InvestMacro

By D. Brian Blank, Mississippi State University and Brandy Hadley, Appalachian State University 

Americans don’t need a press release to know that inflation is rising. Gasoline is above $4 per gallon amid the ongoing conflict in the Middle East and closure of the Strait of Hormuz, and the release of key price data on May 28, 2026, underscores why policymakers are worried these pressures could spread into the broader economy.

The report offered a mixed but still uncomfortable picture. The month-to-month rise was softer than expected, but the change year over year still points to concern: a 3.8% jump from a year earlier, the fastest pace since 2021, and a less volatile index that excludes food and energy up 3.3%.

This increase suggests inflation isn’t limited to gasoline. Housing, utilities and recreational spending are also keeping underlying inflation elevated, even as other data shows a slowing economy and weaker income growth.

As finance and applied investments professors who study how businesses make decisions amid uncertainty, we have been watching this tension build. In our 2026 economic outlook, we warned that recession fears could persist alongside rising prices. Fresh inflation data now suggests the challenge may be deeper and longer lasting than many expected.

Are all prices rising?

The fresh inflation data comes from the Personal Consumption Expenditures Price Index, or headline PCE, which is maintained and released by the Commerce Department’s Bureau of Economic Analysis. Headline PCE had already been getting hotter, rising to 3.5% year on year in March 2026, up from 2.8% in February. But an even more important metric for the Federal Reserve is core PCE, which excludes the more volatile categories of food and energy. Core PCE matters because it gives policymakers a clearer read on underlying inflation pressures and is generally considered a better predictor of where inflation is headed, the Fed’s chief concern. That has been rising this year as well.

The key question isn’t simply whether gas prices are rising, but whether those higher energy costs are spreading into the rest of the economy.

That’s why energy costs are both a measure of current inflation and a signal of future rising prices. They show up directly in inflation data like PCE but also affect shipping, airline fares, food production, utilities, packaging, business profit margins and consumer psychology. A one-time bump doesn’t necessarily create lasting inflation. But the risk increases when those higher costs pass through to the broader economy and people begin to expect inflation to remain high. For example, if workers believe costs will be higher in general, they might demand higher wages, which in turn can make inflation even hotter.

There’s already some evidence that the inflationary effect of energy prices is spreading. April’s Consumer Price Index report – another inflation gauge – showed a 3.8% leap, the fastest in three years, with energy prices up 18% and spending on airlines up over 20%, while grocery prices posted their largest monthly gain since 2022. Tariff-sensitive categories like apparel and household furnishings are also still climbing.

And it’s these costs, not core PCE, that households experience every day. Americans buy gas, pay utility bills, purchase groceries and start changing their spending behavior in response to these pressures. That’s why the Fed is watching to see how energy prices impact other measures of inflation.

What’s the Fed to do?

Kevin Warsh has just been sworn in as the new chair of the central bank, which means the next meeting of the Fed’s policymaking committee on June 16-17, 2026, will be his first in that role. He’ll face an unusual amount of disagreement among committee members as well as scrutiny over his own positions given his rhetorical shifts on inflation and Fed policy since he was nominated by President Donald Trump. The president has pressured the Fed to cut rates, while Warsh has recently downplayed the significance and accuracy of the PCE gauge.

The Fed’s tool for responding to inflation is to raise interest rates, but it’s not always straightforward. The Fed doesn’t just hike interest rates as a direct response to inflation. If the increase in energy prices looks temporary and inflation expectations remain “anchored” – that is, stable among consumers – the Fed may hold steady on rates or even cut them as consumers continue to dial back spending. But it may have to keep rates higher for longer or even consider additional tightening if those conditions don’t hold and inflation continues rising.

This creates a problem for the Fed’s “dual mandate” to control inflation while supporting economic growth. Higher gas prices are inflationary, but they also reduce households’ spending power and dampen growth. In that sense, higher energy prices can act like a tax on consumers: People spend more to drive, heat and cool their homes, and receive goods, leaving less income for restaurants, travel, retail and other purchases.

That’s why the Fed doesn’t have a simple answer. If it hikes interest rates to combat inflation, it still won’t resolve geopolitical conflict and increase global oil supplies. But it can reduce demand and slow inflation.

Indeed, according to notes of the most recent Fed policy committee meeting in April, many officials are increasingly concerned that persistent inflation could require additional rate hikes. While the Fed decided to hold rates steady at 3.50% to 3.75% at the time, committee members noted that inflation remains elevated, “in part reflecting the recent increase in global energy prices.”

Another factor: Long-term yields on Treasury bonds, which reflect what investors demand for buying U.S. debt, have reached their highest levels since 2007. That could be a sign that markets expect higher rates or more uncertainty – and it matters because yields influence mortgage rates, business borrowing costs and the value of retirement portfolios, to name a few examples. In other words, inflation concerns don’t have to wait for another Fed rate hike to affect the economy. If markets believe inflation will stay elevated, borrowing costs can rise on their own.

What to watch at the Fed’s June meeting

The leadership transition at the Fed makes this moment particularly noteworthy. Warsh’s first major challenge may not be whether to raise or cut rates immediately, but how to explain what the Fed is watching. Will he emphasize headline inflation, core inflation, other inflation measures, consumer expectations, financial conditions or signs of slowing demand? This is especially important, as some of these gauges are closer to 2% and rising more slowly while others rise more rapidly away from the Fed’s 2% target.

Artificial intelligence adds another complication. AI-related investment may be helping hold up growth even as households feel pressured by higher gas and grocery prices. That creates a divided economy: Consumers struggle with higher prices and borrowing costs, but AI-related investment supports markets, infrastructure spending and business optimism. For his part, Warsh argues that AI also will help drive down prices, allowing the Fed to cut rates sooner.

All of this makes the inflation outlook hard to read. Weakening consumer demand and wage growth argues for caution, while rising inflation expectations and businesses passing on higher costs to consumers and the broader economy argue for higher rates.

Ultimately, the key question for the Fed is not simply whether inflation is rising, but whether energy prices are reopening the inflation fight at the exact moment it’s trying to prove that price stability is still within reach. Warsh’s first months as chair will test whether the Fed can maintain inflation credibility while avoiding unnecessary damage to an already pressured consumer economy.

About the Author:

D. Brian Blank, Associate Professor of Finance, Mississippi State University and Brandy Hadley, Associate Professor of Finance and Distinguished Scholar of Applied Investments, Appalachian State University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

By Gideon Yoffe, Weizmann Institute of Science 

New observatories and spacecraft missions are probing environments in our solar system that could potentially host life but have long remained hidden. Icy moons like Saturn’s Enceladus and Jupiter’s Europa likely contain oceans beneath frozen outer shells. But a layer of ice prohibits space probes from sampling them directly.

Exploring these icy moons is almost forensic: Their surfaces keep a partial record of inaccessible interiors. Scientists need tools that can help them figure out whether evidence of life lies beneath without observing it directly.

I’m a planetary scientist, and my colleagues and I have developed a tool that could help evaluate whether an environment has the right conditions for life, based on patterns in the types of molecules found in a sample.

Future missions may sample environments that could host life, such as Saturn’s moon Enceladus.
Jason Major, Cassini spacecraft/Flickr, CC BY-NC-SA

Looking for life’s fingerprints

The search for life often begins with organic molecules: the carbon-based molecules from which life on Earth is built. Two especially important families of molecules are amino acids, which cells use to build proteins, and fatty acids, which help form cell membranes.

Yet these molecules are not unique to life – they can also form through nonbiological chemistry. Scientists have previously detected them in asteroids and meteorites.

Because detecting amino acids or fatty acids in a planetary environment alone will not tell researchers whether they are produced by life or by nonlife, they must seek additional evidence.

One clue is molecular handedness, or “chirality.” Certain amino acids occur in two mirror-image forms. Nonbiological processes often produce both forms in similar amounts, whereas life on Earth uses almost exclusively the left-handed forms. A strong excess of one form can point toward biology.

Another clue is found in the balance between the heavier and lighter forms of the same element within molecules. Usually, life prefers to use the lighter form.

Both of these clues are powerful indicators but difficult to measure in space. They require sensitive instruments, clean samples and often more material than a spacecraft can obtain.

That said, current and planned missions may provide a more limited – but still valuable – kind of measurement: a list of molecules and the proportions in which they are found. Our study demonstrates how researchers can use this simpler information to learn more about the molecules’ chemical origin.

Investigating diversity

Life does not merely produce certain molecules – it produces them in arrangements of unique patterns. Living systems invest energy into making molecules that serve specific functions, even when those molecules are complex and harder to form. Proteins, for example, require a broad set of amino acids, including relatively complex ones. Nonbiological chemistry can also make amino acids, but typically it makes simpler ones.

In our study, we investigated whether these molecules leave a statistical pattern that could serve as a biosignature: a measurable clue that may point toward life.

To quantify this idea, we used a method from ecology called diversity theory. Ecologists do not only ask how many species exist in a particular ecosystem, but also how those species are distributed: whether the community is dominated by a few very common species or by many species occurring in comparable numbers. The point of diversity theory is to both compile a list of species and capture the prevalence of each.

We applied the same logic to molecules. Within a family, such as amino acids, we treated each molecule like a species in an ecological community and measured its abundance. We wanted to know: Is a given mixture of molecules distributed evenly across different types or dominated by only a few of them? And could that pattern reflect the process that produced those molecules, whether biological or nonbiological?

Testing the framework

To test this idea, we compiled a deliberately broad dataset that included amino acids from a variety of sources: meteorites, samples from asteroid missions, laboratory simulations of nonbiological chemistry, modern organisms, sediments, ancient fossils and samples from various environments on Earth. We later did the same with fatty acids.

For amino acids, we found a clear distinction. The biological samples tended to contain many complex amino acids, in proportions similar to those of simpler ones. Nonbiological samples were usually sparser – that is, more strongly dominated by simple molecules.

This result makes sense. If biology can overcome the chemical bottlenecks necessary to create more complex molecules, you’d expect to see more of those molecules. On the other hand, nonbiological chemistry is more limited and dominated by molecules that form randomly. Complex molecules are far less likely to form under nonbiological conditions.

Fatty acids showed an opposite but equally informative pattern. Chains of fatty acids make up the outer membranes of living cells. We found that in biological samples, the fatty acid chains were all a similar length. In contrast, nonbiological samples had a wider distribution of chain lengths.

Even though, unlike the amino acid results, the nonbiological samples showed greater fatty acid diversity, this chain length finding supported the main idea behind our research: Life shapes molecular mixtures according to function.

Taken together, our results suggest that molecular diversity can serve as a new kind of biosignature. It cannot prove the presence of life on its own, and it should be interpreted alongside other measurements. But it offers a practical way to use the kind of data spacecraft are most likely to obtain: the proportions of molecules.

Searching for life in the solar system and beyond

Future spacecraft are unlikely to find pristine biological material, even if it exists. More likely, they will encounter the chemical traces of molecules, altered by the harsh conditions on planetary surfaces.

Next, we wanted to know how long the diversity signal could survive in the type of harsh environment where scientists may look, such as the surface of Europa. Its surface is continually being bombarded by energetic particles trapped in Jupiter’s magnetic field, which can break different organic molecules apart at different rates.

We modeled how these molecules would degrade under such conditions and found that the diversity signal could remain recognizable for thousands of years when the molecules are buried under a few centimeters of ice. The signal is not indestructible, but it does not require an exceptionally fresh sample.

Our results suggest that in some cases the pattern left by life may still be recognizable even after the individual molecules have begun to break down.

The take-home message from our study is that life organizes chemistry in ways that could persist even after those ingredients are altered. Living systems arrange molecules according to biological needs, while nonbiological chemistry usually follows what is easiest to produce. If this organization can survive in planetary materials, future spacecraft may search not only for the building blocks of life but for the deeper statistical pattern that life leaves behind.

About the Author:

Gideon Yoffe, Postdoctoral Fellow in Planetary Science, Weizmann Institute of Science

This article is republished from The Conversation under a Creative Commons license. Read the original article.