WASHINGTON (AP) — The U.S. and Israeli attacks on Iran add yet more question marks around a U.S. economy already buffeted by on-and-off tariffs, weak hiring, and lingering inflationary pressures.

The war has already raised oil prices and could lift prices at the pump as early as this week, but the ultimate impact on the economy and inflation will depend on the length and severity of the conflict, economists say. Should it wind down in a week or two, its economic effects would be minor and short-lived.

Yet a longer war that pushed oil past $100 a barrel for an extended period would worsen inflation, at least temporarily, while slowing growth and intensifying Americans’ unhappiness with the cost of essentials. After nearly five years of rising prices, concerns around affordability have undercut President Donald Trump’s support in polls and bolstered Democrats in recent elections.

For now, the price of a barrel of benchmark U.S. crude rose 6.3% Monday to settle at $71.23. Brent crude, the international standard, climbed 6.7% to $77.74 per barrel. An increase at that level, even if sustained, would barely lift inflation, economists said.

“While cost-conscious Americans who are dealing with an affordability crisis will not take this increase lightly, such an increase will not materially affect economic growth,” Joe Brusuelas, an economist at RSM, a consulting firm, said.

Stock prices rebounded to show a small gain Monday after initially falling sharply, a sign of optimism that the war will be short-lived.

But a longer-lasting conflict, particularly one that closed down the Strait of Hormuz at the edge of the Persian Gulf, through which roughly 25% of the world’s oil passes, could push oil past that $100 a barrel mark. Gas prices in the U.S. could then reach $3.50 a gallon, up from just under $3 on average nationwide on Monday.

Such price jumps would accelerate inflation in the U.S. and slow growth, economists said.

“Markets are right now really under-pricing the tail risk of a sustained engagement and an operation that does not wrap up quickly, restore travel through the Strait of Hormuz and get everything back to de-escalation and normal in a timely manner,” said Alex Jacquez, chief of policy and advocacy at the Groundwork Collaborative and an economic adviser to the Biden White House.

Here are some ways the war could affect the economy.

Inflation has lingered even as gas prices have fallen

While some measures of inflation have cooled in recent months, the Federal Reserve’s preferred measure has been stuck at about 3% for roughly a year. That is above the central bank’s 2% target, and has occurred even as gas prices fell steadily in 2025.

Should gas prices rise significantly, air fares could also rise as airlines face bigger fuel costs. Shipping would also become more expensive, which could add to grocery prices.

Natural gas prices also jumped Monday, as roughly 20% of the world’s gas travels through the Strait of Hormuz and a liquid natural gas plant was shut down in Qatar. That could raise heating prices in the U.S. Natural gas has already gotten 10% more expensive in the past year, thanks in part to spiking energy usage by data centers powering AI.

Still, economists noted that the U.S. economy is not as oil-dependent as it has been in the past, with most Americans now working in services, rather than manufacturing.

And other factors may help keep oil price increases relatively limited. Rory Johnston, founder of Commodity Context, an oil analytics firm, pointed out that oil inventories were quite high before the conflict, which helped keep prices in check. That’s in sharp contrast to the winter of 2022, he said, when post-COVID supply chain problems had already pushed up oil costs even before Russia’s invasion of Ukraine caused a much bigger spike.

Monday’s increase “is a very minor spike relative to” what happened after Russia’s invasion, Johnston said.

Businesses may pull back amid uncertainty

If the Iran war drags on for months, it could also torpedo business confidence, which could lead companies to invest and hire less, said Kathy Bostjancic, chief economist at Nationwide Financial.

“When there is an injection of new uncertainty into the business environment … that’s a hit to confidence,” she said.

The result could be similar to the impact of Trump’s tariffs, which did not raise prices as much as many economists feared, but did appear to weigh on job gains. Hiring in 2025 was the weakest, outside of a recession, since 2002.

Consumers sour further on economy

Even without a big inflation spike, a major risk for Trump is that Americans sour on his economic leadership.

According to surveys, Americans already have a gloomy outlook on the economy, largely because of the lingering effects of the price spikes of the past five years. Trump’s attempts to portray the U.S. as in a “golden age” have had little impact on those attitudes.

A protracted conflict in Iran that raised gas prices would likely make it worse, Jacquez said.

“People generally don’t think that President Trump is focused on the things that they are focused on,” Jacquez added, “and what they want him to be focused on is the price of groceries. What they think he’s focused on are things like tariffs and foreign policy.”

AUSTIN, Texas (AP) — A gunman wearing clothes with an Iranian flag design and the words “Property of Allah” killed two people and wounded 14 early Sunday at a Texas bar, a law enforcement official told The Associated Press. The FBI is investigating the shooting, which erupted a day after the U.S. and Israel launched an attack on Iran, as a potential act of terrorism.

Police in Austin shot and killed the gunman, who used both a pistol and a rifle to carry out the attack, police said.

The shooting happened outside Buford’s Backyard Beer Garden just before 2 a.m. along Sixth Street, a nightlife destination filled with bars and music clubs and only a few miles (kilometers) from the University of Texas at Austin.

Nathan Comeaux, a 22-year-old senior, had spent the evening there with friends and said the bar was “full of college students, probably mostly UT kids, shoulder to shoulder, hundreds just enjoying their nights.”

The suspect drove past the bar several times before stopping and shooting from the window of his SUV at people on a patio and in front of the bar, according to Austin Police Chief Lisa Davis.

He then parked, got out with a rifle and began shooting at people walking along the street before officers rushed to the intersection and shot him, Davis said. Three of the injured were in critical condition Sunday morning, she said.

The gunman was identified as 53-year-old Ndiaga Diagne, the Department of Homeland Security said in a statement.

A student witnesses the gunfire

Comeaux had left the bar to grab pizza at a food truck across the street about 10 minutes before the first gunshots were fired. No one around the pizza truck understood what was happening, he said, with some thinking the noise was fireworks or a loud motorcycle.

Comeaux said he hid behind a bench for about a minute before getting out, and he saw police officers running toward the scene. He pulled out his phone to begin recording. That’s when more shots rang out. Comeaux said he saw the suspect turn his gun on police before officers shot him.

He said he knows someone who was shot and guessed that many other UT students do as well.

“The UT community has definitely been majorly affected by this,” he said.

FBI says attack may be terrorism

Authorities haven’t provided a clear motive for the attacks but found “indicators” on the gunman and in his vehicle leading them to look into the possibility of terrorism, said Alex Doran, the acting agent in charge of the FBI’s San Antonio office.

“It’s still too early to make a determination on that,” Doran said Sunday morning.

Diagne first entered the U.S in 2000 on a B-2 tourist visa and became a lawful permanent resident six years later after marrying a U.S. citizen, according to DHS. He became a naturalized U.S. citizen in 2013, the department said. Diagne was originally from Senegal, according to multiple people briefed on the investigation who spoke on the condition of anonymity because they were not authorized to publicly discuss the investigation.

The White House said President Donald Trump had been briefed on the shooting.

Texas officials weigh in

Texas Gov. Greg Abbott warned that the state would respond aggressively to anyone trying to “use the current conflict in the Middle East to threaten Texas.”

University of Texas at Austin President Jim Davis said on social media that some of those affected included “members of our Longhorn family.”

“Our prayers are with the victims and all those impacted,” said university President Jim Davis.

The entertainment district has a heavy police presence on weekends, and officers were able to confront the gunman within a minute of the first call for help, Davis said.

Austin Mayor Kirk Watson praised the fast response by police and rescuers.

“They definitely saved lives,” he said.

The scene the following evening was quiet in the typically bustling entertainment district amid downtown Austin’s hills and vintage homes, including that of the governor, whose residence is just blocks away.

Police had taped off several square blocks around Sixth Street, while local police and federal agents, including ATF agents were at the site, according to Austin police serving as sentries.

Unmarked law enforcement vehicles were coming and going, as were firetrucks. Bystanders and news reporters and camera crews stood at the corners outside the yellow tape, trying to catch a glimpse of the activity.

There have been at least two other high-profile shootings in Austin’s Sixth Street entertainment district within the past five years, including one in the summer of 2021 that left 14 people wounded. Although this weekend’s shooting doesn’t meet the definition of a mass killing, there have been five of those so far this year.