The Iran war has made inequality worse. An end won’t fix it

For some Americans’ finances, the Iran war was over almost as soon as it began. Those with access to stocks — a majority of Americans have some, though the ultrawealthy have most — saw the S&P 500 dip about 8% when the war started, only for it to bounce 19% starting in late March, more than making up its losses. The index is now up 10.7% for the year, which if it held would make for the fourth consecutive year of double-digit stock increases.

President Donald Trump has been quick to trumpet these gains. “We have 401(k)s at their all-time high, highest they’ve ever been, and that goes along with the stock market, which is the highest it’s ever been,” Trump said at a televised Cabinet meeting this week, repeating a refrain he has adopted to celebrate market wins. That is all despite the war, he said. 

But as Trump — along with anyone who has to put gas into their car — also knows, the real economic weight of the war is much heftier than lofty stock prices would suggest. The war is heightening an already historic disconnect between those who can share in the affluence spun off by U.S. financial markets and those who can’t. That is aggravating Americas’ frustrations with the president’s economic performance, and likely will weigh on his fellow Republicans’ performance in November’s midterm elections. 

Trump won a return to the White House in large part because of his promises to rein in consumer prices, a pledge voters may feel is unfulfilled when they head to the ballot box.

A slew of new economic data shows the U.S. economy struggling to shrug off the effects of the war. Americans’ purchasing power is falling, according to data released Thursday by the Bureau of Economic Analysis. Americans’ real disposable income fell 0.2% in March and another 0.5% in April. Americans are getting through the energy crunch due to the war by slashing savings. The personal savings rate hit a dismal 2.6% last month, U.S. Bureau of Economic Analysis data showed. Growth in the first quarter was revised downward to just 1.6%. 

But the economy hasn’t stalled out, in part because of that disconnect between the top and bottom halves of the population. Big U.S. companies are doing just fine — that, after all, is what makes up the S&P 500. It is workers, in aggregate, who are having a tough go of things. Although corporate profits are booming, labor’s share of gross domestic income has fallen to 51%, the lowest in 79 years that records have been kept, the Wall Street Journal reported. 

The Iran war didn’t create American inequality, but it hasn’t helped. Researchers at the New York Federal Reserve found that since the war began, people in the Northeast earning less than $40,000 a year have cut back on gas purchases by nearly 10%, while those making over $125,000 have driven on with…