In the eight weeks since the Iran war started, the conflict has driven gas prices above $4 a gallon, strained homebuyers and pushed inflation to its highest level in nearly two years. Even if the war ends soon, Americans are likely to feel the financial sting for months, economists say.

“I think the damage has already been done, in part because there’s no going back on oil prices, at least not any time in the near future,” Mark Zandi, chief economist at Moody’s Analytics, told CBS News.

The war has disrupted traffic through the Strait of Hormuz, a strategic waterway through which one-fifth of the world’s oil supply normally flows. Oil prices have jumped as a result, creating widespread consequences for Americans as they fuel their cars and book travel. As of midday Friday, Brent crude, the international benchmark, was trading at $105 a barrel, up 44% since before the war started.

Oil production will take a long time to ramp up to prewar levels of 100 million barrels a day because of the widespread damage to energy facilities across the Middle East, Zandi said.

While economists forecast that oil prices will dip later this year, they are likely to remain above pre-war levels throughout 2026, according to multiple forecasts. 

“Our view is that full normalization will still take time, especially when it comes to supply chains, when it comes to energy capacity,” said Lydia Boussour, a senior economist at EY-Parthenon, noting the “lingering impacts” of the war.

The White House didn’t immediately respond to a request for comment.

To be sure, the Iran war isn’t the only factor creating headwinds for the U.S. economy. Artificial intelligence is also reshaping the labor market, with companies including Meta and Microsoft announcing major job cuts this week. Uncertainty and higher costs tied to the Trump administration’s tariff policies also persist, as it has pledged to pursue additional import duties after the Supreme Court struck down its “liberation day” tariffs.

Inflation expected to run hot

Economists told CBS News they expect inflation to come in hot in April and remain elevated throughout 2026. Last month, the Consumer Price Index reached 3.3% on an annual basis, the highest level since May 2024, driven by a jump in energy prices.

Another key inflation gauge, the Personal Consumption Expenditures price Index, could hit 4% by the end of the year, double the Federal Reserve’s target rate of 2%, according to Scott Lincicome, vice president of general economics at the Cato Institute, a nonpartisan think tank. The measure rose by 2.8% on an annual basis in February.

“Consumers, of course, want deflation, and we’re definitely not getting that,” he said. “We should expect things to remain higher than what people want.”

The financial pinch from higher energy prices could prompt consumers to pull back, potentially creating a headwind for GDP growth because about 70 cents of every $1 of GDP stems from consumer spending. 

EY-Parthenon chief economist Gregory Daco projects the war could drag GDP down by 0.3 percentage points this year, with GDP growing by 1.8% for the year. That represents a slowdown from the 2.1% pace recorded in 2025.

Cutbacks from consumers are “really the key channel through which we’re expecting the drag on economic activity to materialize,” said Boussour, also with EY-Parthenon, adding that a softer labor market and weak wage growth could also erode purchasing power.

Spending has remained resilient since the war started, although Bank of America data shows most of the growth is being driven by higher-income households. These consumers tend to have more money invested in the stock market, which has continued to hit new records despite the economic drag from the Iran war.

Hitting Americans where it hurts

For many Americans, the biggest impact of the Iran war may be at the gas station, where average prices are up over $1 per gallon since the conflict started due to the global oil supply shortage. As of Friday, the average cost for a gallon of gas in the U.S. was $4.06, according to AAA.

Zandi said under the most optimistic scenarios, gas could settle closer to $3.50 a gallon by the end of the year. While that could offer some relief to motorists, it’s still above the pre-war level of $2.98.

Summer travel is also growing more expensive as a result of the Iran war, as airlines hike ticket prices and introduce bag fees to help offset the cost of jet fuel, which is up more than $2 a gallon as of earlier this month.

While much of the economic pain so far has been concentrated in travel, economists say Americans could soon feel the strain in other parts of their lives as higher diesel prices increase the cost to transport goods, pushing up grocery costs and prices of other items.

“Anything that’s put on a truck is going to cost more,” Zandi said. “That goes from groceries to Amazon packages.”

Disruptions to fertilizer production and supply could put pressure on food prices, economists say. Fertilizer is produced using natural gas, which has been constrained due to the war. In a report released Friday, the International Energy Agency predicted that the conflict in the Middle East will keep global natural gas supplies tight for two years.

“Wholesalers and distributors and retailers can each absorb some of the hit,” Lincicome said, speaking about supply chain disruptions caused by the war. “So it might not be a full pass through to consumers, but it’s going to be some.”