WANA (May 13) – The Chief Economist of Moody’s Analytics has signaled that the world’s largest economy might lack the resilience to survive the current crisis if the conflict with Iran extends beyond the next three months.

 

While the American economy has historically demonstrated a significant capacity to withstand successive shocks, reports suggest it is currently being worn down by a series of mounting pressures.

 

Economic experts are warning that the accumulation of a trade war with China, rising energy costs, and geopolitical tensions has brought the global economic leader to a critical breaking point.

 

Contrasting Views on Economic Resilience

Recent analysis indicates that the U.S. economy has consistently outperformed recession and growth-slowdown forecasts since the beginning of 2025. President Trump has reportedly utilized this perceived economic strength as a defense against critics, dismissing negative projections as being alarmist.

 

Despite these assertions, data from the field paints a more precarious picture. As energy prices driven by the conflict reached a three-year peak, the President sought to minimize the significance of these negative indicators. He reportedly emphasized the strong performance of Wall Street and characterized the current situation as a temporary phase.

 

The AI Bubble and Structural Fragility

Mark Zandi, the Chief Economist at Moody’s, has countered this narrative by stating that the stock market does not truly represent the real economy. He argued that the current market surge lacks solid fundamental roots and instead resembles a self-sustaining bubble fueled by excessive optimism regarding Artificial Intelligence.

 

Zandi further explained that while AI has prompted massive investment and boosted stock values—thereby increasing wealth and consumption among the affluent—the situation remains unsustainable.

 

He noted that although official figures show a 2% growth in the first quarter and a steady 4.3% unemployment rate, the economy has become exceptionally fragile.

 

Zandi pointed out that virtually no new jobs have been created since the introduction of customs tariffs a year ago, warning that even a slight drop in demand could trigger corporate layoffs.

 

Timeline for Crisis and Political Consequences

Regarding the regional conflict, Zandi suggested that while a swift end to the war might allow the country to bypass a full-scale crisis, a continuation for another two to three months could prove unmanageable.

 

In contrast, economic advisor Kevin Hassett has expressed a more hopeful outlook. He told reporters that gasoline prices are expected to decline before the November midterm elections and projected that economic growth could reach between 4% and 6% by the end of the year.

 

A Narrowing Safety Margin

Claudia Sahm, an economist at New Century Advisors, has taken a more measured stance, observing that while the U.S. economy has been patient, that patience cannot last indefinitely. She remarked that while inflation alone might not be enough to derail the economy, the President could face significant political consequences if fuel prices do not stabilize by November.

 

Sahm also highlighted that the U.S. position as a top oil producer helps buffer the impact of disruptions in the Strait of Hormuz. However, she expressed concern over declining public confidence and the vulnerability of the AI sector.

 

She concluded that the nation’s economic safety nets have become much thinner compared to previous years, leaving the system highly susceptible to risk.