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Economy is 'Very Resilient' Despite Geopolitical Risks, Says Luzzetti
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April 8, 2026
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7:34Now PlayingMatthew Luzzetti, Deutsche Bank chief US economist and head of US Economic Research, said that the US economy has revealed to be 'very resilient' in the fact of 'abnormal and historic' shocks over the last year.
Luzzetti said that the geopolitical situation points the fed in a more hawkish direction, but it doesn't necessarily overturn a resilient view of the economy.
A growing number of Federal Reserve officials worried the Iran war could further stoke inflation and wanted to make clear following their March meeting that the central bank may have to consider raising interest rates.
Minutes of the Federal Open Market Committee’s March 17-18 meeting, released Wednesday in Washington, showed policymakers wrestled with starkly differing scenarios for the US economy following the outbreak of the Iran war, and the policy reactions that might follow.
Most officials worried a protracted war could hurt the labor market and warrant lower interest rates. At the same time, many policymakers highlighted the risk to inflation that might ultimately warrant rate increases.
Stephen Stanley, chief US economist at Santander Capital Markets, said the minutes showed the committee saw risks rising for both inflation and employment, and wary of what a longer war may mean.
“A protracted conflict, not the baseline, could further exacerbate both of these risks,” Stanley said in a note to clients. “This left the FOMC firmly on the sidelines.”
Officials who expressed more worry about inflation urged their colleagues to consider adding language to their post-meeting statement that raised the scenario of hiking rates under certain conditions.
“Some participants judged that there was a strong case for a two-sided description of the committee’s future interest-rate decisions in the post-meeting statement, reflecting the possibility that upward adjustments to the target range for the federal funds rate could be appropriate if inflation were to remain at above-target levels,” the minutes said. US consumer spending barely rose in February against a backdrop of persistent inflation that’s set to accelerate due to the Iran war.
Inflation-adjusted consumer spending increased 0.1% after stagnating in January, continuing an extended period of lackluster demand, a report from the Bureau of Economic Analysis showed Thursday.
The so-called core personal consumption expenditures price index, which excludes food and energy items, increased 0.4% from January. From the prior year, the Federal Reserve’s preferred gauge of underlying inflation advanced 3%. Spending on goods rose for the first time in three months, driven by a rebound in motor vehicle purchases. Services outlays edged up, fueled by transportation services.
The latest spending figures are consistent with a consumer who has grown more cautious over the last six months amid cost-of-living concerns and a sluggish job market. Real disposable income declined 0.5%, the most in nearly a year, according to the BEA.
Inflationary pressures have mounted more recently as the war drives up the cost of fuels and materials. Some companies have already started to pass along those costs or announced plans to do so. Higher tax refunds helped support spending in February, but the rise in energy prices risks blunting that tailwind in the months ahead.
“When households are in the midst of or are anticipating financial hardship, they pull back on spending in an act of self-preservation,” said Elizabeth Renter, senior economist at NerdWallet, a personal finance platform. “This can drive real changes to the larger economy, in the form of slower growth.”
Delta Air Lines Inc. said it’s “looking to do more” fare increases beyond what has already been levied. And the US Postal Service plans to raise prices by 8% on some packages until mid-January of next year.
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