A driver refills his vehicle with regular gasoline at a Shell gas station in Hercules, California, on May 21, 2026.
David Paul Morris | Bloomberg | Getty Images
Economically for some Americans, the Iran war was over almost as soon as it began. People with access to stocks (most of the ultra-rich have them, but the vast majority of Americans own them) S&P500 It fell by about 8% when the war began, but has rebounded 19% since late March, more than making up for the losses. The index is currently up 10.7% since the beginning of the year, which would be the fourth consecutive year of double-digit stock increases.
President Donald Trump has been quick to tout these accomplishments. “The 401(k) is at an all-time high, it’s at an all-time high, and so is the stock market, at an all-time high,” President Trump said during a televised Cabinet meeting this week, reiterating the restraint he has adopted to celebrate market victories. Despite the war, that’s all, he said.
But as Trump, along with those who have to turn on the gas Their cars also know that the real economic weight of the war is much greater than the high stock prices suggest. The war deepens an already historic disconnect between those who can share in the wealth generated by U.S. financial markets and those who cannot. This has exacerbated Americans’ dissatisfaction with the president’s economic performance and is likely to weigh on fellow Republicans’ performance in November’s midterm elections.
A key reason Trump won his return to the White House was his promise to keep consumer prices in check, but voters heading to the polls may feel that promise has not been fulfilled.
A number of new economic indicators show that the U.S. economy is struggling to shake off the effects of the war. Americans’ purchasing power is declining, according to data released Thursday by the U.S. Bureau of Economic Analysis. Americans’ real disposable income fell by 0.2% in March and by another 0.5% in April. Americans are surviving the energy shortages caused by the war by cutting back on savings. The personal savings rate hit a dismal 2.6% last month, according to data from the U.S. Bureau of Economic Analysis. The growth rate for the first quarter was revised downward to just 1.6%.
However, the economy has not stalled. One reason for this is the disconnect between the top and bottom half of the population. America’s largest companies are doing well, and that’s what makes up the S&P 500, after all. In general, it is the workers who are facing the toughest conditions. Corporate profits are strong, but workers’ share of gross domestic income has fallen to 51%, the lowest in 79 years of records, The Wall Street Journal reported.
The Iran war didn’t create U.S. inequality, but it didn’t help either. Researchers at the New York Federal Reserve found that since the war began, people in the Northeast who earned less than $40,000 a year reduced their gasoline purchases by nearly 10 percent, while people who earned more than $125,000 a year continued to live on more disposable income.
Nationally, those who can cut back are lucky. Drivers in the Northeast are more likely to be able to switch to public transport than in many parts of the country. In other regions, you’re more likely to have to close your eyes when swiping your card at the pump. According to a Moody’s analysis, Americans have spent an average of $447.19 more on energy costs since the war began.
Gasoline prices have fallen in recent days after the Memorial Day holiday and the start of the summer travel season. The average cost of a gallon of gasoline dropped 16 cents nationally this week to $4.39, according to AAA, as the US and Iran appear to have reached a deal.
A delicate new agreement between the United States and Iran will allow oil tankers to resume sailing from the Persian Gulf through the Strait of Hormuz. Approximately 100 million barrels of oil per day is not reaching the global market because both the United States and Iran are refusing to allow ships to pass through the strait.
The United States produces more oil than any other country in the history of the world, but it is integrated into global markets that determine prices. It’s a double-edged sword. When the closure of the Strait halted jet fuel shipments from producers in the Gulf to Europe, American market ingenuity stepped in to fill the gap. U.S. refineries have switched from auto gas to jet fuel. A global supply catastrophe was averted, at some cost to U.S. consumers.
President Trump said Friday he was making a final decision on a potential deal with Iran. The market welcomed this news, and futures contracts brent crude oil It fell about $1.70 to just under $92 per barrel. Stock prices continued to rise.
But financial markets can adapt in seconds to changes that would take months in the real economy.
Approximately 2,000 ships are trapped in the Persian Gulf. First the mines need to be cleared, then those ships need to be cleared through the strait.
Chevron CEO Mike Wirth said in an interview with Bloomberg on Friday that it will take “many weeks” to get these ships out of port. Other ships that were diverted to transport energy supplies from U.S. markets to places like Asia will also need to be diverted again. “It’s going to take several months,” Wirth said.
Companies and governments, including energy-hungry China, will need to rebuild depleted inventories. Demand for oil will increase compared to before the war. To meet this demand, prices will rise compared to before the war.
And it’s all predicated on agreement. If that doesn’t happen soon, prices could resume rising.
A lot could change by November, but for now it’s hard to see how Trump’s party will be able to avoid political fallout. According to the opinion polling site Strength in Numbers, about 60% of Americans disapprove of his handling of the presidency, compared to 37% who approve.
However, medium-term politics is probably too narrow a frame to consider the effects of rising inequality. The Democratic Party is also likely to be thrown into turmoil, as evidenced by the division within the party between the rising anti-business progressive wing and the waning power of the Clinton-Obama-era free marketers.
For many Americans, the depth and bitterness of the gulf between Americans who thrive on an artificial intelligence-driven stock boom and those who remain closeted is far more real than the consequences of a war occurring half a world away. Of course, it is Trump’s sense of alienation from the realities of American power that made it easy for him to go to war in the first place.
The deepening politics of inequality will unfold in ways we cannot yet predict.
