Economic Overview: Dwindling Optimism Driven by War, Tariff Strategy
The S&P 500 fell 4.35% in the first quarter of 2026 and fell 9.78% from its late January high. So far this year we have seen a remarkable shift from A.I. euphoria in 2025 to a risk off environment driven by the war with Iran and the ensuing energy price spike. We began 2026 feeling constructive on the benefits of “The One Big, Beautiful Bill,” but this has given way to a more cynical view of the U.S. economy and an increased risk of a recession. The FOMC, who had cut the Federal Funds rate by 1.75% in 2024 and 2025, is now on the sidelines, and their path forward remains not clear.
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