Front Burner - Flights, food and finance: is economic chaos coming?

Episode Date: April 3, 2026

As the Iran war wraps up its fifth week, the increasing price on fuel and food is wreaking havoc on consumers and businesses around the world. Global markets are also incredibly volatile.Right now, the economic fallout is more pronounced in the Gulf, Asia, and Europe, but analysts say the shockwaves could soon be felt in North America.Liz Hoffman is the business and finance editor at Semafor, and the host of their podcast, Compound Interest.She talks to host Jayme Poisson about how close we are to a full blown global economic disaster.For transcripts of Front Burner, please visit: https://www.cbc.ca/radio/frontburner/transcripts

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Hey everyone, I'm Jamie Poisson. So all week, I kept seeing all of these economic predictions about the war on Iran as the price of oil continues to rise. That shock waves are headed towards those of us who live in the West, that a COVID-style economic disruption is coming. That everything, from plastic wrap to air travel, is in big trouble. So today, I was hoping to try and figure out what's coming, what that could look like, like and if anything would change, should the Strait of Hormuz open back up, like tomorrow. I'm going to talk this through with Liz Hoffman. She's the business and finance editor at Semaphore and the host of their podcast compound interest. Liz also reported for the Wall Street Journal for

almost a decade. Liz, hi, how are you? It's good to have you on the show. Great to be here, Jamie. So there are many signs of strain across the global economy right now. What is the single biggest economic risk right now? I'm more most worried about the second and third order effects of this. The first order effect is, as you said, oil got really expensive and is going to stay there. As you said, you know, the prices had come down a little bit. The market did not like what it heard from the president last night. Thanks to the progress we've made, I can say tonight that we are on track to complete all of America's military objectives shortly, very shortly. we're going to hit them extremely hard over the next two to three weeks.

We're going to bring them back to the Stone Ages where they belong. In the meantime, discussions are ongoing. And so they are back up. But that is sort of a quantifiable risk. We have less oil than we used to. The price is going to be higher. What you want to be worried about are the downstream effects of that. So that's refined oil products like gasoline, diesel.

The U.S., and I think Canada, too, is a trucking nation. Most things you buy got there onto the shelf via a truck. And that service is about to get a lot more expensive. So those cost will we pass through. Refined products like fertilizer, you know, a huge percentage of the world's fertilizer is reliant on the straight of Hormuz in one way or another. And, you know, that's one of those things where, you know, if you or I were going to take a vacation in a few weeks and it turns out jet fuel is more expensive.

And so maybe we'll wait for this war to end when it finally does. And then we'll take it later. That's okay. That's demand replacement. the GDP this year for the country will still be the same. But if you miss a growing season, farmers are going to miss growing seasons, which means that what comes out of the ground months from now is going to be smaller and less productive. And so you're talking about widespread food shortages.

Other refined products, we don't think about it, but helium, which is a huge input into a lot of medical imaging. I don't know how long you want to wait for your next MRI, but those wait times are going to get longer as we end up. This is a supply shock. There is not enough of physical things that we need in the world right now because of this closure of this very small choke point in the Middle East. We're in great shape for the future. The United States imports almost no oil through the Hormos Strait and won't be taking any in the future. We don't need it. We haven't needed it and we don't need it. The countries of the world that do receive oil through the Hormos Strait must take care of that passage. They must cherish it. They must grab it and cherish it. it. They can do it easily. Let's talk a bit about how countries are responding to all of this, starting in Asia,

around 80% of the region's oil imports pass through the strait of Hormuz. That's an enormous amount. Many Asian countries also rely on LNG export shipped through the strait. And we're seeing fuel rationing across the continent. What are some examples of governments or just regular citizens trying to cut down on energy consumption that have stood out to you? Yeah, you've seen governments in Vietnam, Thailand, Cambodia, you know, sending government employees home from work. You know, work from home for a couple of days thinking that the energy grid will be under less strain of people working from their homes. That I think is less true in the West. I don't about you, I have a lot of lights in my apartment, but certainly seems to be true in more emerging economies. You know, governments are encouraging carpooling and cycling as they try to take some mass transit offline. I mean, these are real inputs into economies. I mean, these are real inputs into economies. economies. And I think, you know, one thing that you have to worry about is the U.S. will, you know, be fine.

Our gasoline is more expensive. Same is true of Canada, which has a lot of its own energy. These prices are set globally. But these are big global markets and richer countries will simply be able to outbid and out-compete poorer countries for a fixed supply of things. You know, if and when the straight does start opening up, you're going to see this backlog of tankers. And these are, these are markets. These things are for sale every day and they go to the highest bidder, you know, absence of some contract disputes here and there. So this is, you know, going to be one of those, as all sort of global catastrophes do, it hits weakest nations the hardest. Which countries in your estimation are the closest to some kind of various, very serious rupture here? I think you really have to look at Southeast Asia,

Sri Lanka, Thailand, Vietnam, parts of India. These are nations that are really reliant on imports. To save energy, Sri Lanka has declared every Wednesday. a public holiday. And Myanmar is limiting how often citizens can buy gasoline. In Bangladesh, the energy crisis has forced universities to close. Further east in Thailand, the government is begging workers to wear short sleeves and asking offices to turn down air conditioners in a bid to save power. President of the Philippines, Fernand Marcos Jr. has declared a state of national energy emergency in response to the Middle East conflict.

And what you're in Japan, you know, one thing you never want to be in a global crisis is an island. It is just like you are economically constrained and they import a lot of their energy. I think China is actually an interesting one. It is, it imports a lot of energy, but it is an export economy, basically. Its factories make a lot more stuff than its domestic population, as big as it is, are able or willing to buy. And so, you know, it's probably better off. for the moment, but then if you look down the road and if you end up, you know, people are, the odds of a global recession have obviously, to state the obvious have increased here. And that is really bad for economies like China that rely on foreign consumers to buy their stuff because that stuff is going to be more expensive when you ship it. It's going to be more expensive when it gets to the store. And it's going to hit economies, you know, including in the West where consumer demand is just going to be softer. People are going to feel poorer and they are going to be poorer in some real way. And, you know, one real kind of emotional gut punch is stock market goes down. People feel poorer and they spend less money. So you have at the moment, this is a supply shock, but, you know, it is going to turn into a consumption and demand problem at some point if the mood stays this bad. What does this tell you about how fragile the system is? You know, it's interesting. I think, you know, I wrote a column about this the other day.

You know, when the whatever, what's the right? metaphor. When the light leaves the sun, it hits the earth like 10 minutes later. Yeah. Right. There is a lag. And actually, I think the global economy is living in that lag right now. We have all been, and I've been covering Wall Street finance for 15 years. And we've all been kind of lulled into this sense that sort of everything is priced in instantaneously. Remember high speed, you know, frequency trading and and this idea that markets are super efficient. And that is sort of true in what I might call like financial markets, but physical things move slowly. You know, the last oil that left the Gulf before the war hasn't arrived yet. You know, it'll be in the U.S. in the next, in North America, in the next week or so, it has already kind of petered out in Africa where you're going to see shortages really hit. For reasons around sort of global sea trade routes, Australia's got like a week, a week more than the rest of us.

Like, it's come in there a little bit later. But these things do move slowly. And so we are in like a little bit of a false lull, I think, where things don't feel quite as bad. But it is, this is a cliff, not a, this is an exponential supply shock, not a linear one. Right, right. Just to quote you, if you don't mind, in your recent piece, like I just, this line was very clarifying for me. You wrote, the crisis will arrive slowly and then all at once. Yeah, I think, I mean, maybe just remember, take yourself back to March of 2020.

It's a pretty interesting comparison, I think, because it's on the flip side of the economy. Here is this supply problem. Then it was a demand problem, which is that you have smart people, scientists who are doing the research, who are watching these epidemiological numbers come in and say, this virus is coming. Here are the numbers. Here's what we think it's going to do. And I remember, I live in New York City, walking around thinking, should I get a manicure? All right. And then you shrug your shoulders and you walk in.

And then within two weeks, you can't believe you ever did that. You can't imagine that you'll ever do it again. And that was a demand shock, which is that people stopped buying things all at once. This is the flip side of that. This is a supply shock. The things that people want are for the moment still available. But I'm looking at this data, the shipping data and these factories in Asia that are having to furlough people and turn off the lights for a day a week or something. And you can just see the supply is going to vanish.

And I think it's actually kind of a helpful analogy because it's pretty visceral. People pretty much remember what that felt like, that everything was normal until it wasn't. Yeah. And we are sort of in the mirror image of that right now. You know, you ended up writing a whole book on the fallout from the pandemic. Yeah. I just, do you see any important differences right now? I do.

And not one that's going to make your listeners feel any better, which is that the economic toll of the pandemic could have an arguably should have been a lot worse. And in fact, it wasn't because central banks and governments around the world just threw money at the problem, right? Trillions of dollars in direct stimulus, checks to consumers, in additional unemployment insurance. In the U.S., we had a program called the Paycheck Protection Program, which put, you know, millions of private sector workers on the federal government's payroll for some period of time. You can kind of financial engineer, you could paper your way through certain kinds of problems. It is much hard. to do that with a supply shock. Like literally, we've been sort of tricked into thinking that we live

in a very digital and financial and kind of synthetic world. But this is a shortage of physical stuff that we need. There is no way to financial engineer yourself out of a growing season where there isn't enough nitrogen and there isn't enough fertilizer to get the yields that people expect. And so this is, you know, I think actually governments got pretty good from 2008, you know, then test it again in 2020 at pulling down that particular playbook. Like what do you do when markets are freaking out, when liquidity is tight, and when you have a real demand shock? You have a recessionary problem, which may be where we end up. But in the meantime, no central bank can conjure oil.

And that, I think, puts governments in a really tough spot. So to the extent you're looking for governments to step in here, I don't know exactly what they would do. You know, we have a strategic energy reserve in the U.S. And Canada has a lot of oil that can be put onto the market. But again, that's finite. And on some level, you're just, you're pouring it into a hole. If journalism is the first draft of history, what happens if that draft is flawed? In 1999, four Russian apartment buildings were bombed, hundreds killed.

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You know, I just wonder if you could talk to me a little bit more about what Europe is facing here. This is its largest oil supply disruption in history. They are a lot less dependent on the Middle East for energy than Asia. But what's the impact that we're seeing across Europe? Yeah, less than Asia, but more than the West. And, you know, they've already had their energy shock from Russia, right? I mean, if you go back to 2022, right, that's when Russia invaded Ukraine. You saw fuel prices in central and eastern Europe just skyrocket.

These are sort of pipelines that got shut off. Europe is now scrambling to reduce its dependence on Russian energy. The price of gas was already high before the invasion. Now that Russian soldiers are in Ukraine, prices have spiked again. Natural gas now costs 10 times more than at the start of 2021. And so on some level, maybe they have that they're slightly better prepared. But to step back, I mean, Europe just had economic problems for years. You know, 10, 15 years ago, the U.S. and the Eurozone were roughly the same size to

economies, and they've just massively diverged. There's a real growth problem in Europe, mostly driven by problems in its sort of industrial heartland, which is Germany. And they have tried to sort of grow their way out of it. But they, you know, they are sort of fundamentally fragmented. They don't have the kind of cross-border connectivity you need to have like a truly regional economy. And they have real political problems. I think every, I think almost every government, you know, major government in Europe has collapsed at some point in the last two years. They have real polls from the populist right. And those are not going to get any quieter when there's lines for gas, right?

This is a, you know, a real politically dicey moment for a lot of the West, but Europe is just, it is pushing on an open door there. The chokehold on the Strait of Hormuz is not just affecting fuel. Important components for fertilizer, essential for crops, are also being held up. It's driving up costs for farmers with some now questioning whether they can afford to plant all their fields. If they don't, food shortages could hit Europe by September. I know you've been talking about North America

kind of throughout this conversation, but I do wonder if you could expand on what you think the potential impacts could be or the worst case scenarios here. Yeah, look, Canada has a lot of energy. You know, I think when you look at North America in particular, because I've been getting a lot of questions, well, if we're all energy independent,

Why is gas prices? Why are gas prices so high? And the answer is that prices are set globally. Like, the global oil market is one that Donald Trump is finding he actually cannot bully. Like, we have a lot of it. We will have access to it. But a lot of the energy that's produced in North America is cooled and exported as LNG, right, from the Gulf of Mexico. A lot of it's refined domestically into other things. But the price is set globally. And so if you are looking for, well, wait, we have a lot of energy, as Canada does too. that is not going to save you at the pump. We'll see. Canada, I actually think, is helped by it, has a very strong domestic investment economy. You have particularly these big pension funds that play a huge role in funding large portions of the economy. And, you know, you have a prime minister who has actually sort of uniquely been a foil for Donald Trump. Mark Carney has shown like a bit of backbone and certainly a lot of flair in doing so. But, you know, look, global problems hit everyone.

And we talked earlier. They're going to hit weaker nations first. But no one is going to come out of this unscathed. Is there anyone who comes out of this stronger or better? You know, it's a unifying moment. It's going to sound weird. But it is perhaps a unifying moment for the Gulf, you know, which has been attracting huge amounts of Western capital.

So the bare case for the Gulf is that all of these sort of Wall Street suits who came in over the last five or ten years really attracted by this oil money that the UAE and Saudi were throwing around and made these big investment dollars to spend are going to say, oh, wait, I forgot that this place has been violent and volatile for hundreds of years, like, no thank you. I do think there is a flip side, which is that the region has always kind of had these sort of internal rivalries and you're starting to see them coalesce. And so I think if the war ends fairly soon and Donald Trump last night put a vague kind of rolling three week clock on the whole thing, I do think this could be a clarifying moment for the Gulf, particularly if it ends with sort of more

normalized relations with Israel and closer ties to the U.S. We've not yet seen any of the Gulf militaries really join the action. But, but, you know, the Gulf military's really join the action. But I think that this is sort of a generational moment, particularly for Saudi Arabia and the Emirates. And what about different industries? Like, who is quietly benefiting here? The winner for the moment is companies who make electric vehicles. We've seen, you know, sales spike and, you know, interest from car buyers in electric vehicles. So that's one.

And that probably ultimately benefits China, which makes the best and the cheapest EVs, even though they are. actually, we're quite jealous of you. Apparently, they're available in Canada, coming soon to Canada, but it's still excluded from the U.S. market. Not many, though, still. I think we're pretty jealous of Mexico and many countries in Europe. No, it's fair. It's interesting. Yeah, and I feel like some Americans are going to be in Toronto and a B.Y.D. Robotaxy being like, wait, why don't we have these? These are great. So, you know, it probably benefits companies in the renewable supply chain, which ultimately is. good for China, could have been good for the U.S. had we not pivoted away from that over the last year or two. There was a moment where, you know, we were building a really strong domestic, renewable supply chain here, and for political reasons, that has kind of gone by the wayside. So anything that doesn't touch oil, I guess, is benefited here. But you have to remember

that it almost doesn't matter because, you know, what's really bad for everyone is a recession. Like, you know, it solves inflation. It gets prices down because no one's buying anything. But it is bad for everyone. And I would struggle to see like a relative winner on all of this. I know you mentioned that kind of vague three-week timeline from Trump. And just what are there going to be the lingering consequences there? Can things go back to the status quo?

This is not as simple as turning a spiket back on and having the water come out. These are really big, heavy things that are stuck in weird places with their anchors in places they don't want to be. Like, there is a real lag to this, and you're talking about months. You know, some also worth saying some energy and oil infrastructure in the region has been damaged. That takes real time to fix, and you can't get crews out to fix it until missile stopped flying. Like there's just, again, these are logistical, physical delays. But we also, you know, look, I'm not a political reporter. I've got colleagues who cover the White House closely.

But, you know, they're puzzled by the fact that we still don't really know what the objectives are here. And what is the bright line for the U.S. to declare victory? There was some reporting, I think earlier this week, that Trump could declare victory without the street being reopened. And then there was some backpedaling on that. And now he's telling Europe to just go in and take the oil as if that were. feasible, but, you know, without clear objectives for what we're trying to accomplish here, I really struggle to see a situation in which the strait reopens anytime soon. And that's to say nothing of what the Iranians actually want. I mean, that is a regime that is in turmoil,

and we'll see sort of where the hardline ends for them. You know, it is hurting their economy, but there's also a world in which they just charge people a lot of money to get through the straight, right? And, you know, they've relaxed some sanctions on other things, right? They may actually be making money on all of this as their, you know, leadership is decapitated in their economy withers. Yeah, if they did start charging to go through the straight, like, what would be the kind of economic domino effect of that? It would benefit countries that can pay. I mean, ultimately, that's what it is. And that's what I'm saying that, you know, these big seismic events tend to exacerbate inequality. You see that the global level, which is that the U.S.

came out of COVID much better than other countries economically, part because we just have a much more kind of dynamic economy. We like to take risk more. So when things are bad, we kind of pile back in before. And so we bounce back faster. But we also have the money to do it. And that's going to be the same thing that happens here. Okay. That feels like a good place for us to end it. Liz. Thank you so much for this. Thank you. Thank you for having me. All right. That is all for today. Front burner was produced this week by Matt Yu Amha, Joytha Shang Gupta, Shannon Higgins, Kevin Sexton, and McKenzie Cameron. Our YouTube producer is John Lee. Our music is by Joseph Shabison. Our senior producers are Elaine Chow and Imogen Burchard.

Our executive producer is Nick McCabe-locos. Thanks so much for listening. Talk to you all next week. For more CBC podcasts, go to cbc.ca.ca slash podcasts.