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You drive up to the pump, swipe your card, and start filling your SUV.
A few minutes later, you see the total on the screen: $130.
Sound far-fetched? It’s not. Experts have warned there could be severe repercussions for the U.S. economy if the Israel-Hamas conflict escalates.
With persistently high inflation and rising interest rates brought about by wildly irresponsible government policy, the U.S. is already in a vulnerable position. The last thing we need is another conflict in an energy-producing region.
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The potential involvement of Iran and the U.S. in the Israel-Hamas conflict could spike oil prices to well over $150 a barrel, a price not seen since oil hit an all-time high of $147.27 in July of 2008.
This would result in a substantial economic downturn in the U.S., leading to layoffs, runaway inflation and increased economic uncertainty.
Economists estimate this could reduce U.S. inflation-adjusted GDP growth by 1.2 percent, equivalent to $500 billion in lost production, increasing the risk of a recession.
Ongoing skirmishes in the region, involving Israel with Hezbollah in Lebanon and airstrikes in Syria, are adding fuel to these concerns.
Defense Secretary Lloyd Austin has expressed worries about the conflict spreading throughout the Middle East.
Speaking to ABC’s “This Week” program, Austin said, “We’re concerned about potential escalation. In fact, what we’re seeing … is the prospect of a significant escalation of attacks on our troops and our people throughout the region.”
In his first public remarks since the conflict began, Federal Reserve Chair Jerome Powell said, “Geopolitical tensions are highly elevated and pose important risks to global economic activity.”
Treasury Secretary Janet Yellen has also highlighted the heightened geopolitical tensions as significant risks to global economic activity.
A War That Can’t Be Won
The fact the war has no end in sight makes analysts’ doomsday economic predictions more likely to become reality.
“This is a war that cannot be won.” That is what Jordan’s foreign minister, Ayman Safadi, asserted at a recent Qatar forum, according to Time Magazine. He continued, “Israel has created an amount of hatred that will haunt this region that will define generations to come.”
Qatar’s emir, Sheikh Tamim bin Hamad Al Thani, told the forum that mediation efforts seeking to stop the war and have all hostages released will continue, but “unfortunately, we are not seeing the same willingness that we had seen in the weeks before.”
And despite calls for a cease-fire in Gaza, Israel says it’s willing to fight for months or longer to defeat Hamas.
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How likely is it that this conflict will escalate? One thing is for sure, President Joe Biden’s past weakness in the region has increased the risk significantly, as he has suddenly had to bring the U.S. into a war that didn’t have to happen.
“The United States has Israel’s back.”
After the Hamas attack on Israel, Biden declared the unwavering backing of the United States, emphasizing, “the United States has Israel’s back.” Biden’s words have been backed up with strong support.
The U.S. vetoed a United Nations Security Council resolution to end the fighting and pushed through an emergency sale of over $100 million worth of tank ammunition to Israel.
Biden has deployed aircraft carriers in the region, placing thousands of U.S. troops on standby.
The U.S. has supplied Israel with American-made jets, precision-guided munitions and interceptor missiles for the Iron Dome air defense system.
The U.S. has shown it is prepared to take action in response to threats from Hezbollah from Israel’s northern border.
Secretary of State Antony Blinken and Defense Secretary Lloyd Austin have asserted the U.S. would respond if any U.S. personnel or military assets are targeted.
Israel’s former ambassador to the U.S., Michael Oren, suggested the deployment of U.S. aircraft carriers in the region signals the U.S. is ready to use significant airpower if the situation escalates.
House Approves $14.5 Billion in Assistance for Israel
The House of Representatives, led by Speaker Mike Johnson, approved a $14.5 billion military aid package for Israel, showcasing strong support from the United States.
The measure passed with mostly Republican support and opposition from Democrats, reflecting a partisan divide.
The Republican-sponsored bill aims to provide Israel with essential assistance for defense, hostage release and addressing the threat from Hamas. The funding includes $4 billion for Israel’s Iron Dome and David’s Sling defense systems.
Biden has expressed his intention to veto the bill, which falls short of his broader $106 billion emergency spending package, including support for Israel, Ukraine and Taiwan.
To offset the aid, House Republicans propose cuts to the IRS, a move contested by Democrats, who argue it could increase the budget deficit.
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US Foreign Aid to Israel
The U.S. is the largest contributor of military aid to Israel. It sends approximately $3.8 billion in defense aid to Israel annually. Since Israel’s founding, the U.S. has provided around $130 billion, fostering a strategic military ally in the Middle East. The aid to Israel includes weapons grants, access to advanced military equipment and intelligence cooperation.
The Biden administration and the U.S. Congress have recently outlined a comprehensive $105 billion national security package, emphasizing support for various nations. Billions of those dollars would have been saved had antagonists in the Middle East not been emboldened by Biden’s retreat from Afghanistan.
The breakdown of the aid to Israel includes:
- $14.3 billion in aid
- $10.6 billion for Defense Department assistance, including air and missile defense support
- $3.7 billion for the State Department to strengthen Israel’s military and enhance U.S. Embassy security
Christian Groups in the U.S. Show Their Support for Israel
Christian groups in the U.S. have expressed their support for Israel. This includes an evangelical lobbying group called Christians United for Israel. It claims to have more than 10 million members.
Many of America’s 100 million evangelicals are hosting fundraisers and poster campaigns, and they’re sending volunteers and supplies to Israel.
Two thousand evangelical leaders in the U.S. have said they “fully support Israel’s right and duty to defend itself against further attack.”
Evangelical research group Lifeway Research has looked into American Christians’ sentiments about the conflict.
Their executive director, Scott McConnell, has said, “American Christians have been following the war between Israel and Hamas, and two-thirds of those who attend church most often say their church has prayed for peace in Israel,” according to Christianity Today.
Ultimately, they want the conflict to end peacefully with both sides benefitting. He continued, “While a majority of American Christians support military action by Israel now, a much larger group believe lasting peace must come by mutual agreement of Palestinians and Israelis.”
Their survey found:
- 50 percent of US Christians believe America is doing the right amount to help Israel.
- 26 percent believe the U.S. is doing too much in trying to help Israel.
- 16 percent believe America isn’t doing enough.
- And 7 percent are unsure.
Big Companies Support Israel
Some of the world’s biggest companies have shown their support for Israel. This includes BlackRock, Apple, Adidas, Bank of America, Bloomberg, IBM, JP Morgan and, most notably, McDonald’s and Starbucks.
After the Oct. 7 attacks, McDonald’s said it was giving free meals to Israel Defense Forces personnel.
Pro-Palestine groups claimed this makes McDonald’s complicit in supporting the ethnic cleansing of Palestinians.
Some Palestinian supporters claim Israel’s actions against them have been erased from the narrative compared to the Oct. 7 attacks.
Starbucks worker’s union shared a message on X, stating their “Solidarity with Palestine!”
U.S. Sentiment Is Shifting as Support for Israel Declines
However, Christian groups’ and big companies’ sentiments aren’t aligned with the general public’s feelings toward the conflict.
According to a recent PBS NewsHour/NPR/Marist poll, while a majority of Americans sympathize with Israel in its conflict with Hamas, there is a growing sentiment Israel’s military response has been “too much.” The key findings from the poll include:
- Overall, 38 percent of U.S. adults believe that Israel’s military response to Hamas has been “too much,” indicating a 12-percentage point increase since October.
- Americans are divided on the U.S. role in global affairs and whether Congress should authorize additional military funds for Ukraine and Israel.
- Thirty-six percent of respondents oppose approving more war funding for either Ukraine or Israel, while 35 percent support additional funding for both countries.
- About half of Republicans and a majority of independents suggest that the U.S. should play a more limited role in global affairs, revealing a divided perspective.
- Despite concerns about Israel’s response, a majority of Americans (61 percent) still express greater sympathy toward Israel compared to the Palestinians (30 percent).
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Would a Trump Presidency Bring the Conflict to a Quicker Conclusion?
Former President Donald Trump initially criticized Israel’s response after the Hamas attacks. He’s since said the conflict wouldn’t have happened under his watch due to his hard-line approach with Iran.
In a recent interview with Univision, he said, “You’re probably going to have to let it play out, because a lot of people are dying.”
Regardless, much damage has already been done, and it wouldn’t take much for the violence to escalate further, causing serious economic ripple effects around the world.
What Do You Think?
Will an escalation of the Israel-Hamas war cause a recession?
Will a Trump presidency turn things around and help bring the war to an end with the least economic impact?
Let us know by commenting below.
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