Fallout from Trump administration's decisions have pushed prices higher and pressured workers' pay

Republicans could see their Senate chances fly away with inflation.

If Republicans lose control of the Senate as well as the House of Representatives in the midterm elections six weeks from now, they can thank President Donald Trump, Defense Secretary Pete Hegseth and their decision to launch a war against Iran last February with little - or perhaps, no - advance planning.

The price increases unleashed by this bungled adventure - or "little excursion" - as well as tariffs have sent inflation rocketing at an estimated annualized rate of 6.2%, more than three times the Federal Reserve's official target rate.

To put it in political context, a MarketWatch analysis of official data shows that this has outstripped wage growth in eight of the 11 states with competitive Senate races this fall. So, in the wake of the war and the closure of the Strait of Hormuz, the typical worker in those states has received a pay cut in real purchasing-power terms as a result of the war.

All of this helps explain, as if explanation were needed, why Trump is now desperately thrashing around for a juicy media row or two he can start to distract people.

Will voters forgive Republicans for costing them money, once they realize, say, that CNN's Kaitlan Collins has been banned from the White House? Or that Lake Ontario has been renamed? Or that the president insulted the people of Iceland such that their government recently summoned our ambassador?

Will these things adequately compensate people for falling living standards? Are those considered kitchen-table "wins" in middle America?

Earlier this summer a pair of economists did some deep digging among the political weeds of the 2022 midterm and 2024 presidential elections. What they found wasn't necessarily surprising, but it was useful to have it confirmed mathematically. The inflation of 2021-'23 was politically very costly to the incumbent party, which at the time was the Democrats. Worse than the inflation, however, was that average wages didn't keep up. Democrats typically suffered their worst losses in the counties where inflation had risen faster than wages, so that in real, purchasing-power terms people were working for less money.

"Real wage decline, rather than higher inflation, is predictive of Republican electoral gains" in the elections, wrote Juan Felipe Riaño of Georgetown University and Francesco Trebbi of the University of California, Berkeley.

To be sure, multiple other factors were at play in both the midterms and, especially, the chaotic presidential race.

With that in mind, let's look at what's been happening lately.

From the start of the year through the end of August, the official consumer-price index rose by 2.5%. Substantially all of that rise came after the administration launched its attacks on Iran at the end of February. Iran, in response, moved to close the Strait of Hormuz, sending the prices of oil, as well as other commodities such as fertilizers, through the roof.

These are nationwide prices, rather than those locally.

Political analysts say 11 U.S. Senate seats are potentially in play this November. In eight of those states, average hourly wages have risen by less than inflation: Alaska, Nebraska, Iowa, Georgia, North Carolina, Michigan, New Hampshire and Maine. In only three - Texas, Ohio and Florida - have average hourly earnings risen more than prices.

If we compare the changes in statewide hourly earnings with the changes in national prices, it shows that average workers in Alaska and Nebraska are earning nearly 4% less per hour in real purchasing power terms than they were at the start of the year.

And these numbers don't include any further erosion to their purchasing power that's happened this month.

Early data is approximate and we won't get any official inflation figures until next month. But the Federal Reserve Bank of Cleveland tracks all the individual data points as they come in and aggregates them into a real-time inflation "nowcast."

Its latest reading is that consumer prices are set to rise by 0.5% in September alone. That works out to an annualized rate of 6.2%.

No wonder Fed Chairman Kevin Warsh and his colleagues just voted unanimously to raise short-term interest rates last week. They raised rates by a quarter-point, but they probably should have raised them by a half-point, or even more.

The bond markets don't think the Fed did enough. The interest rate on 10-year Treasury notes BX: TMUBMUSD10Y just jumped to 5.13%, the highest reading in nearly 20 years. Bankrate.com says the average rate on new 30-year fixed mortgages has just hit 7.11% - higher than it was even before the 2022 midterms. Before the attack on Iran it was below 6%.

In this fall's elections, veteran political analyst Charlie Cook says the real story isn't a "blue wave" in favor of the Democrats, but a "red undertow" against the Republicans. If Trump faces a hostile Congress for his last two years in office, he will have only one person to blame - and it won't be the prime minister of Canada, the prime minister of Iceland or CNN's Kaitlan Collins.

-Brett Arends