Demand destruction: How the Iran war could rattle or break the US economy
The International Energy Agency warned that the Iran war could lead to 'demand destruction' as oil prices surge, and the US economy is already showing signs of strain with rising gas prices and inflation. Economists warn that prolonged disruption to oil supplies could have severe consequences for the US economy.
The International Energy Agency warned of 'demand destruction' due to the Iran war, which has caused a severe oil supply shock. In the US, fast-rising gas prices have eaten into Americans' hard-earned pay and tax refunds, hitting those who can least afford it. Inflation has jolted higher, wage growth slowed, and consumer sentiment slumped. Economists warn that the longer the Strait of Hormuz remains blocked, the greater the danger of worse outcomes. The erosion of Americans' pay can lead to reduced spending, dampened business investment, and layoffs. A potential chain reaction includes oil price spikes, sinking confidence, frozen big purchases, businesses feeling the squeeze, the Federal Reserve raising interest rates, and permanent behavior changes.
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