The Iran war is a new test of America's economic superpower

"Based on all the historic measures, all the hand-wringing, all the chaos, the economy should be tanking or tormented. Yet it keeps snapping back, even growing. In Trump 2.0, the global trade order has been upended, the independence of America's central bank has been put in doubt and an AI boom has erupted that threatens millions of jobs. Yet the economy has kept growing throughout, with the unemployment rate a manageable 4.4% last month."

"This all reflects the inherent strength and adaptability of the U.S. economy that becomes most evident at moments of strain. The U.S. is now a net oil exporter, which wasn't true during major Middle East wars of the past. So while the surge in energy prices is bad news for Americans buying gasoline or paying electric bills, it may actually raise GDP growth."

"Earlier this decade, the Federal Reserve raised interest rates repeatedly, which had many analysts predicting recession. The war in Ukraine created deep stress in global commodity markets. Before that, the 2010s were full of warnings that this or that - fear of a fiscal crisis or the Eurozone debt crisis or feckless policy - might create a downturn. The exception proves the rule: It took a global pandemic to generate the only recession of the last 17 years."

Oil prices have surged 43% this month to over $103 per barrel due to Iranian threats in the Strait of Hormuz, while Middle East exports of fertilizer ingredients face disruption, threatening food inflation. However, the U.S. economy demonstrates remarkable resilience despite these pressures and other challenges including trade policy changes, central bank independence concerns, and AI-driven job displacement. Unemployment remains manageable at 4.4%, lower than 72% of historical months since the 1940s. GDP growth is projected at 2.7% for Q1 2025. This pattern reflects the economy's inherent strength, as it has weathered numerous predicted crises over the past 17 years, with only a pandemic-induced recession occurring. The U.S. position as a net oil exporter now benefits GDP growth from energy price increases, contrasting with past Middle East conflicts.

Read at Axios