What now?
We will soon find out just how much damage Trump’s Iran War will do to our economy, inflation, and employment…we’ll leave out the untold damage he’s done to our national security and credibility among allies and enemies alike (for insights on this there’s no one more incisive than Phillips O’Brien).
TL/DR…
Gas prices will stay well over $4 a gallon; food prices will also increase
Overall Inflation will continue to increase - it hit 3.3% in March - as will interest rates.
Hiring will suffer as companies hoard cash, don’t fill empty positions and put off expansion plans
Unless President Trump does something even dumber than starting his war in the first place - e.g. re-opening attacks on Iran - which is a real possibility, here’s where I think this is headed.
Lest you think the ceasefire will return things to “normal” - quoting a headline from The Economist:
A ceasefire will not prevent the Iran war’s economic harm
What will happen:
Inflation - which jumped 0.9% in March will slow down economic growth, resulting in fewer new jobs and adding pressure on consumers who will cut back on spending.
Interest rates will edge up due to the Fed’s justified fear of accelerating inflation, further hampering economic growth.
Trump’s immigration policies are further cutting employment and thereby reducing payrolls; the labor force participation rate has also dropped meaning fewer folks are working or looking for work.
Why this will happen:
Iran controls the Strait of Hormuz for the foreseeable future and there’s not a damn thing we or the Israelis or NATO or Middle Eastern countries can do about it.
This enables Iran’s Revolutionary Guard - the hyper-conservative and quite powerful entity currently ruling Iran - to coerce our former allies and neutral parties (France, India, Pakistan, Turkey and many more) to move away from the US.
What this means for you.
Rising prices, fewer new jobs, higher inflation aren’t going away anytime soon.