If any of Iran’s Islamic Revolutionary Guard Corps thugs think that a small increase in gas prices will kill the American economy, forcing President Trump to withdraw our military and make a watered-down Obama-Biden deal, those thugs better think twice. Not only will Mr. Trump not back down on his key demands to end Iran’s nuclear capability, transfer enriched uranium from Iran to America, and stop state-sponsored terrorism and long-range missile construction, but the economic fact is that the U.S. economy is doing quite well despite the increase in gas prices.
It is the Iranian economy that is sinking and will continue to sink due to the US Navy blockade, effectively ending Iran’s money and ability to pay its IRGC troops. The IRGC controls about a third of Iran’s economy. And about half of their energy income. They have been stealing and plundering from the Iranian people for decades. It looks like a mafia-led operation. And Mr. Trump and Treasury Secretary Scott Bessent are putting an end to that. State Secretary Bessent spoke to me last night about Operation Economic Rage.
“The president carried out the operation over a year ago and ordered a maximum pressure campaign,” Mr Bessent said. “It was that pressure that brought the Iranian economy to a standstill,” and “Iran’s largest bank collapsed. The central bank had to convert debt into money, and that caused massive inflation.” He added that “their currency has fallen about 60 to 70 percent against the US dollar, so they are in the middle of a currency crisis. And what we are doing now is we are in a long race and sprinting to the finish line.”
Now, as for the US economy. Lots of good economic data today and a record-breaking stock market. Over the past year, real GDP increased by 2.7 percent. If the Democrats had not shut down the economy last winter, we would have had growth of more than 3 percent. But within that number, the One, Big, Beautiful Bill and its 100 percent cost spending has created an astonishing boom in business investment. It’s up 17 percent in the first quarter and almost 10 percent over the past year. It’s huge. And don’t forget the record-breaking tax refunds from the One, Big, Beautiful Bill used by more than 50 million Americans, which offset the temporary spike in gasoline prices, and even then, consumer spending is doing better than you think, up nearly 2.5 percent over the past year.
Economist Art Laffer and American Action Forum President Douglas Holtz-Eakin discuss the resilience of the US economy amid the conflict in Iran on ‘Kudlow’.
And more recently, in April, Redbook consumer sales rose nearly 7 percent year over year in April. Our energy dominance ensures record-breaking exports of oil, diesel and petrol. Here at home we are setting oil production records.
One other thing: Inflation numbers were a bit on the high side today, but call me skeptical: the Cleveland Fed’s average consumer price index is up just 2.7 percent over the past year. And the trimmed average of 16 percent, a weighted average of recent inflation statistics, is up 2.6 percent. Unit labor costs increased by 2.4 percent. And the big, big story is the profits, the mother’s milk of stocks and the lifeblood of the economy. Profits drive business, and business drives the economy. Profits and profit margins are breaking records, with returns of 15 percent or better, boosting productivity. And that produces an economy that is the envy of the world.
Once the world normalizes, the US economy will grow even faster and inflation will become even lower. However, remember that it is the strong American economy that creates the means to destroy horrific Nazi-like regimes like Iran. Never bet against the Trumpian America First economy.
