Business
The War in Iran Has Upended the Global Economy. The U.S. Has Been Mostly Spared.
The fallout from two months of war in Iran is shuttering textile mills in India and Bangladesh, grounding airplanes in Ireland, Poland and Germany, and prompting energy rationing in Vietnam, South Korea and Thailand. The only country, it seems, that has been relatively spared from the economic chaos is the one that started the war: the United States.
While warning signs of a recession are flashing across countries in Asia and Europe, the United States is likely to outperform most of the world’s advanced economies. Growth is steady and unemployment low. “It’s still hard to bet against the U.S. economy,” the Royal Bank of Canada said last week.
The United Arab Emirates, one of the world’s richest countries, with sovereign wealth funds that total more than $2 trillion, has asked the United States for a financial lifeline in the wake of missile-damaged gas fields and a halt to shipping in the Strait of Hormuz.
In just eight weeks — less time than it takes to age a traditional English fruitcake — the global economic outlook has been knocked sideways.
The worst economic pain will be felt in poor countries, where consumers cannot afford higher energy prices, and governments cannot afford to provide aid to offset the costs. And as financing tightens, the cost of desperately needed borrowing for these countries increases.
Soaring prices now for fuel and fertilizer mean higher prices for food later in the year. In Africa, “food insecurity looms large,” the International Monetary Fund said last week. In the Asia-Pacific region, millions of people are at risk of falling into poverty because of the conflict, the United Nations Development Program warned.
Already, many countries in Asia are grappling with fuel shortages, which will grow only worse as the war drags on, said Raghuram Rajan, an economist at the University of Chicago and a former governor of the Reserve Bank of India.
“The shortages will start hitting more and more,” said Mr. Rajan, who formerly served in a top role at the International Monetary Fund. In many countries, the real consequences are only just beginning to be felt.
Energy inventories are running out, and some shipments have stopped. “The water’s on the boil, the frog is in the water and the temperature’s rising,” Mr. Rajan said. “And now, increasingly, you’re going to see industry shut down.”
Steel plants in India and automakers in Japan have cut production because of higher energy prices and concerns about reduced demand. Toy factories in China, already suffering from U.S. tariffs, are contending with discontent from thousands of workers angry about losing their jobs.
One morning last week, in Firozabad, a city in northern India, workers were idly milling at an open-air labor market. “Because of the war, work has dwindled,” said Muhammad Waseem, a plasterer. He was haggling with a potential employer who wanted to pay him 500 rupees ($5.30) for a construction job, significantly less than what he usually earns.
Aas Muhammad, 25, a laborer who loads bricks and cement onto trucks, had walked five miles to the market from his home. He was willing to take the 500 rupees, but even that wouldn’t go far. A kilogram of cooking gas that would normally cost 80 rupees now costs 200.
Millions of other Indian workers who usually live and work in the Emirates and Saudi Arabia, and collectively send billions of dollars in remittances home every year, are stranded abroad without work.
Shortages of other commodities that ordinarily travel through the Strait of Hormuz, like helium, aluminum and naphtha, are affecting the supplies of a dizzying array of other goods, from condoms to microchips.
Of course, the U.S. economy isn’t entirely insulated from the shock. Gas prices have jumped more than $1 a gallon since the war began, a tax on American consumers that has hit lower-income households especially hard.
On Wall Street, banks have marked their growth forecasts down and their inflation forecasts up since the war began and have all but given up on the possibility of further interest rate cuts before the fall at the earliest.
Compared with the rest of the world, though, the impact on the domestic economy has been muted. Consumer spending remains strong, layoffs remain low and forecasters still expect solid growth this year.
Economists say it would take a much more significant spike in oil prices, perhaps as high as $150 a barrel, for them to begin worrying seriously about the possibility of a recession in the United States.
That is not the case elsewhere, where the dreaded combination of slower growth and higher inflation is already raising alarms about stagflation.
Around the world, scarcity and high prices are setting off a worrying cycle of reduced economic activity: High prices lower the demand for fuel, and the lower demand, in turn, shrinks production, employment and spending.
The German airline Lufthansa canceled 20,000 flights scheduled for this summer. As jet fuel prices have doubled, all 20 of the world’s top air carriers have cut at least some flights, according to Freightos, a digital shipping marketplace. Fewer flights cut sharply into tourism and business travel, reducing spending at hotels, restaurants and retailers.
For the United States, the biggest advantage is that, unlike most of its global peers, it produces more oil and gas than it consumes. That doesn’t mean it is unaffected by what happens in global energy markets, but it helps dampen the impact.
The U.S. economy is also heavily based on services and depends relatively little on the energy-intensive manufacturing industries that have been hit hardest by the spike in oil prices. And it went into the war with a stronger economy than many other countries, giving it more of a buffer against a slowdown.
“We’re not feeling the same pain the rest of the world is,” said Jason Bordoff, the founding director of the Center on Global Energy Policy at Columbia University.
“In a shock this large, the physical shortages are showing up in Asia, and they’re trickling through to Europe,” he added. “We’re the last to feel the effects.”
The toll on the U.S. economy will grow if the war drags on. Higher fuel prices will further raise the cost of shipping, and that could drive up prices for other consumer goods.
“We don’t know how long this shock will last, and I think if it persists we’ll probably be having a very different conversation six months from now,” said Ben Harris, a Brookings Institution economist who served as chief economist at the Treasury Department under the Biden administration.
Even if the war were to end tomorrow, most energy executives and political analysts doubt that traffic through the Strait of Hormuz, a critically important shipping lane for oil and gas, will ever return to the way it was before. The war has demonstrated how easily free passage can be stopped, raising risks and costs.
The shortfall caused by the halt in oil and gas production and the missile damage inflicted on infrastructure also mean that oil prices are likely to remain elevated or rise over the next four years, according to High Frequency Economics, a research consulting firm.
“We are more resilient to energy shocks, but I don’t think that’s going to last,” said Adam Posen, president of the Peterson Institute for International Economics.
Many countries, including allies, had already been re-evaluating their relationship because of President Trump’s punitive trade policies and erratic behavior, including his demands to take over Greenland.
Now American pre-eminence has been undercut by Mr. Trump’s decision to start a war with Iran that has had severe economic consequences for much of the world, Mr. Posen said.
“As a snapshot at the moment, the U.S. is less directly troubled,” Mr. Posen added. “I wouldn’t make too much of that.”
Keith Bradsher contributed reporting from Beijing, and Alex Travelli from Firozabad, India.
In a case that has become a local flashpoint, environmental groups seeking to halt a lithium operation in Imperial County until it gets further review argued before a state appeals court in San Diego on Thursday.
Controlled Thermal Resources wants to extract lithium from hot brine that will be used to power a geothermal electricity plant it plans to build. This type of lithium removal is different from traditional hardrock mining or evaporation ponds. The project also would need 6,500 acre-feet of fresh water annually for washing the mineral and cooling.
Earthworks, a nonprofit focused on the impacts of mining, and Comité Cívico del Valle, an Imperial County environmental justice group, allege the county didn’t adequately examine the project’s effects on water supply, air quality and tribal cultural resources when it granted approvals.
The groups filed suit in March 2024 and Imperial County Superior Court Judge Jeffrey Jones ruled against them in January 2025, saying the county met its legal requirements.
Before a panel of three judges for the California Court of Appeals 4th Appellate District, plaintiffs’ lawyer Doug Carstens argued that if water becomes scarcer, the project may rely on agricultural runoff that currently feeds the shrinking Salton Sea, exacerbating dust and air quality issues. He also said the environmental review did not account for future water-thirsty projects in the desert area.
“There will be a lot of straws dipping into the pool,” Carstens said.
The project, called Hell’s Kitchen, also failed to adequately involve local tribes in assessing the effect on cultural resources, he said.
Controlled Thermal Resources attorney Suzanne Varco said that the company reached out to 26 area tribes in 2021 and received no reply. She noted that one elder from Kwaaymii Laguna Band of Indians responded with concerns about mud pots and other resources in the area, but it was more than five months after the consultation period closed.
Justice Julia Kelety’s questions suggested the tribes provided names for resources in the area but failed to say how they would be affected.
Justice Truc Do said it was hard to assess fully how the project will affect the region’s water because the environmental review was unclear whether it will last 30 or 50 years. The region primarily relies on water from the overtapped and shrinking Colorado River.
The case is important because Imperial County has pegged its future to lithium, a mineral critical for electric car batteries. Two other companies are trying to reach commercial extraction near the Salton Sea. Gov. Gavin Newsom called Imperial Valley “the Saudi Arabia of lithium” in 2022, and has touted the industry’s potential to bring jobs and community benefits to one of the poorest counties in the state.
Multiple setbacks and deadline extensions later, lithium has yet to materialize even as industry job training programs graduate students into careers that have not arrived in the area. The county has blamed the lawsuit for the slow start. The boom and bust nature of mining as well as shifting federal policies have also played a role.
The court could decide within a few weeks to several months.
Earthworks and Comité Cívico del Valle have repeatedly said they don’t outright oppose lithium development in the area, but want CTR to acknowledge and minimize potential harm.
“We are not trying to stop the Hell’s Kitchen Project, we think it should be fixed, with enforceable protections for the environment, tribal cultural resources, and the health of frontline communities,” said Jared Naimark, senior manager at Earthworks.
Imperial County and CTR declined to comment on pending litigation, but Controlled Thermal Resources spokesperson Lauren Rose articulated a commitment to advancing geothermal and lithium development “as core components of our Hell’s Kitchen Project.” The company recently announced a plan to power local data centers which led some to worry about the company’s commitment to lithium.
Earlier this year the company delayed its plans for lithium production to 2028. Rose said the project is still progressing toward initial construction and will announce timing “as key development, financing, and construction milestones are achieved.”
Netflix on Thursday reported higher revenues and profit in the second quarter as it sought to assure investors about its growth prospects.
The streaming giant reported revenue of $12.6 billion in the second quarter, up 13% from a year ago. Net income during the period rose 9% to $3.4 billion.
Netflix said it expects revenue to grow 12% in the third quarter, but lowered its 2026 revenue forecast to $51 billion from $51.4 billion.
The results were roughly in line with what analysts had predicted and were driven by recent price increase and growth in advertising revenue. The latter is expected to reach $3 billion this year, the company said.
In a presentation with analysts, Netflix executives touted global expansion plans.
“We’re entertaining an audience approaching a billion people with still lots of room to grow into our addressable market on every measure,” said Spencer Neumann, Netflix’s chief financial officer, in the earnings presentation. “We believe we’ve got lots and lots of runway for solid growth ahead of us.”
Those comments appeared intended to assuage investors who’ve grown concerned that people could be spending less time on the streaming service as rivals like YouTube gain market share.
Netflix’s share of TV viewing time in the U.S. has steadily declined in recent months as rivals have gained market share, according to Nielsen data.
The streamer represented 7.8% of all TV viewing in the U.S. in April — the lowest percentage since May 2025. It was 7.5% in April 2025, Nielsen said.
By comparison, YouTube has seen its share of the streaming audience grow. YouTube’s TV viewing share in April rose to 13.4%, up from 12.4% a year earlier, Nielsen said.
Some investors fear that if viewership is down, subscribers could cancel the service, which would negatively affect the platform’s growing advertising business. It could also undercut Netflix’s ability to raise prices in the U.S. and other countries.
Those worries have caused Netflix’s stock price to plummet 41% in the last year. The stock closed on Thursday at $74.35 a share, up 1%. In after hours trading, the stock fell 8%.
“The engagement elephant continues to rear its head and investors are on edge that an earlier price hike in a seasonally tough period and lighter content slate could have driven more churn than usual,” wrote Morgan Stanley Research analysts in a research note.
On Thursday, Netflix said in a letter to shareholders it has a sophisticated understanding of its consumers and “we know not all hours are equal” and that engagement on its platform is “healthy.”
“The entertainment industry remains dynamic and competitive,” Netflix told shareholders. “We aim to stay ahead by executing against our three areas of focus: delivering more entertainment value, leveraging technology to improve every aspect of our service, and improving monetization.”
The Los Gatos-based company said it plans to allocate more than 5% of its content spend on live programming this year. Live content has been a key driver for subscriptions, accounting for six of the top 10 new member sign-up days over the last five years, the company said.
In the first half of 2026, Netflix said members watched more than 97 billion hours, up 2% from a year ago. Among the most popular shows: the crime thriller “I Will Find You,” which had 87 million views; and the romantic comedy film “Voicemails for Isabelle,” which garnered 71 million views.
Netflix has been adding new types of content to its platform, including video podcasts to help increase engagement with subscribers during the day.
As part of the diversification efforts, the platform has expanded its portfolio of live programming over the years, including adding NFL games and streaming Major League Baseball’s opening day game.
In 2022, Netflix had also faced investor pressure when it reported declining subscribers for the first time in more than a decade. That pushed the company to delve into other areas including advertising, gaming and cracking down on password sharing.
SpaceX stock dropped below its initial public offering price for the first time on Wednesday, signaling dwindling hype around the Elon Musk company.
Shares dipped below their IPO price of $135 on Wednesday morning for the first time since listing, a humbling loss for the stock, which had skyrocketed more than 50% in its first days of trading last month.
The shares regained some ground later in the day, closing at $135.27.
The initial offering gave the company a market cap of $2.2 trillion, making it one of the world’s most valuable public companies. For a short period, the IPO also made owner Elon Musk the world’s first trillionaire, though his net worth now is about $800 billion.
On July 7, the company was added to the Nasdaq-100 after a rule change allowed companies to join 15 days after their IPOs.
SpaceX raised a total of $86 billion after underwriters exercised their right to sell additional shares, on top of the $75 billion initially raised. It was the largest IPO in history.
SpaceX, based near Austin, Texas, is the leading launch services company in the world, with its Falcon 9 rocket accounting for the vast majority of satellites launched last year.
It is also the leading satellite-based broadband provider with its Starlink service. The extraordinary interest in the IPO was driven by Musk’s plans to make the company an AI leader — including plans to launch orbiting satellite data centers powered by the sun that crunch AI data.
The company’s headquarters moved from Hawthorne to Texas in 2024, but it retains large operations in the South Bay city and blasts off regularly from Vandenberg Space Force Base in Santa Barbara County.
Since the IPO, SpaceX has used its newfound wealth to expand in the AI space.
It announced last month that it was acquiring the AI coding startup Cursor for $60 billion, with the deal expected to close in the third quarter. The San Francisco company, founded in 2022, enables engineers to instruct software in English to run coding tasks autonomously.
Musk also merged his xAI artificial intelligence company into SpaceX earlier this year. The combined entity recently announced it was leasing computing power to rivals Anthropic and Google at two terrestrial data centers it has constructed.
Since the IPO, investors have expressed concerns about the company’s spending plans and debt load.
Even with the volatility of the last month, there’s still more uncertainty to come.
The stock could fall further as locked-up shares held by current and former employees are released.
At least 20% of the shares will be released after second-quarter results are disclosed sometime in the coming months, with all the lockups expiring in December.
But Space X isn’t the only megacap stock to experience ups and downs early on.
Shares of Meta, then named Facebook, fell significantly below the IPO price of $38 before recovering. After its May 2012 launch, shares plummeted by nearly 50% and hit a record low of $19.69 in August 2012.
The company took more than 14 months to rebound, finally surpassing its $38 IPO price in July 2013.
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