A driver fills up a regular car at a Shell gas station in Hercules, California, May 21, 2026.
David Paul Morris | Bloomberg | Getty Images
In the finances of some Americans, the Iran war was over as quickly as it began. Those who have access to stocks – most Americans have them, even if the wealthiest – see S&P 500 sinking nearly 8% when the war began, only to explode 19% since late March, more than making up for its losses. The index is now up 10.7% for the year, which if held would make it the fourth consecutive year of double-digit stock gains.
President Donald Trump was quick to announce these benefits. “We have 401(k)s at an all-time high, the highest they’ve ever been, and that goes along with the stock market, the highest it’s ever been,” Trump said in a televised Cabinet meeting this week, repeating a speech he made celebrating the market’s victory. All that despite the war, he said.
But like Trump — and so should anyone put on the gas their car – you also know, the true economic weight of the war is much greater than the high stock prices would suggest. The war widens an already historic divide between those who can share in the wealth led by US financial markets and those who cannot. That is fueling Americans’ frustration with the president’s economic performance, and is likely to limit the performance of his fellow Republicans in November’s midterm elections.
Trump won a return to the White House in large part because of his promises to boost consumer prices, a promise voters may feel unfulfilled when they go to the polls.
A raft of new economic data shows the US economy is struggling to reverse the effects of the war. Americans’ purchasing power is falling, according to data released Thursday by the Bureau of Economic Analysis. Real earnings of Americans fell 0.2% in March and another 0.5% in April. Americans weathered the war’s energy crisis by cutting back on savings. The personal savings rate reached 2.6% last month, US Bureau of Economic Analysis data said. Growth in the first quarter was revised down to 1.6%.
But the economy is still stagnant, in part because of the disconnect between the top and bottom half of the population. Big US companies are doing well – that’s, after all, what makes the S&P 500. It’s workers, as a whole, who are going through tough times. While corporate profits are booming, workers’ share of gross domestic income has fallen to 51%, the lowest figure in the 79 years that records have been kept, the Wall Street Journal reported.
The Iran war didn’t create American inequality, but it didn’t help either. Researchers at the New York Federal Reserve found that since the war began, people in the Northeast earning less than $40,000 a year have cut back on gas purchases by about 10%, while those making more than $125,000 have continued to earn more.
Nationally, those who can cut back are the lucky ones: Drivers in the Northeast are more likely to be able to switch to public transportation than in most parts. of the world. In some places, people may have to cover their eyes when swiping their cards at the tap. Americans have spent an average of $447.19 more on energy costs since the war began, according to an analysis from Moody’s.
Gas prices have fallen in recent days after the start of the Memorial Day holiday and summer travel season. The average cost of a gallon of gas fell 16 cents on average nationwide this week, to $4.39, according to AAA, as the US and Iran appeared to be reaching a deal.
A tough new deal between the US and Iran will reopen the movement of oil tankers from the Persian Gulf through the Strait of Hormuz. Since the US and Iran refuse to allow ships to pass through the sea, 100 million barrels of oil per day do not reach the world market.
The US produces more oil than any country in the history of the world, but it is stuck in world markets that set prices. That is a double-edged sword. When the closure of the strait halted the shipment of jet fuel from gulf producers to Europe, American market intelligence stepped in to close the gap. US refineries have switched from gas to automobiles to jet fuel. A global supply crisis was averted, at some cost to US consumers.
Trump on Friday said he was making a final decision about a potential deal with Iran. Markets accepted the news, and futures contracts for Brent crude oil falling about $1.70 to just under $92 a barrel. Stocks continue to rise.
But financial markets can adapt in seconds to changes that would take months to play out in the real economy.
There are about 2,000 ships stranded inside the Persian Gulf. First, the mines need to be cleared, then those ships need to be guided through the strait.
“You need weeks and weeks” to get those ships out, Chevron CEO Mike Wirth said Friday in an interview with Bloomberg. Some ships diverted to take US market power to Asia and elsewhere will need to be diverted again. “It’s going to take months,” Wirth said.
Companies and governments, including energy-hungry China, will need to rebuild their depleted inventories. The demand for oil will be higher than it was before the war. Prices will rise compared to pre-war days to meet this demand.
And that all takes a deal. If someone doesn’t come soon, prices are likely to resume their upward trend.
A lot can change in November, but right now it’s hard to see how Trump’s party can escape the political consequences. About 60% of Americans disapprove of his handling of the presidency, compared to 37% who approve, according to polling aggregator Strength in Numbers.
But medieval politics is probably too narrow a framework for thinking about the consequences of rising inequality. It could clash with Democrats, too, as exemplified by the party’s split between its growing anti-corporate, progressive wing and the waning power of Clinton- and Obama-era liberals.
The depth and bitterness of the divide between Americans who find themselves thriving in the artificial intelligence-driven stock boom and those who remain locked out are more real to many Americans than the effects of a distant war. Of course, it is this alienation from the realities of US power that made it easy for Trump to go to war to begin with.
The deepening politics of inequality will play out in ways we have yet to see.
