Judging by the headlines of recent years, the American economy should have long since slipped into recession. Reality, however, has turned out differently. Despite higher interest rates, an armed conflict in Europe and a trade war, the U.S. economy has shown unexpected resilience.
The key sources of that resilience remain scale, diversification and an ability to adapt. These qualities have allowed the world’s largest economy to keep moving forward even during periods of severe disruption. Now the war with Iran is becoming the next test—it will reveal how large an external shock the American economy can absorb without a meaningful downturn.
After Tehran threatened to attack vessels passing through the Strait of Hormuz, oil prices surged—rising 43% this month alone and exceeding $103 a barrel at the close of trading on March 13.
At the same time, supplies of other key commodities from the Middle East are tightening, including raw materials used in fertilizer production. That raises the risk of another wave of food inflation.
If judged by traditional economic indicators, the many warnings and the broader turbulence of recent years, the U.S. economy should by now be mired in a severe crisis. Yet it continues to rebound from shocks—and even to grow.
In the era of Donald Trump’s second presidency, the global trading order has been shaken, the independence of America’s central bank has been called into question, and a rapid boom in artificial intelligence has created a potential threat to millions of jobs.
Yet the economy continues to expand. Last month the unemployment rate stood at 4.4%. In historical terms that is relatively low—since the 1940s the figure has been higher in 72% of months.
Revised data published Friday showed modest GDP growth at the end of 2025. Nevertheless, the Federal Reserve Bank of Atlanta estimates that growth could accelerate to 2.7% in the first quarter.
Just a few years ago the outlook appeared far more alarming. The Federal Reserve repeatedly raised interest rates, and many analysts were convinced this would inevitably trigger a recession. At the same time, the war in Ukraine sent shockwaves through global commodity markets.
Before that, throughout the 2010s, economists regularly warned of looming crises—whether fears of fiscal collapse, the eurozone debt crisis or flawed economic policy.
The only exception over the past 17 years was the pandemic—it was this shock that pushed the economy into recession. Even then, the downturn proved to be the shortest on record.
All of this reflects the underlying strength and flexibility of the American economy, qualities that become particularly evident in periods of strain.
Today the United States is a net exporter of oil—a situation radically different from the era of earlier wars in the Middle East. As a result, rising energy prices, while increasing Americans’ spending on gasoline and electricity, can simultaneously contribute to higher GDP.
As recently as April, forecasts of recession and surging inflation tied to new tariffs were widely discussed. Yet President Trump backed away from some of the harshest duties, while importers found ways to reconfigure supply chains and spread the additional costs, softening the negative impact.
Even despite the president’s attempts to force the Federal Reserve to sharply cut interest rates, the Fed’s leadership and the courts have so far held the line. On Friday, a federal judge ruled in favor of Federal Reserve Chair Jerome Powell.
The bond market continues to signal confidence in the American economy. The yield on ten-year Treasury bonds stood at 4.28% on Friday. Such borrowing costs would be impossible if investors expected the United States to drift toward an economic system resembling a “banana republic.”
There are deeper reasons behind this resilience. America’s role in the global economy and financial system continues to give the country unique advantages.
Investors around the world seeking to bet on the artificial-intelligence revolution almost inevitably end up buying shares of American companies. Hundreds of billions of dollars are flowing into the construction of new data centers.
Economic growth has also been supported by the Trump administration’s tax reform adopted last year. It increased the budget deficit, yet after its passage interest rates, paradoxically, declined.
This reflects strong global demand for U.S. Treasury bonds, which is directly tied to the dollar’s role as the world’s primary reserve currency.
“If there is one lesson from recent years—especially from the events of the past week—it is that true energy independence means freedom from the volatility of global markets,” said Ben Harris, director of economic studies at the Brookings Institution and a former U.S. Treasury official.
“When you have an economy this large, with this much wealth and this level of diversification, it is very hard to disrupt it.”
That does not mean Americans are satisfied with the state of the economy. Surveys of consumer sentiment show levels of pessimism typically associated with recessions or spikes in inflation.
The main risks remain. The most likely sources of future shocks are tied to two areas—the development of artificial intelligence and geopolitics.
The rapid displacement of millions of workers by generative AI could lead to mass unemployment—at least during a transitional period.
If the war with Iran were to block the flow of oil and gas through the Persian Gulf for an extended period, it could trigger a global recession and a sharp surge in energy prices.
Yet the baseline condition of the U.S. economy—now worth $30 trillion—remains one of steady forward momentum.
It will take more than another round of alarming headlines to bring it to a halt.