July 1, 2025
As we look at the effect of tariffs, the pending tax bill, the jobs report, retail sales, inflation data and a host of other economic indicators, a few weeks ago we received a stark reminder of why the preponderance expert predictions could be for naught. And it was not unusual for that reminder to come directly from the Middle East region of the world. The latest battles between Iran and Israel have the potential to change the world economy in a way that all previous bets are off. Or the battles could quiet down and have no lasting effect.
Whether it is a war, a natural disaster or another surprise occurrence, we are used to weathering abrupt changes in our lives which affect the economy significantly. Certainly, the pandemic was a prime example of such an occurrence. Predictions are typically a shot in the dark, but when you add major unforeseen variables, the exercise can be futile. Just looking at one factor such as oil prices demonstrates the dilemma. On one hand, we could see the Strait of Hormuz closed for a time, sending oil prices skyrocketing. On the other hand, this battle could lead to lasting peace which brings more Iran oil to the markets – quite the opposite.
Meanwhile, we can’t forget about the economic data in front of us. Last week we saw readings on personal spending, the PCE inflation index and more. The big data comes this week in the form of the jobs report. Two weeks ago, we experienced a very weak retail sales report showing that consumers were hesitant to spend. If the jobs picture also weakens, it is likely we will see lower mortgage rates on the horizon, regardless
Source: Origination Pro
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