The ongoing war in Iran is already hitting the wallets of people across the United States. Gas prices have surged sharply over the past month, with little indication they will ease anytime soon. As the conflict continues to disrupt global oil supplies and key shipping routes, economists warn that a prolonged war could tip the U.S. economy into a recession within the next year.
According to CBS News, analysts at Goldman Sachs estimate that rising oil prices could lift U.S. inflation by 0.2 percentage points, reaching around 3.1% by the end of the year. This added pressure could further slow consumer spending. Speaking at a news conference in Australia, Fatih Birol, head of the International Energy Agency, said the disruption caused by the Iran conflict is even more severe than the oil crises of 1973 and 1979 combined.
Because of these disruptions, Goldman Sachs currently estimates a 30% chance of a recession within the next year. Meanwhile, Moody’s Analytics has raised its forecast to 48.6%, signaling even greater concern.
“Even before the conflict, I believed recession risks were rising,” said Mark Zandi in an interview with CNBC. “Now, the risks are extremely high—and unless tensions ease soon, a recession in the second half of the year looks increasingly likely.”
For many Americans, especially those earning under six figures, the situation may already feel like a recession. Economists describe the current climate as a “K-shaped economy,” where higher-income households continue to thrive while lower-income groups struggle. Consumer spending has largely been supported by wealthier individuals, but that could change.
“If higher earners pull back, it could push the economy into recession,” said Gus Faucher of PNC Financial Services Group. He also advised consumers to delay major purchases due to economic uncertainty in the coming months.
The impact of the Iran conflict is being felt across multiple sectors. Gas prices have jumped to a national average of $3.68 per gallon—about a dollar higher than before the war began. Diesel prices, crucial for farming and shipping, have climbed even more steeply, rising from $3.75 to $5.37.
Beyond fuel costs, food prices are also under pressure. A significant portion of the world’s fertilizer supply moves through the Strait of Hormuz, which has been heavily disrupted during the conflict. Reduced fertilizer availability is expected to lower crop production, leading to higher food prices globally.
Compounding the issue, the U.S. economy was already showing signs of weakness before the war began. The rising cost of living played a major role in the re-election of Donald Trump in 2024. At the same time, the job market has struggled, highlighted by a February report showing a loss of 92,000 jobs.
With unemployment rising and prices continuing to climb, the overall outlook for the U.S. economy remains uncertain, and increasingly concerning.
