Key Takeaways

1.   As of early Sunday afternoon, the Iran-US negotiations are on-going. The shooting war may resume, or the extended ceasefire/negotiating period may continue.

2.   The US midterm elections now handicap as a zero to two seat R gain in the Senate and neither party making more than a small gain in the House.

3.   Even as the Iran War continues, the US economy is on an even keel and gaining momentum. That is unlikely to change.

4.   Over the early months of this year, Ukraine has been winning its war against Russia. The evidence for Russia being force into a negotiated settlement this year is increasing.  

The Current Situation in the Iran War 

As of early Sunday afternoon, the negotiations between the US and Iran are still underway.

The Strait of Hormuz has been effectively closed to ships headed to or from Iranian ports by a US Navy blockade. Some other ships are being permitted by the Iranians to exit based on negotiated deals. Still other ships are using stealth to avoid the Iranians and to transit out of the Persian Gulf through the Strait of Hormuz.

The shooting war is now in a ceasefire. If the shooting war resumes, the US and Israeli attacks on Iranian military, government, and defense industry targets are sure to resume. But it is also quite likely that numerous Iranian economic assets will be added to the target list. That will probably include major road and rail bridges, power plants, oil and gas terminals, and other economically valuable Iranian assets.

Including them would put much more political, economic, and financial pressure on the Iranians to cut a deal to end the war. That seems to be what Trump is counting on. But the hardliners in Iran seem to believe that Trump will cave. We’ll see.

Trump has established three red lines he is highly likely to stick to and enforce.

They are:

1.   A free, open, and safe Strait of Hormuz and Persian Gulf guaranteed.

2.   Shipment of Iran’s current supply of enriched uranium out of that country.

3.   An enforced prohibition on future uranium enrichment by Iran.

Those red lines are real. If they are not met through current or future negotiations the shooting war will restart.

Take note of something that is making negotiating with the Iranians difficult. A single person in the US, President Trump, has the final say in what the US accepts or rejects. In Iran the situation is much more complicated. The “Supreme Leader”, Mojtaba Khamenei, does not appear to be the real leader, just one of many with power. There is little doubt that General Vahidi, head of the IRGC, has the most power but it is far from absolute. The various political and military leaders in Iran have different agendas. Those agendas are not just about what is good for the country or the current regime, but what is personally beneficial. This is an overstatement but negotiating with Iran is a bit like negotiating with the various mafia and getting a deal they all agree to.  

FACTS & REALITIES 

The US and Israel have been in a major war with Iran for over three months. Below is a list of realities I think will help you understand where we are and where we are probably headed.

1.   Iran’s military has been mostly defeated. It has lost almost all its defensive capabilities against air and naval attacks except hiding its remaining missiles, drones, small boats, and other weapons. But Iran still has offensive military capabilities, especially missiles, drones, and small boats with weaponry which can swarm ships in the Strait of Hormuz. An important consideration is that Iran can still do major damage to the Gulf Arab countries.

2.   The Iran defense industrial base (DIB), its various defense industries, has been mostly destroyed.

3.   A large ground invasion of Iran by the US will not occur and will not be necessary.   

4.   Do not count on regime change in Iran. The regime may survive even if it must accept a demeaning settlement of the war.

5.   The formation of a new post-war maritime alliance to protect the waters of the Middle East is now in its early stages. About 50 nations have indicated interest in participating, but only after the war is over. The US is now participating in the discussions and seeking allies for what it is calling a “Maritime Freedom Construct”.

The Democratic Postmortem of Their 2024 Loss 

Former Vice President and 2024 candidate for President, Kamala Harris, recently goaded the DNC Chairman Ken Martin into releasing the party’s postmortem of the 2024 presidential election. If she thought that release would help her, she was wrong.

Only a partial report was released and what was released was heavily redacted. Even with those cover-ups, the report still painted a picture of failure. Some points the report accurately portrayed were:

·      Almost completely focusing on Trump was a failed tactic. Many voters disliked Trump, but that is not enough for most to vote D. They wanted to know what the Ds were going to do for them and what problems the Ds are going to solve. The Harris-Walz campaign never provided a good answer. (Notice that the Ds are making the same mistake this year.)

·      Nominating Harris with no open democratic process was a serious error.

·      Harris’ campaign was a disaster and she was clueless.

·      The report ignored the loss of minority male support and that of minority working-class voters, especially Hispanics.

·      The report noted the importance of reconnecting with the voters in the south and Middle America. (The Ds are again ignoring those groups this year and focusing on left-leaning radicalism.)

The postmortem was hidden for over a year. Now that it has been partially published, it shows that the Democrats are on track this year to repeat many of their 2024 mistakes.

Update on a New Reality for the Midterms

I’m going out on a limb and suggesting that the way we have been analyzing midterms for decades is now misleading us. Fundamental changes are underway in various structures and realities of our politics, especially for the election of House members.

Historically, the party controlling the White House has lost 26 House seats in midterm elections. But the 2026 midterms now handicap far differently than that.

The structure and realities of US election campaigns have changed dramatically and are changing further. The old rules and formulas are no longer reliable. Consider the evidence for that.

·      American partisanship has hardened. There are now fewer split-ticket voters and swing voters who go back and forth between the parties. Straight ticket voting has increased because of the antipathy, even hatred, between the parties.

·      The Democrats have moved significantly to the left and away from the center, while the Republicans have remained right of center where they have been for years.

·      Widespread redistricting and gerrymandering, especially since the last election, has markedly cut the number of House races likely to be competitive. As recently as the 2022 midterms, about 60 House races were rated as competitive “toss-ups” while this year it appears the number of such races will be less than half of that.

·      Trump, the Rs, and the Ds ALL have much higher disapproval scores than approval scores. The voters are very unhappy with the PRESIDENT and with BOTH PARTIES. Normally the party controlling the White House/Presidency gets punished because the party out of power looks more appealing. But this year both parties look terrible and are being rejected.

In an election year where the electoral system looks fundamentally changed, we also see the Rs with some unusual advantages and the Ds creating an increasing number of problems for themselves.

·      Led by President Trump, R fundraising this year is likely to be much higher than D fundraising. It is likely that R funding of the eight competitive Senate races will be over $100 million each, perhaps even $200 million each. The Ds are unlikely to be able to match that. Similarly, in the 20-30 competitive House races, R fundraising and spending in competitive districts is likely to be over $50 million each. Again, the Ds will be hard-pressed to match that.

·      With the Democrats now lambasting billionaires and campaigning across the country to “tax the rich,” it is less likely that the rich will fund D campaigns. And some angry rich folks who normally fund the Ds may fund some R campaigns.

·      The trend so far this year is for the Ds to nominate candidates farther to the left than they have in the past. That will continue. By contrast, the Rs are nominating few “kooks” and mostly conventional center-right candidates. D candidates farther to the left are likely to find winning in November harder than traditional center-left candidates would.

·      Avowed socialists like Zohran Mamdani and AOC have become the faces and voices of the Democratic party. That may not go over well with centrist American voters. Many Democratic candidates believe socialism can work (IT CANNOT) and will forcefully push it. That will work against them and the Democrats in general.

·      The Ds are in the process of nominating quite a few “kooks” and extreme radicals this year. Senate nominees Graham Platner in ME and James Talarico in TX are “kooks.” The Ds also look headed to choosing a radical nominees in the important MI Senate contest and in the MN Senate race. Numerous D nominees are socialists and/or antisemites and far from the center of American politics.

·      It is certain that the Rs will run well-funded media campaigns against the leftist radicalism of the D party and many of its candidates.

·      The recent Louisiana v. Callais Supreme Court decision unexpectedly gives the Rs the opportunity to redistrict a few states and gain 2 to 4 seats they were expected to lose. In LA, AL, TN, and other states, efforts are underway to eliminate previously required “majority-minority districts.”

·      A month ago, it looked like the redistricting wars would end up close to a draw. But recent changes such as the Louisiana v. Callais decision and the VA Supreme Court throwing out the VA gerrymandering now suggest the Rs will have a net gain of 10 to 14 seats, up from 8 to 12 seats a few weeks ago.

Considering these major changes, which have occurred or are now occurring, I am shifting my previous analysis that the Ds would gain a dozen or so seats in the House to an analysis that neither party will make much of a gain in the House. My analysis is that the Rs will gain zero, one, or two seats in the Senate.

But remember, it is five months until the midterms, and much can change. I’ll update my analysis regularly.

The Economy and Markets 

UPDATE - The US Economy Overall

We are now three months into the Iran War. It is comforting to see how limited the effects of the war have been on the US economy and on the financial markets. It is very unlikely the war will seriously harm the US economy. Consider:

·      10-year treasuries are now up 35 basis points (.35%) from the first of the year, before the war started. That hurts but not seriously.

·      The major stock market indices are at record highs and have surprised many with their strength during a war.

·      Unlike almost all other nations, the Iran War has had only limited negative effects in the US with the worst widely felt negative being a $1.00-1.50 rise in the cost of gasoline. That has pushed inflation up noticeably.

As we move toward summer, the economy looks very positive overall. Corporate earnings have been very strong and look like they will continue that way. Real economic growth in 2026 looks likely to be solid and a 2026 recession looks very unlikely.

Last year’s trends of both very low numbers of layoffs but also limited hiring continue. Ignore the hyperbolic headlines about cuts at a handful of companies. Both the numbers of layoffs and hires are low. An article in the WSJ said it well, “Large-scale layoffs due to artificial intelligence have yet to happen, but businesses that are beginning to invest in AI may also be reluctant to hire a lot more workers until the technology’s impacts on workflow and productivity are clearer.”

Economic Data

·      NEW – The estimate of Q1 GDP was lowered modestly from +2.0% to +1.6%.

·      NEW – The Fed’s favored inflation measured for April was up a high 0.4%. But core inflation, minus energy and food, was up a significantly lower 0.2%. The difference was caused by a steep rise in gasoline prices because of the Iran war.

·      Retail sales rose 0.5% month over month, a positive sign of a growing economy.

·      NEW - The latest estimate for Q2 GDP from the Atlanta Fed GDPNOW is a strong +3.8%.

·      NEW – Earnings reports for Q1 continue to look very strong, especially for the banks and tech companies.

·      NEW – New claims for unemployment insurance last week stayed low at 215,000. This demonstrates that layoffs are still quite low. Other stats show hiring is also low.

Global Watch Updates

Is the Ukraine War Headed to an End? … Probably 

UPDATE - My analysis is that the shooting in the Russia-Ukraine War will end before the end of this year in a negotiated settlement. The reason is that Russia is now losing the war militarily, politically, economically, financially, and technologically.

Month by month this year there have been growing indications that the Ukraine War has moved into a new phase, one much more favorable to Ukraine. April was a bad month for the Russians in the war, and May has been worse.

The following factors have shifted dramatically to a Ukrainian advantage.

·      Almost all Russian attempts to gain ground this year have failed badly with large manpower losses for them. The beginning of a planned spring-summer Russian offensive has been stalled by the Ukrainians and may never get underway. So far in 2026 the Russians have lost more territory in Ukraine than they have gained.

·      Russian casualties have been unsustainably high, higher than their ability to replace lost troops with new recruits. New Ukrainian drone technology and tactics are substantially increasing Russian casualties, while limiting Ukrainian casualties. In Q1, the Russians had about 35,000 casualties per month but were able to replace only about 23,000 of them with new recruits.

·      Extensive hard evidence now shows that new drone technology and tactics developed by the Ukrainians have crippled many of the tactics which previously worked for the Russians. In the land war, the stalemate continues. But the Ukrainians have gained control above the battlefields. Their new drone tech and tactics are stymying the Russians at the fronts and for many miles into the Russian rear. Depots, barracks, weapons systems, and command centers there are now in Ukrainian range.

·      Ukrainian missiles and drones are also doing increasing amounts of serious damage to Russian energy and defense industries in the western half of Russia. Ukrainian air attacks can now reach over 1,000 miles into that country. This is a huge problem for the Russians for which they seem to have no good defense.

·      Week after week Ukraine’s missiles and drones are seriously cutting Russia’s ability to export oil from their Black Sea and Baltic export terminals. If the Ukrainians can continue creating such major damage at the Russian oil export terminals, the Ukraine War will be in a whole new phase. Ukrainian drones and missiles are also doing serious damage to defense industries in Russia.  

·      According to many economists, including Russian analysts, Russia’s economy is stagnating and near collapse outside of the heavily subsidized defense industries. A major economic and fiscal crisis is at hand and Putin is getting desperate.

·      Putin is also panicking because he fears a coup against him. He has ordered Russia’s Telegram messaging system to be crippled to prevent easy communication in the country. Telegram was the only major private internet messaging system still operating.

Interesting Things to Cogitate About

1.   President Trump just completed his annual physical. His US Navy physician reports that, “President Trump remains in excellent health, demonstrating strong cardiac, pulmonary, neurological, and overall physical function.” The doc continues, “Cognitive and physical performance are excellent.”

This should put an end to speculating that Trump will not be able to physically complete his term. If the Ds take control of the House in the midterms, Trump is likely to be impeached again. But there is zero chance the Senate would have the two-thirds majority needed to convict and remove him.

Ideas to Remember 

1.   The US is the world’s dominant power. China and Russia are declining in power relative to the US.

2.   Take Trump seriously but not literally. Remember he is always setting up the next negotiation. His off-the-cuff comments frequently cause major confusion.

3.   The Republicans have become the party of the working-class and middle-middle class.

4.   In politics, it’s the economy, stupid. The average household will be able to balance their budget or else the party in power will be punished.

Political Psychiatry 30-Day Test

With daily disturbing news, teach yourself to take a deep breath and ask if that news will matter much in 30 days or so. Only rarely will it be important. So, ignore it, and lower your blood pressure.

Tuchfarber Report Goals

Predictions – Methods & Standards

My method – gather accurate facts, analyze them with no biases, and make accurate predictions.

The Tuchfarber Standard – make predictions on important issues when I’m over 80% convinced the prediction will be correct.

I’m sure many of you chuckle when I claim I do unbiased analyses. But if my biases, which I do have, and hopes influenced my predictions, how did I get 97% of my 248 predictions correct over the last four years?

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Al Tuchfarber PhD -- Professor Emeritus of Political Science, University of Cincinnati

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Tuchfarber Political-Economics LLC

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Dr. Tuchfarber founded the Ohio Poll, one of the country’s most accurate, while directing the Institute for Policy Research at the University of Cincinnati for four decades. He also founded the Institute for Health Policy at the UC Medical Center. He is an engaging, informative, and dynamic speaker. Al has published well over 100 publications about politics, political-economics, society, and research methods.

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