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Americans are already beginning to feel the financial impact of military action in Iran – starting with higher prices at the gas pump. But higher oil prices don’t stop there.When it costs more to fuel trucks, ships and planes, those added transportation expenses can ripple through the economy. The result: higher prices for groceries, airline tickets and everyday goods. Economists say the impact could go even further. If rising energy costs push inflation back up, the Federal Reserve may have less flexibility to cut interest rates in the coming months. That could keep borrowing costs elevated for mortgages, car loans and credit cards.”It’s creating a very difficult situation where the uncertainty might push the Fed to want to ease policy in some respects … but the inflation implications leave it positioned poorly to do anything in terms of adding accommodation,” said Zachary Griffiths, head of U.S. investment grade and macro strategy at CreditSights. Financial markets have also reacted, with stocks experiencing periods of volatility as investors weigh the economic uncertainty. Still, experts say you shouldn’t panic about your 401(k) or make quick decisions. “If you are truly an investor and not a trader, you certainly shouldn’t be doing any reallocation on the back of this,” Griffiths said. “Seeing this news and deciding to sell, that’s pretty much the worst thing you can do in this environment.”Geopolitical events tend to have a short-term impact on the markets. The real thing to watch now is oil prices. If they stay high and the conflict drags on, it could put more pressure on the economy. But if the prices settle down, the impact on your wallet could be short-lived. Stay connected with the National Consumer UnitGet clear, actionable consumer reporting delivered across platforms.Follow National Consumer Correspondent Allie Jasinski for real-time updates, money-saving tips and behind-the-scenes reporting on Instagram, TikTok and YouTube.
Americans are already beginning to feel the financial impact of military action in Iran – starting with higher prices at the gas pump. But higher oil prices don’t stop there.
When it costs more to fuel trucks, ships and planes, those added transportation expenses can ripple through the economy. The result: higher prices for groceries, airline tickets and everyday goods.
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Economists say the impact could go even further. If rising energy costs push inflation back up, the Federal Reserve may have less flexibility to cut interest rates in the coming months. That could keep borrowing costs elevated for mortgages, car loans and credit cards.
“It’s creating a very difficult situation where the uncertainty might push the Fed to want to ease policy in some respects … but the inflation implications leave it positioned poorly to do anything in terms of adding accommodation,” said Zachary Griffiths, head of U.S. investment grade and macro strategy at CreditSights.
Financial markets have also reacted, with stocks experiencing periods of volatility as investors weigh the economic uncertainty. Still, experts say you shouldn’t panic about your 401(k) or make quick decisions.
“If you are truly an investor and not a trader, you certainly shouldn’t be doing any reallocation on the back of this,” Griffiths said. “Seeing this news and deciding to sell, that’s pretty much the worst thing you can do in this environment.”
Geopolitical events tend to have a short-term impact on the markets. The real thing to watch now is oil prices. If they stay high and the conflict drags on, it could put more pressure on the economy. But if the prices settle down, the impact on your wallet could be short-lived.
Stay connected with the National Consumer Unit
Get clear, actionable consumer reporting delivered across platforms.
Follow National Consumer Correspondent Allie Jasinski for real-time updates, money-saving tips and behind-the-scenes reporting on Instagram, TikTok and YouTube.
