This Time Is Different, Sort Of
Amazon is rolling out 30-minute delivery service in certain cities in the U.S. Millions of U.S. customers can now get fresh groceries and household essentials delivered to their door in less time than it can take to get a pizza delivered in many locales. Amazon plans to expand this ultra-fast service further to tens of millions of customers by the end of the year. In its first quarter earnings report, Amazon noted that its online stores business, its biggest revenue generator, grew 12% as the company continued to spend on faster delivery. The investments appear to be paying off.
Amazon’s fastest U.S. delivery options now include: Amazon Now (30-minute delivery), Prime Air drone delivery (under 60-minutes), and Same-Day Delivery. Amazon Now is widely available in Atlanta, Dallas–Fort Worth, Philadelphia, and Seattle, with rapid expansion underway in dozens of U.S. cities. In 2025, Amazon delivered to Prime members around the world at the fastest speeds ever for a third consecutive year, with more than 13 billion items arriving the same or next day.
Mail delivery 100 years ago was surprisingly fast, often providing same-day or next-day service within cities due to frequent daily deliveries, sometimes 2-3 times per day. That is hard to imagine as modern mail often takes 1 to 5 days for first-class delivery. At least making a phone call today only takes roughly 2 to 5 seconds to connect, while 100 years ago a long-distance call could take 15 minutes to set up, requiring human operators to physically patch lines together.
Modern high-speed trains are significantly faster than 100 years ago, capable of exceeding 200 mph. However, daily passenger and freight train speeds in many regions of the US have not improved dramatically, and in some cases are slower today than the 1930s. US Amtrak “high-speed” Acela passenger trains are capable of hitting 150 mph on the Northeast Corridor, but most Amtrak trains run at 79 mph due to shared track constraints. A trip from New York to DC is now about 11 minutes slower than a 1914 timetable. Freight train speeds are much faster than 100 years ago due to diesel-electric power, but rarely exceed 50–60 mph for efficiency and safety. Why didn’t trains become significantly faster? Infrastructure limitations are partly to blame.
On the AI front, there are some infrastructure and capacity constraints as well. One major issue is electrical grid capacity. Training and inferencing for next-generation AI models requires massive power loads that existing grids struggle to support. Some regions face years of delays for grid interconnection and permitting. Hardware and semiconductor chip bottlenecks have also arisen along with speed and latency issues. Furthermore, there are environmental issues to consider as well as high-density data centers can require enormous amounts of cooling capacity and energy production. Massive spending on AI infrastructure is leading to faster information gathering and analysis, though energy bottlenecks and supply constraints may put some governors on that expansion eventually. For now, the spending continues at breakneck speed.
It’s All About That Base Inflation
US inflation accelerated in April on rising gasoline and grocery costs, exceeding wage growth for already strained consumers. The consumer price index rose 3.8% from a year earlier, according to The Bureau of Labor Statistics, the most since 2023. Energy remained the key driver, accounting for about 40% of the headline increase. Grocery prices, rents and airfares also saw large increases from a month earlier. Americans are currently paying about $4.50 a gallon for regular gasoline, according to AAA, up more than 50% since late February. Meanwhile, “core” goods prices, excluding food and energy, were up a smaller 2.8% year over year thanks to a slump in prices for new vehicles. The current concern is that a sustained pickup in the cost of essentials could lead consumers to cut back on spending, regardless of how fast a package arrives.
Stagflation Light?
The economy is better equipped to weather the current energy supply shock than during the 1970’s stagflation. The quantity of oil consumed per unit of economic output, has declined by 70% since then. The rise of alternatives to fossil fuels, as well as the vastly improved fuel efficiency in autos, has reduced exposure to energy-supply shocks. The expansion of domestic oil and natural gas output has also given the U.S. a level of energy security that didn’t exist 50 years ago. Economic growth may slow below the long-term trend of 2% and inflation may head above 4%, but unemployment will likely be contained. Changing demographics, such as retiring baby boomers and tight immigration policies, should continue to keep a lid on the number of workers looking for work.
That provides little chance for another interest-rate cut from the Federal Reserve in 2026.
Technology stocks have been on a winning streak for several weeks after a poor showing in the first quarter of the year when the Magnificent 7 stocks dropped 11%. Meanwhile, corporate earnings reports have been stronger than expected and strategists have been raising their price targets for the S&P500 for the year. “Stagflation light” may be in the cards until the Middle East conflict is resolved, but in the meantime, markets continue to deliver and look through the valley.
Stevie Wonder turns 76 today, Stephen Colbert turns 62, and singer Darius Rucker turns 60.
Christopher Crooks, CFA®, CFP® 610-260-2219