This week in Trumponomics: Good news that doesn’t matter

President Trump has gotten some good economic news recently. It’s already largely forgotten.

Inflation continues to cool, and consumers are feeling a bit cheerier. The year-over-year inflation rate for May came in at a tame 2.4%, lower than economists expected. There were few signs of price hikes caused by Trump’s new import taxes.

Consumer confidence picked up, according to a monthly University of Michigan survey that has mostly shown gathering gloom since Trump took office. The sentiment index improved for the first time since December, with Americans less worried about runaway inflation than they have been in recent months.

Those modest improvements follow a nice gain in the stock market during the last few weeks. It all ties together: Trump rattled investors and consumers in March and April with tariffs that were far more severe than most expected. He has since dialed back the steepest tariffs and relented in other ways. Trump is doing damage control, and the tariff shock is wearing off.

This is a fleeting respite, however, because the sudden escalation of the war between Israel and Iran will bum everybody out anew. The war will bring some sticker shock, even for Americans thousands of miles away. Oil prices have jumped 20% in two weeks, to $74 per barrel, as traders first anticipated some kind of an Israeli attack, then bid prices higher still after Israel bombarded Iran’s nuclear weapons facilities and other targets on June 12.

That price jump is just a fear premium — there hasn’t been any actual disruption to oil supplies. If either combatant does target Middle East energy infrastructure, prices could easily top $100, at least for a while. Israel is now determined to destroy Iran’s nuclear weapons program, which means the fighting could go on for a while and possibly intensify. This is no one-and-done face slap.

Gas prices are down from last summer to a national average of about $3.10 per gallon. That’s obviously a relief to drivers who were paying $4 and even $5 per gallon just a couple of years ago. Gas prices have an outsized effect on consumer psyches, so that’s one important problem Trump hasn’t had to deal with.

Pump prices will undoubtedly drift up in proportion to rising oil prices. It could be temporary. But that will be happening as Trump’s self-imposed trade deadline of July 9 approaches. That’s the date by which Trump says he wants trade deals with dozens of countries, or else he’ll reimpose “reciprocal” tariffs that caused a big market sell-off when he first announced them on April 2. Trump halted those tariffs on April 9, but the threat of reimposing them is supposedly the leverage he’s using now to hammer out trade deals.