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The global economy is running out of time. That’s the stark assessment from Mohamed El-Erian, who was CEO of PIMCO and chair of former President Obama’s Global Development Council.
He recently put a precise deadline on what has become a pressing economic crisis, stating it will “avoid a recession, provided — and here’s the important thing — the Straits are reopened in the next four to eight weeks. If they’re not … it will look very different,” Fortune reported (1).
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The Strait of Hormuz — the narrow waterway shared between Iran and Oman connecting the Persian Gulf to the open ocean — has been largely blocked since February 28, when the U.S. and Israel launched strikes on Iran, killing Supreme Leader Ali Khamenei. Iran closed the Strait in retaliation, and commercial traffic dropped more than 90% almost immediately (2).
The consequences for global energy markets have been severe. According to the International Energy Agency (IEA), roughly 20 million barrels of oil per day transit the Strait, representing around 25% of all global seaborne oil trade, with the vast majority destined for Asian markets (3).
The IEA has described the situation as the “largest supply disruption in the history of the global oil market (4).”
And there’s little sign of a quick resolution.
While Admiral Brad Cooper recently testified in front of the Senate Armed Services Committee that American military action has “significantly degraded” Iran’s military capabilities, there’s no clear indication when the Strait could open for commercial transit.
“The Iranian capability to stop commerce has been dramatically depleted through the strait, but their voice is very loud,” Cooper testified, “And those threats are clearly heard by the merchant industry and insurance industry (5).”
What this means for Americans
El-Erian acknowledged that the U.S. is comparatively insulated — its domestic energy production and agile economy offer a buffer unavailable to Europe or Asia.
But that doesn’t mean the country’s unaffected. According to the U.S. Energy Information Administration, imports still made up 17% of U.S. energy supply in 2024 (6).
The indirect effects of a global oil shock are already visible at the pump. AAA data shows the national average price of a gallon of regular gasoline stands at $4.53 as of May 6 (7) — up from $2.98 on February 26, days before the conflict began (8).
Over six in 10 Americans say their household’s finances have been hit by higher gas prices, according to a Reuters/Ipsos poll conducted earlier this month (9).
According to the Center for American Progress, Americans are paying roughly 35% more for gas than they were before the war started (10), and almost 70% say they’re concerned about high gas prices as a result, per a Pew Research Center poll (11).
Meanwhile, research from Goldman Sachs and Morgan Stanley found that the oil price shock from the Iran conflict has nearly entirely wiped out the consumer tax benefits from the One Big Beautiful Bill Act, and for lower-income Americans, the math may actually be negative, Fortune reports (12).
Read More: Non-millionaires can now hoard property like the 1% — how to start with as little as $100
The recession warning
Moody’s chief economist Mark Zandi has been equally blunt about the domestic outlook. In a recent note, he described U.S. growth as “fragile” — sufficient to avoid contraction for now, but not sustainable enough to drive meaningful job creation (1).
Unemployment, he noted, is drifting higher even as it remains historically low.
“Even if the Iran war winds down and oil prices recede quickly, the fallout will ensure there is no GDP pickup or job growth this year,” Zandi wrote. “Unemployment will rise further, and already considerable recession risks will worsen.”
Deutsche Bank’s Jim Reid reinforced the concern, noting that investors are now “pricing in a more protracted conflict,” with longer-dated oil futures climbing to their highest levels since the standoff began.
Shockproof your finances now
Whether it’s the price of a tank of gas, the rising cost of groceries or the stability of a job market already showing cracks, the outcome at the Strait of Hormuz is expected to land close to home.
But the impact is already being felt — inflation jumped 3.8% year-over-year in April, marking the largest spike since May 2023 (13).
A financial advisor can help you plan your finances so that the ongoing inflation crisis or recession fears don’t derail your financial future.
But finding a reliable expert can be challenging in this era of “finfluencers (14).”
In unstable economic times, working with a financial advisor can help reduce costly mistakes.
If you have a portfolio of $250,000 or more, platforms like WiserAdvisor can connect you with vetted professionals who specialize in this kind of planning.
Simply answer a few questions about your savings, retirement timeline and overall investment portfolio.
From there, WiserAdvisor reviews its network to match you — for free — with up to three vetted, reputable advisors aligned with your specific needs.
Schedule a no-obligation consultation with your matches today to find the best fit for your long-term goals.
WiserAdvisor is a matching service and does not provide financial advice directly. All matched advisors are third parties, and specific financial results are not guaranteed.
Park your savings in low-risk assets
Despite the Middle East crisis dragging on for over two months, equities have reached record highs, pointing out the low correlation between stocks and the broader economy.
“There is a disconnect between what the markets look like and what is actually happening in the world,” said Tibor Besedes, a professor of economics at the Georgia Institute of Technology. “It is like investors do not realize we are still in a war (15).”
To hedge against such risks, parking at least a portion of your portfolio in lower-risk assets might be worth considering.
Certificates of Deposit offer a fixed rate — typically higher than traditional savings accounts. You lock in a rate up front, so your earnings stay fixed for a set term, even if market rates slip.
Platforms like CD Valet can make it easier to spot high-yield CDs that fit your goals.
Their CD rates are updated continuously, so you can shop, compare and open CDs with ease.
CD Valet tracks more than 40,000 verified rates from FDIC-insured banks and NCUA-insured credit unions, giving users a fuller snapshot of the market instead of just a handful of promoted offers.
And unlike other websites, they show every publicly available rate, ensuring you have a comprehensive view of the market.
A safe addition
Gold has been one of the best-performing assets over the past year, as investors have flocked to the safe-haven metal amid growing economic uncertainty.
You can combine the inflation-resistant properties of the precious metal with the tax advantages of an IRA by opening a gold IRA with the help of Priority Gold.
You can rollover your existing IRA or 401(k) into a precious metals IRA — tax and penalty free. Plus, their platinum package offers insured shipping and storage for up to five years.
And you can even receive up to $10,000 in complimentary silver when you make a qualifying purchase.
To learn more about how precious metals can hedge your retirement nest egg, download Priority Gold’s wealth preservation guide for free today.
Create a passive source of income
In uncertain times, having additional streams of income can help soften the blow if layoffs rise or wage growth stalls. That’s why income-producing assets like real estate continue to attract investors during turbulent periods, since property values don’t always move in lockstep with the stock market.
Property investments can also offer some protection against inflation. As construction and land costs climb, rent also rises — creating an income stream that can potentially keep pace with higher living costs.
Of course, buying a rental property outright isn’t realistic for everyone, especially at a time when borrowing costs and household expenses remain elevated.
Platforms like Arrived can help bridge that gap by letting you purchase fractional shares of rental and vacation properties for as little as $100.
Arrived distributes any rental income generated by properties to investors monthly, allowing you to potentially set up a passive income stream without the extra work that comes with being a landlord.
To get started, just browse their selection of vetted properties, each chosen for their appreciation and income-generating potential.
And for a limited time, when you open an account and add $1,000 or more, Arrived will even credit your account with a 1% match.
— With files from Emma Caplan-Fisher
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
Fortune (1),(12); Britannica (2); International Energy Agency (3),(4); Politico (5); U.S. Energy Information Administration (6); Fox Business (7); AAA(8); Reuters (9); Center for American Progress (10); Pew Research Center (11); U.S. Bureau of Labor Statistics (13); CNBC (14); Washington Post (15)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
