But despite all this, one economist argues it could be much worse.
Eswar Prasad, senior professor of trade policy and economics at Cornell University, said Americans can thank the U.S. losing its manufacturing influence (and instead shifting toward a service-oriented economy) as the major reason why it relies less on oil than it did half a century ago.
“The increase in prices that we are seeing at the gasoline pump, for instance, are very visible manifestations of the increase in oil prices,” Prasad told Fortune. “But the overall disruptive effect of the economy is limited by the fact that the U.S. is not the manufacturing powerhouse it once used to be.”
“The disruption to the U.S. production system is really much milder than in many other countries, including advanced economies such as Germany, that are still much more reliant on manufacturing than the United States is,” he said. “So that intrinsically limits the impact of the shock.”
“This war is the real cause of the problems we are experiencing in our own country,” Chancellor Friedrich Merz told reporters last month.
“That is what has kept the U.S. economy buoyant during an otherwise difficult period in the world economy,” Prasad said. “That, I think, continues to make the U.S. economy much more resilient to this or any other shock that might come along compared to other economies.”
Prasad was undeterred by the war’s impact on the American economy compared to its heavily industrialized counterparts: “The U.S., even before the shock, was in the best position to withstand any major global shock.”
