Daily data are starting to show a significant deterioration in inflation expectations and consumer sentiment across the income distribution, see the first two charts below.
But there is a difference between what consumers are saying and what they are doing. The third, fourth and fifth charts below show that weekly data on consumer spending remain strong, daily data on airline travel remain strong and weekly data on hotel demand remain strong. A full review of all publicly available daily and weekly indicators shows no signs of demand destruction, see our chart book here.
Markets are overreacting to what will likely be a 4- to 6-week period of volatility, which will ultimately result in 50 years of stability in oil markets, supply chains and geopolitics. The Gulf region will become more stable and even more closely integrated with the global economy. For the Fed, the rise in inflation due to higher oil prices is temporary; once the conflict is over, Fed cuts will be priced in again, and long rates will decline.
The bottom line is that the Iran shock is not big enough to offset the strong tailwinds to the US economy from AI spending, the industrial renaissance and the One Big Beautiful Bill.
Sources: Morning Consult, Bloomberg, Macrobond, Apollo Chief EconomistNote: The Truflation US Inflation Index is a daily measure of US inflation based on data from over 30 sources, including major retailers like Amazon and Walmart, and real estate data from sources like Zillow. It tracks price changes from a consumer cost of living perspective across 12 spending categories and is differentiated from the traditional Consumer Price Index (CPI) by its daily updates, use of digital data and a methodology that leverages blockchain for immutability and decentralization. Sources: Truflation, Bloomberg, Macrobond, Apollo Chief EconomistSources: Redbook Research Inc., Macrobond, Apollo Chief EconomistNote: Airports included are ATL, LAX, DFW, MIA, ORD, DEN, IAD, SFO, MCO and JFK. Sources: CBP, Apollo Chief EconomistSources: STR, Haver Analytics, Apollo Chief Economist
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