THE DEEPER DIVE: Tiny Bits of Truth and Huge Gulps of Lies
What is the real state of our union?
The president front loaded more lies into his speech than I thought any politician could tell in a single speech, but I want to start with one statement that was true temporarily because it is critical for you to understand it is a deceptive fact of the moment which the headline evidence would appear to support as true. It is a will-o’-the-wisp that will quickly vanish. That was Trump’s claim that inflation is falling faster than anytime since the end of Covid. While that was true for the last month reported, it is also the basis for my digging deeper because, if the president actually proves right, I’ll need to hang up my accountant’s visor and stop writing on economics.
Trump was right that CPI inflation took a 0.4% drop in a single month, and that is a lot. Both the mainstream press and some in the alternative press said it indicated inflation has turned around. Of course, I’ll point out the obvious right up front, which is that a big part of that drop was due to energy prices plunging during the recent MoU shmeasefire. Since I said they would plunge before they did, that doesn’t trouble me, especially since they have now rebounded, as I also said they would (told in advance so that you would be able to know you can trust me on the rest of the story) because the schmeasefire got blown to bits, which means that contribution to disinflation will reverse in the next monthly report; but let’s dig into that.
The Consumer Price Index for gasoline prices plunged in June from the spike in the prior months, roughly as expected as prices at the pump started dropping in May.
But June was also one of those rare months when the month-to-month squiggles – represented by the blue lines in the charts below – in many major categories either were negative or nearly unchanged at the same time, reflected in the “core” CPI, which excludes energy and food, and thereby excludes the plunge in gasoline prices.
Core CPI (excludes energy and food) fell by 0.02% in June from May, or annualized -0.20% (blue line in the chart), according to data from the Bureau of Labor Statistics today. The last time it fell month-to-month was in 2020, before it bounced back violently. [Still, 0.2% annualized is only a tiny bit.]
As the blue line in the chart shows, big outlier month-to-month moves like this are followed in a month or two by big moves in the opposite direction. That’s how the month-to-month squiggles work. (Wolf Street)
So, we got some true generalized reduction in CPI inflation, but it was a move that tends to swing to the opposite direction the next month, like this:
The all-items CPI (which includes energy and food) dropped by 0.42% in June from May (-5.0% annualized, blue line), hammered down by the month-to-month plunge in energy prices.
This month-to-month drop of the all-items CPI caused the year-over-year reading to decelerate to a still very high +3.53% (red in the chart).
Here it is important to note that, while any drop in the inflation rate is good news, disinflation is not the same thing as deflation. It means your prices are still inflating—in this case way above the Fed’s 2% target—just not as quickly. It never means prices are falling. They are still rising way too quickly based on the Fed’s target. It’s just they the are not as way-too-quickly as they were the month before.
As you can see, overall inflation got a helpful downturn, but it is still way hotter than the Fed wants it, and way hotter than you want it:
That continued heat makes it a weak bragging point at best, unless the new direction of travel becomes a new trend. So, that’s what we need to look at next. Is it the start, at last, of a downturn in the heat of inflation, which would be the exact opposite of what I have been predicting for months? So, shame on me if that is what it proves to be.
I shall sleep comfortably on this one at nights, not because I like to see inflation, but because I won’t have to eat crow.
While the disinflation was broad-based, albeit with many things still inflating faster than they should be, the bulk of the action was in energy, and that part will certainly reverse now that the war has gone full hot and Iran has called off all negotiations with Trump: Notice how hugely bigger the energy numbers were than the overall numbers:
The CPI for energy plunged by 5.7% in June from May (-50.6% annualized), driven by the plunge in the CPI for gasoline and the drop in the CPI for electricity.
But year-over-year, the energy CPI was still up by 45%. The CPI for energy weighs 7.8% in the all-items CPI.
The CPI for gasoline plunged by 9.7% month-to-month, seasonally adjusted.
But year-over-year, it was still up by 26.7%. And since January 2020, it was up by 41%.
That plunge looks like this, but because fuel rises instantly when crude rises but falls more slowly than crude falls, those fuel prices looked like this:
You can see fuel prices are still way elevated over where they were before the war. If we had reason to hope they would repeat that decline, that would be great; but we have reason to believe the opposite. Now that crude is way back up, we can expect fuel prices to leap back up, not down further. More importantly, we have not even begun to see any spike in fuel prices due to shortages at the pump, though the timing for that is likely close now.
We know that if Trump’s own estimate when he explained why he had to do the MoU is accurate, then the SPR should be running effectively dry from anything that it can contribute right about now. With Cushing also effectively dry, shortages at gas stations are likely to start showing up before long. Trump, after all, said that if he didn’t do the MoU, the price of crude oil would cause “bedlam” for the entire global economy.
With that, I want to segue from the charts and data for a moment to make a clear argument about what Trump did or did not gain from the MoU/ceasefire and more importantly from the Trump-Israel-Iran War.
A reader lit my hair on fire this morning by presenting the most atrocious and desperate and utterly self-deceived article on Trump’s war I have ever read, justifying it as a huge victory, which I could never imagine. I won’t mention the author’s name because I’m going to rip him to shreds, and I don’t want it to be personal. The article was so blatantly self-deceptive that the writer had to start out by asking his readers to ignore everything in the headlines about the war objectives and focus, instead, on the war tactics—the mechanics of the war, whereby Trump is really shining in a game of 4D chess.
By saying we should ignore the mainstream press’s obsession with the objectives and focus on the tactical accomplishments, the author managed to spin a tale that turned the war into an business allegory of huge successes. My counter argument ran like this because who cares about the fantasy brilliance of the tactics if they are accomplishing no objectives at all:
I said the article made me feel sick to my stomach because it forced me to see how deep the delusional thinking of Trump Derangement Syndrome can run, which causes people to praise their assailant and justify his attacks on their lives. It’s kind of like Stockholm Syndrome. It should have been so easy for anyone, including the author, to assess how far off from reality the article was and, therefore, deranged.
Simply put, when you have to go to such creative lengths to create a fictional fantasy about the tactics of the war that avoids looking for any factual accomplished objectives and, instead, you spin the mechanics of the deal into some kind of clever business allegory, the really sad part is that there are people who will go to such extremes to keep justifying the guy who is swindling them just because their own ego cannot accept the obvious deep losses coming out of the swindle, and so the swindle gets to keep running. It really was unsettling to see derangement go that deep.
Simply put, if you want to assess the success of Trump’s war, you don’t do it by creating fantasies about the mechanics of what he is doing, such as how he is brilliantly bringing the Kurds in as allies. Who cares that the Kurds have joined the battle if we are losing the entire war every single day? The writer should have assessed the successes of Trump’s war just like he would assess the successes of the business world he was using as an allegory. You never asses the success of a business based on its clever shenanigans. That kind of accounting usually creates trouble for a business. You assess it far more easily than that. You simply look at what kind of actual profits it is showing or, in the very least, what profits (the objective of business) it is likely to show. By that measure, Trump’s latest war is total bankruptcy.
There has been zero profit of any kind from this war for the US, and there is no hope of future profits, as I went on to explain, by which I don’t just mean financial profit, but any kind of gain that puts America first.
One cannot name a SINGLE objective that Trump’s Iran War 2.0 has accomplished, unless one wants to call a lot of death and destruction on all sides an objective. However, calling the creation of destruction and chaos an objective is like calling bankruptcy an accomplishment of business.
First, look just at the MoU. It accomplished absolutely NOTHING for Trump or the USA or the West. However, it accomplished a LOT for Iran. Iran got huge monetary awards in released sanction money right off the top. Trump front-ran the monetary enticements to get Iran to sign on to the MoU. Iran also made huge profits off of all of its oil that it shipped through the strait right away when the US dropped its blockade while Iran maintained its blockade, and Iran got some instant sanctions relief. (Other sanctions relief was performance base, so that never happened.)
More importantly than all the financial gains for Iran with none for the US, the MoU bought Iran time that was relatively relieved from American bombing, and time is what you must have by definition to win a war of attrition. Iran knows in this hugely asymmetric war that the one weapon it has on its side is control of the strait and the damage that can do over time to the USA and to the entire West. It is counting on the effectiveness of that damage, and Trump winced so intensely when he admitted publicly he had to sign the MoU in order to avoid economic bedlam. He admitted he was strong-armed by Iran’s effective strait closure. But the only thing the MoU delivered was more time for the bedlam to develop. It actually made the situation worse for the US in every respect:
The strait remained entirely closed to oil traffic that would benefit either the US or anyone else in the West while on Iran’s side Iran’s own tankers shipped night and day, free of US attacks, delivering oil ONLY to Iran’s preferred customers. So, the MoU bought Iran and its allies reprieve and a chance to do some small restocking of oil, while delivering NONE of that to the US or its former Western allies.
The US didn’t a get one drop of oil through the strait that went to Cushing or the SPR or even strait to US refineries. Instead, the US continued to drain the salt caverns of the SPR at the same rate Trump was so concerned about when he signed the MoU, and it continued to drain US tank farms. By now we should have hit that point the president said would be coming in a month , since the MoU did not deliver any oil to the US. That would be the point where the SPR can no longer be used for commercial oil production because the remainder is legally designated for defense use only.
Cushing is effectively dry. The SPR is likely effectively dry by now. The MoU bought Iran some time relatively free of bombing to wait out its siege on the West. It delivered exactly what attrition demands—time to work. Iran has the whole world by the neck, which looks like a goose neck getting wrung through the Strait of Hormuz. The MoU allowed Iran to run out some time on the clock while restocking its weaponry and pocketing some big oil money during the time out.
Now, look at what the accomplishments are for Trump from the entire war effort:
The Strait of Hormuz remains as locked up and blockaded by both sides now as it was during the worst part of the initial oil crisis.
Oil has not moved and is still not moving for the US, so prices of oil are back up to nearly to where they were during the heat of the war.
The heat of the war is nearly back up to where it was during the heat of the war.
The US has exhausted a fortune in weaponry that you and I are going to be paying to replenish for years to come.
Yes, the MIC has been made much richer if that is something anyone wants to list as one of Trump’s accomplishments.
The US has lost dozens of American lives and seen hundreds more wounded in order to create that wealth for the billionaire industrialists who finance or build for war.
The US has lost military bases that are now mostly nonfunctional all over the Middle East. It has said it may not even rebuild some of them because the cost is too great.
The US has lost allies all over the world who now HATE us for bringing this economic ruin upon their nations, which is now a baked-in certainty, and they know it, even if some here are still denying it like the writer I’m talking about.
The US has severely strained its alliances in the Middle East, and may have lost some of those relationships by fighting a war that benefits Israel but does not benefit any of them one iota.
Iran’s regime is still fully in place.
Iran’s regime actually appears to have been empowered by the Iranian populace that is clearly enraged at the US over the destruction it has brought to their towns and cities and ports and the huge suffering in their daily lives and loss of civilian lives.
Iran has actually gone back to enriching uranium.
And the US did not get any of Iran’s enriched uranium stock away from Iran. Iran still retains every speck of uranium dust that it had before the Iran War 2.0 began. It got no further than where it was last summer when Natanz and other uranium-enrichment sites were bombed.
Iran now promises that it is going to go for a nuclear bomb, something it always denied it wanted until now. Maybe it was going for the bomb anyway, but now they are brazenly making sure we know they are going for the bomb.
The Iran “board of directors,” as the writer of the fantasy framed the snakes who operate that sick core regime, has stopped negotiating with Trump.
Worse still, the Iran parliament has now made it it illegal to negotiate with the Trump administration.
So, the MoU has been completely shredded by both sides, and all the accomplishments were to Iran’s benefit. The US got nothing at all out of the MoU or out of the overall war. Yet, the writer tries to spin that as a huge and brilliant accomplishment by Trump because it proves Trump knows the art of the deal. The writer admits you need to take your eyes off the prize and focus, instead, on the mechanics of what Trump is doing in order to see the gains; but those mechanics are clearly just spinning his wheels in the dessert sand because they have not moved the vehicle ahead one inch on its objectives.
Rather the US has dug down even deeper with less oil in US storage facilities, a return to high oil prices, much higher national debt with rising interest rates as Trump has funded all of this with deficit spending. So, the writer can go on and on with spinning his allegory about Trump’s business acumen, but I’ll stick with evaluation of objectives that were actually accomplished by the war, and by that measure this is total bankruptcy and you can find a much better story that Bill Bonner created today to explain Trump:
To me, it was sickening to see the extent to which some Trump supporters will still go to try to rationalize Trump’s latest war into some kind of success just to avoid damage to their own egos for having supported him in the past. It’s the same 44DDD garbage we had to stomach throughout Trump 1.0 by QAnon, etc, with no one ever admitting all of that proved wrong when the swamp overran Trump and as he failed on most of his campaign pledges—Obamacare, finishing the wall, making Mexico pay for it, reducing immigration, making America great again. While there has been NO success in terms of war objectives/benefits from this war for the US, the inflation you are going to pay over longterm energy prices now that the war rages on makes Trump’s claim last night that one of his great accomplishments was the huge reduction of inflation, laughable if the truth were not so painful.
Shortly, I’ll go back to the utter bankrupt failure of this war to deliver anything that has been in AMERICA’s best interest, which was a Trump MAGA PROMISE, to laying out the reasons you can still be sure inflation is raring onward; but, first, I want to get the president’s lies last night out of the way:
The lies the president told
I’ll briefly recap all the lies in the introduction to Trump’s speech since it is hardly fair to claim it was entirely lies without giving evidence for that claim: (The president’s statements from the video below are in boldface in the summary and my response.)
Our country is safer, stronger and wealthier than we have ever been before. How are we safer when our people are dying and being wounded in a war that has gained NOTHING for the US and when countries all over the world increasingly hate us for bringing economic calamity down upon them? What is the actual measure of “safer.” Wealthier only if you were in the Trump family or are one of his billionaire buddies. The inflation we have already experienced under Trump, as I will graph out carefully below, has already made most of us less wealthy.
After we inherited the worst inflation in years and wide open borders with millions and millions of people pouring in from all over the world, including criminals of all types. I addressed this yesterday in “THE LIAR-in-CHIEF.” Border arrests of criminals of all types have been WAY less than they were under Biden. Deportations in 2025 were lower under Trump than in Biden’s last year. Inflation has been hotter than it was at the end of Biden’s term in every single month of this year and most of most of 2025, except the last month reported. See all the graphs above for clear proof.
The whole world was laughing at us as a nation, but not any more. Better laughing than all shaking their fists at us as they are now for the bedlam Trump is bringing their way.
Now we are the hottest country anywhere in the world. America is respected like we have never been respected before. Actually, Europe and Canada have turned away from the US as a dependable ally but also as a trading partner. More to the point, I read an article this past week that said China is now more loved by most of the world than the US: “People in Many Countries Now View China More Positively Than the U.S.” More also have confidence in Xi than Trump, according to a survey in three dozen countries, the article claims That’s pretty bad when oppressive, communist China supplants you for world respect and a Chinese dictator supplants your own president who rules by decree.
More Americans are working today than ever before. Total baldfaced lie on that one. I blew that to bits in my Deeper Dive at the start of this week: “Employment Data and Decline in Labor Force Shows the US Is in a Stealth Recession.” (Of course, you have to be a paying subscriber to see the hyuge details about how bad t he labor market really is with the data to back it all up; but I’m confident those who could see it will back me up.)
This week it was announced that inflation saw the largest monthly decline in more than six years. True, but see all the caveats in this article below about why that won’t hold and about how it does not come close to offsetting the other five months of this year.
No tax on Social Security. It was a lie when he promised it, but is a proven lie now that congress delivered something very far short of that. Instead, there was a partial write-off for Social Security income. Likewise with his blatant emphasized claim of NO tax on tips. There was an exemption for the first 25,000 on tips. That’s not nothing, but it is not “NO tax on tips.” (See: “Everything you need to know about “no tax on tips”)
Our stock markets are at their highest point in many years, but we can actually say of all time. Blatant lie. The Dow has fallen a little for about a month now. The S&P has fallen a little more for about two months, but the real damage is in the NASDAQ which has put in a clear and dangerous triple top because that is where the bulk of the AI bust is showing up:
Your 401(k) and retirement accounts are setting records EVERY SINGLE DAY. Not anymore. See above.
Now we pay the lowest prices in drugs. (Maybe. I haven’t researched that one, so will leave it alone.)
The cost of health care is coming way down because of what we have done with prescription drugs. CPI showed a small decrease in the rate of inflation for health care; but PCE shows a hyuge increase that was the second-largest category in the report.
Unfortunately, we are forced to use the most powerful military in the world now. No one is forcing us. Trump already claimed he “completely decimated” and “totally obliterated” Iran’s nuclear capability last summer. He doesn’t get to claim the same victory twice or that he was forced to go back and do a job he already claimed he completely accomplished to such an extent that he deserved the Nobel Peace Prize for accomplishing what no president prior to him had the courage to do. It is an absurd set of self-contradictions.
We won in Venezuela and are working with them to produce millions and millions of barrels of oil. Apparently true.
We are likewise winning big in Iran. We’ve won ABSOLUTELY NOTHING in Iran; hence all the arguments above.
From there Trump went on to his long tirade about elections being corrupt, which would have to include his own since he stated repeatedly that the problem started in 2020 and hasn’t been resolved since then. Kind of a self-defeating argument. I think we can anticipate years of election turmoil if he loses. The problem will instantly go away and never be dealt with, however, as happened under Trump 1.0, if the Republicans win enough to keep both houses of congress, though that seems unlikely. So, Trump is preparing the way as he has done with every election he’s run in to say the election was rigged, but only if he loses. He did that in 2016, but then said almost nothing and did absolutely nothing to correct the “rigging” after he won and was inaugurated.
If this is the problem Trump has always claimed it is, he should have fixed it then when he won a sweep of the Executive branch and both houses of congress during 1.0. He’s doing a lot to undermine Americans’ confidence in their own democratic government, yet did absolutely nothing during Trump 1.0 nor during his first year and half in office under 2.0 to fix the problem he keeps harping about. He’s always just laying the ground for discrediting his opponents’ victory and to claim he was never actually a loser because he hates losers.
Sad, sad little narcissist.
