More than five months after the United States launched its war against Iran, the conflict is placing growing pressure on American consumers, farmers and the broader economy.
President Donald Trump initially described the campaign as a four-to-six-week military operation. But fighting that began March 1 continues, while the Strait of Hormuz — a critical route for global oil and natural-gas shipments — remains severely restricted.
The disruption has pushed the national average for gasoline above $4 a gallon, compared with about $2.98 before the war. Diesel prices have also increased, raising transportation costs throughout the economy. Oil prices climbed again Monday as Washington and Tehran exchanged demands and showed little sign of returning to negotiations.
Farmers have been hit especially hard. The conflict interrupted shipments of natural gas, urea and other materials used to manufacture fertilizer. Some U.S. fertilizer suppliers warned of shortages, while higher diesel prices increased the cost of planting and harvesting crops. Those expenses can eventually contribute to higher grocery prices.
The Federal Reserve reported that inflation accelerated after energy prices surged in March. Its preferred inflation measure was running at roughly twice the central bank’s 2% goal in May, complicating efforts to lower borrowing costs.
Trump continues to describe the economy as being in a “golden age.” However, the latest Labor Department report showed employers cut 23,000 jobs in July—the first monthly decline since February. The unemployment rate nevertheless fell to 4.1%, suggesting the labor market has weakened but not collapsed.
An eventual reopening of Hormuz could reduce energy prices. But without a diplomatic breakthrough, prolonged fighting risks keeping inflation and household costs elevated while further slowing hiring.
Guests:
Elizabeth Pancotti is the Vice President of Policy, Advocacy, and Research at Groundwork Collaborative. Prior to Groundwork, she advised Sen. Bernie Sanders (I-Vt.) on economic policy.
Janelle Jones is a Visiting Senior Fellow at The Century Foundation. A nationally recognized economic policy leader, Janelle is an expert in labor markets, macroeconomic policy, and strategies to close racial and gender economic disparities.
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