When will the conflict with Iran end? President Trump’s timeline, like his military strategy, is ephemeral. But its knock-on effects are already here. This war is, in all likelihood, impacting your life — and will continue to for most of this year.
Let’s start with your summer vacation planning. The airlines are responding to high jet fuel prices by raising fares while trimming their schedules — United has already announced a 5 percent flight cut. That means fewer seats will be available at peak travel season and flight crews will work fewer hours.
Heading to or from a city such as Presque Isle, Maine, or Butte, Mont., that is served exclusively by regional airlines? Those flights will be the first to be canceled, Mike Boyd, an airline industry consultant, has pointed out. Carriers can’t run the small, 50-seat jets that serve those markets profitably when jet fuel has more than doubled to more than $4 gallon.
The value carriers that serve popular destinations such as Orlando and Las Vegas could be particularly hard hit. Florida-based Spirit Airlines, known for its yellow jets and unbundled fare structure, just emerged from its second bankruptcy; Frontier, its Western counterpart, delayed orders for new planes and canceled some leases on its current fleet to concentrate on filling the planes it has. And all this is on top of the airport chaos created by bad weather (hello, climate change), air traffic controller shortages and Transportation Security Administration staffing issues.
Road trippers won’t have it much better. For recreational vehicle owners or renters, a trip to national parks such as Zion or Great Smoky Mountains — already suffering from DOGE budget cuts — will get more challenging with R.V.s that average six to 15 miles per gallon in mileage. Motor boaters could be up a creek, too.
Expect to pay even more for food, also. Prices for meat, wheat, coffee and sugar are rising because the planting, harvesting, processing, storage and transportation of food is energy intensive. Farmers are struggling to get the fertilizers they’ve ordered from the Middle East. The price of anhydrous ammonia fertilizer, one of the most used, is up more than 20 percent this year. Farmers can buy potash-based fertilizers from Canada — but those are subject to a 10 percent tariff. The other big supplier? Russia.
If the current fertilizer disruption interrupts planting season, which is already underway in many parts of the world, food prices will rise in the back half of the year.
And that’s not all.
In developed countries like ours, persistently high inflation increases the risk that the Fed and other central banks will feel compelled to raise interest rates. That lifts the price of borrowing money across the economy: not just credit card and auto loans, but also mortgage rates.
Although conventional wisdom says that central banks should look beyond an energy price shock and not change their rates, their capacity to remain steadfast is limited. Still contending with their pandemic-era inflation, Europe’s central banks may soon have to consider raising rates to protect their inflation-fighting credentials — another economic brake when we hardly need one.
At a time when rising oil prices are pressuring family budgets, E.U. governments may be forced to cut their spending. Interest rates on government bonds have risen sharply in Britain and France since the start of the war, meaning these nations will have to spend more to cover debt payments, leaving less money for price relief for the public.
The great build-out of the artificial intelligence infrastructure — which has been pumping billions into our economy — is also in jeopardy. Helium is a vital component in semiconductor production, and one-third of the world’s supply is produced in Qatar, which has been targeted by Iranian strikes. Without a reliable supply, the semiconductor manufacturers that make chips won’t be able to meet demand. So, too, is the level of financing for these projects, tied to a retrenching private credit sector and perhaps a pullback by sovereign funds in the Middle East that must now spend to repair war damage.
Most of America’s problems, and they are not insignificant, still pale in comparison with what’s happening in the rest of the world. Developing nations are in a particularly dangerous bind. The United Nations reckons that more than 670 million people were living with hunger in 2024 and, across 68 countries in which the U.N. World Food Program is active, 318 million people are projected to face acute hunger this year.
This is all assuming that everything in Iran remains as is. Things could get a lot worse in a hurry if the Houthis in Yemen decide to block the Strait of Bab al-Mandab at the mouth of the Red Sea, where ships must pass after transiting the Suez Canal. That is likely when $100 a barrel oil becomes $200 a barrel.
The worst-case scenario is impossible to predict, of course, but what’s becoming more certain is that if disruption from the Iran conflict is still significant on the day America celebrates its 250th birthday, the bill for the party is going to be enormous.
Bill Saporito is a senior staff editor in Opinion. David Stubbs is the chief investment strategist at AlphaCore Wealth Advisory.
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