While the economic shock triggered by the global energy crisis centered on the Strait of Hormuz in the Iran War waged by the USA and Israel revealed the structural fragilities in the US economy, the famous economist Joseph Stiglitz also warned of stagflation for Washington. Speaking to Haber Global, another US expert, Professor William Engdahl, stated that Washington’s economic and military strategies are intertwined, saying, “We cannot talk about a war that causes a crisis, but a permanent economic crisis that gives rise to a war.”
US ECONOMY IS SOUNDING ALARM
The increasing tension in the Strait of Hormuz following the US and Israel’s military operations against Iran led to sharp fluctuations in global energy markets. According to data from the International Energy Agency (IEA) and Bloomberg, while oil prices increased by up to 20 percent in a short time, there were serious breaks in global supply chains. These developments increased inflation pressure, especially in economies dependent on energy imports. Nobel Prize-winning economist Joseph Stiglitz stated in his statement that the US economy was in a fragile structure due to weak growth and high inflation even before the war. According to Stiglitz While the US economy grew in the 1.5-2 percent range in 2024 and 2025, the inflation rate remained in the 4-6 percent range. Analyzes based on US Department of Labor and FED data stated that wage increases lagged behind inflation and consumer demand weakened. Stiglitz emphasized that the aggressive customs tariffs and trade wars implemented by Trump also dragged the economy into a structural crisis. According to World Bank and IMF reports, the total public debt of the USA exceeded 34 trillion dollars. The budget deficit approached 6 percent of GDP. Stiglitz described this situation as “a risk of stagflation similar to the oil crisis of the 1970s.”
DEBT AND REcession SPIRAL
According to data from the US Department of Commerce and the US Congressional Budget Office (CBO), the country’s economy has been in a serious financial imbalance in recent years. While the total debt burden of the USA (including the public and private sectors) is approaching the level of 90 trillion dollars, the decline in productivity despite the increase in production is also noteworthy. According to Financial Times and Wall Street Journal analyses, the protectionist trade policies implemented by the Trump administration narrowed the global trade volume and led to unfeasible cost increases in the US industry. In the same period, the interest policies of the US Federal Reserve (FED) were insufficient to control inflation. According to analysis by CNBC and Bloomberg, defense expenditures have reached the highest level after the Cold War, exceeding the level of 900 billion dollars by 2025. It is stated that high expenditures in the USA, especially in the energy and defense sectors, increase the pressure on the budget, and the war economy pushes up prices in the domestic market.
HÜRMÜZ’S SHOCK WAVE
The crisis in the Strait of Hormuz further deepened the vulnerabilities in the US economy. According to the data of the International Energy Agency, approximately 20 percent of the world’s oil supply is provided through this narrow passage, and any tension in the strait directly affects global energy prices and increases inflationary pressure. The rapid rise in oil prices following the US attacks on Iran has increased fuel and production costs within the US. According to experts, this situation increases the risk of stagflation in the USA.
FIGHTING TO OVERCOME THE CRISIS!
Speaking to Haber Global Web Özel, US political scientist Professor William Engdahl describes Stiglitz’s assessment as “only half in the right direction”. According to Engdahl, the United States is not being dragged into crisis due to war; On the contrary, since it is already in a deep economic crisis, it is turning to war policies, and this is not a new but historical tendency. Engdahl uses the following statements regarding the current tension:
“We are now seeing economic dynamics similar to the 1929 Great Depression in US history and the oil crisis of the 1970s in the war against Iran. The US economy is increasingly becoming financial by breaking away from qualified production. This debt-based growth approach has not been sustainable since the era of former President Joe Biden. Donald Trump is trying to create an economic revival through military expenditures and foreign interventions. The same policy was implemented before the Iraq and Afghanistan wars. Therefore, to claim that the energy-related financial crisis occurred because of the war is to read the picture only half-way. “Wars break out due to constant crises in the US financial system.”
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