As if a global trade war wasn’t enough for businesses and consumers to contend with, it’s looking increasingly like the Israel-Iran conflict could reach the brink of a full-blown war. While the conflict is playing out thousands of miles away from US soil, Americans may not be able to escape the economic impact of it.
Federal Reserve Chair Jerome Powell told reporters Wednesday after the central bank’s latest monetary policy meeting that officials are monitoring the situation. “What’s tended to happen is when there’s turmoil in the Middle East, you may see a spike in energy prices, but it tends to come down,” he said in response to a question from CNN’s Matt Egan.
“Those things don’t generally tend to have lasting effects on inflation, although, of course, in the 1970s they famously did because you had a series of very, very large shocks,” Powell added.
Among those: The Iranian Revolution, which caused global oil production to fall substantially and then contributed to already-high gas prices as a result of the Arab oil embargo following the Yom Kippur war. Powell seemed assured there isn’t a risk of such a scenario this time around, adding that “the US economy is far less dependent on foreign oil than it was back in the 1970s.”