April 21, 2026
Just a few more weeks. That is the message we have heard from the Administration for several weeks. If we assume this will be the case (give or take a few weeks), then we must ask this follow-up question—how long will it take to recover? We understand that it could take years for the recovery of the physical and psychological damage of war. And we are not discounting these extremely severe factors. But our focus in this newsletter is upon the economic factors.
On the surface, the economic effects of war are obvious. We have seen a sharp rise in the price of oil, a concurrent rise in mortgage rates and a drop in the value of the stock market. Additional factors are beneath the surface but are also easy to surmise. The price of oil has the ability to exacerbate the overall inflation rate – including gas, food, plastic and additional commodities. Additional defense spending will escalate government borrowing, which in turn could place additional pressure on interest rates. Higher interest rates have the potential to affect the real estate market.
Will these factors just reverse themselves automatically after the hostilities cease? Not likely. Some factors might rebound quickly, such as confidence in the stock market. Other factors will take more time such as the calming of inflation. Still additional factors might depend upon the conditions which will prevail after the hostilities cease. For example, will shipping lanes reopen promptly and completely? It is not just oil which moves through these conduits. The entirety of these factors will be on the plate as the Federal Reserve meets next week. And because most of these questions cannot presently be answered, most market analysts are expecting the Fed to keep rates steady in a wait and see approach.
Source: Origination Pro
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