The Iran war's economic hit could linger through 2026, economists say
Summary
The war in Iran has caused oil prices to rise sharply, pushing gas prices above $4 a gallon and increasing inflation in the U.S. Economists say these economic effects will last through 2026, even if the conflict ends soon.Key Facts
- The Iran war began eight weeks ago and has raised U.S. gas prices over $1 per gallon.
- Oil prices increased by about 44% since the war started, with Brent crude at $105 a barrel.
- The war has disrupted oil flow through the Strait of Hormuz, which normally handles 20% of the world's oil.
- Damage to energy facilities will delay a return to prewar oil production levels of 100 million barrels a day.
- Inflation rose to 3.3% annually in March, the highest in nearly two years, driven by higher energy costs.
- Inflation is expected to remain high through 2026, with some measures possibly reaching 4%.
- Higher energy prices may cause consumers to spend less, slowing down U.S. economic growth.
- Wealthier Americans are currently supporting spending growth, partly due to gains in the stock market.
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