The U.S. airstrike on Iran’s nuclear sites has intensified economic uncertainty as investors brace for possible inflationary fallout, renewed geopolitical tension, and new pressure on the Federal Reserve’s policy path.
The current state of oil prices has analysts warning that increased energy costs will limit household spending power and reduce GDP growth which faces challenges from high tariffs and cautious consumer attitudes. According to Morgan Stanley’s Ellen Zentner the increase in crude prices would reduce the ability of households to spend money.
The markets will focus on Federal Reserve Chair Jerome Powell’s congressional testimony which will include questions about the economic effects of the Middle East crisis. The central bank will determine its future actions based on upcoming inflation data and jobless claims reports.
Economists disagree about whether the conflict will lead to sustained regional stability or additional economic disturbances despite Israel’s positive stock market reaction to the strike. The U.S. economy shows weakening job creation and consumer spending while rising energy prices might reactivate inflation concerns that seemed to fade away.
