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The Affordability Report: Week of April 13th

These past two weeks have shown how fast any affordability win can deteriorate. The Iran war drove March inflation to 3.3%, the highest in nearly two years. Gas hit $4.17 a gallon. Every major U.S. airline raised checked bag fees in the same seven-day window. Major shipping companies all imposed fuel surcharges. Real wages went negative. And the OECD revised its U.S. inflation forecast to 4.2% for the year. Meanwhile, Gov. Spanberger signed one of the most comprehensive state affordability packages in the country, the Pew Charitable Trusts dropped some new research backing YIMBY claims. Let’s get into it. New Pro–CoL Developments: Thanks for reading The Rebuild! Subscribe for free to receive new posts and support my work. Gov. Spanberger Signs a Model Affordability Package Across Housing, Healthcare & Energy What happened: Virginia Gov. Abigail Spanberger signed hundreds of bills from the 2026 General Assembly session in two waves with a core slate targeting the three pillars of affordability. On housing: HB867/SB74 gives every locality the option to adopt an affordable housing program; HB4 empowers communities to preserve long-term affordability; HB352 creates performance-based grants for affordable construction; HB164/SB328 removes caps on homeownership grants for local employees; a separate bill requires localities to treat manufactured homes equally. On healthcare: HB736 limits prior authorization delays (passed unanimously); HB425 expands telemedicine for high-risk pregnancies on Medicaid. On energy: HB1002 prohibits utilities from disconnecting residential customers without offering a payment plan; HB770/SB650 allows water and sewer utilities to offer discounted rates for low-income customers; HB683/SB659 creates a Solar Interconnection Grant Program. Why it matters: This is what a comprehensive supply-side affordability agenda looks like from a Democratic governor in a swing state. Spanberger campaigned on cost of living, announced an “Affordable Virginia Agenda” in December, and has now delivered across housing, healthcare, and energy simultaneously. The utility disconnect protection and low-income water rate bills are particularly timely given that energy costs are spiking nationally from the Iran war. The manufactured housing bill creates a scalable homeownership pathway. And the bipartisan vote counts across nearly all of these demonstrate that affordability policy can still be a unifying issue. The Pew Austin Study: Building Housing Works, and Now There’s Proof What happened: A Pew Charitable Trusts analysis (published in March, with widespread coverage exploding in early April via Halina Bennet’s April 8 Slow Boring column, Vox, KUER, and others) found that Austin added 120,000 homes between 2015 and 2024 — a 30% increase, more than 3x the national rate. Median rent fell from $1,546 in December 2021 to $1,296 by January 2026, dropping 4% below the national median. In older, non-luxury “Class C” buildings serving lower-income renters, rents fell about 11%. Large apartment rents fell 7% from 2023 to 2024 alone — the steepest decline of any major metro. All of this happened while the city’s population grew by 18,000 residents. Why it matters: This is another strong empirical case that supply-side housing reform lowers costs for the people who need it most. Austin reformed zoning, cut parking mandates, passed a $250 million housing bond, eased ADU permitting, and in 2023 became the largest U.S. city to eliminate parking requirements citywide. The 11% rent decline in older non-luxury buildings is the crucial finding: it demonstrates that new construction doesn’t just benefit residents of new buildings, it relieves pressure across the entire market. New Anti–CoL Developments: March CPI at 3.3%: Gas Prices Drove a Record Spike What happened: The CPI surged 0.9% month-over-month in March, the largest monthly increase in nearly four years. Gasoline prices rose a record 21.2% in a single month, accounting for nearly three-quarters of the headline increase. The annual inflation rate jumped from 2.4% to 3.3%, the highest since May 2024. Real average hourly earnings fell 0.6% for the month, wiping out wage gains. For the year, real earnings are up just 0.3%. Why it matters: The Iran war, which began February 28, triggered the largest oil supply disruption in history by effectively closing the Strait of Hormuz. Even the benign core numbers offer limited comfort. Heather Long: “It’s going to get a lot worse before there’s any relief. Even if the war on Iran ends in two weeks, inflation will continue to rise for months to come.” And tariff effects are layered on top: toys rose 2.3% (largest monthly gain in nearly five years), tools and hardware up 1.4%. The Fed Confirms Full Tariff Pass-Through to Consumers What happened: The Federal Reserve Board published a FEDS Note on April 8 finding that tariffs implemented through November 2025 raised core goods consumer prices by 3.1% through February 2026. The cumulative effects are consistent with full dollar-for-dollar pass-through, contributing to a 0.8% boost in core PCE prices overall. Separately, the Minneapolis Fed published a complementary analysis on April 9 arguing that while some goods categories show disproportionate inflation beyond their tariff exposure, the tariff signal is real and significant. Why it matters: The Fed itself is now confirming what affordability advocates have been saying: tariffs are a consumer tax and they’ve landed entirely on American households. And this analysis only captures tariffs through November 2025 — before the Section 122 tariffs, the additional Section 232 tariffs on automobiles and copper, and the 10% baseline global tariff. Yale Budget Lab estimates the current tariff regime (effective rate at 11%, highest since 1943) costs the average household $780-$1,338 per year. The tariff story has been overshadowed by the war, but it’s compounding underneath. Every Major Airline Raised Bag Fees in the Same Week What happened: Between April 3 and April 9, every major U.S. airline raised checked baggage fees. United went first (April 3), followed by JetBlue, Delta (April 8), Southwest and American (April 9). First checked bag is now $45 across the board, up $10. Second bag: $55. Third bag: $200, up $50. Jet fuel hit approximately $4.88 per gallon in early April, more than double the $2.50 pre-war level. A family of four checking two bags each on a round-trip domestic flight now pays $320-$480 more in baggage fees than they would have in February. These fees are not subject to the 7.5% federal excise tax on ticket prices. Why it matters: Baggage fees are “sticky” once raised, it is hard for them to come back. Drew Powers of Powers Financial Group told Newsweek these will be permanent regardless of what happens with fuel. This is another clear example of how war-driven energy costs ripple through the economy into everyday consumer expenses that have nothing to do with oil on their face. And because these fees are untaxed, airlines prefer raising them over raising ticket prices, which means the cost is more opaque and less visible to consumers until they’re checking out. Amazon, USPS, UPS, FedEx: Fuel Surcharges Hit E-Commerce What happened: Amazon announced a 3.5% fuel surcharge on its roughly 2 million Fulfillment by Amazon sellers (effective April 17). The USPS announced an 8% fuel surcharge on packages (effective April 26, through January 2027). UPS and FedEx have both raised fuel surcharges since the war started. Amazon’s surcharge averages an additional 17 cents per unit, and has no end date. E-commerce experts expect these to become permanent. Why it matters: Nearly everything Americans buy online is about to get more expensive. Amazon hosts 2 million sellers; those sellers either eat the surcharge or pass it to consumers. Same dynamic for every small business shipping via UPS, FedEx, or USPS. This is a second-order energy shock: it’s not just gas at the pump, it’s the cost of moving goods through the entire economy. The OECD Revises U.S. Inflation to 4.2% What happened: The OECD revised its 2026 U.S. inflation projection from 2.8% to 4.2%, citing the Iran war as the primary driver and tariff pass-through as a secondary factor. Growing numbers of Fed policymakers at the March meeting indicated rate hikes might be needed. The Fed held rates at 3.50%-3.75%. Why it matters: A 4.2% inflation forecast means rate cuts are dead for 2026 and hikes are on the table. For consumers, this means mortgage rates stay elevated (6.38% currently), auto loans remain expensive, and the cost of borrowing stays high indefinitely. It also means the affordability squeeze intensifies: higher prices and higher interest rates simultaneously. The dual shock of tariffs + war is now projected to push inflation meaningfully above the Fed’s target for the remainder of the year. Liberation Day, One Year Later: Peak Pass-Through Is Arriving Now What happened: The Council on Foreign Relations published a one-year retrospective on Liberation Day, finding that tariffs drove food prices up 2.8% and fresh produce up 4%. U.S. soybean exports to China collapsed 78%. Corn exports to China fell 99%. Sugar prices rose 5.7% YoY through January 2026 with another 6.7% increase projected. Yale Budget Lab projected an annual food cost increase of roughly $1,500 per household. Economists estimate a 12-18 month lag before tariff effects fully reach consumers. Why it matters: That 12-18 month pass-through window places peak tariff impact between April and October 2026 — right now. Tariff pain is arriving just as war-driven energy costs layer additional pressure on top. For lower-income households who spend a higher share of income on food and energy, the compounding is severe. And because the Section 122 tariffs (the replacement for struck-down IEEPA tariffs) expire after 150 days, businesses face deep uncertainty about whether to plan for more or fewer tariffs. You can find our retrospective here. Win of the Week! New Jersey Lifts Its Nuclear Moratorium! Governor Mikie Sherrill signed legislation this week ending New Jersey’s de facto ban on new nuclear construction — a ban that’s been in place since the 1970s. As Sherrill put it: “For costs to come down, we need more energy supply. New Jersey is well-positioned to be a leader in next-generation nuclear energy to help bring that supply.” The state also launched a Nuclear Task Force covering financing, supply chains, workforce, permitting, and public trust, the full playbook for actually getting projects built. As I have recently written, nuclear delivers affordable, reliable, carbon-free baseload power — and states that clear the regulatory path are positioning themselves to meet surging electricity demand without spiking rates. That’s all for now — see you in two weeks! Thanks for reading The Rebuild! Subscribe for free to receive new posts and support my work.