Seven Reasons Why The Hormuz Crisis Has Not Yet Caused A Global Recession

The global economy is currently defying the oil shock caused by the Hormuz Crisis due to time lags, the AI investment boom, and precautionary buying. However, the risk of recession will spike in June as oil inventories deplete and the delayed impact of $117/barrel oil hits consumer spending.

Key Takeaways

• 1.The global economy has remained resilient to the $117/barrel oil shock so far, with growth forecasts for 2026 holding steady.
• 2.Economic damage from oil shocks typically lags by four to six quarters, meaning the full impact of the Hormuz closure has not yet manifested.
• 3.The US economy is uniquely supported by its status as a top oil producer and the record-high investment in AI hardware and software.

Table of Contents

• An Extended Excursion
• Strong US Economic Data
• Reason #1: Lags
• Reason #2: Lower Oil Intensity
• Reason #3: Well-Anchored Inflation Expectations
• Reason #4: Fiscal Policy Response
• Reason #5: Precautionary Buying
• US Reason #6: AI Boom
• Reason #7: Expectations of Lower Oil Prices
• Investment Conclusions

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