U.S. Economy Defies Iran War Shocks But Unequal Spending Masks Fragility

The Trump administration’s manufactured war with Iran has sent shockwaves through global energy markets, pushing oil prices to a four-year high and driving gasoline costs through the roof. Yet the U.S. economy showed surprising resilience in the first quarter of 2026, growing at an annualized rate of 2%, according to the Commerce Department’s latest report. This marks a sharp rebound from the previous quarter’s sluggish 0.5% growth, which was hampered by a protracted government shutdown.

Government spending surged 4.4% in the quarter, reversing earlier cuts and providing a critical boost. Meanwhile, consumer spending increased 1.6%, defying the pinch of higher gas prices. Experts credit larger tax refunds — averaging $330 more than last year — for cushioning lower- and middle-income households and keeping their wallets open, at least temporarily.

Mark Zandi, chief economist at Moody’s Analytics, underscores the pivotal role of consumers in driving the economy forward but warns that this momentum may not last. “It feels like it would be much more healthy if we saw a broader distribution of spending,” Zandi said, pointing to the stark reality that the top 20% of earners, those making over $175,000 annually, account for 60% of all personal spending. Wealthier families are buoyed by soaring stock markets and rising home values, advantages out of reach for most Americans.

This top-heavy spending pattern exposes the economy’s vulnerability amid ongoing geopolitical tensions. The Trump administration’s reckless foreign policy gambit not only risks dragging the nation into costly conflicts but also threatens to exacerbate inflation and squeeze ordinary Americans already stretched thin.

The resilience seen in the headline numbers masks deeper fault lines. As tax refunds fade and energy prices remain elevated, the economic gains risk being pulled out from under the many for the benefit of the few. This is not just a story of economic growth but of growing inequality and the dangerous costs of authoritarian brinkmanship abroad that reverberate at home.

Only Clowns Are Orange will keep tracking how the Trump administration’s war games and economic policies continue to undermine democratic accountability and everyday Americans’ livelihoods.