Iran War Spillovers Threaten US Growth and Household Affordability
Americans face intensifying cost-of-living pressures as inflationary pressures broaden. Higher energy and borrowing costs are exacerbating affordability pressures, creating downside risks for jobs and consumption. The US Commerce Department recently halved its growth estimate for the fourth quarter of 2025, taking it from 1.4% to 0.7%. This growth slowdown is driven by spillovers from the US-Israeli war against Iran. In the first three weeks of the war, US gasoline prices rose 30% and diesel prices rose 40%. These costs translate into higher prices for semiconductors, fertilizers, and airplane tickets. Companies are now seeking to pass these higher input costs on to consumers.
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