MIDDLE EAST TENSIONS RENEW INFLATION CONCERNS
Benjamin L. Varner, Chief Economist

Recent geopolitical tensions in the Middle East, particularly involving Iran and the Strait of Hormuz, have increased concerns that higher global energy prices could place additional upward pressure on inflation. Recent economic data, including increases in Personal Consumption Expenditures (PCE) inflation, the Federal Reserve’s preferred inflation measure, have reinforced these concerns and suggest that progress toward the Federal Reserve’s long-term inflation target may be stalling or even reversing. In response, financial markets have shifted expectations regarding future Federal Reserve actions, with investors increasingly expecting interest rates to remain elevated for longer than previously anticipated.

GENERAL FUNDS SEE ADDITIONAL GAINS IN MAY DUE TO STRONG MONTH FOR FEDERAL SOURCES
Eric Noggle, Revenue Manager

Revenues deposited into the State’s General Funds increased by $152 million, or 3.9%, in May despite a relatively flat month for most State revenue sources. The increase was driven primarily by a strong month for Federal Sources. As a result, year-to-date General Funds receipts through eleven months of FY 2026 total $50.586 billion, an increase of $1.868 billion, or 3.8%, over the same period last fiscal year.