Here are all the ways the Iran war has affected the U.S. economy so far

The Iran war is starting to show up in the U.S. economy in ways both obvious and not so much, with soaring energy costs leading the impact and potential hits on broader growth simmering beneath the surface.

Though recession fears have grown since the fighting began more than six weeks ago, most economists think the war will have only modest effects on gross domestic product — maybe shaving off a few tenths of a percentage point overall.

But there’s an important caveat, mainly around duration: Should the current ceasefire hold, inflationary impacts will wear off. If fighting resumes, however, the future becomes much murkier, threatening the fragile growth the economy has seen over the past two quarters.

“It’s going to gouge out some of the growth, but we’ll weather through it,” said Mike Skordeles, head of U.S. economics at Truist Advisory Services. “The bigger issue is the uncertainty.”

Indeed, uncertainty has hung over the U.S. economy for most the past year, ever since President Donald Trump unveiled his “liberation day” tariffs in early April 2025 and continuing through what has become an increasingly muscular and aggressive foreign policy.

The war has intensified the pressure, resulting in a host of questions: whether the inflation surge during the war is temporary, how much conditions will affect the consumers who drive most U.S. economic growth, and the extent to which less energy-independent nations are hurt by the war fallout.

Underlining all of it is how the Federal Reserve and other central banks will respond.

“Iran’s important. The price of crude oil is important. Other things matter more. Incomes and other things are continuing to hang in there,” Skordeles said. “The other piece of that uncertainty is by the Fed that’s delaying — and I think it’s delaying, not canceling — any sort of additional cuts, pushing them into the back half or even later in the year. That means you’re elevating borrowing costs for consumers.”

Suffering at the pump

High rates come at a bad time with prices at the pump — most recently at national average $4.10 a gallon, according to AAA — already hitting consumers. A spike in mortgage rates also helped drive existing home sales in March to their lowest in nine months.

Still, debit and credit card spending surged 4.3% in March, the most in more than three years, according to Bank of America.

That was powered by a 16.5% jump in spending at gas stations. But there also was “healthy growth” of 3.6% excluding gas, the bank said, indicating that wallets were still resilient enough to handle the increase.

One factor expected to help sustain consumers is bigger tax refund checks following changes made in last year’s One Big Beautiful Bill Act. The average refund this year has been $3,521, an 11.1% increase over the same period in 2025, according to IRS data.

Higher…