CNN reports:

At its linguistic core, the two-word phrase “demand destruction” feels severe, harsh, maybe even violent.

In practice, that’s not far off: It means that the magnitude of a price shock can be so large, so persistent and so painful that spending behaviors shift – sometimes to the point where they permanently alter the course, the structure and the stability of a sector or an entire economy.

Earlier this month, the International Energy Agency warned that in the wake of the “most severe oil supply shock in history … demand destruction will spread as scarcity and higher prices persist.”

In the US, this “destruction” has already started to unfold.

Fast-rising gas prices have quickly eaten away Americans’ hard-earned pay and tax refunds – landing the heaviest blows on those who can least absorb them.

Inflation has jolted higher, wage growth sharply slowed and consumer sentiment slumped, a potential harbinger of further fallout to come.

American consumers have remained resilient thus far. But economists warn that the longer the Iran war keeps the critical Strait of Hormuz blocked to oil tankers and cargo ships, the greater the danger of drastically worse outcomes.

“Time is not the ally of the American economy,” said Joe Brusuelas, chief economist for RSM US, an accounting and consulting firm. [Continue reading…]

CNBC reports:

California gasoline prices hit $6 per gallon on Thursday, a 30% increase since the U.S. and Israel launched the war against Iran in late February.

Drivers in California are paying the most in the nation at $6.01 per gallon on average, according to data from AAA. Prices in the Golden State are at the highest level since October 2023, the data shows.

Diesel, meanwhile, cost about $7.50 per gallon on average in California on Thursday, a 47% increasse since the war broke out on Feb. 28. Diesel is essential for the economy because the fuel is used by trucks and trains to deliver all the goods that consumers buy. [Continue reading…]