Kevin Hassett noted on Face the Nation yesterday:
Oil Futures in War
1 Reply
Miran’s Next Vote
Polymarket reports betting that Stephen Miran will dissent with 98% probability, up from 89.1% on the eve of the Iran war. To me, the interesting question is not whether he dissents, but how he justifies his vote (does he still believe that r* has declined?).
Hassett on the Economic Impact of the US-Israel-Iran War
On Face the Nation, on timeline, impact:
The Oil and Energy Intensity of US GDP
Possibly one factor in the impact of oil shocks (although Blanchard and Gali (2007) place greater weight on greater wage flexibility and central bank credibility):
Instantaneous PCE Inflation with Nowcasts/Tracking
Goldman Sachs tracking ticks higher core PCE inflation for February. The Cleveland Fed’s core nowcast imply lower instantaneous inflation for February and March.
Towards Correction?
Most quick assessments of the impact of a continued US-Israel/Iran war work of reduced form responses to oil shocks. I’m not sure how equity market responses, quantitatively, fit in. However, I suspect that higher uncertainty and perceived risk may prove the catalyst for a sustained correction.
Pre-War/Conflict/”Excursion” GDP, Core GDP, and Nowcasts
2025Q4 2nd release, GDPNow, and Survey of Professional Forecasters:
Business Cycle Indicators: GDP Growth Downshifts, Consumption Slows, Downside Surprise
Q4 GDP growth halved, Q4 consumption undershoots consensus by nearly half percentage point (ann’d):
Probability of 2 Qtr Negative Growth in 2026 at Post-Strike High
From Kalshi:
Uncertainty Regarding Trade Policy Remains High
Most recent data (last available Caldara et al. TPU at 3/6):