Continued rebound for sample June 23 to July 13 — which largely predates the resumed increase in gasoline prices.
Figure 1: U.Michigan Economic Sentiment (blue), Conference Board Confidence Index (brown), Gallup Confidence (green), all demeaned and divided by standard deviation 2021M01-2025m02. Orange dashed line at “Liberation Day”, green dashed line at US-Iran War start. Source: UMichigan, Gallup, Conference Board, and author’s calculations.
Hsu discusses web bias in the Michigan survey.
Inflation expectations were also reported.
Figure 2: U.Michigan Economic one year expected CPI inflation (blue), Orange dashed line at “Liberation Day”, green dashed line at US-Iran War start. Source: UMichigan.
Note that the July readings cover survey responses 6/23-7/13, when gas prices were (relatively) low:
I suspect that the July final reading will read lower for sentiment, higher for inflation expectations.
Speaking of the war – ’cause face it, the war is what’s driving sentiment right now – today, the war on Iran was on the one hand, a seige, on the other, a proxy war:
https://www.nbcnews.com/world/iran/us-strikes-bridges-iran-port-hormuz-bandar-abbas-syria-rcna587959
The U.S. can’t invade, so it’s working to starve Iran out, hitting ports and transportation infrastructure. Iran can’t attack the U.S. at home, so it attacks U.S. allies at home, along with U.S. bases. If Iran can knock out water supply infrastructure in Kuwait, it can do so elsewhere in the region. As the article indicates, the water supply in Saudi Arabia, Oman and Kuwait is mostly from desalination plants.
Earlier in the war, the U.S. hit desalination plants in Iran and Iran responded by hitting plants in the UAE and Kuwait:
https://bisi.org.uk/reports/reliance-on-desalination-strategic-targets-in-the-middle-east
By the way, something like 85% of Israel’s portable water comes from desalination, or did in the drought year of 2022 anyhow:
https://www.eib.org/en/stories/wastewater-resource-recovery
Along Iran’s Persian Gulf coast, a considerable share of portable water comes from desalination. In the more populous north, there is very little reliance on desalination, but drought has been a major problem and the government wants to spend a bundle on desalination – doesn’t have the money.
So far, Iran’s short-term goals seems to be to end the war, control Persian Gulf shipping and sell oil. I don’t know how much restraint Iran has shown in pursuit of those goals, but there is a good chance Iran has the capacity to escalate. Iran has flagged regional water resources as a likely target in any escalation.
This puts U.S. allies in the region in a bad spot. They have to rely on the U.S. either winning the war (by whatever definition of “winning” we’re using today) or quitting it before Iran knocks out critical water resources. Losing is pretty much a non-starter for Iran’s regime, and we all know how soft-hearted the current U.S regime is when it comes to allies. I kinda think that fighting two different kinds of war – seige on on side, proxy on the other – could make it hard for either side to know how to keep score.
Potable water. Not “portable”. Stupid thumbs.
Speaking of wars and prices, y’all remember the spike in grain prices in 2022 because of Russian attacks on Ukraine’s grain shipments? It’s getting started again. Here’s news of Russia destroying a third of Ukraine’s grain exporting capacity:
https://www.yahoo.com/news/world/articles/ukraine-loses-one-third-black-123800820.html
Here’s news of Ukraine cutting off Russia’s cargo shipments of all kinds through the Sea of Azov, Russia’s main access to the Black Sea and so to ocean shipping:
https://edition.cnn.com/2026/07/15/world/russia-ukraine-sea-of-azov-intl
Wheat is nowhere near the prices paid in early 2022, but are near the highest level in two years, and this latest mutual attack on shipping is only a few days old:
https://www.barchart.com/futures/quotes/ZWY00/overview