War's Toll: "Demand Destruction" Is Now Eating America Alive

The war is draining America's wallet. Since the US-Israel-Iran military conflict erupted, the Strait of Hormuz has faced a blockade, driving international oil prices to repeated record highs. In early April, the International Energy Agency (IEA) warned that the world is experiencing "the most severe oil supply shock in history." As shortages and high prices persist, demand destruction will spread.

War chokes the Strait of Hormuz — and oil prices keep breaking records.

CNN reported on April 30 that, according to economists, this "demand destruction" is already manifesting in the United States — and if it continues, the damage will be irreversible.

Gasoline prices are rising fast, quickly eating into the hard-earned wages and tax refunds of Americans. Those least able to absorb the blow are hit the hardest. Soaring inflation, a sharp slowdown in wage growth, and a plunge in consumer confidence may be harbingers of a deeper recession.

Rising gas prices are draining Americans' wallets — and the poorest are hit first.

American consumers have remained resilient so far — but economists warn that the longer the Iran war drags on, and the tighter the blockade on oil tankers and cargo ships through the Strait of Hormuz, the greater the risk of severe consequences.

Joe Brusuelas, Chief Economist at accounting and consulting firm RSM US, puts it bluntly: "Time is not the ally of the American economy." Energy touches every single household, industry and sector — and with more than a billion prices operating across the US economy, the effects of demand destruction will play out differently by industry and income cohort. "There's more than a billion prices in the US economy, so demand destruction is going to be different by industry, by income cohort," Brusuelas said.

Brusuelas and RSM economist Tuan Nguyen recently published a report drawing on the aftermath of past oil crises. Their aim: to help Americans and the broader economy map out potential trajectories ahead.

The report is sobering. The "shrinking" purchasing power of Americans' hard-earned wages means fewer restaurant visits, less travel, fewer cars purchased, and fewer homes sold. Reduced business investment and falling demand lead to layoffs — deepening economic hardship further still.

Fewer restaurant meals, more Costco runs. Belt-tightening is already here.

The Potential Chain Reaction

The dominos are already lined up. First, oil prices surge, adding an extra energy expenditure for every household and business — the more spent on energy, the less available for everything else. Second, confidence falls: when people worry that bad things may happen, they begin cutting non-essential spending.

Then big-ticket purchases freeze. People delay buying new cars or postpone signing mortgage documents. Businesses begin to feel the pressure next: falling consumer spending, combined with rising diesel prices for the semi-trucks hauling goods, squeezes profit margins. Investment and hiring are put on hold, eventually forcing cost cuts and layoffs.

The Federal Reserve steps in at that point. Oil-price-driven inflation may force the Fed to raise interest rates, further slowing the economy. Finally, if high prices persist, consumer behaviour changes permanently — people buy electric vehicles, workers seek remote work arrangements, and companies turn to technology to replace labour.

Soaring prices are permanently reshaping how people live and work.

Supply disruptions in other major commodities compound the problem further. Oil is not the only commodity transiting the Strait of Hormuz. Fertiliser shortages could push up food prices. Disruptions to helium supply could slow chip production and raise medical costs. Disruptions to sulphur and natural gas supply could drive up industrial costs.

Bryan, a 30-year-old automotive engineer living in Detroit, is already living the numbers. He has started driving less, working from home whenever possible, and reducing outings with friends. He has moved his emergency funds into Treasury bills and is buying more groceries at large warehouse stores like Costco and BJ's. Plans to renovate his kitchen and buy a V8 engine car are both on hold.

He can sustain this belt-tightening for another six months. But if oil prices remain high and other living costs rise sharply, he is likely to give up holidays, seek longer-term remote work arrangements, and consider buying a hybrid vehicle.

Nancy Vanden Houten, an economist at Oxford Economics America, says the economic situation still looks reasonable for now. Oil prices have pulled back from their highs, a ceasefire has brought a degree of stability, and consumers have to some extent been cushioned from the surge in gasoline prices by larger tax refunds, still-solid investment portfolios, and home values.

But she candidly acknowledged that "things could also change very quickly." Ultimately, how long consumers and the broader economy can hold out will depend on how quickly the conflict is resolved — and whether vessels can pass through the strait more freely.

Recovery Will Not Come Quickly

Make no mistake: even if the war were to end immediately, economic recovery would not come quickly.

Brusuelas noted that in some scenarios, production could take years to fully recover. Turning off the oil and turning it back on, he explained, "is not like turning on your lights." Even under the best of circumstances, it would take at least six months to gain a clear picture of how far Gulf oil production remains from pre-war levels.

The impact of rising prices, meanwhile, could persist for a long time. "Remember when we shut down the supply chains in February, March 2020? We didn’t really see an increase in inflation until April 2021," Brusuelas said. "And then we were just starting to see the pass-through of tariffs that started in April 2025 at the end of last year and at the turn of this year."

He warned that supply shocks in key materials such as oil and fertilizer are already rippling through the US economy, and could push up the prices of a wide range of goods and services. 

The oil shock is spreading — and prices across the economy are following.

Food Prices: The Next Front

High diesel prices — used by trucks and tractors alike — are a leading indicator of rising grocery prices. That is before accounting for disruptions to nitrogen fertiliser supply, which could affect farmers' planting decisions and in turn impact food supplies come autumn. CNN cited David Ortega, a food economist and professor at Michigan State University, as saying it could take close to six months or longer to feel the full impact of this shock on food prices.

The reality is that demand destruction caused by a depressed market is irreversible. Brusuelas explains that a "depressed market" refers to the lowest-income Americans — households with no emergency savings and budgets with almost no room to manoeuvre. These families must contend with a sharp reduction in disposable income until prices stabilise, and may find that this becomes the "new normal."

The latest data from the US Department of Commerce shows that US gross domestic product (GDP) grew at an annualised rate of 2% in the first quarter — slightly below the expected 2.3%, but above the 0.5% recorded in the fourth quarter of last year. Global oil prices surged above US$126 per barrel on April 30, hitting a four-year high.

Deep Throat

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Trump has never made peace with the American press. But his sit-down with NBC's Meet the Press on Sunday took that long-running war to a new extreme — ending with the president walking off set, ripping off his microphone, and stamping on it as he stormed away.

Trump sat down with NBC Meet the Press anchor Kristen Welker for an exclusive interview at a farm in Wisconsin on Saturday local time.

The interview took place on Saturday at a farm in Wisconsin, where Trump sat down with anchor Kristen Welker. What started as a structured conversation escalated rapidly into an extraordinarily heated argument over allegations of electoral fraud. Both sides were visibly flushed with anger by the time Trump finally snapped, walked out mid-interview, and crushed his microphone underfoot as he left.

The flashpoint was Welker's question about the $1.776 billion "Anti-Weaponization Fund." The fund was born from a major legal settlement Trump struck with the Department of Justice in May 2026. It originated when Trump withdrew a $10 billion lawsuit against the Internal Revenue Service over alleged tax information leaks, with the DOJ establishing this dedicated fund in its place. Its stated purpose: to compensate individuals or organizations who claim they were subjected to the "weaponization" of government institutions or unjust investigations during the Biden administration.

The fund ignited controversy in Washington almost immediately. Critics warned it could become a taxpayer-funded political slush fund. Democrats questioned whether Trump supporters, political allies, and even participants in the January 6, 2021 Capitol riot could eventually become beneficiaries. Notably, a significant number of Republicans also voiced opposition. Last month, a court struck the fund down.

The 6 January 2021 riot and storming of the US Capitol.

That court ruling led the acting Attorney General to declare the fund permanently discontinued. Trump told Welker he still hoped to see it move forward. "If it was up to me, I’d pay them the kind of money that they deserve… People have been destroyed. Lives have been destroyed. Many suicides, think of it," he said. "If they get it approved, that’s great; if they don’t get it approved, I’d be disappointed."

Trump also insinuated that those he called "rioters" at the Capitol were in fact escorted into the building by FBI agents. He claimed the Biden administration had put innocent people in prison — but offered no evidence to support either assertion.

Trump and anchor Kristen Welker became embroiled in a fierce argument over allegations of electoral fraud.

When Welker pressed him for proof, Trump replied: "There’s a lot of evidence. There’s tremendous evidence. There’s nothing but evidence." Welker shot back: "Well, it’s not been presented in a court of law." 

Trump then pivoted to broader claims of electoral fraud. He alleged the 2020 presidential election was stolen and asserted that fraudulent practices are currently playing out in California. "The election was rigged. It was a dirty election. And it’s happening again right now in California," he said. He claimed Republican candidates' polling numbers are “dropping fast because it’s a rigged election” with the intent of eliminating Republican candidates.

California's electoral system adds important context here. Unlike most other US states, California employs a distinctive "Jungle Primary" — all candidates from all parties compete on the same ballot, and only the top two vote-getters advance to the general election.

Trump raged at the media, branding it corrupt and declaring that Meet the Press itself was "corrupt."

Welker pushed back directly: "That’s how they count the votes in California." She noted that local officials had publicly acknowledged the counting process was indeed "slow," then challenged Trump to produce evidence that California's elections were being "rigged." That's when the interview turned combustible. "They’re crooked just like you’re crooked, your press is crooked. And ‘Meet the Press’ is crooked." Then, with pointed finality Trump added: "You’re either crooked or you’re stupid."

Trump accused Welker of "playing right into their hands" and unloaded on the program's credibility in a single broadside. "You’re a one-sided crooked network. Sorry. Let’s call it quits because I’ve had enough. Thank you, darling, have a good time." He then fired off attacks against ABC, CBS, and CNN in one breath.

Trump abruptly terminated the interview and stormed off set in a fit of fury.

Welker pleaded with Trump to continue, noting that the NBC team had traveled all the way to Wisconsin for the interview. Trump refused, pressing his point: "I sat in the rain with you for an hour," Trump said. "On and off in the rain, and I've given you enough time. You ought to straighten out your press, because you know what? A country can never be great with a dishonest press." As he delivered those final words, he reached up to remove his microphone, stormed off in fury, and stamped on it as he walked away.

After the interview aired, Welker disclosed that she had spoken with Trump again by phone. He agreed to a follow-up interview, though she provided no details on when or where it would take place.

Trump's relationship with the American press has long been defined by extreme tension. He routinely deploys derogatory terms when referring to journalists in public.

The reality is, Trump's attacks are no longer confined to the liberal mainstream media. He has recently widened the scope of his targets to include figures from the conservative media world. On April 9, Trump posted on his Truth Social platform, explicitly calling out prominent MAGA-aligned commentators who had criticized his stance on the Iran war — among them well-known podcast host Tucker Carlson, as well as Megyn Kelly, Candace Owens, and Alex Jones. He labeled these commentators "low-IQ," "nut-jobs," and "trouble-makers".