Bulwark Takes: The Economic Consequences of Trump’s Iran War (w/ Catherine Rampell)

Podcast: Bulwark Takes
Host: Bill Kristol
Guest: Catherine Rampell
Date: March 22, 2026

Episode Overview

This episode explores the unfolding economic impacts of President Trump’s war with Iran, with Bill Kristol hosting Catherine Rampell, columnist and Bulwark contributor. Together, they break down how the war acts as an accelerant to pre-existing economic vulnerabilities, such as stagnant job growth, persistent inflation, and policy missteps (tariffs, immigration). The conversation critically examines the unique risks posed by oil and supply shocks from the conflict, the limits of potential policy responses, and the looming danger of stagflation or global recession.

Key Discussion Points & Insights

The Economy Before the Iran War

• Stagnant Job Creation: Rampell notes that, per Fed data, there was “zero job creation in the past six months” before the war, with sluggish hiring and minimal firing, leading to economic stasis.

  “If you kind of adjust for some methodological issues, we've had no jobs added.” (Catherine Rampell, 01:53)

• Inflation Sticking Around: Inflation remained elevated for years, driven by COVID-19 shocks, fiscal policy errors, and especially Trump/Biden tariffs, which reignited price increases.
• Policy Problems: Trump’s tariffs and anti-immigration policies both contributed—tariffs to inflation, immigration curbs to labor market tightness.

  “Those two Trump administration policies… anti-immigration and tariffs have contributed to… one of those two problems.” (Bill Kristol, 04:08)

Immigration, Labor Market Stagnation & Tariffs

• Immigrants as Economic Drivers: Immigrants largely fueled recent US job gains. Deportations and declining in-migration shrink the working-age labor force, leading to frictionless unemployment stats but increased fragility under stress.

  “Immigrants are disproportionately working age. So they have been filling jobs… They’re more likely to come here and… actively contribute to the economy.” (Catherine Rampell, 05:17)

• Churn Matters: Healthy economies need churn—new jobs, business investments, workers quitting/finding better roles—but stasis and uncertainty predated the war.

The Economic Shock of the Iran War

Supply Chain & Energy Disruptions

• Strait of Hormuz Is Pivotal: Roughly 20% of world oil and a similar share of global LNG transits the Strait; its closure or infrastructure damage is globally consequential.

  “Once the infrastructure is gone, it is gone. It will take a while for it to come back.” (Catherine Rampell, 11:54)

• Physical Destruction is Key Difference: Unlike Iraq or Venezuelan conflicts, this war is destroying oil and gas infrastructure (South Pars field, Qatari facilities), causing potentially irreversible (or long-term) supply shocks.
• Knock-on Effects: Beyond fuel, disruptions affect fertilizers, crop prices, and petrochemical-based goods (e.g., shampoo, foams).

  “A third of the world’s urea… which goes into a nitrogen fertilizer comes through the Strait of Hormuz that is now disrupted.” (Catherine Rampell, 14:36)

Oil Markets & Price Volatility

• Spike in Oil and Jet Fuel: Oil has swung above $119/barrel, with expectations from industry (e.g., United Airlines) planning for $175/barrel scenarios; jet fuel prices have doubled, raising consumer costs.
• Airline/Travel Ripple: Rising operational costs force airlines to increase fares or cut flights, affecting global mobility and trade.

War Uncertainty, Consumer Behavior & Vicious Cycles

• Economic Confidence Erodes: High oil/gas prices mean consumers divert spending from other sectors ($300M/day more on gasoline), hurting retail, services, and leading businesses to freeze hiring/investment.

  “There can become kind of a vicious cycle… all of those things are bad.” (Catherine Rampell, 18:37)

• Risk of Recession High: Pre-war, economists put recession risk at 1-in-3; post-war, that number likely rises, given heightened uncertainty and the potential for “stagflation” (high inflation plus stagnating or falling growth).

  “When we’ve had big oil shocks before… in the 70s we had a bad recession, we had stagflation.” (Catherine Rampell, 24:11)

Policy Response Constraints

• No Good Levers: Fed is stuck—raising rates tames inflation but worsens stagnation; fiscal stimulus (like checks, oil reserves) are limited or self-undermining. Removing Iranian oil sanctions gives only short-term relief and has global consequences (e.g., benefiting Russia).

  “This is why stagflation sucks so much… the things that you would do to fix one… make the other problem worse.” (Catherine Rampell, 33:53)

• China & Renewables: China is less vulnerable due to heavy investment in renewable energy and coal; Europe and Japan remain highly exposed.

Market Psychology & Feedback Loops

• Broken Feedback Loops: Trump previously adjusted policy (e.g., delayed tariffs) when markets reacted strongly—market “forgiveness” or anticipation may now be dulling feedback at a critical juncture.

  “Now the markets are like preemptively… assuming that he'll lay off. And…I worry that… feedback loop is for oil markets is also going to get destroyed.” (Catherine Rampell, 28:35)

• AI Bubble Risks: Concentration in AI stocks (40% of S&P 500 in 10 names) is reminiscent of past bubbles; a simultaneous tech correction and energy crisis could produce a severe recession.

Notable Quotes & Memorable Moments

• On Economic Fragility Pre-War:

  “We are in this situation where… the fact that net population or net working age population may be falling… maybe you don't notice it as much in the unemployment numbers… but maybe it's sort of being hidden by these other migration related issues.” (Catherine Rampell, 08:20)

• On Supply Destruction:

  “It’s not just about reopening a strait again, it’s about destroying the infrastructure for the stuff that would go through the strait.” (Catherine Rampell, 15:40)

• On Policy Tools:

  “Short of just—don’t start a war in the Middle East to begin with—that would have been helpful. There just are not that many levers available to them.” (Catherine Rampell, 34:53)

• On Market Feedback:

  “The thing that was causing Trump to chicken out was the market flip out. So if the markets are not flipping out, the worry is he's not getting the feedback that he needs.” (Catherine Rampell, 28:35)

• On the Difficulty of Policy Response:

  “The Fed has been kind of stuck in this horrible situation that they have one blunt instrument effectively that they can use and whatever they do will, will screw up something.” (Catherine Rampell, 33:59)

Important Timestamps & Segments

• [01:52] – Rampell summarizes pre-war economic status and risks
• [04:15] – Discussion of immigration's complex effects and deportation fears
• [09:18] – Kristol frames the escalation: “We were in a one or two alarm situation and now we’re in a three or four”
• [10:57] – Rampell explains the unique role of the Strait of Hormuz and physical supply destruction
• [14:36] – Knock-on effects: fertilizer and product price inflation
• [18:02] – Rampell on consumer impacts and economic “vicious cycles”
• [24:11] – Historical context: past oil shocks and risks of stagflation
• [28:35] – The breakdown of the market-policy feedback loop under Trump
• [33:53] – Constraints on monetary and fiscal policy; policy gridlock
• [45:21] – What economic indicators to watch for war impacts in coming weeks

Closing Points

• Short-Term Outlook: Risks to growth and inflation are real, with limited tools to stabilize the economy; consequences hinge on duration and scale of war.
• Long-Term Risks & Unknowns: The possibility of compounded shocks (war + tech bubble + credit issues) could tip the US and world economy into a deep recession.
• Indicators to Watch: Inflation readings (esp. March and going forward), job data, oil/jet fuel/fertilizer prices, crop futures, and the pace of consumer spending shifts.
• Policymaker Dilemma: The lack of coherent feedback loops and confusing signals from markets/policy threaten effective crisis management.

“We don’t have that many levers. The best thing that they could do is to try to find a way to get oil flowing again.” (Catherine Rampell, 34:53)

This episode offers a sobering and clear-eyed analysis of the potentially cascading economic consequences of Trump’s Iran war, emphasizing the precarious state of the US and global economy, and the daunting limitations facing policymakers.