TPM26: Iran conflict puts new risk on US economic growth: Yellen

The duration of US and Israeli attacks on Iran and the effect on oil prices threaten to push inflation higher and jeopardize the modest growth expected in global container shipping demand for 2026, former US Treasury Secretary Janet Yellen said Monday.

Front-month crude oil futures jumped to their highest level in more than a year Monday due to the weekend attacks on Iran. Yellen, speaking during her keynote address at the start of the Journal of Commerce’s TPM26 conference, said the 14 million barrels of crude that flow through the Strait of Hormuz daily have been cut to a trickle, a development that bears watching.

“The risk to the global economy will depend on how long energy flows through the Strait of Hormuz are disrupted,” Yellen, also former chairperson of the US Federal Reserve, said. “If oil prices do remain higher, then we will really need to worry about the impact on inflation over the next year and it’s likely to have negative consequences for growth.”

Container shipping demand is expected to increase 1.7% globally this year, according to a forecast from S&P Global Maritime, Trade and Supply Chain, a sister company of the Journal of Commerce. Most of that growth will occur outside of the US, which is likely to see flat results compared with 2025.

The US economy is demonstrating some strength, Yellen said, with a low 4.3% unemployment rate, a tapering inflation rate of 3%, and gross domestic product (GDP) expected to grow at a similar rate in the first quarter.

However, underneath those figures, Yellen said there are signs of fragility that could upend that growth. The monthly creation of 15,000 jobs in the US in 2025 remains well below trend. She added that consumer spending growth rests largely on high earners, with the top 10% of US household incomes now accounting for half of retail spending.

“We have a K-shaped economy and an expansion [in which] upper income households are doing well,” Yellen said. “They’re in good financial shape and driving consumer spending.”

Fed could be cautious about new rate cuts

The Supreme Court’s recent decision to strike down the Trump administration’s emergency tariff powers could cut the inflation rate modestly in 2026. But with oil prices having the opposite effect, the Federal Reserve may become more cautious about further interest rate cuts, Yellen said.

The Fed’s key overnight lending rate, which currently sits between 3.5% and 3.75%, is a driver of mortgage rates and interest on other types of consumer loans. Trump has been browbeating the Fed to bring its key rates below 2% in a bid to stimulate the US economy.

“The Fed is terribly worried that it’s not yet gotten inflation back to its target of 2%,” Yellen told TPM26. “It’s not realistic that we’re going to go back to 2% right now. I think the recent Iran situation puts the Fed even more on hold, more reluctant to cut rates.”

This article was originally published in The Journal of Commerce on March 2, 2026.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.