Current Economic Resilience#
The ongoing conflict in Iran has not yet significantly affected the U.S. economy, according to Wolfe Research. Analyst Stephanie Roth highlights that consumer spending remains strong through April, with a robust first-quarter GDP and early signs of improved hiring trends. This economic resilience is largely attributed to fiscal stimulus from the One Big Beautiful Bill and a surge in investments related to artificial intelligence (AI).
Fiscal Stimulus Impact#
Wolfe Research estimates that the fiscal stimulus bill has provided around $188 billion in consumer support. This includes approximately $35 billion in tax refund checks, which have more than countered the estimated $20 billion to $30 billion burden on consumers from rising gasoline prices. Essentially, the financial aid has helped maintain consumer spending despite higher costs at the pump.
AI Investment Growth#
On the investment front, domestic spending on AI-related projects is estimated to be about $582 billion annually, which represents 1.8% of the GDP. This investment is credited with contributing nearly 25% of the GDP growth in the first quarter. When including imports related to AI, total investment in this sector reaches approximately $770 billion annually.
Emerging Risks#
Despite the current economic stability, Roth warns that risks are building beneath the surface. Three main concerns could threaten this resilience: a sustained increase in crude oil prices by $30 to $35, which could push gasoline prices above $5 per gallon; a slowdown in AI investment; and tighter financial conditions. Roth emphasizes that while the war and high oil prices have not yet severely impacted the economy, the potential for significant damage exists if these risks materialize.