Iran Attacks Threaten US Economy with Uncertainty

Conflict could worsen inflation and slow growth, economists warn

Mar. 3, 2026 at 6:15am

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The U.S. and Israeli attacks on Iran add more uncertainty to a U.S. economy already facing challenges like on-and-off tariffs, weak hiring, and lingering inflationary pressures. The war has already raised oil prices, and a prolonged conflict that pushes oil past $100 a barrel could worsen inflation, slow growth, and intensify Americans' concerns about the cost of essentials like gas and groceries.

Why it matters

The economic effects of the Iran conflict will depend on its length and severity. A short-lived war would have minor impacts, but a longer war that disrupts oil supply could significantly accelerate inflation, slow growth, and further erode public confidence in the economy - a major political risk for President Trump.

The details

Oil prices jumped 6.3% on Monday, with U.S. crude settling at $71.23 per barrel and Brent crude at $77.74. Economists say such an increase would barely lift inflation, but a sustained rise past $100 per barrel could push gas prices to $3.50 per gallon and raise costs for shipping and heating. The conflict could also undermine business confidence, leading to less investment and hiring. However, the U.S. economy is less dependent on oil than in the past, and high pre-conflict inventories may help limit price spikes.

  • Oil prices rose 6.3% on Monday, March 3, 2026.

The players

Joe Brusuelas

An economist at RSM, a consulting firm.

Alex Jacquez

Chief of policy and advocacy at the Groundwork Collaborative and an economic adviser to the Biden White House.

Rory Johnston

Founder of Commodity Context, an oil analytics firm.

Kathy Bostjancic

Chief economist at Nationwide Financial.

President Donald Trump

The current U.S. president.

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What they’re saying

“While cost-conscious Americans who are dealing with an affordability crisis will not take this increase lightly, such an increase will not materially affect economic growth.”

— Joe Brusuelas, Economist

“Markets are right now really under-pricing the tail risk of a sustained engagement and an operation that does not wrap up quickly, restore travel through the Strait of Hormuz and get everything back to de-escalation and normal in a timely manner.”

— Alex Jacquez, Chief of policy and advocacy, Groundwork Collaborative; economic adviser to Biden White House

“This is a very minor spike relative to what happened after Russia's invasion.”

— Rory Johnston, Founder, Commodity Context

“When there is an injection of new uncertainty into the business environment ... that's a hit to confidence.”

— Kathy Bostjancic, Chief economist, Nationwide Financial

“People generally don't think that President Trump is focused on the things that they are focused on, and what they want him to be focused on is the price of groceries. What they think he's focused on are things like tariffs and foreign policy.”

— Alex Jacquez, Chief of policy and advocacy, Groundwork Collaborative; economic adviser to Biden White House

What’s next

The ultimate impact on the economy and inflation will depend on the length and severity of the conflict with Iran. If the war drags on for months, it could further undermine business confidence and lead to less investment and hiring.

The takeaway

The Iran conflict adds more uncertainty to a U.S. economy already grappling with challenges like tariffs, weak hiring, and high inflation. While a short-lived war would have minor effects, a prolonged conflict that disrupts oil supply could significantly worsen inflation, slow growth, and further erode public confidence in the economy - a major political risk for President Trump.