The economy was already losing steam before the first reports of war with Iran.
That’s the argument from economist Peter Schiff, who says the slowdown didn’t start with the conflict; it simply now has something to hide behind.
“The U.S. economy and labor market were already weakening, and inflation strengthening, before the war with Iran began,” Schiff wrote on X.
He says the timing matters. “Now, as those problems get worse, Trump can blame them on a war he will insist we had no choice but to fight,” Schiff added.
Then came the line that grabbed attention: “Stagflation will be sold as the cost of freedom.”
What Stagflation Means
Stagflation is the worst of both worlds. Prices rise. Growth slows. Hiring weakens. Families feel squeezed from every direction.
Inflation has cooled from its peak, but it remains above long-term targets. Job growth has moderated compared with earlier rebounds.
Wage gains have eased. The economy isn’t officially in recession, but it doesn’t feel strong.
That backdrop is what Schiff says was already in place.
War And Energy Prices
Conflict in the Middle East often hits energy markets first. Oil moves. Gasoline follows. Transportation and shipping costs rise. Businesses pass those increases on to consumers.
If energy climbs sharply, inflation pressures can intensify again, even if underlying demand is slowing. That combination is what results in stagflation risk.
Schiff’s broader point is about timing and accountability. If prices rise and hiring weakens further, he believes the war will become the explanation.
Politics And Principle
Schiff also weighed in on how both parties respond to military action.
“Had Harris won the election, and the circumstances surrounding the war with Iran been identical, Democrats would be rallying around the president, while Republicans would be wildly condemning her actions,” he wrote.
He added, “Putting party loyalty above principle or the Constitution is not a virtue.”
In another post, Schiff questioned the legal process behind the conflict itself.
“The United States is now at war with Iran. However, the U.S. Constitution clearly empowers Congress with the exclusive authority to declare war. If this war is truly just, Trump is legally required to seek congressional authorization before waging it.”
The Constitution gives Congress the authority to declare war, while the president serves as commander in chief.
Modern conflicts have often blurred that line, with military action taking place without formal declarations.
The Economic Narrative
Economic downturns rarely have a single cause. Global shocks, domestic policy, interest rates, and energy markets all interact.
Schiff’s warning focuses less on the data itself and more on how it will be framed.
If growth slows and prices rise at the same time, Americans may be told the pain is unavoidable, the price of national security.
For households, the reason may matter less than the outcome. Higher grocery bills. More expensive gas. Fewer job openings. Slower wage growth.
Whether the U.S. enters a sustained period of stagflation remains to be seen.
But Schiff’s message is direct: the economic weakness didn’t begin with the war, and if it worsens, he believes it won’t be presented that way.
As he put it, “Stagflation will be sold as the cost of freedom.”
IMAGE CREDIT: “Peter Schiff” by Gage Skidmore, via Flickr. Licensed under CC BY-SA 2.0. Image adjusted for layout.