Paul Krugman says US-Iran peace won't bring swift economic relief

Paul Krugman warned in a Substack post that even if President Donald Trump’s claim of a near peace deal with Iran and a return of shipping through the Strait of Hormuz proves true, Americans should not expect quick economic relief. Trump has said the US economy would improve when the war ended, but Krugman sees several obstacles.

First, damage to Persian Gulf infrastructure will take months or years to repair. Many oil tankers are out of position and will take weeks or months to relocate, and some shipping channels remain at risk from stray mines. Countries that dipped into their oil reserves during the crisis will also need to replenish them, which keeps demand elevated.

Krugman invoked the “rockets and feathers” effect: crude-price shocks send gasoline prices up quickly, but they fall back only slowly. Although gas recently dipped below $4 per gallon for the first time in months, he predicts prices will not return to pre-war levels for months.

United States, Persian Gulf

paul krugman, donald trump, iran, hormuz strait, persian gulf, oil tankers, oil reserves, gasoline prices, crude prices, shipping channels