Inflation & Real Economic Growth Update

My guess is the U.S. economy will suffer only a mild and temporary rise in inflationary pressures, but real economic growth may weaken more and for longer than most now appreciate.

Since U.S./Iran hostilities are currently on a temporary (?) pause, I thought it would be a good time to consider the economic outlook for the U.S. economy. How challenging does the Federal Reserve’s dual mandate -- both inflation and growth – appear currently and what does it imply about the financial markets. Particularly, when considering that although potential geopolitical volatility is probably not yet over, there does appear to be desire from both sides of the conflict to find a mutually satisfying off ramp.

Although there will still probably be some potholes along the way, my current guess is an end to the current turmoil will likely be achieved during the next few weeks. If this proves correct, inflationary fallout, although noticeable for a couple months, should be minimal. However, it may take considerably more effort to ensure an adequate pace of real economic growth during the balance of 2026.

What follows is a narrated pictorial of the current inflation and growth environment within the U.S. economy and some speculation on what may be required from policy officials in the coming months and how the financial markets could respond.