Summary

• For lower- and middle-income US households already contending with stagnant real incomes and rising consumer credit delinquencies, the energy shock is compounded by tax relief that may be less impactful than many hoped.
• The increase in oil prices, while sharp, has been contained relative to the magnitude of the supply disruption.
• The energy shock will only exacerbate the K-shaped trends that have characterized US growth over the past few years.

Even in the event that the Middle East conflict eases and shipping resumes as usual through the Strait of Hormuz, it would likely take time for the global economy to normalize after one of the

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