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Despite Headwinds, Economy Remains Resilient

The economy has faced a number of significant headwinds in 2026, most notably the Iran war, which has caused energy costs to spike and inflation to reaccelerate. Core PCE inflation, the Fed’s preferred inflation gauge, increased to 3.4% — the highest rate in three years and well off the central bank’s 2% target.  Despite these challenges, the economy continues to post solid data suggesting that recession risk remains contained. Consumer confidence has improved, but sentiment itself is highly