The Economy
Median household income rose to an all time high of $87,460, surpassing the previous peak of $$85,420 set in 2019 during the first Trump administration. Median income means that half the households in the country make more than that amount, and the other half make less. The Census bureau prefers median to average income because the latter is skewed by outliers on both ends of the economic spectrum.
Unemployment was at an all time low, and layoffs were rare. At the same time, the poverty rate also fell to an all-time low of 10.2%. That is certainly good news.
These figures seem to confirm that America prospered in the first year of President Trump’s second term, and despite inflation, there are indicators that the economic boom has continued in 2026. Stock indexes have repeatedly made new highs. In every speech the President talks about massive new investments in the economy that will create thousands of new well-paying jobs.
But what about inflation?
In recent remarks Treasury Secretary Scott Bessent noted that “core inflation” is currently at 2.4%, close to the Federal Reserve’s 2% target. However, energy prices are not included in “core inflation” figures, and obviously the Iranian war and the subsequent interruptions of oil traffic through the Strait of Hormuz have caused oil prices to spike causing substantial increases in the price of oil and gas. The average price of gas at the pump has risen to about $4.50 although that figure will vary from state to state. *
However, on September 29. The Wall Street Journal headlined the news that Middle East oil producers are now shipping almost 80% of their pre- war shipments. This news confirms what retired General David Petraeus explained in a Journal op- ed the day before. Oil prices, which had climbed over $100 per barrel during the summer, are now around $90 per barrel. If this trend continues, it will be good inflation news.
Speaking of dollars, I have also been following the price of gold and silver this year. Even before the Iran war, the price of the two metals had soared to record highs. In particular, I follow the price of an exchange traded fund that just invests in silver. The fund’s symbol is SLV and in February it soared to about $110 per share. In other words, it would have taken $110 of your dollars to buy one share, while in the previous February it would only have taken about $30 dollars.
Before the war began, precious metal prices were signaling a decline in the value of the dollar, a definite sign of inflation. However, since the war began, precious metal prices have steadily declined to the point where today you could have bought a share of SLV for $55, half what you would have paid in February. Our dollars are worth much more than they were at the beginning of the war, and so we should be able to buy more with them. A rise on the value of the dollar means a decline in inflation.
Nevertheless, my wife insists that prices continue to rise not only at the pump, but also in the supermarket. However, she did note that the price of the store brand of bite size shredded wheat, my favorite breakfast cereal, just dropped from $2.19 to $1.99 a box. Could the cereal be a leading economic indicator?
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*Note: In the summer of 2022, as the Biden administration faced the mid-term elections, the average price of gas at the pump was $5.00.
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