Overseas Energy Shocks, Not Domestic Policy, Are Temporarily Reversing Affordability Gains and Will Ease Once Wars End
Source: "Energy shock from overseas wars is driving up costs and mortgage rates | Fox News." November 2, 2026. www.foxnews.com
The Gist
The author says families have struggled with costs since the Biden years, but things were getting better until wars in Iran and Ukraine sent energy prices soaring, which pushed up prices and mortgage rates. Because this is an energy shock from overseas and not bad domestic policy, he argues costs will fall again once the wars end.
Conclusion
The current rise in costs and mortgage rates is a temporary energy shock caused by overseas wars (Iran and Ukraine), not by domestic economic mismanagement, so affordability will resume improving once those conflicts end and energy markets normalize.
Premises
- The affordability crisis began under Biden, when prices rose faster than earnings and real purchasing power fell (paychecks up ~17% but buying about 4% less) while high interest rates doubled the monthly payment on a median-priced home.
- From January 2025 through February 2026, real weekly paychecks rose about 2% and homeownership affordability hit a three-year high, which the author attributes to tax and regulatory reform and sound energy policy.
- The Iran war disrupted global energy markets and supply chains, pushing oil from $60-70 to $100-120 per barrel, and Ukrainian strikes on Russian energy infrastructure worsened oil and diesel shortages.
- Energy is an input cost for nearly every good and service, so the energy shock raises prices broadly and lowers real earnings; it also raises inflation expectations, which pushes up mortgage rates and reduces housing affordability.
- Unlike the 2022 inflation, which came from excessive government spending, borrowing, and money creation, the current price rise comes from a supply-side energy shock, and domestic fundamentals (investment, manufacturing expansion, job growth, AI-driven productivity) remain strong.
- When the overseas conflicts are resolved, energy prices and inflation expectations will fall, putting downward pressure on consumer prices and interest rates.
Assumptions
- The Iran and Ukraine wars will end in the foreseeable future, and energy supply will return to pre-war levels afterward.
- The affordability gains from January 2025 to February 2026 were caused mainly by Trump-era policy rather than by lagging effects, base effects, or other factors.
- The current inflation is driven almost entirely by energy supply shocks rather than by domestic demand or monetary and fiscal factors.
- Energy price declines will pass through to consumer prices and mortgage rates quickly and fully, rather than prices being sticky downward.
- Domestic policy plays no significant role in the current price increases (e.g., tariffs or deficits are not contributing).
- Strong domestic indicators (manufacturing, investment, jobs) are reliable signs of sound fundamentals relevant to affordability.