HARMFUL IMPACT ON U.S ECONOMY FOR U.S - IRAN WAR. ■
1. Oil Price Surges & Inflation Pressure
Iran, responsible for ~3–4% of global oil production, could disrupt exports—especially if the Strait of Hormuz is threatened, affecting up to 20% of global seaborne oil.
Goldman Sachs warns that halving flow through Hormuz for a month could send Brent crude past $110/barrel .
Higher oil means more expensive gasoline and goods, raising consumer price inflation by 0.5–0.7 percentage points in major economies.
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📉 2. Slower Economic Growth (GDP Impact)
IMF, World Bank, OECD have all flagged oil shocks and trade disruptions as brakes on growth .
A hypothetical U.S.–Iran war could wipe approximately 0.3% off global GDP—comparable to a major trade war—primarily via energy price .
In the U.S., elevated energy prices slow consumer spending and investment.
🚚 3. Consumer Costs & Supply Chain Disruption
Shipping route disruptions (e.g., via Hormuz or Red Sea spillovers) can spike freight rates—domestically pushing import prices and consumer inflation higher by ~0.5% .
As companies reroute logistics, U.S. businesses face higher supply costs and delays.
💵 4. Federal Budget & Fiscal Strains
Historical U.S. wars (e.g. Iraq) show multi-trillion-dollar costs including military and veteran care noahpinion.blog+3en.wikipedia.org+3sciencedirect.com+3. Even a limited Iranian conflict could require Congress to reallocate funds, increasing deficits.
Rising defense spending might crowd out infrastructure, education, or climate investments.
🛑 5. Market Volatility & Confidence Drops
Geopolitical tension data (GPR index) shows volatility spikes dampening consumer/business confidence and lowering investment
Stock and bond markets typically wobble during such crises. The dollar might briefly strengthen as a safe haven—though ING reports there's “no safe-haven effect, yet” .