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The US has been surreal this year. Here’s my rundown of how the major events in the US this year have affected the global economy
A rundown of the impact of major US events in 2026 on the global economy

In a nutshell: The US story this year is “sticky inflation + higher rates for longer + tariff swings + Middle East energy shocks + AI leverage unwind + out-of-control fiscal debt.” These six forces are transmitted globally through five channels— the dollar, Treasuries, trade, energy, and capital markets—leaving the world in a state of relatively tight liquidity, pressured risk appetite, and wi

Hard prerequisites for rate cuts (the Fed will not cut rates solely for the stock market)
1. Core inflation (core PCE, core CPI) must decline steadily and consistently, with month-over-month readings stably falling to 0.2% or below, confirming that inflation stickiness has broken rather than reflecting a one-month dip;
2. The labor market must cool significantly: wage growth eases and unemployment rises, breaking the “wages–services inflation” cycle;
3. Oil prices must stop rising persistently, with no new geopolitical supply shock pushing up the energy component;
4. It cannot be just a slight

Inflation is not a one-off, rapid decline, but a sticky downward trend with repeated fluctuations: “easy to rebound, hard to fall quickly.” Baseline scenario: Overall CPI will gradually decline, but core services (rents and labor-related costs) are highly resilient, making it difficult to return to the 2% target in a short time. The Fed’s pace of rate cuts will continue to be delayed.

I. Downward forces restraining inflation (positive)

1. Oil prices are the biggest variable: Current oil prices include a geopolitical risk premium. If tensions in the Middle East ease and OPEC+ increases produc

Current situation: Inflation is hotter than expected, oil prices are elevated due to geopolitics, leverage in the AI sector is unwinding, and the Fed is hawkish, with rate hike expectations largely priced in.
Potential positives (ranked by certainty)
1. Oil prices retreat: If geopolitical tensions ease, falling oil prices could quickly bring down CPI and reduce pressure to raise rates
2. Inflation has natural channels for easing: tariff refunds, AI-driven cost reductions, and a recovery in household income
3. Negative news is fully priced in: Rate hike expectations are already priced in; as lo