Our most recent book is The Comeback: The 2024 Elections and American Politics. The second Trump administration has been full of ominous developments -- now including a war in the Middle East.
Samuel Benson and Liz Crampton at Politico:
In Nevada, a gallon of gas is approaching $5. In Pennsylvania, farmers are fretting about the prices of fertilizer. And in Michigan, supply chain woes are throwing a wrench into the manufacturing and auto industry operations.
One month into the war in Iran, a new political reality is sinking in for Republicans in these and other battlegrounds: The war may not end as quickly as they initially hoped, and the literal and figurative costs keep rising.
European Central Bank President Christine Lagarde has warned that financial markets are underestimating the severity of the economic fallout of the Iran war, saying investors may be in denial about how long the disruption will last.
Speaking to The Economist, Lagarde said the conflict represented "a real shock" that was "probably beyond what we can imagine at the moment."
She pushed back on market optimism, arguing that technical experts saw no quick return to normality given the extent of damage to energy infrastructure. "Most people are actually talking about years," she highlighted.
Lagarde also warned that the true economic consequences were only becoming clear gradually, citing supply chain knock-on effects that markets had yet to fully price in.
She pointed to helium — much of which transits the Strait of Hormuz — as an example of a critical input for microchip production whose scarcity was not yet reflected in semiconductor costs.
"We are learning almost bit by bit, day by day, what the actual consequences will be."
