Energy, War and the Return of Inflation Uncertainty

Northern Trust /

23-03-2026

Northern Trust frames the U.S. outlook with a simple observation: the smoke is visible before the fire arrives.

Escalation in the Middle East is feeding directly into higher energy prices, reintroducing inflation risk just as disinflation was taking hold.
Growth remains intact for now, but rising oil prices are eroding real incomes and tightening financial conditions at the margin.
The Federal Reserve is caught between opposing forces—persistent inflation and softening growth—making policy more reactive than directional.
AI-related investment continues to support business spending, but uncertainty may begin to weigh on future capex decisions.

The key tension is not whether the economy is strong—it is whether it can remain so under rising external pressure. Energy is once again the transmission mechanism through which geopolitics enters macro.

United States of America