Source: Fortune
Summary
The One Big Beautiful Bill was expected to boost the US economy with historic tax refunds, but the Iran war has led to higher oil prices, canceling out the benefits for many Americans. Goldman Sachs and Morgan Stanley estimate that the war’s impact on oil prices has offset the tax refunds, with lower-income households being hit the hardest. The average tax refund has increased by 11.2%, but higher gasoline prices have risen by nearly 40%, neutralizing the anticipated fiscal impulse to household spending.
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The numbers tell one story. The Iran war has turned Trump’s marquee tax cut into a wash—or worse, a loss—for the very voters it was designed to reward. The average tax refund has increased, but the gas price shock hits hardest at the bottom. Goldman Sachs finds that households in the lowest income quintile spend roughly four times as much on gasoline as a share of after-tax income compared to those at the top. The ceasefire hasn’t fully reopened the Strait of Hormuz, and tensions—and prices—remain elevated. Wall Street has revised its outlook lower, with Goldman forecasting real consumption growth of just 1.2% for 2026. The Big Beautiful Bill was supposed to be the economic counterweight, but it may have been turned into a loss.
Author: Evan Null
