Economy is 'Very Resilient' Despite Geopolitical Risks, Says Luzzetti

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Deutsche Bank 8.5
Investment Bank $1338.00B
Matthew Luzzetti 9.0

Economy is 'Very Resilient' Despite Geopolitical Risks, Says Luzzetti

ndx

Higher interest rates and inflation pressure from energy/defense spending could weigh on growth-sensitive tech.

wti

Energy prices are just higher than they were before the recent events... energy prices overall... is going to be higher as a result. Infrastructure damage, Strait of Hormuz closure, and ongoing conflict risks.

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4/8/2026 12:37:05 PM	short term down	5 days later	-6.73%	+6.73%
3/13/2026 12:22:23 AM	medium term cautious up	21 days later	+20.22%	+10.11%

yields

Defense spending, fiscal proactivity, and higher inflation will 'raise interest rates, keep interest rates higher'.

Fundamentally, how is the US doing?

speaker1
speaker2

The economy is very resilient, growing at 2%+ despite historic shocks. Labor market stable with unemployment ~4.2%.
Energy shock impacts vary; Chime CEO reported 25% fuel spending rise due to war with Iran.

What does it do when that consumer is hit so hard to your outlook of the US economy?

speaker3
speaker2

Shocks are regressive, hitting lower income more via fuel/food prices/tariffs, but aggregate spending and CapEx remain solid.

The economy is skewed toward higher-income spending; lower income is more fragile in high-rate/high-inflation environment.
Longer war impact: nations rethinking domestic production/security could raise labor costs and inflation long-term.

speaker1
speaker2

Supply-chain resiliency concerns intensify; higher costs feed inflation. Defense spending rises in Europe, fiscal policy more proactive, raising interest rates and inflation.
War may persist with heavy US/Israel presence, affecting economy.

speaker3
speaker2

Energy prices likely higher than pre-war due to infrastructure damage; oil at $150/barrel could wipe out tax-cut benefits and damage growth.

Even if Strait of Hormuz reopens, damage takes time to repair. Higher energy prices lift inflation, keep Fed hawkish, but economy can absorb unless nonlinear effects emerge.
Before war, AI was seen as disinflationary; what did Deutsche Bank find on AI and inflation?

speaker1
speaker2

AI not convinced near-term disinflationary; big investment boom can add upward pressure on energy prices. Over 5 years, equal probability AI is disinflationary or lifts inflation.

Highlights supply-chain issues and investment demand.

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