While President Donald Trump has repeatedly insisted that prices would fall “rapidly” once his administration’s war against Iran ends, a prominent economist on Monday not only rejected that claim, but warned that “pre-war prices” may never return in the United States.
“I don’t think we’re going back to the pre-war prices for the foreseeable future,” said Mark Zandi, the chief economist of Moody’s Analytics and among the first economists to predict the 2008 financial crisis, speaking with Politico for its report Monday. “Certainly won’t be this year, won’t even be next year. Might not be ever.”
The national average price for a gallon of gas recently eclipsed $4 as Iran continues to restrict access to a critical shipping waterway in response to U.S.-Israeli attacks, and is forecast to reach as high as $6 as soon as this summer. Surging oil prices have also driven up food costs, which were already increasing due to Trump’s tariff policy and immigration crackdown.
In an apparent effort to address concerns over rising prices, Trump has said gas prices would “come tumbling down” as soon as the United States pulls out of Iran, as would inflation – a claim Zandi rejected out of hand.
Rory Johnson, an oil market researcher, told Politico that the world is only beginning to feel the strain from fuel shortages caused by Trump’s Operation Epic Fury, with pressures expected to escalate sharply as the war continues. Even if the conflict were to be resolved soon, business leaders fear that any market improvements would be delayed by months.
“The die is being cast for the rest of the year for what’s going to happen in the markets,” said Jim Fitterling, the CEO of Dow Inc., speaking at the CERAWeek conference in Houston recently, as reported by Politico. “It’s like the unwind we saw on supply chains during COVID. You could be in the 250- to 275-day range. This is not going to be an instantaneous rewind.”
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