The US economic situation at the Iran Ceasefire and its world effects

Oscar Ugarteche[1], OBELA[2]

April 9^th, 2026 had two relevant economic news. The first was the ceasefire the US requested from Iran which Iran agreed placing ten conditions for it. The second was the economic news by the Bureau of Economic Activity where it was informed that GDP grew in 2025, in its third revision, 2.1% which is less than the 2.8% growth of 2024.  Total exports growth shrunk by 0.21% in spite of a depreciation of the US dollar index of 5% during 2025 and a major depreciation with Japan, India, China, and Latin America of over 10%. Devaluing the US Dollar has not resulted in more exports. Imports on the other hand, shrunk 0.39% as a result of “liberation day” unlawful tariffs plus the currency depreciation. The fiscal deficit shrunk.

 (chrome- extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.bea.gov/sites/default/files/2026-04/hist4q25-3rd.pdf)

USD conversion rate

The poor performance of the American economy is visible in the manufacturing jobs component were Trump’s team expected it to grow as a result of tariffs but instead shrunk by 75,000 between march 2025 and 2026. (FRED). Investment has grown very little over 2025:  Fixed investment did not grow as expected beyond the first quarter (7.1%), after the Presidential Speech. Then it grew less in the second quarter (4.4%) and turned into 0.8% by the third and 1.5% in the fourth quarter. With no real investment push, productive infrastructure has not changed and is old and obsolete. The same is true for public infrastructure.

Inflation should have gone down but instead it appears to be increasing as a result of both tariffs and the price of oil derived from the six-week War against Iran.  It went up from 3% in January of 2025 to 2.4% in February 2026 and 3.3% in March 2026, with an upward trend, leading the Federal Reserve Chairman Powell to say on March 18^th  that "In the near term, higher energy prices will push up overall inflation...But it is too soon to know the scope and duration of the potential effects on the economy," 

(https://www.lemonde.fr/en/economy/article/2026/03/18/us-fed-raises-inflation-outlook-over-uncertain-iran-war-impact_6751577_19.html)

 The US fiscal side remains weak. The US economy is heavily overborrowed and has interest payments for over a trillion USD. The deficit-to-GDP ratio has declined from 6.4 percent in fiscal year 2024 ending September 2024 to 4.8% in December 2025. Bessent states that “The President's time in office-the (has an) improvement (that) is even larger: a 1.6 percentage point reduction.” Secretary of the Treasury stated that “A government that lives beyond its means ultimately erodes the foundations of its own strength. Getting our fiscal house in order is not only an economic imperative, it is also essential to preserving the strength and credibility of the United States at home and abroad.”(chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://fiscaldata.treasury.gov/static-data/published-reports/frusg/FRUS...) 

This reflects the situation to December 2025 but then comes the War of Choice, an attack on Iran costing one billion dollars a day with no extraordinary tax to cover it save tariffs. (https://iran-cost-ticker.com/) This has led the public debt to increase to 39 trillion USD and interest debt payments to go beyond the amount of $970 billion in interest costs in 2025 (Peter Peterson Foundation).in 2026 when it would reach 3.2 percent of gross domestic product (GDP) or 1.2 trillion USD. Given the fiscal deficit is 4.8% of GDP, debt service expresses 66% of the fiscal deficit. So the Federal Government must borrow to pay its debt service thus having entered a never ending debt spiral that assures stagnation, analogous to highly indebted countries in  poor regions.

The price of oil is the second factor in the ceasefire. Apparently when the war started, the price of Brent rose before the attack on February 28. This would mean there was information in the market and that some investors were able to buy futures at much better prices. It has been followed by a stop go cycle that every time restarts with a rise in prices before the attacks are restarted. It is unclear who the investors are or if the Israeli Government is using the information to profit. However, the trend in oil prices changed substantially. Paradoxically, China’s long-term buildout of clean energy capacity and strategic oil reserves has left it more resilient than any other large economy in the face of the Strait of Hormuz blockade thus marking more the division between East and West in terms of economic growth, inflation and energy independence. It leaves oil prices hurting basically the Western economies and those of the Global South.

The price had been on the average of around 65 USD/BBL for a long period, including US Dollar sanctions to fifteen oil producing nations, thus rising prices. The longer-term trend appears to be downward given the slow energy matrix change. In this context, the attack on Iran pushed prices upwards while the destruction of refineries by both sides across the Middle East will keep them high for a longer time that the war itself. The upper right hand square of the bgrapg below is the price after the attacks.

Finally. The US started a war it could ill afford and is now in lose/lose situation. With a weak economy and a weak currency, it is heading into inflationary stagnation caused by themselves to the Western world and to the Global South. The longer the war, the greater the problem.