War with Iran could bring down U.S. retail sales, experts warn

Tehran [Iran], April 4: U.S. retail sales in February saw an uptick, but that could change next month if the war with Iran drags on longer, experts warned.
Retail sales rose 0.6 percent in February from the prior month, the U.S. Census Bureau of the Commerce Department said Wednesday in a monthly report. However, that report pre-dated the war in Iran -- now in its fifth week -- and experts said that next month's retail sales could drop.
"I don't see any way we can avoid higher inflation and slower growth in sales. The only question is how much," Dean Baker, co-founder of the Center for Economic and Policy Research, told Xinhua.
Iran has severely disrupted shipping in the Strait of Hormuz during the war with the United States and Israel. That has pushed oil prices higher and led economists to predict a rise in inflation this year.
Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics, told Xinhua that he believes oil prices will remain near 100 U.S. dollars a barrel for most of this year. Accordingly, he expects inflation to approach or even exceed 4 percent due to the war with Iran.
Despite U.S. President Donald Trump's frequent statements that the war will soon be over, experts note that ending the conflict may be more difficult than the president might believe.
Trump said the two countries are currently in talks, although Tehran denies it.
Trump has floated the idea of exiting the conflict without addressing the trade disruption in the Strait of Hormuz, through which 20 percent of the world's oil flows.
Without getting the strait back to pre-war norms of activity, oil prices could remain high for longer periods, experts said.
"I don't know anyone who thinks oil prices will go back to their pre-war level even if the strait were reopened tomorrow," Baker said.
Other shortages could also ensue.
There will be shortages of fertilizer for planting worldwide, which will mean worse crop yields, unless the Strait of Hormuz is opened almost immediately, Baker said.
Reports said on Tuesday that the U.S. national average gas price rose above 4 dollars per gallon for the first time since 2022. U.S. citizens have increasingly expressed negativity over the U.S. economy as the war continues, according to polls.
A CNN poll released Wednesday shows that around two-thirds of U.S. citizens said Trump's policies have degraded economic conditions in the United States.
Source: Xinhua News Agency