President Donald Trump is predicting higher gas prices could last through November as the ongoing conflict in the Middle East and tensions with Iran continue to impact the American economy.
The International Monetary Fund is predicting slower economic growth this year because of the war. The recent blockade of the Strait of Hormuz by Trump is raising fresh questions about how the war is impacting the global economy, with ripple effects likely to be felt for months.
The International Energy Agency reports demand for oil is sinking because of higher prices. There are 1.5 million fewer barrels of oil being consumed globally each day than originally forecasted, marking the sharpest decline since the COVID-19 pandemic. However, this is not expected to lower gas prices, which are still averaging above $4 a gallon in the U.S.
RELATED STORY | IMF warns global economy could stall as Iran war disrupts oil flows
Trump has long said prices will fall once the war ends, but in an interview with Fox News this week, Trump suggested prices could be around the same in November during the midterm elections.
The economic impact is also reaching housing and interest rates. The National Association of Realtors is reporting a decline in home sales in March, despite the traditionally busy spring real estate season.
"In March the data shows sales have remained sluggish," Lawrence Yun said.
Yun is the chief economist at the National Association of Realtors. Mortgage rates are at their highest levels in seven months, driven in part by interest rates being impacted by rising oil prices.
Federal Reserve Chairman Jerome Powell is still forecasting just one interest rate cut before the end of the year. Powell's term as chairman ends in May, which means interest rate plans may change.
RELATED STORY | Inflation was already high before Iran war drove up gas prices, new report shows
Inflation has surged to its highest levels in nearly two years, with higher diesel and gas prices as the major reason why.
The economic strain has resulted in Americans feeling less confident about the economy. The University of Michigan has been tracking consumer sentiment for over 70 years, and this month reported its lowest levels ever recorded.
