Nobel laureate Paul Krugman warns that the US-Iran conflict could be the 'straw that breaks the camel's back' for an already fragile American economy. The economist points to mounting pressures including President Trump's tariffs, restrictive immigration policies, and financial stability concerns that mirror the shadow banking risks that triggered the 2008 crisis.

Krugman highlights how the military escalation has injected fresh uncertainty into markets already rattled by AI concerns and potential job losses. He notes that the Trump administration has provided no clear plan or timeline for the conflict, suggesting the Strait of Hormuz could remain closed for weeks, keeping oil prices elevated and adding economic strain.

The economist argues this isn't a war of choice but rather a 'war of whim' lacking strategic planning. He joins fellow economist Mark Zandi in warning that the combination of existing economic stress points and the new conflict could push the US into recession, creating what he calls a dangerous economic scenario.