A driver fills a vehicle with regular gasoline at a Shell gas station in Hercules, California on May 21, 2026.
David Paul Morris | Bloomberg | getty images
For some Americans, the Iran war was over almost as soon as it began. Those who had access to stocks — most Americans have some, though the ultra-wealthy have the most — saw it. S&P 500 After falling about 8% when the war began, it surged 19% in late March, more than making up for its losses. The index is now up 10.7% for the year, which if it holds would mark the fourth consecutive year of double-digit stock growth.
President Donald Trump has been quick to tout these benefits. “We have 401(k) at its highest level ever, the highest it’s ever been, and it moves right along with the stock market, which is the highest it’s ever been,” Trump said at an event. telecast of cabinet meeting This week, he reiterated a bet he adopted to celebrate market wins. All this, he said, despite the war.
But as Trump – with anyone who has to put gas in His car – also knows that the real economic burden of war is far greater than high stock prices. The war is exacerbating the already historic divide between those who can share in the prosperity generated by American financial markets and those who cannot. This is increasing America’s disappointment with the President’s economic performance and is likely to affect the performance of his fellow Republicans in the November midterm elections.
Trump returned to the White House in large part because of his promises to rein in consumer prices, a pledge voters may feel unfulfilled when they head to the ballot box.
A set of new economic data shows that the US economy is struggling to recover from the effects of the war. purchasing power of americans The decline is coming, according to data released Thursday by the Bureau of Economic Analysis. Americans’ real disposable income fell 0.2% in March and 0.5% in April. Americans are dealing with the energy crisis by cutting savings due to the war. The personal savings rate hit a disappointing 2.6% last month, data from the US Bureau of Economic Analysis shows. The growth rate in the first quarter was revised down to only 1.6%.
But the economy has not stagnated because of the separation between the upper and lower segments of the population. Big US companies are doing just fine – after all, that’s what makes up the S&P 500. Overall, it is the workers who are facing difficult conditions. Although corporate profits have been rising rapidly, labor’s share of gross domestic income has fallen to 51%, the lowest in the 79 years that records have been kept. The Wall Street Journal reported.
The Iran war didn’t cause American inequality, but it didn’t help it, either. researchers of New York Federal Reserve found that since the war began, people earning less than $40,000 a year in the Northeast have cut back on gas purchases by about 10%, while people earning more than $125,000 have moved forward with more disposable income.
Nationally, those who can make the cut are lucky: Drivers in the Northeast are more likely to be able to switch to public transit than in many parts. Of the country. Elsewhere, people are more likely to close their eyes while swiping their cards at the pump. According to Moody’s analysis, Americans have spent an average of $447.19 extra on energy costs since the war began.
Gas prices have declined in recent days following the Memorial Day holiday and the start of the summer travel season.. The average cost of a gallon of gas across the country dropped an average of 16 cents to $4.39 this week, according to AAA, as a deal between the U.S. and Iran appeared to be on the way.
A weak new deal between the US and Iran would reopen the flow of oil tankers from the Persian Gulf through the Strait of Hormuz. Due to the refusal of both the US and Iran to allow ships to pass through the strait, about 100 million barrels of oil per day is not reaching global markets.
The US produces more oil than any country in the history of the world, but its pricing is tied to global markets. That is a double edged sword. When the closure of the strait halted shipments of jet fuel from Gulf producers to Europe, American market smarts stepped in to fill the gap. US refineries switched from gas to jet fuel for automobiles. A global supply disaster was averted at some cost to American consumers.
Trump said on Friday that he is making a final decision on a possible deal with Iran. The market welcomed the news with futures contracts brent crude oil It fell nearly $1.70 to below $92 a barrel. Shares continued to rise.
But financial markets can adapt in a matter of seconds to changes that would take months to implement in the real economy.
About 2,000 ships are stranded inside the Persian Gulf. First, the mines need to be cleared, then those ships need to be guided through the straits.
“You need weeks and weeks” to get those vessels out, Chevron CEO Mike Wirth said Friday in an interview with Bloomberg. Other ships that have diverted to carry energy supplies from the U.S. market to Asia and elsewhere will need to reroute. “It will take several months,” Wirth said.
Companies and governments, including energy-hungry China, will need to rebuild their depleted reserves. The demand for oil will be higher than before the war. To meet this demand, prices would rise compared to pre-war days.
And all this assumes a bargain. If one doesn’t come soon, prices are likely to rise again.
A lot could change by November, but right now it’s hard to see how Trump’s party will be able to escape political consequences. According to polling aggregators, about 60% of Americans disapprove of his handling of the presidency, while 37% approve of it. strength in numbers.
But medium-term politics is perhaps too narrow to think about the consequences of rising inequality. It is also likely to cause scuffles among Democrats, as reflected in the division between the party’s growing anti-corporate, progressive wing and the declining power of Clinton- and Obama-era free marketeers.
The depth and bitterness of the divide between those Americans who find themselves prospering in the artificial intelligence-driven stock boom and those who are left out is far more real for many Americans than the consequences of a war half a world away. Of course, it is this detachment from the realities of American power that has made it so easy for Trump to start a war.
The politics of inequality will deepen in ways we cannot yet imagine.