Economics
May 5, 2026
Nouriel Roubini
After failing to clinch a decisive victory against Iran, US President Donald Trump is now facing deteriorating macroeconomic conditions ahead of November's midterm elections. With his options limited, he has been left to choose between wishful thinking and a high-risk re-escalation of hostilities.
NEW YORK—After decapitating the Iranian regime and bombing Islamic Revolutionary Guard Corps positions for 40 days, the Trump administration has failed to secure a surrender and left Iran in control of the Strait of Hormuz. With Iran striking critical infrastructure across the Gulf Cooperation Council states and threatening shipping, the United States reverted to TACO (Trump always chickens out) mode by agreeing to a ceasefire. And now rising inflation and slowing economic activity imply a bout of stagflation—just in time to anger voters ahead of the US midterm elections.
