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Tehran in Chaos, but U.S. Stocks Steady


Why the Power Vacuum Hasn't Hit Home


There’s an unusual situation unfolding in the Middle East right now. Even if the United States gains the upper hand, there may not be a clear path to resolution because there isn’t a stable counterpart to negotiate with. President Donald Trump had reportedly hoped to hold talks this week, but those plans fell through as Iran remains internally divided. That fragmentation, worsened by recent leadership disruptions, helps explain why the current ceasefire has been extended for now.


In the meantime, tensions remain elevated. The United States continues to block Iranian ports, while Iran maintains pressure on key shipping routes like the Strait of Hormuz. Whether this is a temporary pause or a setup for further escalation is unclear. What is clearer is the economic impact. Energy prices, especially oil and gasoline, may stay higher for longer than expected, raising questions about consumer spending and broader market momentum.


So far, though, consumer activity has held up. Retail sales increased 1.7 percent in March, with some of that driven by higher gas prices. Even excluding gasoline, spending still showed solid growth. The Redbook Retail Sales Index also points to strength, with same store sales up 6.7 percent compared to last year, suggesting demand remains steady beneath the surface.


Economic growth has been more moderate. Estimates from the Federal Reserve Bank of Atlanta place first quarter GDP growth at around 1.2 percent. While that is relatively soft, it likely reflects temporary factors like severe winter weather earlier in the year. Broader real time indicators such as the Weekly Economic Index remain stable and have even ticked slightly higher, pointing to a steady overall trend.


The labor market continues to show resilience. Data from ADP indicates consistent job growth, while job postings tracked by Indeed have been rising. Demand for software developers is notably strong. At the same time, ZipRecruiter reports that more recent graduates are finding jobs within a few months of finishing school, a sign that hiring remains active.

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Finally, while higher gas prices are noticeable, they are being offset to some extent by larger tax refunds this year. Gasoline also makes up a relatively small portion of total consumer spending, around 1.9 percent as of February. Taken together, the data suggests that while uncertainty remains high, especially globally, the U.S. economy continues to show a level of stability that may not be obvious from the headlines alone.


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