraud and malfeasance, yet this one judge arrogated to herself the authority to dismiss all such concerns.

District Judge Paul Friedman has made the extraordinary ruling that the Pentagon is not allowed to mandate escort-only access policies within the Pentagon. Those running the nexus of this nation’s security are being told to allow journalists free run of the building, national security be damned.

Another District Judge, John McConnell, Jr., has told the US Citizenship and Immigration Service it must continue approving asylum claims, even as evidences of rampant abuses of such claims appear repeatedly even in the corporate media.

Nor can we overlook the execrable Judge James Boasberg, who has thumbed his judicial nose at President Trump so many times that at least one senator, Eric Schmitt of Missouri, has called for his impeachment.

The prospect of impeaching several federal judges who have seemed hell-bent on thwarting President Trump at every turn emerged very early last year. Even then, there was considerable evidence that several judges were (and are) exercising a most un-Hamiltonian “will” rather than the “judgement” which is their Constitutional obligation.

In the tariff case earlier this year, Justice Neil Gorsuch used his concurrence to take his colleagues on the Court to task for subjecting President Trump to a different judicial standard than President Biden19.

Unpack that last claim first. My concurring colleagues contend that, as a matter of “straight-up statutory construction,” IEEPA does not grant the President the power to impose tariffs. Post, at 7. In doing so, they make thoughtful points about the statute’s text and context. But their approach today is difficult to square with how they have interpreted other statutes. Dissenting in past major questions cases, they have argued that broad statutory language granting powers to executive officials should be read for all it is worth. Yet, now, when it comes to IEEPA’s similarly broad language granting powers to the President, they take a more constrained approach.

If the tariff case was decided on the basis of anti-Trump animus, as Justice Gorsuch clearly believes, can we be certain Trump v Barbara was not motivated by similar political considerations? No, we cannot.

“Because Trump” is a statement of politics, not a statement of law.

Yet “because Trump” has been an increasingly obvious factor in many judicial rulings. Many are ultimately overturned by the appellate courts, but that has not dissuaded judges from arbitrarily seeking to impose their own will on the law, and for no other reason than Donald Trump is a President they personally despise.

The courts, as envisioned by Alexander Hamilton and as championed by John Marshall, are meant to be wholly neutral adjudicators of facts in light of applicable law. The courts are entrusted with the task of calling Constitutional balls and strikes because they are presumed to be outside the political fray. Judges are given lifetime appointments specifically to place them outside the political fray.

The courts are demonstrably no longer outside the political fray. With this latest juridical aberration, John Roberts has shown once again that the Chief Justice of the United States is not outside the political fray.

As the courts are not outside the political fray, they are by definition not articulating what the law is, but what they believe the law should be. They are by definition not wholly neutral adjudicators of facts in light of applicable law. They are political entities pursuing political agendas.

When judges pursue political agendas from the bench, justice has left the courtroom entirely.

Political rulings by politicized justices must not be allowed to stand, because if they stand the Republic will fall. Some might say it is already falling—and they might be right.

If we do not nullify Roberts’ insane ruling on birthright citizenship, we might avoid Constitutional crisis for a while longer. We will not avoid it for much longer, however, because the growing roster of rogue judges making indefensible rulings will bring us to a Constitutional crisis by their perverse lawlessness no matter how much we try to avoid it.

We The People must nullify John Roberts’ unconstitutional ruling on birthright citizenship, for the sake of the very Constitution on which John Roberts has clearly turned his back.

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In defense of that statement, as well as the premise “that all men are endowed by their Creator with certain inalienable rights,” the signers of the Declaration pledged their lives, their fortunes, and their sacred honor.

From the Declaration of Independence, and the years of warfare which followed, came the United States of America. We quite naturally celebrate the Declaration of Independence every July Fourth as the “birthday” of this most remarkable republic.

Some argue that this nation's founding is no cause for celebration. Some argue that ours is a nation founded on slavery and birthed in corruption. Some denounce Thomas Jefferson and the rest of the Founding Fathers for owning slaves, and argue we should disown them, rejecting them and all their works—including, apparently, the Declaration of Independence.

Have any of them considered what that alternative means?

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We should acknowledge one important truth straight away: our Founding Fathers were flawed and imperfect men to say the very least.

Thomas Jefferson not only owned slaves, he carried on an extended sexual liaison with his slave Sally Hemmings, a relationship that is charitably described as exploitative. In the modern era his conduct would almost certainly result in criminal charges, and could any of us honestly say such charges would not be warranted?

George Washington owned slaves as well. He was also quite the opportunist, and a social climber who had anger management issues. A good deal of his antipathy towards Great Britain almost certainly stems from being denied a commission in the regular British Army and the social status it would have conferred. There is no small irony that the leader of a rebellion premised on human equality longed to be numbered among the elites in an aristocratic society patterned on prevailing presumptions of human inequality.

John Adams did not own slaves, but he was intelligent and irritating in very nearly equal measure. He was blunt, frequently tactless, and notoriously prickly and thin-skinned. He was frequently impatient with his fellow delegates. He was often abrasive and obnoxious. To say his was not the temperament of a politician would be an understatement!

John Hancock made his fortune in colonial shipping. In other words, he was a smuggler who was quite successful at evading British taxes and customs duties. In the 1760s he was even charged with smuggling. He likely would have been convicted but for the lawyerly brilliance of none other than John Adams.

Ben Franklin was renowned in his day as a ladies man. His son William was born out of wedlock. Some modern moralists would denounce him as a womanizer and misogynist.

These are the historical realities of the men who authored the Declaration of Independence and then fought for the freedom they claimed as theirs.

Were our Founding Fathers “good men”? Again, modern moralists frequently argue that they were not, and that their negative traits warrant excising them from our historical memory, along with all their works.

We can honestly acknowledge the sins of the Founding Fathers. We can honestly acknowledge that Thomas Jefferson's conduct with Sally Hemmings was indefensible. We certainly should not pretend that our Founding Fathers were perfect when they so clearly were not.

Yet if we do as some would suggest and reject all these flawed and imperfect men did with their lives, where does that leave the Declaration of Independence and its pronouncements of human equality and human liberty?

If we reject the Declaration of Independence, including its statement that all men are created equal, are we also rejecting the premise that all men are created equal? If we cast out the Declaration of Independence, are we saying Man does not have inalienable rights?

Is that really an argument we want to make?

Some will argue that Thomas Jefferson especially was a hypocrite, that he did not actually believe what he wrote. Even if we assume that to be true for the sake of argument, does his lack of belief invalidate the premise that all men are created equal?

Do we conclude from Jefferson's presumed hypocrisy that men are not created equal?

Do we conclude from Jefferson's presumed hypocrisy that we do not possess the inalienable rights of “Life, Liberty, and the Pursuit of Happiness“?

We do well to consider the world that would leave us.

Do we want to live in a world where all men are created equal, or do we desire a world with aristocratic inequality?

Do we want to live in a world where freedom is an inalienable right, or do we desire a world where freedom is given or taken at the whimsy of government?

Do we desire society in which rights and liberties come from the hand of God, or a society where rights and liberties are defined by the problematic generosity of government?

Do we desire a society which aspires to universal human equality, or a society where a person's worth is defined by the arbitrary accidents of birth?

The Founding Fathers were not saints, and we would do violence to their legacy to pretend that they were. Yet we would do greater violence to their legacy to pretend that their human failings somehow render the truth of the Declaration of Independence false.

We would do great violence to ourselves to take seriously the proposition that the Declaration of Independence, along with its declarations of human worth and human liberty, should be discarded simply because its authors were flawed and imperfect human beings.

We do well to remember we are all flawed and imperfect. Our Founding Fathers were certainly no better than we are, but it strains credulity to seriously suggest they were somehow worse.

We do not need to debate whether the premise that all men are created equal is true. All men are indisputably created equal.

We do not need to debate whether the premise that all men are endowed by their Creator with certain inalienable rights is true. All men are indisputably endowed by their Creator with certain inalienable rights.

What we also cannot debate is that the Declaration of Independence was the first time human equality and the inalienable rights of men were proposed as the foundation for an actual government. The Declaration of Independence was never just a statement of political theory; it has always been a statement putting political theory into political practice.

Despite the flaws and failings of this nation’s Founding Fathers, the Declaration of Independence marks the first time these self-evident truths were put forward as the aspirational basis for human government. The Declaration of Independence stands as a powerful and historic declaration of what government should strive to be.

For 250 years, the Declaration of Independence has been this country’s highest aspiration, and our fondest hope.

Despite the flaws and failings of this nation’s Founding Fathers, the aspiration that is the Declaration of Independence warrants celebration, not just on the Fourth of July, but on every day throughout the year.

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The common thread in both jobs reports: Job growth slowed in June. ADP reported 98,000 jobs created, down from 122,000 jobs in May.

The BLS jobs report showed an even greater cooling of labor markets, with job growth slowing to 57,000.

Both total nonfarm payroll employment (+57,000) and the unemployment rate (4.2 percent) changed little in June, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in professional and business services, social assistance, and health care. Leisure and hospitality lost jobs.

Both numbers were well below Wall Street as well as Trading Economics projections. Wall Street had anticipated ADP would report 113,000 jobs created in June.

Wall Street had similar expectations for the BLS jobs report at 110,000 jobs.

The job growth was there, just much less of it than was forecast.

Neither the ADP nor the BLS jobs reports are, on the surface, particularly bad jobs reports. Both reports are considerably cooler snapshots of US labor markets than we have seen in recent months.

While the headline numbers for both reports are not altogether bad numbers, when we delve into the details we quickly see that labor stumbled in June, with a number of sectors shedding jobs rather than adding them.

The June job reports are not altogether bad reports, but the strength of the overall jobs numbers cannot conceal the reality of continuing weaknesses within US labor markets.

We may not be backsliding into a jobs recession…yet. We are still very much at risk of a return to jobs recession, and without a lot of advance warning.

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May JOLTS Was Right About Downward Revisions

One the more significant cautionary notes found in the May JOLTS data was the warning signal that the Employment Situation Summary may be about to experience significant downward revisions.

That warning signal proved to be prescient, for the June ESS had major downward revisions for both April and May.

The change in total nonfarm payroll employment for April was revised down by 31,000, from +179,000 to +148,000, and the change for May was revised down by 43,000, from +172,000 to +129,000. With these revisions, employment in April and May combined is 74,000 lower than previously reported.

This abrupt elimination of 74,000 previously reported jobs erased last month’s achievement of year to date job revisions printing positive.

Total year to date revisions to the jobs data is now down 8,000 jobs.

The June jobs report gives us another warning signal as well: signs that Lou Costello Labor Math is still lurking within the overall data set, as the Employment Level from the Household Survey once again broke with from the All Employees metrics within the Establishment Survey.

Given that both the Household and Establishment Surveys are supposed to be measuring the same overall data—the American labor force—we should expect similar growth trends within both surveys. In June the Employment Level dipped again in a clear divergence from the All Employees trends.

When the two surveys are not reporting similar trends, we must be cautious about what to make of the data.

Sector Results Were Uneven

ADP’s Chief Economist Dr. Nela Richardson summed up the sector results for both the ADP and BLS data sets succinctly as a slowdown in job growth.

The pace of hiring is telling a story of both supply and demand. We know it’s taking people longer to find work, but there also are signs of labor supply constraints in certain industries. For now, the overall effect is a slowdown in job creation.

While the headline numbers were not bad—the ADP headline number would have been quite good were it not a climbdown from May’s much stronger figure—they obscure the weakness reemerging in several sectors. Several sectors lost jobs in June, according to the ESS.

ADP was more optimistic, although there is still a clear cooling trend in the data.

The BLS data for manufacturing was again one of the brighter spots in the ESS report. Although the downward revisions wiped out the past two months’ positive job numbers for the manufacturing sector, the June data still showed job growth for the sector.

ADP showed manufacturing job growth gaining steam in June.

The ESS print shows Leisure as the worst performing sector in June, shedding a shocking 61,000 jobs.

From the revised May figure of 40,000 jobs created, in June Leisure job growth suffered a 100,000-plus shift from job creation to job destruction.

ADP tells a different, more muted, job growth story for the Leisure sector, printing job growth of 2,000 jobs in June.

Leisure job growth cooled in June, but it did not go into the deep freeze reported on the ESS.

The ESS and ADP reports also differed in jobs numbers for Information as well as Financials Services. In June ESS printed 0 job growth for Finance and 9,000 jobs lost for Information. ADP reported 14,000 jobs for Finance and 9,000 for Information.

One sector were the ESS and ADP data largely agree is Mining, which the ADP report prints as losing 5,000 jobs, and the ESS printing job loss of 4,000.

Both the ESS and the ADP reports show Healthcare returning to its status as the dominant sector for job growth, with the ESS printing 69,000 jobs in June and ADP printing 48,000 jobs.

Where the reports differ on Healthcare is ADP shows the job growth cooling in recent months, while the ESS report shows Healthcare having something of a rebound in June.

Overall, while both jobs report show job growth cooling in June, the ESS data is the more pessimistic not only in showing less job growth, but also in a cooling trend from peak job growth in March. The ADP data shows stronger job growth as well as job growth at a peak in May before cooling in June.

The one aspect of job creation for the US where the reports are clearly in agreement is that job growth for June was more uneven than was reported in April or May—although with revisions the Employment Situation Summary is proving to have been more uneven than originally reported, to the surprise of exactly no one (at least, no one who follows my work!).

The ESS in particular has snatched part of the employment rug out from under everyone’s feet, taking back a substantial portion of the glowing job growth narrative of the past two months. We still have job growth, we still have manufacturing job growth, but we have quite a bit less than we have been told in both April and May.

Employment Level Declined Again

A major warning signal coming from the Employment Situation Summary is the decline in the overall Employment Level, which declined by some 507,000 individuals in June.

May apparently was a brief hiatus from a decline in overall employment from a December 2025 peak.

If we look at just the Employment Level data from the ESS’ Household Survey, we would see employment declining throughout 2026 to date, with only last month showing any respite from the contraction in the employed labor force.

The Employment-Population Ratio shows a much longer-term decline, beginning back at the end of 2023.

For all the reports of job growth in the ESS’ Establishment Survey data, the Household Survey continues to tell a tale of fewer and fewer people working over time, and a smaller segment of the population.

The Establishment Survey data might spin an optimistic narrative of job growth and jobs recovery within the US economy, but the Household Survey is challenging the jobs recovery narrative.

Declining Joblessness?

Despite the grim outlook on the nation’s overall employment level, unemployment actually dropped in June, in both the official and “real” unemployment rate metrics.

Both gauges of unemployment fell by approximately a tenth of a percentage point. The official unemployment rate fell from 4.3% to 4.2% in June. The real unemployment rate, still higher as I include with the unemployed people those not in the labor force but who want a job now in calculating that percentage, dropped a little bit more, from 7.61% to 7.45%.

Looking at the reported numbers of unemployed individuals, official unemployment for June declined in this country by 213,000 people.

Even the number of people not in the labor force but who want a job now dropped in June by 142,000.

Paradoxically, even as the Household Survey shows fewer people working, it also shows fewer people not working but still looking for work.

However, while the cohorts of people not working but looking for work declined, the overall number of people not in the labor force rose in June, surging by 832,000.

These are curious trends, and disturbing trends. Taken as a whole they suggest that people who lose their jobs are, in increasing numbers, simply giving up on working.

That is not a healthy trend for any economy. Is the United States seeing a labor phenomenon similar to the “lying flat” trend among younger Chinese workers? The data tells us that may be exactly what is happening.

Wage Growth Disappoints Overall

Paychecks proved another disappointment in the June ESS. While wage growth is still occurring, in June it appears to have continued the recent trend of losing ground to inflation once again.

We have yet to see the June CPI print, but unless it flatlines for the month, wage growth will still prove to have been less than inflation.

When wages can't keep up inflation becomes a major economic concern as well as a political one. With less money to spend relative to rising prices, workers’ overall consumption is restrained, and that means economic growth is constrained.

Since the start of Operation Epic Fury and the war with Iran, wages have not kept pace with inflation. That does not augur well for overall consumption in the second quarter. With less real income, people overall have less means for consumption, which will push down economic growth in this country.

In another demonstration of how uneven the June jobs data is, the changes in nominal pay became more highly volatile during the month.

Curiously, or perhaps a reflection of the broader implications of shifting job growth numbers among sectors, the sectors who lost jobs showed the most wage gain, while the sectors showing job growth also printed slower wage growth.

Strictly speaking, wages are the “price” of labor. If labor demand is falling in a particular sector, as evidenced by job loss for the month, then we would expect to see slower wage growth as well.

In the real world, wages are a good deal less elastic. It is quite possible the shifts in wage growth are at least in some measure a direct consequence of May’s job growth numbers.

Continuing Jobs Recovery Or Slide Back Into Jobs Recession?

The overarching question surround the jobs data is whether or not we are seeing a continuing jobs recovery, or seeing labor markets in the US slipping back into recession?

While the June jobs data shows a slowdown in job growth, it still shows job growth. Relative to prior months, the June data still shows fairly robust jobs growth. Before March, an ESS jobs print of 57,000 jobs would have been unanimously viewed as a strong jobs report. We would have said the same thing about an ADP print of 98,000 jobs for the month.

Even after the robust job increases of April and May, both the ADP and ESS reports are still respectable reports showing in the aggregate respectable job growth.

Yet the data remains troubling. Any month where the Household Survey data diverges from the Establishment Survey data is a month where we must take all the data with an extra large grain of salt, as Lou Costello Labor Math means the overall numbers do not add up.

June was a month where the Household Survey diverged from the Establishment Survey. The numbers do not add up.

As robust as job growth numbers have been recently, wage growth remains a disappointment, as rising inflation is overwhelming increases in workers’ paychecks.

Are we seeing a continuing jobs recovery, or are we seeing labor markets in the US slipping back into recession?

On the strength of just the June data, it would be premature to call an end to the nascent jobs recovery we have seen over the past few months. The sector level numbers are in many sectors a disappointment, but other sectors did very well, more than compensating for job losses elsewhere. Wage growth is again a disappointment, but largely because of rising inflation pressures undercutting wage gains.

At the same time, the jobs data is warning us that all is far from well in US labor markets. The jobs data is telling us that the employed labor force is declining, and that workers as a percentage of the overall population are declining. The jobs data is indicating that if workers leave the labor force, they are giving up on working altogether.

Are workers choosing “lying flat” over searching for a job? That is certainly one interpretation of the data. If we see similar shifts among the civilian labor force and those no longer in it, we may have to pay particular attention to that interpretation.

The June jobs data shows cooler job growth than in May, by a wide margin. On just about every metric, June was a worse month for jobs than May.

The June jobs numbers are technically “not bad”, but the June jobs reports make it clear that labor stumbled. That’s never a good shift in the narrative, and if the numbers do not move back in the direction of more robust job growth over the coming months, it could mean that the jobs recovery is already petering out, and a jobs recession is coming back into the picture.

A return to jobs recession is of course a bad thing, and that would make the June jobs reports bad reports. We are not there yet, but we have moved away from where we can say the reports are unambiguously good reports.

Labor stumbled in June. Hopefully labor stumbles only in June.

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No such intersovereign concerns apply to children born of parents unlawfully or temporarily present in the United States; no foreign sovereign would “have any motive for wishing” them outside this Nation’s authority. Ibid. Those children are thus subject to the jurisdiction of the United States. They satisfy both elements of the Citizenship Clause: they are “born . . . in the United States” and “subject to the jurisdiction thereof.” Under the Constitution, they are citizens at birth

Roberts is wrong.

Roberts is wrong on the history.

Roberts is wrong on the law.

Roberts is wrong on the Constitution.

This is what happens when judges let politics triumph over the law.

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With nearly two hundred pages of rambling and functionally irrelevant dicta, Roberts sought to conceal that he was not ruling on the law but rather enacting his own views into law. The Roberts ruling in Trump v Barbara is the worst example of judicial activism in decades.

For the Chief Justice of the United States, that is an especially noxious judicial sin. Roberts completely cast aside the standard of judicial review laid down so eloquently by Chief Justice John Marshall over two centuries ago in Marbury v Madison2:

It is emphatically the duty of the Judicial Department to say what the law is.

It is not the duty of the courts to say what the law should be. Roberts forgot this, to his eternal shame and humiliation.

I have written at some length on the topic of birthright citizenship, most recently to defend President Trump’s Executive Order 14160. During President Trump’s first term of office, I contemplated what was then only a proposed Executive Order in light of the Court’s ruling in Wong Kim Ark3, until now the main pillar of judicial reasoning on the citizenship clause of the Fourteenth Amendment. I have also scrutinized how to read the phrase “subject to the jurisdiction.”

Unlike John Roberts, I based my analyses on the actual text and the actual history of the Fourteenth Amendment, and the legal principles upon which it is based. My writings on this topic stand, and I am quite confident they are a superior treatment of the issues than Roberts’ 194 pages of juridical posturing. I invite everyone to read them, critique them, and challenge me on them.

That John Roberts is wandering down the path of politics is immediately evident with the beginning of his rationalizations. After a brief and perfunctory recitation of the issues in the case, Roberts immediately jumps off the judicial reasoning train to drag the infamous but irrelevant case Dred Scott v Sandford4.

To understand the Citizenship Clause of the Fourteenth Amendment, it is first necessary to understand the context in which it arose—and the opinion of this Court, Dred Scott v. Sandford, 19 How. 393 (1857), that it rejected.

This is categorically false.

Dred Scott has no overlap with Trump v Barbara, not on the facts and not on the law.

President Trump’s Executive Order 141605 made no pretense that citizenship was derived from a person’s race or ethnic makeup. The Court was not asked to rule that citizenship was so derived.

Dred Scott has absolutely no legal relevance to the particulars of President Trump’s Executive Order. The only purpose dragging that infamous ruling into the present case is to confuse and conflate the issues, to argue—falsely—that there is some racial or ethnic animus behind EO 14160.

Rather than simply ruling on Trump’s EO, John Roberts decided to “settle” the question of birthright citizenship once and for all in a burst of hubris on par with Roger Taney’s infamous arrogance in issuing the indefensible Dred Scott v Sanford ruling which declared that black people could have no rights under the Constitution.

Taney’s effort to “settle” the question of slavery in the United States propelled the country down the path towards the Civil War. We should be gravely concerned that Roberts’ effort to “settle” the question of birthright citizenship may suffer a similarly ignominious fate.

Having thus gone to great lengths to muddy the legal waters of this case, Roberts then goes on to fundamentally misstate much of the history on citizenship within English common law upon which American common law is built. Justice Clarence Thomas repeatedly calls Roberts out for his errors of fact in his very excellent dissenting opinion6.

Most crucially, Roberts overlooks the crucial consensus within English sources that birthright citizenship does not attach when the parents are “alien enemies” in conflict with the host nation.

Wong Kim Ark explicitly acknowledged this:

The real object of the Fourteenth Amendment of the Constitution, in qualifying the words, “All persons born in the United States” by the addition “and subject to the jurisdiction thereof,” would appear to have been to exclude, by the fewest and fittest words (besides children of members of the Indian tribes, standing in a peculiar relation to the National Government, unknown to the common law), the two classes of cases -- children born of alien enemies in hostile occupation and children of diplomatic representatives of a foreign State -- both of which, as has already been shown, by the law of England and by our own law from the time of the first settlement of the English colonies in America, had been recognized exceptions to the fundamental rule of citizenship by birth within the country.

Let me reiterate this point, as Roberts chooses to pretend it does not exist: children born of alien enemies in hostile occupation have never been considered to receive birthright citizenship.

The concept of the enemy alien is pivotal to the correct view of the Fourteenth Amendment, and we need to be clear on the meaning of the term7:

In customary international law, an enemy alien is any native, citizen, denizen or subject of any foreign nation or government with which a domestic nation or government is in conflict and who is liable to be apprehended, restrained, secured and removed.

As I have stated previously, any person who illegally enters any country clearly has a conflict with that country. The very act of illegal entry is a defiance of the laws of that country. That is conflict by definition.

In every sense of the term, an “illegal alien” is by definition also an “enemy alien”. That much is easily seen when one reviews the legal foundations behind President Trump’s use of the Alien Enemies Act to remove transnational gang members from the United States.

The Alien Enemies Act has been a fixture of US law for far longer than has the Fourteenth Amendment. Unlike the citizenship clause of the Fourteenth Amendment, the Alien Enemies Act is indisputably settled US law.

What makes Roberts’ legal confabulations in Trump v Barbara especially perplexing is that the Supreme Court upheld President Trump’s proclamation declaring the transnational gang Tren de Aragua a foreign terrorist group that had “invaded” the United States8. At the very least, the Supreme Court has already upheld the notion that “illegal aliens” can be declared “alien enemies”.

Remember, even under English common law antecedents, enemy aliens do not endow their offspring with birthright citizenship.

Further, even if one blanches at the thought of recognizing all illegal aliens as enemy aliens, the realities of lacking legal status still lead to the same end point that illegal aliens cannot endow their progeny with birthright citizenship.

As Clarence Thomas argues eloquently in his dissent, any person in this country on a transient, temporary basis is not domiciled in the United States, and so birthright citizenship cannot attach to their offspring.

The United States thus did not claim as a citizen every child born on its soil. Instead, pursuant to the principle that children followed their parents’ domicile, a child was a citizen of the place where his parents were domiciled. “[A] child born of foreign parents is not, on principles of natural reason, necessarily to be considered as a citizen of the country where he is born.” 1 Tucker 57 (emphasis deleted). If he was “born in the country,” but “both his parents were strangers not designing a permanent change of country,” then he was “as much a stranger to the country as his father.” Ibid. The rule was that “when a subject is traveling or sojourning abroad,” he “continues under the protection of ” his home nation, so “his children” are “an exception to the rule which makes the place of birth the test of citizenship.” Ludlam v. Ludlam, 31 Barb. 486, 503 (N. Y. Gen. Term 1860); see also 37 Annals of Cong. 599 (1820) (statement of Rep. Hemphill) (for “citizenship” to be “acquired by birth,” a child must be born to “parents belonging to no other nation or tribe”); Hardy v. De Leon, 5 Tex. 211, 236–237 (1849) (a child born on American soil to parents domiciled in the then-Republic of Texas was a citizen of Texas); Political Code of New York §5 (1860) (citizenship requires “domicil[e]” and excludes “children of transient aliens”).

Any illegal alien is by definition always at risk for immediate deportation from the United States. By definition every illegal alien is also a “transient alien”. Consequently they cannot claim to be domiciled in the United States and therefore they cannot endow their offspring with birthright citizenship.

We must remember that this was the clear and explicit understanding of the Senate during the original debate on the passage of the Fourteenth Amendment. The Senator who introduced the Amendment, Jacob Howard, made that absolutely clear:

I do not propose to say anything on that subject except that the question of citizenship has been so fully discussed in this body as not to need any further elucidation, in my opinion.

This amendment which I have offered is simply declaratory of what I regard as the law of the land already, that every person born within the limits of the United States, and subject to their jurisdiction, is by virtue of natural law and national law a citizen of the United States.

This will not, of course, include persons born in the United States who are foreigners, aliens, who belong to the families of ambassadors or foreign ministers accredited to the government of the United States, but will include every other class of person.

Whether we view the illegal alien as an enemy alien, as has been explicitly done for transnational gang members, or as a transient alien, as Senator Howard clearly did in 1866, the end result is the same: no birthright citizenship accrues to their offspring.

In both perspectives, birthright citizenship for the children of illegal aliens is a clear Constitutional impossibility. It cannot happen, and it has never been understood to happen, not once in over three centuries of both English and American common law.

This is the irredeemable defect of Roberts nearly 200 pages of juridical pretense and posturing: he contorts and distorts clearly settled points of common law to impose a meaning on the citizenship clause of the Fourteenth Amendment that it does not have and has never been understood to have.

Roberts’ ruling is not the law according to the United States Constitution. Roberts’ ruling is the law according to John Roberts.

Earlier I cited Chief Justice John Marshall’s seminal quote from Marbury on the role of the courts. That John Roberts has so clearly abandoned this well established understanding of judicial review within American jurisprudence leaves us with an uncomfortable truth encapsulated by another quote from Marbury:

…the theory of every such government must be that an act of the Legislature repugnant to the Constitution is void.

Just as the Congress and the Executive Branch are guided and constrained by the Constitution, so too are the courts. That was the explicit conclusion of Marbury.

If acts of Congress which are contrary to the Constitution are void on their face, if Presidential actions which are contrary to the Constitution are void on their face, then it must also be that court rulings—even those of the Supreme Court—which are contrary to the Constitution are void on their face.

There is no dispute to be had that Roberts’ ruling is contrary to the Constitution. There is thus no dispute to be had that Roberts ruling is void on its face.

Corporate media will pretend otherwise, and the popular narratives will present otherwise, but the fatal flaws of Roberts’ ruling mean that, by clear precedent and by the clear text of the Constitution, it cannot stand and it cannot overturn President Trump’s Executive Order.

Roberts’ ruling defines a political reality in which President Trump’s Executive Order 14160 has been overturned. The legal reality, which everyone will conveniently ignore, is that nothing has been overturned. Executive Order 14160 is still in full legal force. Birthright citizenship is still legally denied the children of illegal aliens.

Before a court ruling can enjoy the operative force of law, it must accurately and honestly state what the law is. That has been the standard for the American judiciary since John Marshall and Marbury v. Madison.

That is the standard Roberts abandoned with this ruling.

Instead of stating what the law is, John Roberts stated the law as he wished it would be. In so doing, he only managed to void his own ruling.

This is what happens when Supreme Court justices let politics triumph over the law.

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The number of job openings was unchanged at 7.6 million in May, the U.S. Bureau of Labor Statistics reported today. Hires were unchanged at 5.2 million, while total separations changed little at 5.1 million. Within separations, quits (3.1 million) changed little, while layoffs and discharges (1.7 million) were unchanged.

If we take the JOLTS report at face value, job markets in this country hardly change ever.

My advice: do not take the JOLTS report at face value.

On the surface, the JOLTS report appears strong, with job openings printing well above Wall Street projections, and even above Trading Economics more optimistic forecast.

What that seemingly robust job opening number obscures is the significant drop in private net hiring during the month of May.

What that seemingly robust job opening number obscures is the rise in separations during the month of May.

What that seemingly robust job opening number obscures is the fact that net hiring is significantly less in each job sector than the change in the All Employees data from the Employment Situation Summary. While not proof positive, the weak JOLTS net hiring is a warning signal there may be a major downward revision to the All Employees data in the near future.

For all the corporate media hooplah over job openings, the weak net hiring data suggests the May JOLTS report may be much ado over not very much.

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Corporate Media Loves Job Openings, All But Ignores Net Hiring

The number of new job openings is indisputably an optimistic number when it comes to jobs in this country. An employer posting a job opening presumably is a company hoping to expand its payroll, or at least sustain it.

When that job opening does not soon translate into actual hiring, the job opening might as well not even exist.

The Associated Press, as is the case with nearly all corporate media, ignores this simple reality in favor of pushing Wall Street’s preferred narrative that job openings tell the tale on US job markets. We can see that much just in their headline regarding the preferred narrative.

One has to get to the fourth paragraph before the AP report acknowledges that private net hiring is anemic at best.

Employers are advertising openings, but they aren’t actually doing much hiring. Gross hiring — before counting people who lost or quit their jobs — dipped to 5.17 million in May from 5.26 million in April. When the job market was booming from mid-2021 to mid-2023 after COVID-19 lockdowns, gross monthly hiring regularly topped 6 million.

Reuters buried the possibility the JOLTS report is signalling a downward revision on May jobs in the bottom half of its reporting on the BLS release.

“We were surprised to see the total hiring rate unchanged and the private hiring rate decline again in May despite stronger May job growth,” said Veronica Clark, an economist at Citigroup. “This could mean possible revisions lower to May data or weaker net job growth could reflect actions taken in the second half of May. This would suggest softer June employment.”

CNN, still the Most Busted Name In Fake News, once again lived down to its reputation by ignoring the drop in net hiring. Their take extrapolated solely from the job opening numbers to pronounce US jobs markets are still very robust.

“The hiring recession is over, and we are starting to see more industries look for workers again, and that’s really good news,” Heather Long, chief economist at Navy Federal Credit Union, told CNN in an interview Tuesday.

With the May Employment Situation Summary being the third consecutive strong jobs report, even I have considered the possibility that the jobs recession is now over.

However, such speculation should not blind us to the reality that a drop in net hiring on the JOLTS report is a signal that perhaps the jobs recession is not quite over. The JOLTS report is a signal we should not blithely ignore.

Job Openings Still Not Real

As wonderful as a high job openings number sounds—and 7.6 million job openings absolutely sounds wonderful and optimistic—the unalterable reality of the data is those job openings are not translating into actual hiring. We can see that just from the headline data itself.

What is frequently ignored is that the job openings data has printed well above hiring and separations ever since the start of the Biden Reign of Error, which is a marked change from pre-Pandemic Panic data.

If we strip away the job openings data, the hiring and separations data loses quite a bit of its luster.

Hiring and separations have been more volatile in recent months, but the longer term trend since the start of the Trump Administration 2.0 in January 2025 is still slightly down. March was the strongest hiring period in that time, but it comes on the heels of the worst hiring period, which was February.

As optimistic as 7.6 million job openings sounds, the reality is that net hiring is still not even attempting to fill that many openings, rendering most of them effectively unreal.

Net Hiring Declined Overall

One undeniable bright spot in the JOLTS report was that Manufacturing held its own, once again printing 10,000 net hires in May.

Leisure and Hospitality rebounded in May, with its net hiring of 47,000 very nearly equaling its March level.

Professional and Business Services had perhaps the best results, as its net hiring of 37,000 was its best result since April of 2025.

Construction, on the other hand, shed jobs in May according to the JOLTS report.

Healthcare also did not fare well on the May JOLTS report, shedding jobs in what has been a steady decline since January 2026.

Net Hiring for Trade Transportation and Utilities (TTU) simply vanished for May.

TTU shed jobs throughout most of 2025, and April was the first time since the start of Trump Administration 2.0 that TTU net hiring printed consecutive months of job growth.

Taken together, net hiring across all private sectors plunged from 173,000 jobs in April to just 34,000 jobs in May.

With the Employment Situation Summary having printed private sector job growth of 120,000 jobs in May, the JOLTS report is quite a bit less optimistic. The disparity between the ESS and JOLTS reports—86,000 jobs—is the largest such gap since February 2025.

There are good reasons to fear a major downward revision coming to the Employment Situation Summary data. Those same reasons also warn us the jobs recession perhaps is not quite over after all.

We do not want to abandon the jobs recovery narrative on the basis of one weak report in one month, just as we would not want to declare a jobs recovery on the basis of one strong report in one month. Still, we do well to be mindful of the possibility the jobs recovery was just a flash in the pan.

Openings Are The Least Important Data

Contrary to what Wall Street insists and what corporate media promotes, the job openings data itself is the least important data set in the entire JOLTS report.

When hiring responds to job openings, that data can be a useful leading indicator of where hiring might be heading. The data shows that, since the COVID Pandemic Panic of 2020 especially, hiring has not responded to job openings. Even worse for the job openings data is the reality that, since late 2014, job openings have not only exceeded hiring and separations, but that gap has grown steadily wider.

Perhaps most damning of all for the job openings data is that, from 2001 through 2014, the job openings number was consistently below hiring and separations.

The simple reality of job openings is that not a single job opening has economic significance until it is filled.

A job opening is not an expansion of payroll—a paycheck is.

A job opening is not a reduction in unemployment—a new hire is.

In the May JOLTS report, the least important number rose, while the most important number fell.

That is a warning sign. The data is reminding us that, for all the positive job growth data over the past few months, much about US labor markets remains unwell and unresolved.

The May JOLTS report is not a horrible report. Arguably it is not even a bad report.

It is a report that printed net hiring of 34,000 in May. That is still job growth, and that is very much a good thing, but 34,000 is quite the climbdown from 173,000.

That cooling off to the tune of 139,000 jobs not filled precludes the possibility the May JOLTS report is an indisputably good report.

There is some good in the May JOLTS report, but there is considerable bad as well.

Pay attention to both.

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The fourteen-point Memorandum of Understanding was simultaneously clear on what would be negotiated and vague on the final outcomes, other than there was to be peace both in the Persian Gulf and in Lebanon.

Except peace never really emerged in Lebanon, and it is now fading rapidly in the Persian Gulf, as tit-for-tat media announcements metastasizes into tit-for-tat drone and missile strikes.

Is there still a ceasefire at this point? With escalating strikes between the US and Iran, that is a dubious assertion at best. Perhaps the ceasefire and peace talks are technically still in place, but the renewed exchange of drone and missile fire is hardening Iranian positions and attitudes, pushing the prospect of a final peace deal farther and farther beyond easy reach of negotiators on both sides.

A more honest appraisal arguably would be that the peace deal has been in slow-motion collapse almost since the completion of the Memorandum of Understanding ten days ago.

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Is Iran Reading The Same MOU?

From the moment the memorandum itself was announced, and even before its terms were made public, Iran and the United States had wildly different views on what the memorandum stated, with each side quick to contradict the other.

Even as the Memorandum of Understanding was being accepted two weeks ago, Iran was claiming the MOU was vastly different from President Trump’s depiction. Initially, Iranian media outlets were circulating no fewer than three different claimed versions of the MOU.

The disparity between Iranian and American depictions of what was in the Memorandum did not stop pro-Trump media outlets such as Breitbart from triumphantly proclaiming the war to have ended.

Yet even as pro-Trump outlets were taking a victory lap over the MOU, Iran was asserting the MOU was something very much different from what had been reported, in particular reasserting its persistent claim it can charge a toll on shipping navigating the Strait of Hormuz.

Vessels that cross the Strait of Hormuz will need a mandatory insurance policy that is currently free but could have a cost in the future, the country’s Persian Gulf Strait Authority (PGSA) said in a document on its website. It also said that ships must follow its prescribed route, instructions that appear to run counter to guidance late Thursday by western naval groups, which advised ships to hug the Omani coast.

Point Five of the published terms of the Memorandum do not support Iran’s contention:

5 — Upon signing this Memorandum of Understanding, the Islamic Republic of Iran will immediately take steps to ensure that the movement of merchant ships from the Persian Gulf to the Sea of Oman and vice versa is resumed within 30 days to the pre-war volume, taking into account the need for the removal of technical obstacles and the neutralization of mines by Iran.

Also contradicting Point Five was the recurring IRGC demand for an upfront release of frozen Iranian assets, before even any substantive talks took place.

The Strait of Hormuz should not be reopened until several conditions under the Iran-US MoU are met, among them the release of at least $12 billion in Iranian assets, the implementation of oil sanctions waivers, and Israel’s withdrawal from Lebanon, the IRGC-affiliated Tasnim News said on Saturday.

This was a contention that has been rejected by President Trump every time it has been raised.

In a reference to criticism over the deal from both sides of the political aisle in Washington, President Trump reiterated his insistence in his Friday post that Iran would “get no money, not ten cents!” under the deal signed this week.

When Vice President JD Vance intimated that frozen assets might be released to allow Iran to purchase needed humanitarian supplies for the Iranian people from the US, the Iranians were quick to insist that no strings would be attached to the release of any Iranian assets.

The dichotomy began pushing tensions to a breaking point when Iran rejected the idea of discussion inspections of its nuclear facilities by the International Atomic Energy Agency.

US Vice President JD Vance said the talks with Iranian officials in the Swiss mountain resort of Buergenstock laid a good foundation for a final accord and that Tehran had agreed to allow nuclear inspectors back into the country.

But Iran denied it had begun discussions on its nuclear program at the talks, mediated by Qatar and Pakistan, and said it had not agreed to invite back International Atomic Energy Agency inspectors.

IRAN SAYS IT WILL DECIDE ALONE ON ASSETS’ USE

Foreign Ministry spokesperson Esmail Baghaei said on Tuesday Iranian officials had not held a meeting with IAEA chief Rafael Grossi in Switzerland and had no plans for the UN nuclear watchdog to inspect Iran’s damaged nuclear ‌facilities.

We should take careful note that the Nuclear Non-Proliferation Treaty, of which Iran is a signatory, obligates non-nuclear states such as Iran to submit to IAEA inspections to ensure treaty compliance.

Each non-nuclear-weapon State Party to the Treaty undertakes to accept safeguards, as set forth in an agreement to be negotiated and concluded with the International Atomic Energy Agency in accordance with the Statute of the International Atomic Energy Agency and the Agency’s safeguards system, for the exclusive purpose of verification of the fulfilment of its obligations assumed under this Treaty with a view to preventing diversion of nuclear energy from peaceful uses to nuclear weapons or other nuclear explosive devices. Procedures for the safeguards required by this Article shall be followed with respect to source or special fissionable material whether it is being produced, processed or used in any principal nuclear facility or is outside any such facility. The safeguards required by this Article shall be applied on all source or special fissionable material in all peaceful nuclear activities within the territory of such State, under its jurisdiction, or carried out under its control anywhere.

Iran’s leaders are simply ignoring both past and present treaty commitments as part of its overall negotiating posture.

At no point have Iranian and US depictions of the peace talks taking place in Switzerland aligned with each other. So wide is the disparity one has to wonder if the negotiators are actually talking with each other.

Iran Broke The Ceasefire?

With both sides clearly talking past each other publicly, the question of the 60-day ceasefire initiated by the Memorandum breaking down has perhaps always been more of “when” rather than “if”.

Even so, tensions began to mount when reports emerged from UK Maritime Trade Operations of fresh attacks on ships transiting the Strait of Hormuz.

The UK Maritime Trade Operations (UKMTO) previously reported that a vessel was struck by “an unknown projectile” while operating off the coast of Oman, but did not attribute the attack to any particular nation-state or actor. The UKMTO, which is operated by the British Royal Navy, said the projectile damaged the bridge of the vessel but reported no injuries or environmental impact as a result of the attack.

When reached for comment about the attack, a U.S. official said Iran’s Islamic Revolutionary Guard Corps launched a drone at the vessel in question.

The U.N. International Maritime Organization paused its operation to escort ships through ‌the Strait of Hormuz on Thursday after Iranian forces attacked a cargo vessel in the Strait of Hormuz a day before.

Perhaps predictably, the United States responded with strikes on Iranian targets near to the Strait.

U.S. aircraft struck Iranian missile and drone storage locations and coastal radar sites after Iran hit M/V Ever Lovely on June 25 with a one-way attack drone. The Singapore-flagged cargo ship was exiting the Strait of Hormuz along the Omani coast at the time of Iran’s attack.

The unwarranted aggression against commercial shipping by Iranian forces clearly violated the ceasefire. Furthermore, Iran’s dangerous behavior undermined freedom of navigation as commerce increasingly flows through the vital international trade corridor.

Prior to the strike, President Trump was coy about how the US would respond to the Iranian drone strike on a civilian ship. When asked if the US would respond Trump’s answer to the media was simply “you’re gonna find out.”

Shortly after Trump made those remarks, Iran really did “find out.”

In the alternate reality that is global geopolitics, this naked exchange of hostilities was not considered an abrupt cessation of the ceasefire, as various media outlets pushed competing narratives on whether the strikes were substantial or performative.

Perhaps if that had been the only exchange between the US and Iran, we could plausibly consider the ceasefire to be in place. It has not been the only exchange.

Iran Escalates, The US Escalates, Iran Escalates Its Escalation

In response to the US strikes on Iranian targets, Iran chose to escalate with a ballistic missile strike on Kuwait, according to the Kuwaiti Ministry of Defense.

The official spokesperson of the Ministry of Defense, Major General Saud Abdulaziz Al-Otaibi,

stated that the armed forces detected at dawn today two hostile ballistic missiles within Kuwaiti airspace, which were intercepted and dealt with in accordance with approved operational procedures.

No material damage or human injuries resulted from this.

The armed forces affirm their continued performance of their duties and responsibilities with efficiency and capability, within a framework of ongoing readiness and permanent preparedness, thereby enhancing the security of the homeland and preserving the safety of citizens and residents.

There were reports of an attack on a second ship in the Strait of Hormuz as well.

Almost predictably, the US has responded with another round of air strikes against Iran.

In a statement, US Central Command (CENTCOM), which directs military action in the Middle East, explained that the latest attacks came “at the Commander in Chief’s direction”.

“CENTCOM forces launched strikes today in direct response to continued Iranian aggression against commercial shipping,” the command centre wrote.

“U.S. military aircraft targeted Iranian military surveillance infrastructure, communication systems, air defense sites, drone storage facilities, and minelayer capabilities.”

Explosions were reported in southern Iran, around the village of Tahrui, near the port of Sirik, which was also the focal point of Friday’s US attacks. State media also indicated that Qeshm Island had been hit.

Iran responded by targeting Bahrain as well as Kuwait.

Iran’s Revolutionary Guards said on Sunday local time that it carried out strikes against Kuwait and Bahrain in retaliation for U.S. attacks on Iranian territory, warning any further aggression would be met with a “crushing response.”

Separately, Iranian Foreign Minister Abbas Araghchi has reiterated Iran’s claim of sovereignty over the Strait of Hormuz, asserting that Iran alone has control—and responsibility—over the Strait’s reopening.

Iran alone is responsible for managing and fully reopening maritime traffic in the Strait of Hormuz under recent understandings, Foreign Minister Abbas Araghchi said on Sunday in Baghdad.

Speaking at a news conference with Iraqi Foreign Minister Fuad Hussein, Araghchi said the reopening would take place after existing obstacles were removed and that implementation was underway.

“No other country or institution has any responsibility in this regard,” Araghchi said.

Most ominously is a recent article appearing in IRGC-affiliated Iranian news outlet Fars claiming that Iran “must” develop nuclear weapons in order to preserve peace in the Persian Gulf.

During the transition to the new order, Iran has no choice but to reach nuclear deterrence to remove the military option to occupy and break up Iran. In order to achieve the peace needed by Iran, it must be necessary to reach a nuclear deterrence to ensure that the rest of the negotiations will be resolved. Only then can the negotiation take place from the right position.

Bear in mind that Iran agreed explicitly in the Memorandum that it would never develop nuclear weapons (Point Eight).

8 — The Islamic Republic of Iran reiterates that it will never produce nuclear weapons. The Islamic Republic of Iran and the United States have agreed that the fate of enriched material and the fate of all other mutually agreed nuclear-related issues, including Iran’s nuclear needs, will be adequately addressed in a final agreement; the final agreement will confirm the provisions of this Article.

This is in addition to being a signatory to the Non-Proliferation Treaty, which further obligates Iran not to pursue a nuclear weapons program.

We must note also that Iran has not been in compliance with the NPT for many years. The origin of many of the sanctions against the regime have arisen from its refusal to cooperate with the IAEA on inspections and to otherwise confirm to the expectations of the NPT.

More War? Or A Faux Peace?

Whether the ceasefire is still in place, or whether Iran and the US have resumed hostilities probably depends very much on whom one asks the question.

Technically, the 60-day ceasefire is still in place. Technically, the Switzerland peace talks have not been suspended.

But even as the MOU was being finalized and signed, the rhetoric coming out of Tehran has been contradictory and bellicose. President Trump has been quite willing to match Tehran’s muscular warlike remarks. As the recent tit-for-tat strikes have demonstrated, both sides are willing to inflict a modicum of damage on the other, although neither side has committed to an all-out attack in the vein of Operation Epic Fury.

We might even question whether the recent exchanges between the US and Iran are a true shift, or if they are merely the inevitable progression from the contradictory and ultimately uncooperative rhetoric which has been the hallmark of the Switzerland peace talks.

We should definitely question whether either side is truly ready for peace talks, and truly wants a peaceful, diplomatic resolution to Iran’s (illegal) nuclear weapons program and (illegal) seizure of the Strait of Hormuz. If we go strictly by the events of the past week, we would be hard pressed to conclude that Iran and the US genuinely desire to have peaceful relations at this point.

Whether there is still technically a ceasefire, still technically peace talks being conducted, is becoming increasingly irrelevant as tit-for-tat attacks on each other’s strategic assets in the region escalate. At some point such back and forth attacks will escalate to the point where talk of ceasefire seems quaint; we may already be at that point.

Despite the high hopes that accompanied President Trump’s initial announcement that the MOU had been agreed and adopted, the reality has been that the IRGC especially, but broadly the whole of the Iranian government, simply does not want peace.

The Trump Administration says it desires peace, but its rhetoric has been more along the lines of making peace with the possibility of renewed war. President Trump has not shifted his initial “red lines” on Iran, most especially the absolute prohibition on Iran ever obtaining nuclear weapons.

As the peace deal continues its slow and seemingly inevitable collapse, the question of whether or not there is still a ceasefire is increasingly likely to be answered in the negative. If escalations continue, the current faux peace will eventually be acknowledged as more war.

That appears to be where this has always been headed, and we’re just now finally arriving there.

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From the preceding month, the PCE price index for May increased 0.4 percent. Excluding food and energy, the PCE price index increased 0.3 percent.

From the same month one year ago, the PCE price index for May increased 4.1 percent. Excluding food and energy, the PCE price index increased 3.4 percent from one year ago.

We know that prices are rising.

We even know why prices are rising: an oil price and supply shock after Iran illegally closed the Strait of Hormuz during the hopefully-ended war between the US and Iran.

What we do not know is how much more inflation are we likely to see. We also do not know how impactful renewed inflation will eventually be.

Corporate media continues to fret about inflation moving higher, and for the usual propaganda reasons. What corporate media overlooks is that there are signs this latest inflation cycle may have already run its course, and even more signs that the economy is not suffering as much as some have feared due to rising prices.

Inflation is rising, but is it also ending? Quite possibly, it is. At the very least, the risk of a stagflation crisis has diminished.

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Headline Inflation Continues To Rise Faster Than Core

At 4.1% year on year, there is no denying that the PCE report shows inflation continuing to heat up in the US economy.

Yet it is also important to note that core inflation—consumer price inflation with food and energy prices stripped out—continued to increase at a significantly slower pace.

Even month on month, headline inflation is rising much faster than core inflation.

Not only is headline inflation outpacing core inflation, but the margin of increase has been greater over the past three months than at any time since the start of President Trump’s second term of office.

What is frequently overlooked in most media reporting on inflation is that core inflation has been moving steadily higher since last fall, while headline inflation’s recent rise is catalyzed mainly by energy prices.

That core inflation’s rise began last fall is particularly relevant given the obvious inflation impact of the oil supply shock which began in March, when Iran illegally closed off the Strait of Hormuz. While that oil supply shock presents significant risk of stagflation for most of the world’s economies, that risk has thus far largely not materialized in the US economy. The US is seeing primarily energy prices rise from the supply shock, but is not seeing significant contagion effect, where energy price inflation catalyzes additional price increases for other goods and services.

Corporate Media Obsessed With Interest Rates

The lack of a significant stagflation crisis in the US thus far has been almost entirely overlooked by corporate media. Instead, corporate media’s concerns about rising inflation have been revolving primarily around whether or not an increase in consumer price inflation will push the Federal Reserve to raise the federal funds rate. Even before the May inflation print came out, the main concern regarding the report was how it would be received by the Federal Reserve.

The monthly PCE report is the Federal Reserve’s preferred inflation gauge. New Fed Chairman Kevin Warsh has said the central bank is committed to bringing inflation back to its 2% target — a level it has failed to reach for the past five years. Wall Street now anticipates the Fed will raise its key interest rate at least once by year’s end in a bid to counteract the stronger price growth.

By making it more expensive to borrow money, the Fed slows overall economic activity and, with it, the pace of price increases.

“Thursday’s PCE is set to take on greater importance for markets, especially since Federal Reserve Chair Warsh was emphatic in last week’s meeting about the central bank’s desire to achieve price stability, and this PCE reading could affect the market’s rate hike expectations,” Rick Gardner, chief investment officer at North Carolina-based RGA Investments, said in a statement.

Corporate media reporting after the report was released kept focusing on a narrative of rising inflation means the Fed will likely raise interest rates later this year.

The report comes a little more than a week after the Fed and new Chairman Kevin Warsh delivered what markets widely viewed as a tough talk on rates and inflation.

Warsh in particular stressed the importance of price stability, with the Federal Open Market Committee adopting language in its post-meeting statement unequivocally stating that it would “deliver price stability” after missing its 2% inflation target for five years running. In addition, officials took off a previously indicated rate cut this year and indicated a likelihood of a hike.

Axios even regarded the US economy’s seeming resilience in the face of rising inflation as a negative, lamenting how consumers were not “cracking”, but were continuing to spend and consume despite rising prices.

Inflation is bad, we are told, not because of its impact on the prices consumers must pay for goods and services, but because of what it “forces” the Federal Reserve to do with respect to the federal funds rate. What the reporting never gets around to acknowledging is that the Fed is never obligated to raise or reduce the federal funds rate.

Perversely corporate media’s focus on the inflation reports potential impact on future Fed interest rate decisions highlights the importance of newly-minted Federal Reserve Chairman Kevin Warsh’ decision to curtail most of the Fed’s “forward guidance” following the latest Federal Open Market Committee decision to stand pat on the federal funds rate. Instead of examining how the economy is responding to rising prices, corporate media—and, presumably, Wall Street overall—is keeping one eye on the Federal Reserve, looking to the Fed for guidance on what the response “should be”.

If people harbored any lingering doubts that the Federal Reserve is exerting too much influence over financial decision-making in the broader US economy, how the media covers the official inflation reports does much to put those doubts to rest.

Energy Price Inflation Largely Unchanged

While energy price inflation remained the dominant component within overall consumer price inflation, month on month energy price inflation itself did not change much.

Oil supply disruptions from the Strait’s closure are continuing to exert pressure on energy prices in the US, but that pressure did not increase significantly in May.

If anything, it is remarkable that energy price inflation did not come down in May, given the decrease in gasoline and diesel prices throughout the month.

The persistence of energy price inflation in May is even more remarkable considering the decline in benchmark crude prices.

That energy price inflation apparently has not fully captured all of the price decreases in May suggests that energy price inflation may be about to come down, particularly month on month.

Without continued energy price inflation, headline inflation cannot continue to rise at its current pace.

Food price inflation, the other inflation component outside of core inflation, certainly is not likely to push the headline index up the way energy prices have. After a significant month on month surge in April, food price inflation cooled way down in May.

While food price inflation had been rising since mid-2024, since last summer it has broadly stabilized.

Food prices are stripped out of core inflation calculations largely because of their greater volatility, just as with energy prices. Yet the fact that we are not seeing a dramatic inflation surge in food prices from the oil supply shock is the strongest signal we have that energy price inflation is not pushing up other prices, at least not yet.

For all the reporting of inflation heating up, the reality of May’s inflation report is that energy price inflation did not really change, and food price inflation actually fell.

Has the current inflation cycle already reached its peak? Food and energy prices suggest it may have.

Durable Goods In Deflation For May

A further signal that inflation may have already peaked comes from durable and non-durable goods prices in May.

Durable goods prices actually fell in May, and non-durable goods showed price disinflation, despite the continued pressure from energy prices. Service price inflation rose month on month, but is still below its recent January 2026 peak.

That non-durable goods inflation eased in May suggests that, outside of energy prices, non-durable goods might very well have been in deflation for May as well. Certainly when energy price inflation is put next to non-durable goods inflation, we can see that energy prices are the dominant factor in non-durable goods inflation.

Just as with the earlier CPI report, the PCE report is showing considerable energy price inflation, but not much additional inflation.

If energy price inflation eases next month or the month after, there is simply not much inflation in other areas to sustain the current headline inflation rates. If energy price inflation tips back into outright deflation, as it did for most of 2023 through mid-2025, headline inflation will ease dramatically.

AI: The One Contrarian Signal

If we look at just the broad pricing data, we could easily conclude that this latest inflation cycle has already reached its peak and that, barring a major change such as renewed hostilities with Iran, consumer price inflation is poised to cool significantly. We would be remiss not to acknowledge that could very easily prove to be the case.

Yet we should note that energy is not the only source of inflationary pressure in the US economy. One area that is exerting increasing pressure is computer technology.

With events in the Middle East dominating headlines worldwide, little attention was given last week to outgoing Apple Computer CEO Tim Cook’s warning that the tech giant was about to raise prices across the board.

“Unfortunately, price increases are unavoidable,” he said. “We’re doing our best to mitigate the huge increases that are being passed to us, and we’ve been trying to shield our customers from the increases, but the situation has become unsustainable.”

Yesterday, the warning became reality, when Apple announced price hikes across a broad range of products, citing pricing pressures from surging memory and chip prices.

“We have never seen a component price increase this much, this quickly,” Apple ​said in a statement. “We have shielded our customers from these increases so far, but we have now reached a point where we need to begin ⁠raising prices on a number of products, including today’s increases for iPad and Mac.”

Apple hiked the price of MacBook Air with 512 gigabytes of storage rose to $1,299 from $1,099, while the MacBook ​Pro with 1 terabyte of storage rose to $1,999 from $1,699, according to updated prices on its website. The iPad Air with 128 gigabytes of storage rose from $599 to $749, among other changes.

Prices for computer hardware had been on the decline for years up until last year, when prices rebounded during the spring before easing back down later in the year.

Since January, hardware prices have repeated their early-2025 surge. Whether they will ease back down in the fall remains as yet unknown.

Driving much of the surge in hardware prices is the runaway interest in artificial intelligence, along with the building of data centers to meet that growing demand. As one would expect, the surge in computer hardware demand is producing a surge in prices.

With so much demand, prices are rising for many of the things that go into the AI build-out. And because those things are used for more than just AI, those price increases are spilling over into the broader economy.

Memory and storage chips, for example, are used in a broad array of consumer-electronics products that includes everything from videogame consoles to cars. Nintendo, Microsoft and Sony have all raised prices on devices. Higher price tags are coming to Apple products, too, according to Chief Executive Tim Cook, who told The Wall Street Journal that the jump in costs was unlike anything he had seen “in any area in over 40 years.”

According to Tim Cook and Apple, there is already contagion effect at work with chip and memory prices pushing up Apple prices.

Will AI fuel a renewed hyperinflation cycle? That is extremely unlikely. While data center buildouts can and will have impacts on local economies, the surge in component and overall tech prices has not resulted in a sustained inflation pressure across the broader economy. Despite a price surge in tech prices that is now months old, durable goods still went into deflation for May, while non-durable goods showed notable price disinflation.

At the same time, we must recall that core price inflation was trending higher long before Operation Epic Fury and the closure of the Strait of Hormuz. There are clearly inflation pressures at work on the US economy besides energy.

Is Artificial Intelligence one of these inflation pressures? If we take Tim Cook’s warning last week seriously, yes, it is. Against a rising number of inflation signals suggesting inflation is close to being done heating up, computer tech prices stand out as a notable contrarian signal.

Is Stagflation Still Possible?

When Iran first closed the Strait of Hormuz, I noted that, given the softness that had been the prevailing trend in US labor markets, stagflation from the oil shock from the Strait’s closure was a real possibility. Given the “fugly” jobs report we had in February, a stagflation crisis was a very real risk for the US economy at that time.

Since that time, we have had three months of good jobs numbers, including back-to-back revisions to the upside. The soft jobs markets of February have morphed into robust and recovering job markets for May.

With stronger job markets and softer core inflation, at present the risks of a 1970s-style stagflation crisis in the US are greatly diminished. The risks here in the US are apparently less than in the EU, given the European Central Bank’s recent decision to raise interest rates, in contrast to the Fed’s decision to stand pat on interest rates.

That does not mean the risks are non-existent. Some of the members of the Federal Open Market Committee have indicated the Fed may raise the federal funds rate at least once during the remainder of the year.

If American jobs markets soften again, the potential for stagflation will return.

If consumer price inflation surges such as it did in March, the potential for stagflation will return.

If both happen at the same time, the potential for stagflation not only returns, but moves from a possibility to a probability.

At present, jobs markets are not softening and inflation is not surging, but if the last few months are testament to anything it is the capacity of even broad economic metrics to shift dramatically from one month to the next.

Stagflation is still very possible, but unless there is a significant shift in either jobs or prices for June, stagflation is for now not very probable.

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But there is more to economic data than just jobs numbers, and more to economic growth than just employment. There is consumption. There are measures of industrial production without regard to employment. There are measures of industrial capacity utilization.

It is intuitively obvious that rising retail sales—rising consumption—is a sign the economy is expanding.

It is equally intuitively obvious that rising industrial production is a positive sign. To borrow from the late H. Ross Perot, we need to be making more “things”.

For the same reason, we are doing better the more of the nation’s industrial capacity is being put to work.

With the political primaries largely over and done, and the several states heading into the general election in November, it is worthwhile to look beyond jobs and prices, to gauge how the broader health of the US economy, which is sure to be part of the political debate as the fall election season heats up.

With the US also moving from war to a problematic peace with Iran, the next few months could easily prove to be a pivotal time for the US economy. Assessing the state of the US economy now might be helpful in assessing how well the US moves forward now that the war with Iran is arguably over.

It is particularly worthwhile at the moment, because the data shows the economy is doing fairly well. The data leans into the job growth narrative from the May Employment Situation Summary and tells us that the job growth in May was more real than not.

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PMI Data Shows Growth Trend

The most positive notes come from the independent Purchasing Managers Index1, or PMI, surveys.

The May Manufacturing PMI from S&P Global is the third consecutive month of increasing expansion.

Not only does the PMI data show manufacturing concerns in this country to be expanding, the amount of that expansion is increasing.

An important caveat: we must be cautious with the PMI data. At the end of the analysis the PMI data is an industry survey, and therefore all the possibilities for error we see within BLS data on jobs can happen with the PMI data. Always take PMI stats with a grain of salt.

However, the Institute for Supply Management maintains its own PMI data and conducts its own surveys. When the ISM PMI data shows the same trend as S&P Global, that is a confirmation we should not be quick to overlook.

What both manufacturing PMI data sets show is that, beginning in January, US economic activity has been expanding.

The S&P Global services PMI data for May showed expansion, but also indicated the growth was potentially fragile and not at all assured.

The ISM Services PMI data for May shows a stronger expansion, one that goes back potentially back to before the start of Donald Trump’s second term in the Oval Office.

The S&P Global and ISM surveys are conducted independent of each other. While as surveys we need to be cautious about how much significance to place on them, that both survey sets show expansion for both manufacturing and service industries makes the data difficult to dismiss.

The PMI data across the board shows the US economy is expanding right now.

Retail Sales Are Increasing

The U.S. Census Bureau gives another positive growth signal with its measurements of retail sales.

As of May, 2026, the Advanced Retail Sales estimate shows year on year sales growth of 7.5%.

Month on Month, Advanced Retail Sales grew by 1% in May.

More importantly, retail sales—which are measured in nominal dollars—are growing faster than the Consumer Price Index. Sales growth is greater than inflation, which means there is real growth in consumption.

Consumption—by far the largest component of the US economy—is demonstrably robust, and has been almost since the start of President Trump’s second term.

Industrial Production Is Increasing

America’s performance in manufacturing is an especially important consideration. Not only do manufacturing jobs generally command higher wages than most service jobs, but a major campaign promise made by President Trump in 2024 was to turn the United States into a “manufacturing superpower”.

Overall, industrial production has been strengthening in this country since Donald Trump took office at the start of 2025.

Even sectors that started out well under Joe Biden have been picking up under President Trump.

Additionally, US capacity utilization has been increasing steadily under Donald Trump, which is a clear reversal from the long decline under Joe Biden.

These growth metrics, assessed independently of manufacturing jobs, resonate well with the manufacturing sector’s recent return to job growth.

When we see independent data sets supporting the same broad narrative, we necessarily have greater confidence in that narrative. With industrial production growth, capacity utilization growth, and finally manufacturing job growth, a narrative that the manufacturing sectors of the US economy are growing is difficult to refute.

America is making more things, and America is putting more people to work making more things. These are exactly the sort of economic outcomes we need to see if Donald Trump’s pledge to make the US a “manufacturing superpower” is to be realized.

At the moment, the data says Donald Trump’s pledge is being realized.

Staving off Stagflation?

The economic growth outlook has taken on added importance because of the war with Iran, and Iran’s subsequent illegal closure of the Strait of Hormuz, slapping an oil price and supply shock on the world’s economies by effectively bottling up 20% of total global oil supply.

When the war had largely turned into an attritional stalemate over the Strait, with Iran blocking oil shipments from its Arab neighbors and the US blockading Iranian shipping in return, the prevailing assessments indicated that the situation was sending the worlds’ economies into a stagflation crisis, as the sudden loss of global oil supply was setting the stage for global demand destruction.

We do well to remember that signature aspect of supply shocks and the stagflation they can produce. When physical supply is abruptly diminished, physical demand must also be diminished to restore overall economic equilibrium. If the physical supply of widgets goes from 100 down to 80, the physical demand for widgets must also go down to 80, for the simple reason that 80 widgets are all that is available. There cannot be any demand for goods (or quantities) which do not exist.

When an economy is already in the doldrums, such as when job growth is weak or when overall economic growth is weak, a supply shock is particularly thorny, as the demand destruction will push a moribund economy into outright recession.

When Operation Epic Fury began, then-Fed Chair Jay Powell was dismissive of stagflation concerns, when the data clearly showed there was significant risk of stagflation emerging from the Strait of Hormuz closure.

No, we are not seeing stagflation at present, except in the most incremental and technical fashion. The oppositional forces are present and discernible, but they are not (yet) at a 1970s level of severity.

We are, however, seeing several indicators that a stagflation scenario is a real risk to the economy. A significant inflation shock coupled with the soft labor markets the United States has endured for the past few years could very easily translate into a stagflation scenario.

What has changed since then for the US economy has been the transition from jobs recession to jobs recovery. With multiple consecutive months of robust job growth as of the most recent Employment Situation Summary report, the US economy is in a stronger position now than it was just a few months ago.

A broader sweep of economic data indicates that economic strength has some depth to it. The stronger and more robust the US economy is, the better it will be able to withstand the pricing pressures which will linger for a time from the oil shock.

We are already seeing some indication of the benefits of a stronger economy. While the Federal Reserve saw fit to stand pat on the federal funds rate, the European Central Bank is raising interest rates to combat a worsening stagflation crisis on the continent.

Will the US avoid a stagflation scenario altogether? That is highly unlikely. The energy price shock itself has already made itself known. The real misery index—the combination of real unemployment and year on year consumer price inflation—is rising. To a degree, the stagflation scenario has already begun for the United States.

If the US continues to show strong increases in industrial production, capacity utilization, and manufacturing job growth, we may see the misery index rise less sharply than would otherwise have been the case. We may see less overall demand destruction and greater tolerance for consumer price inflation at least in the short term.

If the peace deal is proven to be substantive and real, and brings meaningful change to the Persian Gulf states, a strong US economy would potentially position the US well to reap tangible benefits from that change. It is far too soon to know if the US will “win the peace” with Iran, but a stronger US economy is surely a better position from which that can happen.

Between the upcoming mid-term elections and the unfolding peace with Iran, right now is an important economic moment for the United States. Fortunately, at this moment, a substantial number of economic signals are showing the US economy is growing.

That’s a nice piece of good news.

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The Committee decided to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 percent, in support of the Federal Reserve’s dual mandate. The Committee reaffirmed its policy of maintaining ample reserves in the banking system.

This was exactly what Wall Street had priced in weeks ago. On the rate announcement, Wall Street was not disappointed.

Then newly-minted Federal Reserve Chairman Kevin Warsh opened up his mouth, and it was that moment when the markets started heading south, dropping nearly 600 points over the course of the post-FOMC presser, a performance that surely had former Fed Chairman Jay “Too Little, Too Late” Powell downright jealous.

What did Kevin Warsh say that spooked the markets? Change. Kevin Warsh spoke of how he means to change how the Federal Reserve and the FOMC conduct monetary policy. The Kevin Warsh Federal Reserve will not be a continuation of the Jay Powell Federal Reserve.

That was enough to spook the markets and trigger a selloff in equities, while Treasury yields spiked.

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Whisky Tango Foxtrot

Wall Street has for weeks presumed that the FOMC would stand pat on the federal funds rate, with CME Group’s FedWatch pricing tool putting the probability of no change very near 100%.

It is not hard to see the logic in this. With consumer price inflation heating up, and with producer prices signalling a few more months at least of higher inflation, traditional Fed thinking would lean towards either no change in the federal funds rate, or possibly a rate hike.

Blame Iran for closing the Strait of Hormuz. Blame President Trump for launching a war with Iran over their nuclear weapons program. Regardless of how one frames the oil price and supply shock emanating from the disruption of Persian Gulf oil flows, the reality remains the same: elevated energy price inflation, greater energy price volatility, and a finite capacity of leading industrial nations to buffer the shock with releases from strategic petroleum reserves.

All this has been known for some time, as has the Fed’s traditional policy playbook for such a scenario.

Yet the Fed caught Wall Street off guard even with the policy press release ahead of the post-FOMC press conference, as the first market hiccup of the day showed.

Wall Street’s comfort level with Kevin Warsh did not get any better during the press briefing itself, and by the end of the briefing the Dow had shed close to 600 points, with the S&P 500 and NASDAQ following close behind.

Treasury yields confirmed Wall Street’s shock and dismay, with the 10-Year Treasury jumping almost 10bps between the FOMC press release and the conclusion of the press briefing.

Even while meeting expectations on rates, the Kevin Warsh Federal Reserve succeeded in giving Wall Street a minor “Whisky Tango Foxtrot” moment.

What was the change that spooked Wall Street? While the rate decision was as expected, the tone of the announcement, as well as Warsh’s demeanor during the press conference, were noticeably different: more focused, more disciplined, and perhaps even more confident than had been the norm during Powell’s tenure as Fed Chair.

Less Fed Guidance, More Market Involvement

Warsh lost no time in signalling the start of a new era in Fed policy communications. The FOMC statement announcing the federal funds rate would remain unchanged was barely half a page.

FOMC statement June 17 2026

224KB ∙ PDF file

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April’s statement announcing the same policy decision was over a page in length.

FOMC statement April 29 2026

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Gone was the padding of reassurances that the FOMC really does mean to follow the data and get consumer price inflation down to 2% year on year. Gone was the fluff about what the data presumably showed.

What remained was a simple statement of the policy decision and a few perfunctory sentences on inflation and job growth.

When Warsh began the press briefing a short time later, he wasted no time before announcing significant changes in how the Federal Reserve and the FOMC intended to communicate monetary policy, beginning with how the FOMC rate announcement was likely to be different going forward.

My Fed colleagues and I will be working in close collaboration to ask what changes might improve the conduct of monetary policy.

On that score, you might have already noticed something, a difference in today’s policy statement. It’s a bit shorter, a bit simpler, and it dispenses with some older language. That statement just gives you the facts as best we can judge it. Absent also is so-called forward guidance which we agreed was not well suited to the current policy conjuncture.

This afternoon you also received the usual summary of economic projections. It’s been the practice of this committee for participants to submit these projections and I have encouraged my colleagues to continue to do so. I, however, have refrained from offering any projections of my own, consistent with my long-held views on the SEP, at least as currently structured.

Without missing a beat, Warsh went on to announce a set of task forces to overhaul Federal Reserve communications practices and data management.

I’m appointing a task force in each of five areas that are central to the broad conduct of monetary policy: First, Fed Communications; Second, the Fed’s balance sheet; Third, our use and reliance on existing data sources; Fourth, productivity and jobs in an era of transformation; And last, the Fed’s inflation frameworks.

These subjects are timely, consequential, and in my view worthy of a fresh look. My colleagues and I discussed them with energy and purpose over the last couple of days.

For each of these independent task forces, I’m enlisting some of the very best minds, both inside and outside the economics profession. They will be supported by subject matter specialists from our superb Fed staff.

And they’ll have a straightforward charge: Start with first principles. Ask hard questions. Examine current practice. Consider alternatives. and ultimately propose next steps for policymaker consideration.

With short, succinct sentences in a crisp staccato delivery, Kevin Warsh made it clear that the Fed was going to be handling its brief differently going forward.

Perhaps the most notable point Warsh made during the press briefing was in his rationale for doing away with the previous Fed practice of giving “forward guidance”—a sense of where the Fed anticipated monetary policy going next. Fundamentally, Warsh wants to see the markets playing a greater role in driving interest rates than Federal Reserve policy.

Edward Lawrence with Fox Business. So if you don’t give a lot of ongoing forward guidance, won’t the markets have more volatility and shouldn’t Americans have more access into what you’re thinking going forward?

Kevin Warsh: So I think financial markets perform best when they react to incoming data. I think the financial markets work less efficiently when they ask a question, how will the Federal Reserve react to that incoming information? The more that markets are paying attention to what’s happening in the real economy, deciding what’s good data and what’s less good data, the more financial markets can price what they believe is the most likely and what are the tail risks. Financial market prices are probably the most important source of information to guide central bankers.

But when all the financial markets are doing is reflecting back what we’ve said then we’re taking the most important source of information and we’re being blind to it. I’d like us to create a system where those blinders come off where markets are following data that they efficiently think is reliable and they’ll come with better information through market prices to us we can make more informed decisions with ultimately the goal that I set at the outset, deliver on the price stability objective that Congress told us to do and that we better get in the business of doing.

Without directly criticizing his predecessor, Warsh made it clear that the policy of the Federal Reserve telling Wall Street where interest rates were going to go had the unhelpful consequence of turning Wall Street into little more than a policy echo chamber, where Wall Street was merely sending back at the Fed the outcomes the Fed said were desired through its forward guidance on interest rates.

Warsh wants Wall Street to do its own research, look at its own data, and drive its own conclusions on interest rates. In the short term this may mean greater volatility for both Treasuries and equities, but the end result will be Wall Street giving the Federal Reserve higher quality information on which to base future interest rate decisions.

Warsh quite plainly means to turn Wall Street from a consumer of economic data into a source for the Fed of economic data.

A New Day Has Dawned

Whether Kevin Warsh will turn out to be a good Federal Reserve Chairman or a poor one is a question we will see answered only gradually over the course of the next several months. One part of that answer has already been given, however, and that is how he intends to change the status quo at the Fed.

Warsh undoubtedly appeased the more hawkish Fed watchers by not pushing to lower the federal funds rate, even though President Trump has been consistently vocal about the need for exactly that. He will no doubt go up in the estimation of some if, some time during the summer, the FOMC elects to raise the federal funds rate by 25bps-50bps.

Warsh clearly unnerved much of Wall Street with his remarks. Without regard to how much independence Warsh intends to have from President Trump, he made it clear he will also be independent from Congress and Wall Street. He will steer monetary policy where he thinks it should go, and that may not be where Trump, Congress, or Wall Street think it should go.

A new day has dawned at the Federal Reserve, or so Kevin Warsh wants people to believe. If Warsh accomplishes his vision the Fed will provide less data but hopefully more information using higher quality data.

Whether that ends well for the Federal Reserve’s dual mandate of price stability and full employment is another question we will see answered only gradually over the course of the next several months.

This much is certain: the Federal Reserve will not be as it was.

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As highlighted when the “deal” was announced on Sunday, evaluating the terms of the deal requires the specific text of those terms. We have now been given that text, and we can judge for ourselves if this is a good deal or a bad one.

I will present my initial thoughts after the text itself, but I invite everyone to read the terms and decide for themselves. The deal is not made “good” merely because I or any other analyst says it is. The deal is not made “bad” merely because I say it is.

The deal is the deal. Good or bad, this is the Memorandum of Understanding to be signed on Friday.

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The Fourteen Points

These are the fourteen points of the Memorandum of Understanding to be signed on Friday, as released to CNN, Bloomberg, and other media outlets.

1 — The Islamic Republic of Iran and the United States, together with their allies in the current war, declare upon the signing of this Memorandum of Understanding an immediate and permanent end to the war on all fronts, including Lebanon, and undertake that from now on they will not launch any hostile action against each other, and will refrain from the threat or use of force against each other. The final agreement will confirm the provisions of this Article and the remaining Articles.

2 — The Islamic Republic of Iran and the United States undertake to respect each other’s sovereignty and territorial integrity, and to refrain from interfering in each other’s internal affairs.

3 — The Islamic Republic of Iran and the United States undertake to negotiate and reach a final agreement within a maximum period of 60 days, extendable by mutual consent.

4 — Immediately upon the signing of this Memorandum of Understanding, the United States lift the naval blockade and prevent any interference or obstruction against the Islamic Republic of Iran, and restore traffic within a maximum of 30 days to its full capacity; the traffic of ships shall be proportional to the pre-war volume of traffic on the part of the Islamic Republic of Iran. The United States also undertakes to withdraw its forces from the surrounding areas within 30 days after the final agreement.

5 — Upon signing this Memorandum of Understanding, the Islamic Republic of Iran will immediately take steps to ensure that the movement of merchant ships from the Persian Gulf to the Sea of Oman and vice versa is resumed within 30 days to the pre-war volume, taking into account the need for the removal of technical obstacles and the neutralization of mines by Iran.

6 — The United States undertakes, together with its regional partners, to create a comprehensive plan agreed upon by both parties for the rehabilitation and economic development of the Islamic Republic of Iran, while ensuring financing of at least $300 billion. The implementation mechanism of this plan, as part of the final agreement, will be formulated within 60 days.

7 — The United States commits to ending, on a schedule to be agreed upon as part of the final agreement, all types of sanctions currently facing the Islamic Republic of Iran, including resolutions of the United Nations Security Council and the Board of Governors of the International Atomic Energy Agency (IAEA), and all unilateral U.S. sanctions, both primary and secondary.

8 — The Islamic Republic of Iran reiterates that it will never produce nuclear weapons. The Islamic Republic of Iran and the United States have agreed that the fate of enriched material and the fate of all other mutually agreed nuclear-related issues, including Iran’s nuclear needs, will be adequately addressed in a final agreement; the final agreement will confirm the provisions of this Article.

9 — The Islamic Republic of Iran and the United States agree that, pending a final agreement, they will maintain the status quo: Iran will maintain the status quo on its nuclear program, and the United States will not impose new sanctions on Iran or strengthen its forces in the region.

10 — The United States undertakes that immediately after the signing of this Memorandum of Understanding, and until the date of the lifting of sanctions, the United States Treasury Department will issue waivers for exports of Iranian crude oil, petrochemical products and their derivatives, and all related services, including banking, insurance, transportation, and the like.

11 — The United States undertakes that, in light of the progress of negotiations towards a final agreement, frozen or restricted funds and assets of the Islamic Republic of Iran will be released and made fully available. These funds, whether held in the master account or transferred, will be used for any final beneficiary payment determined by the Central Bank of the Islamic Republic of Iran and will be fully available for use. The United States undertakes to issue all necessary permits and licenses on this basis.

12 — The Islamic Republic of Iran and the United States agree that an implementation mechanism will be established to oversee the successful implementation of and future commitment to the Final Agreement.

13 — Following the signing of this Memorandum of Understanding, and upon receipt of assurances regarding the commencement of implementation of Articles 4, 5, 10, and 11 of this Memorandum of Understanding, and the continued implementation of these steps, the Islamic Republic of Iran and the United States will enter into negotiations for a Final Agreement solely with respect to the remaining Articles.

14 — The final agreement will be approved through a binding resolution of the UN Security Council.

These are the terms of the MeMemorandum Of Understanding due to be signed this coming Friday.

What Do The Terms Mean?

What to make of the MOU?

The critics of the concept of the MOU who have claimed this is not a deal, but a deal to negotiate a deal, are correct. Nothing in the language of this Memorandum finalizes what is to become of Iran’s nuclear weapons program. Iran pledges that it won't develop nuclear weapons, but if such pledges were meaningful, Operation Epic Fury and even last year's Twelve Day War would never have happened.

The Memorandum does fully reopen the Strait of Hormuz and allows unrestricted maritime traffic. Points Four and Five call for reciprocal withdrawal of Iran's mines and other barriers within the Strait and the US naval blockade of Iranian shipping. This is the only substantive point of agreement within this Memorandum text.

What the Memorandum does not address even tangentially: Israel's war against Hezbollah. Nothing in this text obligates Israel to stand down or pause any ongoing operations. Given the diplomatic outcry about that war raised by Iran with respect to the ceasefire agreement, that is a striking omission.

Does the Memorandum call for immediate release of any frozen Iranian assets? Not really, although we should not be surprised to see Iran press the argument that Point Eleven does. However, the language “in light of the progress of negotiations towards a final agreement” is sufficiently vague that we can expect JD Vance be confidently dismissive of such claims, and President Trump to say that the Memorandum does not call for that at all. War hawks and Democrats will go with Iran's interpretation, as it best furthers their individual political agendas.

Point Seven does not lift any sanctions against Iran. It does establish that the ending of sanctions will be part of the final deal to be negotiated over the next 60 days. Point Ten calls for waivers on sanctions restricting oil shipments to be issued for the next 60 days. If no deal is reached, the expiration of the 60 days and thus the waivers indicates a “snap-back” mechanism is fundamentally in place.

War hawks will almost certainly argue that even a sixty day window in which Iran can export oil without sanction penalties being triggered is too much generosity. Some media analysis suggests Iran could generate as much as $100 billion in oil revenue over that 60-day time frame.

The Memorandum confirms there will be a reconstruction fund. However, Point Six does not call for United States tax dollars to be involved nor does it call for Iran to receive a blank check.

Point Six is clearly the most controversial point in the Memorandum. This is definitely an innovation from previous agreements such as Barack Obama's lamentable Join Comprehensive Plan Of Action.

Yet it might also be the point with the most promise. An investment fund could be a means for reintegrating Iran into the global maritime trading order, and that is probably the most enduring deterrent for keeping Iran from funding terrorism and trying to develop nuclear weapons; being invested in a social infrastructure is a powerful disincentive against damaging that infrastructure.

That is what the fund could be. It could alternatively be a $300 billion boondoggle that funnels more cash to the IRGC than the JCPOA.

The best that can be said of the fund proposal is that it is a high risk, high reward concept for both sides. It is outside the box thinking, and that alone makes it worth considering, given the obvious failures of conventional thinking on Iran.

While the Memorandum does not specify downblending of Iran's enriched uranium stockpile, Point Eight makes it clear that the disposition of the stockpile is very much on the table. Given Reuters having reported earlier that Iran understood downblending would happen, I have my doubts how effective Iranian counterarguments to downblending would be, especially if the Khamenei regime desires to see its funds unfrozen.

Point Nine presumably freezes all activity on both sides surrounding Iran’s nuclear weapons program. That means Iran has to halt any work on the facility under Pickaxe Mountain.

Points Twelve through Fourteen are predictable diplomatic boilerplate that any agreement reached will be self-enforcing, with adequate implementation mechanisms, and that the United Nations will put its imprimatur on the final deal.

Is the Memorandum of Understanding a good agreement? It is an agreement to reopen the Strait of Hormuz, and that is all. Everything else is a point to be negotiated later.

Is that enough of an agreement? Readers will have to reach their own conclusions.

Will The Deal Hold?

Will the Memorandum produce a lasting peace? That seems problematic. There is enough imprecision in the points to ensure considerable argument about what is in the Memorandum.

Can Iran be trusted to negotiate in good faith? Not even a little bit. Iranian duplicity rivals Vladimir Putin's, and that is no easy hurdle to clear. If Iran were an honest negotiating partner we would not be at this juncture now. That alone makes this Memorandum an unlikely foundation for any future agreement.

Iran is sure to make Israel an issue during negotiations despite their being excluded from the text of the Memorandum itself.

Yet the Memorandum is a starting point for new negotiations. That is not nothing.

War hawks will push for no negotiations and more bombs.

Democrats and corporate media fabulists have excoriated President Trump for this war with Iran. President Trump has pulled together a plan to end the war, which Democrats will again excoriate. President Trump will remain wrong in their eyes, simply because he is Donald Trump and for no other reason.

War hawks and Democrats alike, however, are faced with one awkward reality: their attempts to deal with Iran's nuclear weapons program have been spectacularly unsuccessful. While there is a significant probability this attempt will not have any better success, the singular question remains: what is the alternative?

President Trump’s critics have been completely silent with respect to realistic alternatives to his strategy thus far. For that reason alone it makes more sense for President Trump to at least attempt a different diplomatic tack.

Will the Memorandum of Understanding hold? Will it lead to a lasting deal on Iran's nuclear weapons ambitions?

We do not know, and cannot know. We can hope, however, and we absolutely should.

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Earlier this afternoon, Pakistani Prime Minister announced that a deal had been reached between the US and Iran, with a formal signing ceremony to be held next Friday.

The question that began the day has now been answered in the affirmative. There will be a deal, which means there may actually be peace.

However, while we have announcements of a deal, what we do not have is any official text of that deal. We have a deal, but no details.

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Deal Against All Odds

While President Trump had been quite upbeat and bullish that a deal would get done today, there were many reasons to doubt if even this much of a deal would happen.

Throughout the day there were even more reasons to doubt if this would happen.

The Iranian Majlis (Parliament) decided to inject itself into the mix, asserting its need to review any agreement before it could be final.

The prospects were not enhanced by Iran’s circulating multiple versions of the proposed agreement.

That Hezbollah and Israel were continuing their tit-for-tat strikes was definitely not helping to further the cause of peace.

Somehow, through all the negativity and unhelpful actions by allies on both sides, at the day’s end a basic agreement was apparently reached by the parties.

No One Knows What Is In The Deal

While there is quite a bit of hooplah about there being a deal between the US and Iran, there has been very little in the way of official details about the deal itself.

Even corporate media, when reporting on Sharif’s announcement of the deal, acknowledged that little was known about the particulars of the deal.

“Following intensive talks, we are pleased to announce that the Peace Deal between the United States of America and Islamic Republic of Iran has been REACHED,” Sharif said on X.

He continued, “Both sides have declared the immediate and permanent termination of military operations on all fronts, including in Lebanon.”

A signing was scheduled for Friday in Switzerland, Sharif said.

No other details of the agreement were immediately available. The White House did not immediately respond to requests for comment.

However, shortly after the announcement Reuters released what the Khamenei regime claimed were the key points of the deal:

STRAIT OF HORMUZ:

* Iran immediately reopens the ​Strait of Hormuz to all commercial vessels, while the U.S. ⁠lifts its naval blockade on Iranian ports. The lifting of the U.S. blockade would ​begin immediately after the memorandum is signed and be completed within 30 days.

FINANCIAL:

* ​The U.S. agrees not to impose any new sanctions on Iran until a final deal is reached.

* Following a final agreement, all U.S. and U.N. sanctions on Iran would ​be lifted according to an agreed timetable.

* The U.S. will waive oil sanctions ​on Iran for a specified period, allowing Tehran to sell oil and receive revenue.

* The ‌U.S. ⁠agrees to release $25 billion of Iran’s frozen assets, including via direct cash transfers, cooperation among regional countries, and financial credit lines.

* Washington, in coordination with its regional allies, would prepare a reconstruction and development plan for Iran, to ​be negotiated and agreed ​with Tehran within ⁠60 days.

NUCLEAR:

* Tehran agrees that it will neither produce nor acquire nuclear weapons.

* Pending a final agreement, Iran would maintain ​the current status of its nuclear programme, refraining from further ​uranium enrichment ⁠and expansion of nuclear facilities.

* The United States agrees to allow Iran to dilute its stockpile of highly enriched uranium on Iranian soil under a future comprehensive ⁠agreement.

* Iran’s ​nuclear programme, uranium enrichment activities and mechanisms ​for handling its stockpile of highly enriched uranium would be negotiated within 60 days of the memorandum ​and addressed in a final agreement.

These points have not been confirmed by the Trump Administration.

Are these the point to which the Trump Administration has agreed? Until we see the official text of the agreement, or until these points are confirmed by Donald Trump, we cannot be sure that they are.

The Terms Are Troubling

The most significant term in the Reuters list is, of course, that the Strait of Hormuz is to be reopened and made freely navigable. If that comes to pass, Persian Gulf oil flows once more, and a global stagflation crisis might be averted.

Also significant is an apparent agreement to allow Iran to “downblend” its stockpile of enriched uranium, lowering the enrichment level to presumably the civilian range of 3%-5%. While there would be an obvious comfort factor in removing the fissile material from Iran altogether, if the enriched uranium is downblended to civilian levels, Iran no longer has “breakout" capacity, where it can quickly enrich its store of 60% enriched uranium to the 90%+ needed to produce a nuclear weapon.

Downblending is arguably in line with the earlier “red lines” established in the first round of Islamabad talks with Iran:

As I have noted previously, the US “red line” conditions are easily and succinctly stated:

• Iran will not enrich uranium

• Iran will not pursue nuclear weapons

• Iran will not develop long range ballistic missiles

• Iran will not maintain its network of terror militias across the Middle East

• Iran will not close the Strait of Hormuz

• Iran will not threaten Arab states in the Persian Gulf

Downblending lacks the finality of complete removal of the fissile material, but downblended uranium eliminates “breakout” capacity where Iran can quickly complete the steps necessary to create a nuclear weapon.

What is troubling is the assertion that the United States will release some $25 billion in frozen Iranian assets. We must remember that Donald Trump has previously said very explicitly the US would not be paying Iran off.

If we take the Reuters report at face value, we can anticipate Iran arguing that the $25 billion in frozen assets is to be released at once. However, it is also possible that President Trump envisioning releasing the frozen assets one the enriched uranium is verifiably downblended—a “pay for performance” standard that is not out of line with what the Trump Administration has said previously on this point.

Equally problematic is the establishment of a “reconstruction fund” to help rebuild Iran.

On the surface, this is perhaps the most reasonable “ask” of the Iranian negotiating team. Iran’s infrastructure was already decrepit before the war began. Fresh rounds of bombing during Operation Epic Fury certainly did not help improve that infrastructure.

No matter who is in charge, Iran needs to rebuild its infrastructure, and that is going to require outside investment.

However, that puts the IRGC on the wrong side of whatever strings a Trump Administration would attach to a reconstruction fund. It would be a simple matter for President Trump to tie reconstruction funding to the successful and verified demolition of Iran’s nuclear weapons program.

Is that what will happen with the reconstruction fund? Of that I have no idea. Remember, this list of negotiated points is what Iran claims were in the agreement—this list might not be the negotiated points at all.

Per Iran’s Tasnim news agency, we won’t see the final text of the agreement until after the signing ceremony next Friday. The delay presumably reflects Iran’s deep distrust of the United States (although how not releasing a text to which both sides have already agreed in full helps is not made clear).

Will The Deal Hold?

What we know today is that we have a deal.

We do not know the terms of that deal. We are not going to know the terms of the deal for at least a few more days.

We do not even know if the deal will hold. Hezbollah and Israel might pop off at each other and derail the entire process. Iran might be slow in clearing their mines from the Strait of Hormuz. A dispute over when/if frozen asset funds are to be released seems almost sure to arise.

Any one of these outcomes—and quite a few more besides—could lead to the collapse of any peace deal and a return to a state of war between the United States and Iran.

What we know is today is that we have a deal. We will not know more than that until next Friday. Even then, the full ramifications of both the deal and the war are not likely to be known at that time.

The US and Iran have apparently made a deal to give peace a chance.

We have that deal. We just do not have any of the details making up that deal.

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While there have been quite a bit of media fulminations about the deal, as well as what it may or may not say, what there has not been is a full and complete recitation of the deal’s text itself.

There appears to be a deal about to be reached. What that deal involves no one knows. We do not know to what the US and Iran are prepared to agree.

Media reporting is that a deal is about to be signed.

Will there be a deal signed today, or at all? The world wonders….

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A Deal Will Be Done…Maybe

The headlines set the narrative quite plainly: the United States and Iran are on the cusp of a deal to end the war between them.

That is the thrust of the Associated Press’ reporting:

The Epoch Times’ reporting was similarly hopeful.

Even the principals were eager to weigh in, with Pakistan Prime Minister Shehbaz Sharif taking to X on Saturday to announce the imminent anticipated signing of a presumably historic peace deal.

As of this writing, there has been no signing ceremony, and no deal has been officially reached.

Details Do Not Matter To The Commentariat

The lack of a deal, or even a publication of the official text being negotiated, has not stopped the commentariat from pontificating about the presumptive “deal”, and whether it is a good or bad deal.

One notable assertion presumably making the alleged deal good for the United States comes from corporate media’s favorite information source, the unnamed “senior US official.” The unnamed source has repeatedly assured reporters that Iran was agreeing to surrender its stockpile of enriched uranium.

A senior U.S. official on Friday said that under the deal, Iran’s highly enriched uranium will be destroyed and Tehran could make a long-term commitment not to procure a nuclear weapon.

The surrender of the enriched uranium would be a significant statement by Iran. While Iran has long said it was not seeking to develop nuclear weapons, they have openly admitted to possessing enough enriched uranium to produce as many as 11 nuclear weapons, based on comments reportedly made to US Special Envoy Steve Witkoff prior to the start of Operation Epic Fury.

The Iranian negotiators reportedly told Witkoff and US President Donald Trump’s son-in-law Jared Kushner “directly and with no shame” that they control 460kg. of 60% enriched uranium, and were aware that it could be quickly enriched to 90% in order to make nuclear bombs, Witkoff said.

The Iranians were proud that they had evaded all oversight protocols to achieve this, he added.

Listing out the situation, Witkoff reported that Iran possessed approximately 10,000kg. of fissionable uranium, which is broken down into roughly 460kg. of 60% enriched material, 1,000kg. of 20% enriched material, and the remainder at 3.67%.

Agreeing to surrender this stockpile or have it “downblended” to levels suitable for civilian purposes is a gesture of intent Iran has steadfastly refused previously.

That Iran has been enriching uranium to levels useful only in nuclear weapons manufacture has been a reported stated of affairs since at least 2021. Last year, during the Twelve Day War with Israel, Iran defended its enrichment program, claiming that it was not a violation of the Nuclear Non-Proliferation Treaty.

There was never a question of Iran possessing 60% enriched uranium, nor of Iran’s intent to enrich that stockpile further to 90%, the threshold level for turning fissile uranium into a nuclear weapon.

However, Iranian state news media has repeatedly published what it said were the 14 points in the “Memorandum of Understanding” being negotiated, which contained no such commitment to either surrender or downblend Iran’s store of enriched uranium. Rather, the Iranian draft of the MoU clearly punts that question into a negotiation cycle after this deal is signed and implemented.

Another criticism of the deal (based on what Iranian state media has reported) has been the proposed removal of sanctions on Iran, with several critics asserting that even a temporary waiver would weaken the effect of sanctions and deny US negotiators future leverage.

Significantly, President Trump took to Truth Social to push back against that claim, and to rebut the rest of Iran’s reported text of the deal.

As of this writing, an official, verifiable text of the proposed Memorandum of Understanding still has not been released to the public, and so no member of the media has any actual knowledge of what the Memorandum says. No member of the media can render any informed opinion about the structure of the deal, or the obligations it imposes upon the United States and Iran.

This is not to say the deal is either good or bad. This is to say that, as of this writing, all of the media commentary the past few days about this latest “peace deal” is complete and total nonsense. There is no informed commentary to be had about the deal because there is no reliable information about the deal. For obvious reasons, assertions by the individual parties to the negotiations are not reliable information unless both sides are in agreement.

Will Iran Accept The Deal?

Even if a deal is nominally signed by representatives of the Khamenei regime, it is far from certain the deal will be accepted by the rest of the regime. Already there are reports of Iranian officials attempting to reassure the regime that a signed peace deal is not a craven act of surrender, even though the deal itself is highly flawed.

Meysam Zohourian, a member of parliament’s economic committee, said phrases such as “turning victory into defeat” or “turning Iran into a colony” were exaggerated and inaccurate, and did not match the current text despite its flaws.

That is not a statement one makes about an agreement that has broad domestic support. No matter what the actual text of the deal may say, we already have reason to doubt the Khamenei regime will be either able or willing to uphold its side.

There are reports of public protests in Iran against the deal, with Iranian women chanting threats against Iranian Foreign Minister Abbas Araghchi, one of the principal negotiators working on the Memorandum of Understanding.

In a video shared by Fars news agency, women in black chadors chanted “death to dishonorable Araghchi, the infiltrator” in front of the building, while waving red and black flags.

The protest comes as the peace deal touted by US President Donald Trump and mediator Pakistan faces opposition from hardline Iranian figures.

They argue that it does not serve Iran’s interests and would deprive Tehran of leverage over the Strait of Hormuz. They also accuse Iranian negotiators of having made too many concessions to secure the deal.

We should note that the Iranian people have no more reliable information about the actual text of the Memorandum than Americans. What they are protesting about the deal may or may not be actually in the deal.

Without speculating on the extent to which such protests are organic demonstrations by the Iranian people or staged events by the Khamenei regime, the reporting is still that there are demonstrations in Iran against the agreement by people who do not have access to any official text of the Memorandum.

Lately, Iranian state media has even been airing interviews casting a fair bit of shade on the Pakistani role in negotiations with the US, claiming Pakistan wasn’t mediating but rather delivering assassination threats.

That is not the sort of commentary Iranian state media wants to see if the objective is to build confidence in the deal when (if?) it is signed.

Regardless of the quality of the deal, if the Khamenei regime signs the deal it will be under a certain domestic pressure to convince the rest of Iran that the deal is a success for Iran. Authoritarian regimes rarely survive if they admit defeat in anything.

The Khamenei regime has to spin any deal it signs as a victory, and if it cannot do so it is unlikely the regime will want to sign such a deal. A deal which will be seen as a defeat will be a body blow to the regime.

We will have no insight into the Khamenei regime’s capacity to present whatever deal is being signed as a victory for the regime until we see the official text of the deal that is being signed. As of this writing, we do not have that text.

Israel-Hezbollah War A Threat? Or An Excuse?

Of course, the constant complication throughout the process of peace talks with Iran has been Israel’s war with Hezbollah. Iran has repeatedly connected peace talks with the United States and the fate of Hezbollah in Lebanon.

While Israel and the US have sought to separate Israel’s occupation of southern Lebanon from the wider US-Israeli war on Iran, Iran has consistently stated that it will not entertain a peace deal that does not extend to Lebanon as well.

The continued hostilities between Israel and Hezbollah have for weeks been at risk of proving to be a last-minute show-stopper derailing any substantive peace effort with Iran.

Even as President Trump was taking to Truth Social to boast about the deal’s imminent signing, Israel launched fresh attacks into Beirut against the terrorist militia.

The IDF said in a statement that it "precisely struck a Hezbollah infrastructure site in Dahieh, Beirut." The army later described the site as a command center "used by Hezbollah terrorists to advance terrorist attacks against the citizens of the State of Israel and IDF soldiers operating in southern Lebanon."

President Trump himself publicly expressed disappointment with Israel over the attack, and especially its timing.

Despite the attack, the Trump Administration continues to project confidence that the deal will yet be signed, with Secretary of War Pete Hegseth taking a measured middle stance on Israel and Hezbollah, and the prospects of that conflict preventing a peace deal with Iran.

“From all I know, we are on track. It’s not a matter of if, it’s a matter of when,” Hegseth said on CBS News’ “Face the Nation.”

“We’re attuned to what’s happening with Hezbollah firing rockets into northern Israel, which they need to stop doing, and Iran needs to encourage them to stop doing that in very adamant ways,” he said.

Hegseth said Israel was “very measured in its response,” adding that it understood “we’re on the verge of a deal.”

“I don’t expect that to disrupt,” he said. “If Iran wants this to hold, they need to pull back Hezbollah, no doubt.”

The rhetoric coming from Iran’s military command, however, is not nearly as optimistic, with the military vowing retaliation for the latest Israeli attack on Hezbollah.

“The sacred ideal of the liberation of Jerusalem and revenge for the blood of Ali Khamenei will never be forgotten,” Abdollahi said.

He added that Iran was waiting for the “smallest mistake” from the enemy to “teach them an unforgettable lesson.”

One clear take-away from Iranian rhetoric is that Iran’s military is at least claiming to be at the same readiness level as US forces in the region. Neither side indicates they are willing to show forbearance on even the slightest provocation.

We see evidence of this in Saturday’s reported Iranian drone attacks on shipping in the Strait of Hormuz, with US Central Command reporting to have swatted them all down.

Last week the US and Iran exchanged a series of significant strikes after an Iranian drone collided with and downed an Apache attack helicopter.

Rabobank’s Ban van Geffen, writing in ZeroHedge, speculated last week that the tenuous ceasefire between the US and Iran, which has more or less held since April 13, was on the verge of breaking down and ending completely.

The US and Iran are still at odds over the frozen Iranian assets, which Iran wants released as part of any deal. But, yesterday, President Trump said that he will not unfreeze any amount of Iranian assets, nor lift sanctions, immediately after a deal is closed: “If they behave, if they do a good job, we start talking” about unfreezing these assets, he said.

And, if it is up to the US Treasury, there may be few assets left by the time Trump is willing to talk. The Financial Times reports that Treasury Secretary Bessent is considering using the Iranian assets to pay for the rebuilding of Gulf countries that were hit by Iranian attacks. So, we’ve now moved from “the US and Gulf countries help with the reconstruction of Iran” to “Iran pays to rebuild the Gulf countries.”

On top of that, new attacks put further pressure on the negotiations, and on the fragile ceasefire that was tacitly extended while negotiations are ongoing. US Central Command reported it took down two Iranian drones that threatened marine traffic near Hormuz, after Iran also fired missiles at Kuwait on Wednesday and at Bahrain on Friday. The US, meanwhile, has struck Iranian radar and surveillance sites.

Fighting between Israel and Hezbollah is also still ongoing. Defence Minister Katz said the country’s air force had launched a strike on a command center in one of Beirut’s suburbs, in response to Hezbollah’s continuing attacks on Israel.

For all the assurances from the Trump Administration that this deal will be signed, there are still multiple forces in play which have the potential to at least delay, if not completely derail, the signing of the Memorandum of Understanding.

No Deal—Yet

As of this writing, the Memorandum of Understanding has not been signed by either side.

As of this writing, the text of the Memorandum of Understanding has not been released.

As of this writing, the odds are excellent that by the time I finish publishing this article the deal will have been signed, rendering everything said here moot.

Will there be a peace deal between the US and Iran? President Trump says yes, and says it will happen today.

Is President Trump right? The world wonders…and waits.

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The May PPI report presents the latest indicator that not only is inflation rising in this country, but also that it is likely to continue to rise for at least a few months more.

At a minimum, the risks of a fresh hyperinflation cycle are growing, given that producer price inflation rose significantly in May.

The Producer Price Index for final demand rose 1.1 percent in May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 1.1 percent in April and 0.7 percent in March. (See table A.) On an unadjusted basis, the index for final demand increased 6.5 percent for the 12 months ended in May, the largest 12-month rise since moving up 7.4 percent in November 2022.

Not only was the 6.5% increase the largest year on year increase since the 2022 hyperinflation cycle, it was also above Wall Street’s projections (although it printed below the Trading Economics forecast).

Of course, there is no real mystery behind the inflation surge: the immediate cause is the disruption of Persian Gulf oil flows by Iran’s illegal closure of the Strait of Hormuz. While the cause is known, however, the ultimate consequence is much less certain.

If the Strait remains closed for a number of months, oil prices are projected to rise much higher, injecting 1970s-style stagflation into virtually all the world’s economies.

If there is a peace deal with Iran and a reopening of the Strait, Persian Gulf oil flows might begin to recover, and stagflation might be avoided.

The key word in both scenarios: “if”. The Producer Price Index is telling us that more inflation and possibly stagflation is on the way. It is not telling us just yet how bad either one will be.

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The Month To Month Rise Was Unexpected

Wall Street and corporate media were caught off guard not by the rise in producer price inflation year on year, which printed just 0.1pp above projection, but by the month on month gain of 1.1%.

Wall Street had been expecting a month on month rise of 0.7%.

Clearly, Wall Street was disappointed.

The miss was large enough that CNBC found that to be the most notable aspect of the PPI report itself.

The producer price index, a measure of final demand costs, increased a seasonally adjusted 1.1% on the month, putting the 12-month wholesale inflation rate at 6.5%. Economists surveyed by Dow Jones had been looking for a monthly move of 0.7%.

CNN was similarly impressed by the month on month figure.

To their credit, corporate media remained largely factual in their reporting of the PPI, a departure from their gaslighting and foolishness over the CPI report a day earlier.

A long-held presumption with some historical validity is that the Producer Price Index gives visibility into what consumer price inflation is going to do over the next few months. A larger-than-expected rise in the PPI to 6.5% year on year indicates that consumer price inflation itself is highly likely to rise even more from 4.2% year on year over the summer at least.

How much more inflation are we likely to see? The data is far less clear on that point.

Headline PPI Inflation, Core PPI Disinflation

In a repeat of the May CPI print, the month on month inflation figure for headline PPI increased slightly, while the month on month figure for core PPI decreased.

Even the year on year print showed a different trend for the core figure than the headline figure.

Core PPI showed disinflation month on month, and almost no change year on year.

While headline inflation did rise month on month, we should also note that the increase was marginal. When we look at the Producer Price Index itself, we see the headline PPI increasing April to May in very close to linear fashion, but core PPI slowing noticeably.

Indeed core PPI and headline PPI have been diverging since January, and the spread between the two indices is larger now than it has been since President Trump took office in January 2025.

The signature difference between the headline and core data, of course, is the inclusion of energy data in the headline index, and the exclusion of it from the core index.

Arguably, we are seeing headline inflation continuing as it has been for the past few months, but core inflation continuing print slower and lower numbers each month.

Is that a forecast for more energy price inflation but with very little contagion affect? That is certainly one interpretation, and a plausible one.

No Surprise Here: More Energy Price Inflation

That energy price inflation increased within the PPI is hardly surprising.

Somewhat surprising, however, was the continued deflation for unprocessed fuel.

Meanwhile, processed fuels felt some price pressure and moved up.

Even more surprising is that retail fuel costs declined in May.

This is in line with the behavior of benchmark oil prices, which, as I noticed in discussing the CPI report, also declined in May.

Yet if oil prices declined, and retail fuel prices declined, what is pushing energy prices up?

Goods Prices Once Again Driven By Energy

Goods prices rose substantially in May, pushed up to 2.8% month on month.

However, just as with the CPI print, there’s no mystery as to the cause—energy price inflation. Putting goods and energy side by side makes that self-evident.

If we strip food and energy prices out from goods prices, we see a much smaller increase.

Just as with the CPI, the PPI is signaling inflation for energy goods, but not for other types of goods. The potentials of a contagion effect, where inflation spreads throughout the economy, do not appear to be on the horizon just yet.

Food Price Inflation Coming?

We should note that food price inflation itself did rise somewhat, although the primary increase within the PPI has been due to energy prices.

The lack of food price inflation may not last, however. Nitrogenous fertilizer prices have been rising since early 2025.

While month on month May’s increase was not as large as April’s, we are still watching fertilizer become more and more expensive over time.

Fertilizer is essential to high crop yields, obviously. If fertilizer prices increase enough to impact fertilizer usage in agriculture, we can reasonably expect food prices to rise some time thereafter, as harvests come in.

Rising nitrogenous fertilizer prices indicates that at least some food price inflation will begin to show up in the not too distant future. It might not be a whole lot but some food price inflation is coming.

Intermediate Demand Rising

The one ominous data within the Producer Price Index Summary remains the intermediate demand data set.

Producer price inflation for Stage 1 Intermediate Demand in particular has been rising steadily since last fall. Stages 2 and 3 have been right behind.

This is producer price inflation within the supply chain. Rising inflation within Intermediate Demand indicates that goods which are used to produce other goods are becoming more costly. Eventually, these inflationary price pressures have to result in higher prices for items.

Rising inflation within Intermediate Demand is a forecast that goods prices are poised to increase. They may not increase next month or the month after, but increased costs of inputs eventually will result in higher prices for various items.

Will It Be Stagflation?

The Producer Price Index Summary is telling us that there will be quite a bit more inflation, and specifically energy price inflation. Consumer price inflation is not done rising.

Will it simply be inflation, perhaps hyperinflation? Will it be stagflation?

The PPI is not going to answer that for us, because it can’t. To answer that question we have to look outside the data, at the underlying drivers of that data.

It is already well established that the catalyst for recent increases in both producer price and consumer price inflation has been the disruption of Persian Gulf oil flows. That disruption is ongoing, as IMF Portwatch data on oil volumes moving through the Strait shows.

Despite the loss of some 20% of global oil supply, oil prices have stabilized and even moved down slightly since the start of the “ceasefire” around April 13.

Arguably, this decline in benchmark crude oil prices is due in part to the releases by multiple nations from their strategic petroleum reserves. We can see, for example, that US oil inventories, both commercial and the SPR, have dropped near lows last seen during and after the 2022 hyperinflation cycle.

At the same time, China has reduced its imports of oil to a 10-year low.

Some of China’s import reductions were inevitable; a large portion of China’s oil imports come from the Persian Gulf and are now cut off. What is notable, however, is that China is not replacing Persian Gulf oil imports with imports from other regions. Instead, China is leveraging its own internal oil reserves to satiate its demand for oil.

The world’s biggest crude importer has leaned on export curbs, refinery run cuts and drawdowns from its massive inventories to cope with the impact of the loss of most Persian Gulf barrels. This has helped ease pressure on global prices, with analysts estimating China’s imports could remain subdued for months to come.

In terms of physical oil volumes, the global economy has managed to replace Persian Gulf oil with reserves held around the world. That immediately begs a simple question: when will those reserves be exhausted?

Some assessments indicate the answer is “soon”, as reserves reach floor thresholds which limit or prevent further releases.

America’s releases have brought relief beyond its shores. Many SPR barrels have made their way from salt caverns in Texas and Louisiana, through commodity traders to buyers in Europe, Asia and Latin America. Yet most analysts expect the pace of deliveries to slow in the coming weeks, from 1.4m to below 1m b/d. Pressure is dropping in the caverns, which risk damage if it gets too low. Bayou Choctaw, the smallest site, is nearly depleted, says Kevin Book of ClearView Energy Partners, a consultancy; others cannot pump more fast enough because of limited pipeline capacity. And the entire SPR has a statutory floor of 150m barrels, just 90m barrels below the level at the end of the current release.

Strategic reserves are finite quantities of stored oil by definition. Once they are depleted they are gone. When the world is no longer able to replace Persian Gulf oil with reserves, if the Strait is still closed and Persian Gulf oil flows are still blocked, the resulting oil supply shock will both drive up oil prices and compel destruction of oil demand.

As I have discussed at length previously, this is a stagflation scenario.

When prices rise because of an abrupt drop in supply—a supply shock, in other words—price stabilization will only be achieved when demand drops to align with the diminished supply.

Organically, the price increases achieve this demand destruction by driving marginal consumers and marginal consumption out of the marketplace. Central bank interest rate manipulations seek to achieve similar results by constraining and restricting consumption and demand by raising the cost of capital. Regardless of how the demand destruction is achieved, demand destruction is necessary to bring physical supply and physical demand back into equilibrium.

Note that when demand is reduced, an economy slips into recession.

Bringing this back to the May Producer Price Index, is the data signalling inflation or stagflation? Given the overall economic and geopolitical backdrop of ongoing war with Iran and continued closure of the Strait of Hormuz, the prognosis leans heavily towards stagflation.

This could change. As of this writing, President Trump is touting a deal that has presumably been reached with the Khamenei regime in Tehran. Current reporting is that the deal includes reopening the Strait.

If the Strait reopens, much of the stagflation scenario can potentially be averted. It will take time for oil flows to return to normal, and depending on what has happened to Persian Gulf oil production—in particular how many wells have been shut in—some production may not come back for a period of months or even years.

That would be an inflation scenario. Prices would rise in the short term, stabilize, and potentially even come down in the long term.

If the Strait does not reopen, the stagflation scenario is simply a matter of time before oil reserves are depleted and oil prices start rising.

The May Producer Price Index Summary is telling us that higher prices will come throughout the summer, that at least some inflation is already “baked in” to the economy.

Whether that inflation turns into stagflation depends entirely on whether there is peace with Iran and a reopening of the Strait of Hormuz.

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We need to remember that when discussing the May Consumer Price Index Summary, because while corporate media speaks in almost reflexively pearl-clutching terms of inflation “jumping”, the data tells a different story.

The all items index rose 4.2 percent for the 12 months ending May, after rising 3.8 percent for the 12 months ending April. The all items less food and energy index rose 2.9 percent over the year, following a 2.8-percent increase over the 12 months ending April. The energy index increased 23.5 percent for the 12 months ending May. The food index increased 3.1 percent over the last year.

At year on year inflation of 4.2%, the May CPI print was right in line with Wall Street projections, and just slightly above the Trading Economics forecast of 4.0%.

At 4.2%, the CPI print also came out exactly where the Cleveland Fed’s inflation nowcast projected.

4.2% year on year is quite a bit more inflation than what we had in February, before the start of Operation Epic Fury and Iran’s illegal response of closing the Strait of Hormuz.

However, we must also remember that year on year inflation for April was 3.8%. For March it was 3.3%, and for February it was 2.4%.

In other words, the big “jump” in consumer price inflation happened in March, and we are actually seeing disinflation since then, meaning inflation increased by less in May than in April, and less in April than in March. The energy price shock is, for the moment, proving to be a good deal less shocking than originally anticipated.

The blunt reality is that corporate media is once again peddling a narrative untethered from the facts. Either they are lying (again) or they do not know how to read the data, but inflation did not “jump” in May. That happened in March.

I leave the reader to decide how much of the media’s gaslighting is from malice and how much is from simple stupidity.

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Corporate Media IS Gaslighting

We only have to look at the headlines corporate media outlets are using to describe the May inflation report to see the narrative they wish to advance.

There is the New York Times getting the data exactly wrong:

CNN, still the most busted name in Fake News, decided to be equally factually challenged about oil prices (oil prices came down in May).

Even Bloomberg chose a headline that was somewhat to the left of accurate.

Gasoline prices did rise significantly in May, but the increase was nowhere near the surge we saw in March.

Consumer price inflation rose in May, and rose significantly. The data does confirm that much.

What the data does not confirm is the presentation of inflation rising at an increasing rate. That did not happen in May. Overall, consumer price inflation rose at a slower rate. Inflation decelerated. Inflation did not accelerate in May.

When inflation rises at a slower rate, that is called “disinflation”. That is what we have in the May report.

All Rates Of Change Matter

As anyone familiar with a dictionary can quickly verify, “accelerate” means to go faster. When we look at the year on year inflation graph for the Consumer Price Index, do we see evidence of acceleration? No. We do not.

When a graph bends down even a little, that means the rate of change has decreased, and close inspection of the data confirms what the eye can see plainly looking at the graph: from March to April to May it bends down.

At 4.167% in May, year on year inflation rose 0.388pp from April’s 3.779%, which represented a 0.493pp rise from March’s 3.286%.

In order for inflation to have accelerated (or “jumped” or “surged”) in May, the change from April would have had to have been greater than the 0.493pp from March to April. As the change from April to May was less than the change from March to April, what the data shows is inflation rising more slowly in May than in April.

We can see this even if we just look at the raw index graph for both headline and core CPI.

Just the fact that both graphs bend down moving from March 2026 to April 2026 to May 2026 is itself absolute proof that inflation slowed in May. It did not slow by much, but what it absolutely did not do is rise faster.

Even when we look at the month on month chart, we see less of headline and core inflation in May than in April.

This is not to say that inflation did not rise significantly in May. It did. Because inflation rose in May, the “Real Misery Index”—consumer price inflation plus real unemployment (including those persons not in the labor force but who want a job now)—also increased.

We must also recognize that, with the May inflation print, inflation is once again outpacing earnings even for the higher paying goods producing jobs.

We cannot say the May inflation report is good. Consumer price inflation rose 4.2% in May, and that is not at all good.

It also rose less in May than in April.

When inflation was printing north of 9%, such disinflation was of great interest to corporate media. The reader is left to draw their own conclusions why corporate media is not interested in such disinflation now (*cough* “Trump!” *cough*).

Energy Price Inflation Almost Unchanged

We still have energy price inflation in May. What we do not have is considerably more energy price inflation in May than in April. 3.80% to 3.88% is not considerably more inflation month on month, particularly for energy.

Even with the components of the energy index, we have more disinflation than outright inflation.

Fuel oil and diesel dropped a full percentage point month on month, from 4.3% to 3.3%. Electricity dropped from 2.1% month on month to 0.6% month on month. Piped gas slipped into outright deflation in May, printing at negative 0.6%.

Gasoline did increase in May, rising 7% month on month, which is a significant increase over April’s 5.4% month on month. That is not a price movement shared by other energy index components.

We still have significant energy price inflation, and gasoline is a significant factor in that inflation. But overall we simply do not have more energy price inflation in May than in April. We have energy price disinflation in May. That should make a difference in how we view the data.

One reason why energy price inflation was not worse in May: Oil prices were lower at the end of May than at the beginning.

Remember how CNN said oil prices “jumped”? I think they meant to say “dropped”.

Actually, they probably did mean to say “jumped”, but the correct word would have been “dropped”, although that would have not made for nearly as gripping a headline.

Food Price Inflation Cooled, Durables Dropped

Food price inflation also did not jump in May, but cooled, from 0.5% month on month to .16%

May food price inflation month on month was actually the third lowest food price inflation print since the start of President Trump’s second term.

Durable goods printed their second consecutive month of outright deflation month on month.

It is rather difficult to credibly speak of inflation surging when the data is printing deflation.

Even nondurable goods printed disinflation month on month, from 1.4% in April to 1.2% in May.

“Aha!” I hear you shout excitedly, “1.2% is higher than it was all last year!”

That is true. For the past three months nondurable goods price inflation have been considerably above where was throughout 2025.

However….

Nondurable goods includes energy and fuel, and when we put the nondurable goods and energy indices side by side, it is immediately clear from where literally all nondurable goods price inflation month on month comes.

If nondurable goods overall showed disinflation, and energy showed marginal inflation, printing well above the nondurable goods index overall, then we most likely have nondurable goods price deflation for everything except energy.

Your Mileage Will Vary, And So Will Inflation Rates

While headline inflation year on year is a sizeable number, when we look at the components of that inflation, we see that energy is by far the only category showing significant energy price inflation.

We see that if we index the components of consumer price inflation to January 2021.

Durable goods have been in a long-term deflation trend, and even nondurable goods were largely treading water in May.

Even if we bring the index forward to January 2025, we still do not see significant inflation outside of energy.

When we pause to consider that much of the rise in nondurables is because of energy, it immediately becomes clear that we are not seeing any substantial inflation at all except for energy.

We know why we are seeing energy price inflation. The data indicates we are not seeing much inflation anywhere else.

To blithely speak of inflation “jumping” when the data shows the reality to be far more nuanced is stupidity at best, malice at worst, and gaslighting regardless. The reality is that there is some inflation beyond energy, but the bulk of May’s consumer price inflation print is energy, almost to the exclusion of everything else.

This Is Not The Stagflation Shock We Feared (Not Yet)

We should not pretend that a headline consumer price inflation rate of 4.2% year on year is a good inflation print. It isn’t.

Headline inflation rose in May, rising not quite as much as it rose in April.

Yet virtually all inflation components showed disinflation for May, rising by less than they did in April. Without energy price inflation, we might have even seen more outright deflation than we did.

Nor should we pretend that the energy price shock is not real. It is extremely real, and very likely will have some very real consequences.

We should also not lose sight of the fact that the war with Iran is ongoing, that the Strait of Hormuz is still illegally closed, and that Iran has roiled energy markets by closing off the Strait.

The forces which injected a price and supply dislocation in global oil markets, thus producing a spike in consumer price inflation here in the United States, are still present. Those forces may even be getting worse.

If (when?) the buffering effects of large scale strategic petroleum reserve releases is exhausted, and if the Strait of Hormuz remains blocked, we could very easily see another energy price shock even greater than the one we saw in March. We might even see a contagion effect as inflation moves beyond energy prices and into multiple supply chains and output channels. What China has been seeing for the past couple of months we could be seeing in the US economy within a month or two.

The disruption of global oil supplies as a result of Iran illegally closing the Strait of Hormuz and shutting off 20% of the world’s oil flows is an unequivocal stagflation force and will, if it is not buffered and marginalized, have impacts which will reverberate through the US economy.

That disruption is threatening or producing stagflation in virtually every economy on earth. That disruption has not yet produced significant stagflation in the United States.

Perhaps that is because the United States is reaping significant benefit from strategic petroleum reserve releases. Perhaps that is because the United States economy is proving to have greater strength and resilience than we might have been tempted to conclude.

Regardless of the reason, the reality is that we are not seeing any destabilizing price surges outside of energy prices, at least not yet.

That could change. If the closure of the Strait of Hormuz continues for long enough, it very likely will change. Depending on what we see in producer price inflation for May (remember, the PPI is a leading indicator for the CPI), we may see destabilizing price surges outside of energy by July or August.

We are are not seeing those destabilizing price surges outside of energy in the May Consumer Price Index Summary. Energy price inflation is up, and that is pushing headline inflation higher. That is the sum total of the inflation we are seeing.

Even at that, the inflation we are seeing in May is noticeably less than what we saw in April. The inflation we saw in April was noticeably less than what we saw in March. The energy price shock was at its most shocking in March, two months ago.

That is what the Consumer Price Index data plainly shows, but that is not what corporate media is telling you.

Corporate media is feeding up headlines that say inflation is accelerating rather than decelerating. Corporate media is feeding up narratives that say prices surged more in May than in March. Corporate media is feeding up stories on inflation that are simply not accurate, and in some instances are demonstrably not true.

Consumer price inflation for May was definitely not good. 4.2% headline inflation year on year qualifies qualifies as “bad”.

Corporate media gaslighting on the actual state of consumer price inflation for May is proving to be even worse. Again.

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For nearly three years, the labor market has looked weaker than the headline numbers suggested. Now we have a string of jobs reports indicating the reverse is now true.

Most recently we had the May ADP National Employment Report indicating the US economy is shifting from jobs recession to jobs recovery. That was a marked improvement over the April Employment Situation Summary, which indicated the jobs recession is showing signs of ending, but there are several stagflation indicators on the horizon.

Now comes the May Employment Situation Summary, which makes a very strong case for declaring a jobs recovery underway.

Total nonfarm payroll employment increased by 172,000 in May, and the unemployment rate was unchanged at 4.3 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in leisure and hospitality, local government, and health care. Employment in financial activities declined.

This was not merely a strong jobs report. Total nonfarm payroll employment printed at double Wall Street’s projections, and nearly 70% above the more optimistic Trading Economics Forecast.

It is not a perfect jobs report, and we should not look for a perfect jobs report. Even so, the May jobs report carries much of what I have said would indicate a jobs recovery:

Job growth was still broadly based (although not as broad as April’s).

Wage growth does not appear to have lost ground to inflation (yet—we won’t have the May Consumer Price Index data until later this week).

The overall employment level rose for the first time in months.

There are still caveats. Real unemployment did rise slightly, although the increase in the number of individuals not in the labor force who want a job now was very nearly offset by the decrease in official U-3 unemployment.

Yet even when we drill down into the details of the May jobs report, the data points more towards jobs recovery than jobs recession.

Is a jobs recovery underway? The data has been suggesting that for some time, now, and it is increasingly difficult to deny.

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Lou Costello Labor Math?

As always, we begin by assessing the extent to which the jobs numbers are reliable. We must always take the data with a grain of salt, in part because we know there will be revisions.

We also have to reconcile the data from the two independent surveys within the Employment Situation Summary: The Current Population Survey (Household Survey) and the Current Employment Statistics (Establishment Survey).

In recent months, the Household Survey’s Employment Level has diverged substantially from the Establishment Survey All Employees data, suggesting the evils of Lou Costello Labor Math are lurking beneath the surface of the jobs report. Yet the May movements for both data sets were strikingly similar, with both showing job growth.

One month of synchronized movements does not mean the taint of Lou Costello Labor Math has been completely banished from the jobs data, but it does give an additional degree of confidence in the May data.

Even more remarkable are the revisions to the March and April data sets. The revisions were not just positive, they were extremely positive (emphasis mine).

The change in total nonfarm payroll employment for March was revised up by 29,000, from +185,000 to +214,000, and the change for April was revised up by 64,000, from +115,000 to +179,000. With these revisions, employment in March and April combined is 93,000 higher than previously reported.

We are presented with an additional 93,000 jobs for 2026 than we have had reported previously. To put that in perspective, the largest job growth number for 2025 was the April 2025 jobs report, which had a revised figure of 108,000 jobs. The revisions on the May 2026 report is on par with receiving an entire extra month of job growth.

Even more significantly, those revisions mean that the revised job totals for 2026 to date are 66,000 jobs higher than the initial reports.

Time is making the BLS data look better and not worse. We have not seen this for several years, and it is a welcome change.

Are the jobs numbers completely trustworthy? The answer is always going to be “of course not,” but between the two surveys showing similar job growth trends and the revisions trending positive rather than negative, we have reasons to be more optimistic about the May jobs data than has historically been the case.

We still need to take the data with a grain of salt, but this month’s grain is quite a bit smaller than it has been.

That bodes well for a jobs recovery narrative.

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Broad Job Growth, Especially In Goods Producing Jobs

A key indicator of a jobs recovery is that the job growth itself is fairly broad, encompassing most job sectors. The broader the job growth more indicative it is of broad increases in labor demand, which in turn drives real wage growth, which in turn powers real consumption growth and real economic growth.

While more sectors reported job loss in May than in April, job growth for May was still fairly broadly based, and broadly based for the third month in a row.

When job growth is thus both broad and deep speaking of a jobs recession quickly loses credibility.

This is one aspect of the job revisions that is especially significant. When we examined the April jobs report, job growth was not nearly as broadly based as April is printing now.

The April revisions in particular resulted in a much healthier jobs growth outlook.

Particularly encouraging is that the past three months have seen job growth across the three main goods producing sectors: Mining, Construction, and Manufacturing.

Given the 2025 had been a bloodbath for Manufacturing jobs, with Construction and Mining jobs scarcely any better, there is no denying that the Employment Situation Summary has been showing a decided trend reversal for goods producing job growth.

As I have said multiple times before, Manufacturing job growth is key to President Trump realizing his Agenda 47 objective of making the United States a manufacturing superpower, the 2026 jobs data shows we may be finally seeing the Manufacturing jobs growth needed for that goal to eventually be met.

While job growth across goods producing sectors was positive, job growth in service jobs was heavily concentrated in Healthcare and Leisure.

Healthcare has been a mainstay of job growth in this country since before the start of the second Trump Administration, and it is continuing to be a mainstay of job growth.

Leisure has been somewhat weaker in job growth over the past two years, but it has been getting stronger. This is why we look for broad job growth as a sign of jobs recovery—we want to see additional sectors pick up employment momentum without pulling it away from other sectors.

Of the three service sectors which lost jobs, Finance and Information have been losing jobs for months.

May is simply the latest in a long downward trend of job loss for both sectors.

The third sector which lost jobs was Trade, Transportation, and Utilities (TTU).

TTU jobs had been declining throughout 2025, although 2026 has been showing signs of a reversal there as well. Whether the marginal loss of TTU jobs in May marks the end of sector-level strengthening is not something we will be able to see for a couple of months yet.

The final major service sector, Professional and Business Services, is something of a cautionary note, for although the job growth is still positive, the level of growth has been diminishing in recent months.

Is the sector about to slip back into the negative, where it was for most of 2025? The trend certainly suggests that it could.

While job growth is far from perfect across the board, most job sectors are showing job growth not just for May but for most if not all of 2026 to date.

That definitely bodes well for a jobs recovery narrative.

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Joblessness Falling? Or Rising Still?

One part of the jobs recovery narrative that is still not certain is whether joblessness is rising or falling in this country.

The unemployment data from the Household Survey is a little contradictory on this point.

The official U-3 Unemployment Level declined 66,000 in May, but the overall number of real unemployed (official unemployment count plus the number of individuals not in the labor force but who want a job now) increased by 76,000. The net increase in joblessness was 10,000, which amounts to less than a 0.01pp increase in the real unemployment rate.

To make sure the unemployment waters are even muddier, we have growing evidence of a trend reversal since November of last year, with both official and real unemployment rates declining, even though the longer term trend since 2023 is still that of rising joblessness.

We see the same divergent long-term and near-term trends across the alternative “official” unemployment data.

Has a trend reversal taken place, such that joblessness is now on the decline in this country?

The evidence of that is accumulating, and that evidence augurs very well for a jobs recovery narrative.

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Employment Level Rose In May

Amplifying the improvement in the unemployment data is the increase in overall employment per the Household Survey.

The Employment Level had been declining in this country (which immediately challenges other job growth narratives), but in May it printed an increase of 149,000 workers.

One month does not make for a trend reversal, but with the Employment Level well below where it was when President Trump took office, any sign of improvement is going to be welcome. If the Establishment Survey figures of job growth withstand scrutiny, we should expect to see the Employment level trending up again in the near future.

Naturally, the Employment-Population Ratio also increased in May, and was likewise a welcome change from a steady rate of decline.

With any luck, the marginal increases for both numbers will continue. Rising employment levels and a sustained but increasing Employment-Population Ratio would be an extremely prominent pair of jobs recovery signals.

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Wage Growth Still Not Quite There

Nominally, wages rose across all job sectors in May. Whether wages rose enough to keep pace with resurgent inflation remains an open question for May.

While wage growth has done better in recent years, most sectors still have not seen enough wage growth to overcome the income reduction effects of the 2022 hyperinflation cycle. Goods producing jobs did largely recover from the 2022 cycle, but consumer price inflation’s recent uptick as a result of Iran illegally closing the Strait of Hormuz is threatening could pose another setback.

Wage growth will be a problematic data point for some time, as there have been only three job sectors where weekly earning have overcome the effects of the 2022 hyperinflation cycle: Leisure, Professional Services, and Construction.

Of those, only Leisure has printed strong enough wage growth to plausibly weather currently resurgent inflation. The wage recovery within Construction and Professional Services is marginal enough that any significant increase in consumer price inflation will eliminate those sectors’ real wage gains.

While oil prices have moderated as of late, we should continue to anticipate ongoing energy price inflation and a still-reverberating energy price shock.

Depending on whether inflation prints hotter or cooler for May will determine whether wages kept pace with current inflation or lost ground to rising inflation.

But for the energy price shock and resulting energy price inflation, wage growth in this country arguably would look much better relative to inflation than is does at present. Of course, we do have energy price inflation and that does diminish real wage growth overall.

Even so, until we see the May consumer price index data, we do not see inflation having discernible impact on real wages—not yet.

Wage growth provides the weakest and most problematic support for a jobs recovery narrative. Perhaps the most balanced assessment of the wage data within the jobs report is that May wage growth does not undermine a jobs recovery narrative, even if it does not necessarily provide clear support for that narrative.

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Stagflation Signals Status?

With the ceasefire between the US and Iran having technically “held” since mid-April, the status quo in the Persian Gulf has not changed much.

Iran still has illegally closed the Strait of Hormuz. The US is still blockading Iranian shipping.

As of May 31, tanker traffic through the Strait is still virtually nil.

Overall cargo volumes are equally nonexistent.

Because the Strait is still virtually completely closed, all the stagflation pressures we have seen for the past couple of months are still present.

In particular, oil production in the Persian Gulf has plummeted.

Only the United Arab Emirates has managed to regain any of its lost oil production.

The major industrial economies of the world have so far been able to buffer the resultant supply shock with releases from strategic petroleum reserves.

If the current drawdown trend continues, there is a point in the near future when total global observed oil inventories, including strategic reserves, will no longer be able to buffer the supply shock. When that happens, oil and energy prices are going to move sharply higher.

Currently, energy prices have been moderating, with oil prices trending down from their earlier peaks.

When the buffering of strategic reserve releases is exhausted, this moderating trend will cease. Oil prices will move sharply higher, carrying other commodities prices higher (as they have already done). Global stagflation is largely baked in without a quick peace deal, and even then we might see some of this.

While the price and supply shock side of the stagflation scenario is almost sure to happen, given the lack of progress on peace talks, we have to also remember that stagflation is the collision of inflationary price shocks with the deflationary forces present in a weak or underperforming economy.

If job growth is strengthening in this country, if the economy is therefore growing more or less strongly, then the stagflationary impact of the price and supply shock in energy is reduced in direct proportion to the growth.

Stagflation requires a weak or underperforming economy. Strong job growth would mean a strong and potentially overperforming economy.

If the job growth reported in the Employment Situation Summary over the past few months continues for the next two to three months, when the next price and supply shock does hit the US economy—which most prevailing forecast anticipate in the next one to three months—the US economy may be in a stronger position to withstand that sort of body blow.

The stagflation signals are not going away, nor are they even really diminishing, but the strengthening job markets raise hope that the ultimate stagflation impact arising from the disruption of Persian Gulf oil flows will be proportionally muted.

The best way to avoid 1970s-style stagflation in the US is for there to be an actual jobs recovery over at least the next few months.

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No Question: May Is A Good Jobs Report

There is no disputing that the May Employment Situation Summary is a good jobs report.

There is also no disputing that the May ADP National Employment Report is a good jobs report.

The April JOLTS report is more problematic, but it also points to there being at least some job growth in April.

Over the past few months, the jobs reports have reported steadily improving outcomes. We are seeing more and more job growth, and we are seeing it in more and more job sectors.

There is no denying that is what a jobs recovery should look like.

If we can be certain the trends of the past few months will be the trends of the next few months, there would be no question that we were in the midst of a jobs recovery.

That uncertainty about the future is the only restraint on calling a jobs recovery is now underway. If job growth suddenly stops next month, or reverses in a big way as it did in February, the jobs recovery narrative would sound immediately foolish.

If job growth continues, not calling the jobs recovery would also sound immediately foolish.

Is a jobs recovery underway? For now at least, yes, it is. Since March, we are seeing improving job growth numbers. Since March, the revisions to the jobs report have been positive. Wages are growing, and the only reason they might not keep pace with consumer price inflation is the resurgence of consumer price inflation.

We should be mindful that this is a very young jobs recovery. It likely will not take much to snuff out this recovery effort, and the price and supply shocks likely heading towards the US economy over the next couple of months definitely fit within the concept of “much”.

For now, we have a jobs recovery. After nearly three years, we are seeing meaningful job growth in the US economy. We cannot say how long this recovery will last, but it is appropriate to celebrate the jobs recovery while it does last.

The May Employment Situation Summary is a good jobs report which shows a jobs recovery is underway. 2026 is so far a good year for job growth.

That’s good news. We should enjoy it while it lasts (because it may not last).

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The May ADP National Employment Report presents a case for a nascent jobs recovery that is difficult to ignore, with a jobs print showing 122,000 jobs were created last month.

It certainly is difficult to challenge ADP Chief Economist Dr. Nela Richardson’s assessment of the report.

Hiring was more broad-based in May than we’ve seen in the last few years. The labor market continues to show sustained momentum going into the summer hiring season.

The report surpassed Wall Street’s increasingly optimistic consensus projection, and completely blew pass the Trading Economics forecast.

Another encouraging note: ADP’s revisions to the April report amounted to a relatively minor reduction, from 109,000 jobs to 105,000 jobs—still a strong headline jobs figure.

Is the jobs recession really over? At the very least we must acknowledge the increasing number of signals that it is.

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Across The Board Growth

What makes the ADP report compelling is not merely that there was broad based jobs growth, but that there is a growing trend of broad-based jobs growth. May was the third consecutive month that nearly all jobs sectors showed at least some employment increase.

Aside from the March bloodbath in Trade, Transportation, and Utilities, the ADP report has shown job growth across most every sector.

Equally encouraging is that job growth has been spreading across all employer sizes.

In March, job growth was almost exclusively concentrated in small establishments. In May, while small establishments still led the way, larger firms are also adding jobs.

Just on these two metrics alone we can say that the ADP report is a strong signal that a jobs recovery is underway, with jobs growth that is both broad and increasingly deep.

Stepping back and looking at a longer horizon, the ADP data also suggests that the pace of job growth has been trending up in recent months.

After the expected rebound in employment in 2021 following the 2020 COVID Pandemic Panic, job growth slowed markedly especially in 2023 and 2024. The first few months of 2025 even showed some job loss. Since last summer, however, the ADP data has been charting consistent job growth, and larger monthly jobs numbers since earlier this year.

There is no denying that this is what the beginnings of a jobs recovery looks like.

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Manufacturing Job Growth…Yay!

As longtime readers are aware, the manufacturing sector is one to which I pay particular attention when assessing jobs numbers. Not only do manufacturing jobs generally pay more, but manufacturing employment is essential for President Trump to realize his Agenda 47 goal of making the United States a “manufacturing superpower.”

The past few years have not been kind for manufacturing. It is particularly good news, therefore, that the May report showed the first positive jobs print for manufacturing in two years.

Construction job growth continued, although it showed further cooling from April.

Among goods producing jobs, only Natural Resources and Mining showed job loss.

Among service providing jobs, only the Information sector showed job loss.

Professional and Business Services, Trade, Transportation, and Utilities, Healthcare, Finance, and Leisure all showed some level of job growth.

Not only did all but two sectors print job growth in May, but even sectors that have been shedding jobs in recent months are now picking up jobs. Information is the lone standout in this regard, as it had been showing job loss more often than not since the start of 2025.

Service providing jobs grew substantially more than goods producing jobs. Perhaps more significantly, service providing jobs have been on the upswing in recent months, even as goods producing job growth has cooled somewhat.

I have said before that sustained broad job growth was needed before we could say with confidence that the jobs recession has ended. The May ADP jobs report printed sustained broad job growth.

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Unemployment Trending Downward

When we look outside the ADP report to the weekly unemployment claims data, in both initial and continuing claims we are seeing a downward trend that points to steady improvement in the unemployment outlook.

We do need to apply some caveats to the unemployment data. Not only has the claims data moved up in recent weeks, but the longer-term unemployment picture from the BLS Employment Situation Summary is still showing rising joblessness dating back to mid-2023.

The ADP report is printing strong jobs growth and is clearly signalling a jobs recovery is underway, but that recovery is unquestionably in its early stages, and it is still extremely fragile. A negative jobs Employment Situation Summary report, or even an underperforming one, would be a serious challenge to a jobs recovery narrative.

The May Employment Situation Summary comes out on Friday. Whether the BLS data confirms or rebuts the ADP data will go a long way towards solidifying or weakening the case for a jobs recovery in this country.

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PMI Data Still Invites Skepticism

As noted the other day, the PMI data from the Institute for Supply Management is both a case for a jobs recovery and a case against it.

The case for is that both the Manufacturing PMI data and the Services PMI data have been printing expansion since the first of the year.

The case against is that both Manufacturing Employment and Services Employment have been printing contraction.

How can industry surveys be printing job growth on the one hand and employment contraction on the other? If we presume pristine data sets then the answer is clearly that they cannot—one data set or the other must be incorrect.

However, this is also where we have to remember that we do not have pristine data sets, and even ADP has in the past succumbed to the temptations of fudged Lou Costello Labor Math to present rosier metrics than were really warranted.

The ADP data may be highly inaccurate. The ISM PMI data may be highly inaccurate. Both data sets may be inaccurate to varying degrees.

If the job growth trends reported by ADP are real, then in due course we should expect to see the ISM PMI data on employment move into expansion territory. Similarly, if the Manufacturing and Services PMI metrics themselves continue to print expansion, we should expect to see that industry growth percolate down into employment growth.

The longer the PMI employment data shows contraction, the more we should be cautious about accepting the ADP jobs data at face value.

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The ADP Report Is A Strong Report

Despite the caveats and precautions, there is no denying that the ADP Employment Report is a strong jobs report. There is no denying that it is the latest in a string of increasingly stronger jobs reports.

On its own, the ADP data is signalling that a jobs recovery is starting to take hold in this country.

Will the BLS Employment Situation Summary due out on Friday show the same strong jobs numbers? Wall Street is guardedly optimistic, with a consensus projection of “only” 85,000 private sector jobs.

In March and April the projections were conservative, and the BLS job prints blew right past them. Will we see the same again for May?

That is, of course, the hope. Labor markets have languished in this country for far too long as it is, and a turnaround is absolutely overdue. A strong jobs report from the BLS, coming on the heels of a strong ADP report, with both reports the latest in a series of strong jobs reports, would be the strongest signal yet that a jobs recovery is finally taking hold in this country, and that it has been for the past few months.

We have more than a few reasons to believe that hope is not in vain. We still have a few reasons to remain somewhat skeptical.

Is a jobs recovery underway in this country? The ADP jobs report is the latest indication that it is.

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The number of job openings increased to 7.6 million in April, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and total separations decreased to 5.1 million and 5.0 million, respectively. Within separations, both quits (3.0 million) and layoffs and discharges (1.7 million) were little changed.

The 7.6 million job openings figure easily surpassed Wall Street’s projection as well as the Trading Economics forecast, both of which were 6.8 million.

The better than expected job openings number excited corporate media outlets, as it put the number of available job openings above the reported number of unemployed individuals.

Yet even just delving into to the levels of hires and separations, it is clear that the optimism corporate media infers from the job openings numbers does not extend very far. Employers and employees alike are still showing uncertainty about the current economic state of affairs.

Still, several sectors showed job growth in the JOLTS report, even when they reported job loss in the Employment Situation Summary.

Is the April JOLTS report a good jobs report? Maddeningly, the answer is ultimately “it depends”. For some sectors it is a good report. For others...not so much.

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Hiring And Separations Are Down

While the Bureau of Labor Statistics still found a way to inject its favorite jobs formulation of “little changed”, the devil in the detail is that overall hiring fell in April, with overall separations falling even more.

The corporate media assessment of these numbers is to impute a lack of overall confidence among both employers and employees.

The department’s Job Openings and Labor Turnover Survey (JOLTS) showed that layoffs fell but so did the number of Americans quitting their jobs - a sign of confidence in their prospects. And the report’s measure of gross hiring also dropped in April, suggesting that companies remain reluctant to add new workers even as they hold on to the ones they have.

Despite the apparent unease, employers presumably are also showing signs of optimism, given that reported job openings surged to a three-year high.

The jump in job openings certainly appears to be an optimistic signal, given that it pushed job openings above the number of unemployed.

The jump in openings put the available jobs above the total of unemployed workers. The rate of openings compared to the size of the labor force rose 0.4 percentage point to 4.6%.

As the top level data shows, however, the surge in job openings was met with a drop in overall net hiring.

Still, the net hiring trend among private employers was still positive, and following the same movements as the Employment Situation Summary’s All Employees data set.

While still positive on the month, indicating real job growth, that the net hiring data cooled in April is a subtle reminder that jobs markets in the US have quite a ways to go before a recovery can be said to be in full swing.

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Manufacturing Jobs Rose

One encouraging note within the jobs report is that net hiring rose in the manufacturing sector.

Manufacturing is one sector where the JOLTS data diverged from the Employment Situation Summary, which showed job loss in manufacturing for April.

Construction was another sector where the JOLTS data was markedly better than the ESS data.

Net hiring in construction strengthened in April, even though the ESS data showed job growth in construction cooling.

Trade, Transportation, and Utilities, a mainstay of service providing jobs, printed especially strong net hiring numbers.

Other service sectors showed net hiring cooling off, although professional and business services did show improvement over March, when net hiring was negative.

Leisure showed a marked cooling in net hiring, printing almost no job growth in April.

Healthcare, which has been the major source of jobs since the start of 2025, had the second weakest net hiring numbers over that time frame.

In what might be an encouraging note for the May ESS report due out on Friday, in most sectors net hiring outpaced job growth per the ESS, a notable shift from the March data.

While overall private-sector net hiring was in line with private-sector job growth from the ESS, the sector-level numbers invite greater skepticism and unease about what’s up next for US jobs markets.

Was the April JOLTS report a good report? It depends on the sector under scrutiny. Some had a good month, others had a less good month.

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ISM Data Invites Skepticism

The PMI data for April from the Institute of Supply Management provides further encouragement for skepticism.

The April Manufacturing PMI print showed Manufacturing continuing to expand in 2026.

The Services PMI print for April also showed expansion, although it also cooled for the second month in a row.

However, in contrast to the JOLTS net hiring data for Manufacturing, the ISM data showed Manufacturing employment contracted in April.

The ISM data has not shown manufacturing employment expanding since January of 2025, a trend which confirms that manufacturing employment has been shedding jobs for quite some time.

The ISM print also showed Services employment contracting, in marked contrast to the overall JOLTS data.

While the overall PMI data set is showing broad economic expansion, the PMI data does not show that expansion percolating through to increased employment.

How much actual job growth was there in April? Arguably, less than the government data sets are showing, and potentially none at all.

What is the state of jobs markets in the US? It depends on the report being examined, as well as the sector.

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No Obvious Energy Shock Impact

One encouraging aspect of the April JOLTS data is that it confirms that the energy shock from Iran’s illegal closure of the Strait of Hormuz and consequent disruption of global oil flows has not yet had any obvious effect on US jobs markets.

While the decline in both hiring and separations arguably shows a broad lack of confidence across jobs markets, the recent volatility in hiring and separations, as well as the longer term downward trend in both, indicates that jobs markets have been nothing if not skittish. Confidence is not a primary feature of US jobs markets at the moment, and has not been for quite some time.

Are jobs markets in the US improving? Broadly, the data shows that they are, although the improvement is uneven. However, some sectors, such as healthcare, may be showing signs of deterioration.

Certainly the JOLTS data gives a more optimistic portrayal of job growth for April, printing greater job growth in most sectors than than the ESS data. Whether that tells us anything about what sort of prior months’ revisions to expect on the upcoming May Employment Situation Summary remains to be seen.

Even though the JOLTS data shows uneven and somewhat problematic job growth, that events in the Middle East have not yet had a negative impact on US jobs markets augurs well for how well the US will be able to withstand the economic attritional battle currently being waged between the US and Iran.

As is the case in all attritional warfare, the longer the conflict goes before we start seeing the eventual signs of demand destruction, including broad based job loss, the better the US position is overall.

Against the backdrop of the war with Iran, is the JOLTS report for April a good jobs report? Arguably, yes.

Does the JOLTS data show the jobs recession in this country ending? Overall, the report certainly leans in that direction. If we continue to see sustained high levels of net hiring, especially if those levels are reflected in other jobs reports such as the Employment Situation Summary, then we definitely have to consider if the jobs recession is coming to an end.

The individual sector data is not quite as optimistic as the headline figures, however, and for that reason we should not leap to the conclusion that the jobs recession has completely ended. We can and should acknowledge that, for many sectors, there is confirmed job growth.

Whether one likes or dislikes the April JOLTS report ultimately comes down to the particular portion of the data one wishes to scrutinize.

Is the April JOLTS report a good report? It depends.

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From the preceding month, the PCE price index for April increased 0.4 percent. Excluding food and energy, the PCE price index increased 0.2 percent.

From the same month one year ago, the PCE price index for April increased 3.8 percent. Excluding food and energy, the PCE price index increased 3.3 percent from one year ago.

There is no mystery as to why inflation has returned: the United States, like the rest of the world, is experiencing an energy price shock as a result of Iran’s illegal closure of the Strait of Hormuz as part of the war between the US and Iran.

What is remarkable is that, somewhat contrary to expectations, the impacts of that energy price shock have not extended beyond energy prices into other goods and services, despite the rise in a variety of commodities prices and inputs.

Energy price inflation pushed the headline PCEPI number higher year on year, yet month on month consumer price inflation eased at the headline level, at the core level less food and energy, and for energy prices themselves.

One result of this fairly muted response to the continuing war with Iran was that Wall Street was able to project April’s PCEPI inflation numbers almost exactly.

That the inflation numbers were fairly easy to project is confirmed by the Cleveland Fed’s inflation nowcast projecting April’s numbers with the same accuracy.

Despite the ongoing war with Iran, the PCE Price Index, the Federal Reserve’s favorite consumer price inflation gauge, showed inflation cooling month on month, resulting in a slower increase year on year.

Despite the ongoing war with Iran, consumer price inflation per the PCE Price Index is more of the same in April that printed in March.

If the Strait of Hormuz remains closed, that will not remain the case indefinitely. Cost pressures are building in the economy, and at some point we will see broader price increases for more than just energy prices.

We are not seeing them yet.

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Little Room For Corporate Media Hype

The April PCE inflation data ironically gave corporate media little with which to spin their typically anti-Trump narratives. While corporate media headlines snarked about inflation rising at its fastest pace in three years, the buried lede was that April’s rise was less than March’s.

Economists polled by Reuters had forecast PCE inflation increasing 3.8% year-on-year. The PCE price index rose 0.4% month-on-month in April after shooting up 0.7% in March.

The nuance—ignored by corporate media—is the impact of cooler month on month inflation numbers.

A cooler month on month metric means that inflation’s rise year on year slowed in April rather than rose.

We should not pretend that April’s cooling indicators mean the worst of the price shock in energy is necessarily behind us. Consumer price inflation is still here, and the year on year numbers are higher than late summer in 2023.

We should, however, acknowledge that inflation has yet to heat up as it might, should the standoff between the US and Iran in the Persian Gulf persist.

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Energy Price Inflation Eased On Stabilizing Oil Prices

The elevated inflation metrics for April tell us that prices are indeed higher, with energy prices leading the way month on month, with April’s percent increase less than half of March.

The reality is that energy prices overall were showing signs of stability, albeit at a higher level than before the war with Iran.

Oil prices had actually been inching downward in the first part of April, before rising at the end of the month.

The price stability of early April helped move market prices for gasoline and diesel lower, with the increases not emerging until the last week or so.

Even the EIA’s retail price data for gasoline and diesel fuel showed stability during April.

The stabilization trend was confirmed by private reporting of retail gas prices.

There is an important distinction to be made between prices that are high and prices that are getting higher. For most of April, energy prices, and fuel prices in particular, were high but did not go higher until the end of the month.

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Food Price Surge

The one clear inflation pain point for April was the surge in food price inflation.

However, the month on month surge, while the highest since President Trump took office in January 2025, did not translate into a notable year on year increase.

Food prices rose significantly in April, but even so the longer trend is still one of stability. While current stability is no indicator of future pricing, it once again leaves us at the point of “not yet” when considering the worst case ramifications from the energy price shock which began in March.

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Goods And Services Eased

The clear sign that the energy price shock has yet to move beyond energy prices was the significant cooling of non-durable goods price inflation.

Even though durable goods prices ticked up in April, non-durable goods declined, and were joined by service prices.

Year on year, non-durable goods increased again, after being the only core category to surge dramatically in March.

Durable goods, which had been rising since well before the war with Iran began, changed little year on year.

Most significantly, month on month inflation for energy goods and services greatly outpaced nondurable goods and services.

Within the US, the energy price shock has been contained to energy prices.

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It Can’t Last

While energy price inflation is a significant discomfort to people, especially as it translates into retail gasoline prices, that the surge in energy prices has not translated into higher prices for other goods and services, broadly speaking, is itself noteworthy.

It is particularly noteworthy because, unless there is a peace deal struck between the US and Iran that reopens the Strait of Hormuz to shipping, that can’t last.

Globally, closing the Strait already means that stagflation is stalking the world’s economies.

Not only are energy prices up, globally, but key industrial commodities are rising as well.

Copper reversed its price decline towards the end of March and is continuing to rise.

Tin showed a similar trend towards increase beginning in late March.

Molybdenum has shown far less volatility, but it also has move sharply higher.

We will have to wait until the May data for both the Consumer Price Index and the Producer Price Index come out to see how much these non-oil manufacturing inputs are contributing to consumer price inflation within the United States.

We do not need to wait to see that these are real cost pressures. Commodities are industrial inputs, as a rule, which is to say that an increase in the price of various commodities is an inescapable increase in the cost of producing a variety of goods and services.

While manufacturers may opt to absorb those cost increases before passing them on to consumers, that will only last so far. If the inflationary price trends among various commodities continues, those cost pressures will result in consumer price inflation for a variety of durable and non-durable goods.

The energy price shock is for now limited to energy prices. That will not last indefinitely. It can’t last indefinitely.

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More Of The Same Inflation…For Now

With the war with Iran ramping up at the end of February, my assessment of the February PCE data was that is was the end of “more of the same”. For pre-war prices, that was absolutely true.

Ironically, the April PCE data has been largely a repeat of the March data. Once again, we have “more of the same” inflation, but with an energy price shock in the mix.

We have energy price inflation, and that is creating headline consumer price inflation within the PCE data just as it did within the CPI data. We also have food price inflation.

Beyond that, we are not yet seeing much in the way of new inflation pressures.

With rising commodities prices, it is only a matter of time before those trends translate into higher consumer prices. It may very well prove to be the case that May will be the month we see the energy price shock from Iran’s illegal closure of the Strait of Hormuz translate into a true stagflation phenomenon.

Globally, we are already seeing supply constraints for oil, for natural gas, and for a variety of industrial input commodities. Stagflation occurs when supply constraints push prices higher, particularly when it happens on top of a weak, underperforming economy. Iran’s lawlessness has provided the global economy with the supply constraints necessary to catalyze stagflation globally, and it is only a matter of time before those supply constraints begin to impact the US economy.

The April PCE data is hardly good news as far as inflation is concerned. 3.8% inflation is a sharp reversal from where inflation was just two months ago.

Yet the April PCE data does offer one significant bit of comfort: It is, in most respects, a milder repeat of the March data.

The April PCE data is more of the same war-inflected consumer price inflation data. We will not see “more of the same” indefinitely. We may see an end to “more of the same” in a few weeks with the May inflation data.

Consumer price inflation has indisputably risen, and risen by a lot. Energy prices have increased by as much as 50%, and fuel prices by even more than that.

Yet the stagflation shoe has not really dropped for the US economy—not yet. If the standoff in the Persian Gulf continues, or if hostilities are resumed, that shoe will drop, but for now we have the paradoxical “comfort” of “only” having to contend with energy price inflation.

The April PCE data is not at all good news. It is, however, a far cry from the worse news that we will soon be seeing if there is not an outbreak of peace between the US and Iran.

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Yet oil prices are not rising, as Wall Street seems largely convinced that the Strait of Hormuz will be reopened literally any day now. Iran and the US will come to terms, the Strait will reopen, and everything will revert back to the way it was before the start of Operation Epic Fury.

At least one investment bank, however, is ditching the hopium, presumably for a more sober and judicious assessment on the Middle East. In that assessment, the Strait of Hormuz stays closed for at least now, which will eventually push oil prices to new highs.

“We think the Strait of Hormuz remains largely closed for months yet, meaning shortages become more urgent and oil hits new highs this Summer,” according to a recent note from the investment bank’s energy and macro teams.

While the implications on oil prices of a prolonged closure of the Strait are both obvious and closely followed, what gets lost in the focus on energy products are the efforts Arab nations in the Persian Gulf have made to diversify their economies. Oil flows are disrupted, but much more flows through the Strait than just oil.

Even more economic output depends on access to oil from the Persian Gulf.

As the standoff between the United States and Iran continues, and with the US rejecting Tehran’s latest “draft Memorandum of Understanding,” a reality of rising commodities prices and constrained supplies is settling over the global economy.

Stagflation is stalking the global economy. Demand destruction must follow, but how much will be needed to restore balance?

The Strait Of Hormuz Is Closed For Business

Make no mistake: no shipping has transited the Strait of Hormuz since right after the start of Operation Epic Fury. All publicly available shipping data points to the same conclusion: the war between the US and Iran has slammed the door shut on Persian Gulf shipping.

Data released between 11-13 May 2026 indicates that commercial traffic through the Strait of Hormuz remains far below pre-war levels, as measured by vessel tracking and trade data cited by the Center for Strategic and International Studies. Daily tanker and cargo ship transits remain far below those recorded prior to the United States/Israel offensive on Iran in November 2018. While some vessels may operate with automatic identification system signals switched off, publicly available traffic data show no broad recovery in flows.

The collapse of cargo traffic through the Strait was immediate and complete, as confirmed by IMF Portwatch shipping data.

The near total collapse in tanker traffic also confirms that the US Navy blockade of Iranian shipping is also having an effect. With next to no tankers transiting the Strait, Iran’s closure of the Strait means Iran is also not shipping any oil.

Yet dry bulk cargo vessels, of which quite a few had been moving through the Strait before the war, have also ceased to transit the international waterway.

The Strait of Hormuz is closed. It does not matter what sort of ship one considers; all classes of cargo vessel are denied transit passage through the Strait.

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Oil Prices Are Stable…For Now

Despite the closure of the Strait and the denial of Persian Gulf oil flows to the global economy, energy prices have broadly stabilized and even been trending down recently, as markets respond ever hopefully to the latest news reports on the peace talks between Iran and the US.

While stabilizing prices are, on the face of it, a good thing, what is not good is that the stability (such as it is) comes when oil prices are more than 40% above pre-war levels.

That stability, however, is somewhat illusory, as it comes as countries are releasing large amounts of their strategic oil reserves to buffer the oil supply shock that began when the Strait of Hormuz was closed.

The United States has released much of the oil recently added to the Strategic Petroleum Reserve over the past thirty-two months.

Notably, US commercial stocks, while having been drawn down, are still within the same broad range as they have been. While the releases from the SPR are significant, the SPR itself is far from the only oil inventory the United States can access on demand.

Separately, the IEA responded to the first announcements of the Strait’s closure by coordinating among its 32 member nations a release of some 400 million barrels of oil from reserves—one-third of physical reserves, and nearly one-fourth of total oil reserves.

IEA members hold emergency stockpiles of over 1.2 billion barrels, with a further 600 million barrels of industry stocks held under government obligation. The coordinated stock release is the sixth in the history of the IEA, which was created in 1974. Previous collective actions were taken in 1991, 2005, 2011, and twice in 2022.

There is a limit to how much buffering is possible with releases from strategic oil stockpiles, however. Oil reserves might be large by nearly every standard imaginable, but they are finite. The lower oil reserves get the less buffering is feasible, and the greater the inflationary pressure on oil prices.

Already, energy analysts are growing wary of how much longer strategic reserve releases can contain oil prices.

The message from this week’s SPR and commercial inventory data could not have been clearer. Combined crude inventories fell by 17.8 million barrels, the largest drawdown since records began in 1982. In effect, Washington is buying time. The administration appears to be using strategic reserves as a temporary liquidity bridge while diplomats attempt to engineer some form of stabilization with Tehran before the physical market begins forcing a much harsher adjustment through price.

The longer the Strait is closed, the closer oil markets get to the point where the buffering of strategic oil releases breaks down, at which point oil prices move sharply higher.

We have already had one oil price and supply shock. If this war continues long enough, we will have another one, and almost certainly it will be a greater one.

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Aluminum, The “Other” Middle East Export

While oil somewhat understandably grabs the economic headlines regarding the war between the US and Iran, the disruption of another commodity is creating its own economic turmoil: aluminum.

As countries such as the United Arab Emirates and Qatar have sought to diversify their economies, one industry they have moved into in a big way has been aluminum smelting.

Three of the top 15 aluminum exporting countries in the world are now situated in the Persian Gulf.

1. Russia: US$9.6 billion (12.3% of total aluminum exports)

2. United Arab Emirates: $7.8 billion (9.9%)

3. Canada: $7.5 billion (9.5%)

4. Malaysia: $5 billion (6.3%)

5. India: $4.2 billion (5.3%)

6. Norway: $4.16 billion (5.3%)

7. Australia: $4.07 billion (5.2%)

8. Bahrain: $3.5 billion (4.5%)

9. Netherlands: $2.7 billion (3.5%)

10. Iceland: $2.2 billion (2.8%)

11. Qatar: $1.93 billion (2.5%)

12. Italy: $1.86 billion (2.4%)

13. South Africa: $1.78 billion (2.3%)

14. Indonesia: $1.6 billion (2%)

15. mainland China: $1.56 billion (2%)

Taken together, the Arab countries of the Persian Gulf account for roughly 9% of global aluminum supply, all of which is bottled up in the Persian Gulf, courtesy of the IRGC.

While oil prices have moved down in recent days, aluminum prices have risen steadily since the war began, even as oil prices have not.

The catalyst for the price increases is not hard to fathom: the outbreak of war almost immediately impacted aluminum production in the Middle East.

The closure of the strait has already forced some smelters to curtail operations. Qatar’s Qatalum said on March 12 it would reduce production by about 40%, while Aluminium Bahrain said it was shutting down about a fifth of its capacity on March 15. Industry executives have warned that if the strait remains closed, further production cuts will be unavoidable — potentially pushing prices above the 2022 record.

While China has sought to leverage the supply disruptions in aluminum with increased production, markets are now becoming fearful that even China may about to trim aluminum production, pushing prices even higher.

Chinese authorities are now moving to rein in that over-production as inventories swell. A smelter in Baise, Guangxi province, has already cut output of molten aluminum, Mysteel wrote, without providing estimates of volumes affected. The steel and oil refining industries will also be targeted, the Ministry of Industry and Information Technology said in a statement on May 13.

The behavior of aluminum prices tells us what will happen to oil prices should the buffer of strategic reserve releases become exhausted. There is no strategic reserve of aluminum, and so wartime disruption of Middle East production has resulted in a steady and ongoing rise in aluminum prices. When supply is constrained and not buffered, when scarcity is artificially introduced into the market, prices of anything will rise accordingly, without fail.

The behavior of aluminum prices today is what the behavior of oil prices will be tomorrow. If the buffering effect of strategic reserve releases ends, oil prices will rise sharply. Of that there can be no doubt.

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Other Commodities Are Also Rising

Last month I explored how the war with Iran was putting stagflationary pressures on China.

Not the least of these pressures were because of sharp price increases in industrial materials such as sulfur, bitumen, styrene, and polyethyline.

Meanwhile, other commodities prices, such as copper, tin, and molybdenum, are also showing inflationary pressures since the war began.

In a quirky reminder that inflation and stagflation are also price distortions, a few commodities such as palladium and rhodium are showing price reductions since the war began.

Perhaps most ominously for global food security, grain prices such as for wheat and rice are also moving upward.

One important caveat regarding food prices: prices for wheat and rice started rising well before the start of Operation Epic Fury. Although the war with Iran has certainly not helped matters, food price inflation is one area that we cannot put all the blame on Iran’s illegal closure of the Strait of Hormuz.

With staples such as wheat and rice becoming more expensive over time, food price inflation is a foregone conclusion, with a corresponding rise in food insecurity not far behind.

More broadly, inflation, instability, and volatility are creeping into a broad swath of commodities markets. Commodities themselves are invariably inputs into other production processes, making rising commodities prices rising costs—something we have seen reflected in rising US PPI for Intermediate Demand.

While US consumer price inflation has not yet shown significant increases outside of energy related products, one does not need a PhD in economics to grasp that continued price pressures in the production process will eventually translate into increased prices for consumer goods of all kinds. As production costs rise, as factory gate inflation continues to arise, particularly for intermediate demand (which shows the inflation’s impact on manufacturing supply chains), there is no place for those cost increases to go but into consumer prices. We may not be seeing broad consumer price inflation yet as a result of the war’s price and supply shocks, but it surely is only a matter of time before we will.

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Multiple Shocks

The economic impact of the war with Iran is naturally most visible in its impact on oil prices. Oil is the most significant and most visible export from the Persian Gulf, as well as the one with the most volatile pricing.

Yet Iran’s illegal closure of the Strait of Hormuz was from the outset completely indiscriminate. Iran blocked all shipping, not just oil tankers. The disruption in oil flows was also the disruption in aluminum flows as well. If a good moved through the Strait of Hormuz, Iran disrupted that movement.

Energy prices also play into smelting and refining metals such as copper, tin, and molybdenum. The price shock in oil has only increased inflationary pressures on those commodities. As oil prices reach the end of near term stabilization when strategic reserve releases are trimmed back, the secondary price shock in oil will almost certainly push commodities with high energy footprints even higher.

From the one price and supply shock in oil comes multiple other price shocks in various industrial commodities. The price and supply shock in oil is also not helping ward off rising food prices. The disruption of other Persian Gulf exports such as aluminum merely adds to global economic stress.

We are already seeing the impact of these price shocks in producer prices, both here in the US and in China. The limits of petroleum reserves tells us that, unless there is a peace deal brokered soon to reopen the Strait of Hormuz, we will soon see more price shocks.

There is no escaping the reality that these price shocks are what triggers stagflation. Stagflation is what arises when there is a sudden drop in available supply, and the global economy is seeing reduction in supply across an increasing range of commodities and production inputs.

When supply drops in this fashion, the only way back to any sort of pricing equilibrium is for demand to drop in order to match supply. Once stagflation takes a big enough bite out of an economy, demand destruction is the next inevitable step. That is the other shoe that must eventually drop and land on the global economy.

Stagflation is already here. Barring a quick end to the war with Iran, demand destruction and recession will soon follow. Demand destruction must happen—people and businesses must eventually buy less and consume less. There are no economic alternatives. Either supply is restored or demand must be destroyed.

The only question as yet unanswered is how much demand destruction will we endure while the world’s economies rebalance themselves?

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