US economy grows despite war, says Volpon

The United States economy continues to grow despite the impacts caused by the conflict in the Middle East. This is the assessment of Tony Volpon, columnist for CNN Money, who points to investments in artificial intelligence as the main driver of American economic activity in the current scenario.

According to the analyst, there is a "game play" in the negotiations between the United States and Iran, with each side directing its communication to different audiences.

"The Americans play a lot for the market, trying to reduce the impact on the market of this war that has raged for much longer than anyone expected," he said.

The Iranians, according to Volpon, focus their speech on the domestic audience, signaling that they do not intend to give in to American demands.

Despite the scenario of geopolitical tension, Volpon rules out the possibility of stagflation in the American economy. "The economy is growing strongly," he said.

The columnist highlighted that the most recent indicators, including job creation data, show robust economic activity.

In Volpon's assessment, this performance is mainly driven by investments linked to artificial intelligence.

"It's billions, 800 billion dollars, almost a trillion dollars is being spent right now in relation to artificial intelligence, it's a lot of money", he highlighted.

For him, this significant volume of resources has been enough to offset the negative effects that the conflict could have on the economy.

On the other hand, inflation remains high and there is no prospect of a fall in the short term. "We have no effective horizon for this war to end", he pondered. Given this scenario, Volpon believes that the Fed (Federal Reserve), the American central bank, should maintain a cautious stance regarding monetary policy.

"I think the American Fed and other central banks, including the Brazilian Central Bank, will simply accept these higher levels of inflation and kind of wait and see," he said. According to his assessment, inflation should stabilize at around 3%, without returning to the 2% target in the near future.

When analyzing the oil market, Volpon explained that economic agents have been adapting to the supply restrictions caused by the conflict.

Among the factors that helped contain a more intense rise in prices are the use of alternative routes to the Strait of Hormuz, such as a Saudi oil pipeline that crosses the desert, in addition to the formation of preventive stocks by China.

Still, the analyst warned that the risk of a stronger spike in prices remains. According to him, a significant reduction in stocks, especially in Asian countries, could put international prices back under pressure.

In the political field, Volpon assessed that high gasoline prices tend to generate wear and tear for President Donald Trump and the Republican Party in the US elections in November.

However, he considered that the phenomenon known as gerrymandering - the practice of redrawing electoral districts at the state level - could favor Republicans and limit eventual Democratic gains.

In this context, the analyst showed caution regarding the most optimistic electoral projections for the opposition.

"I have my doubts whether this victory will be as big and devastating as the Democrats are thinking at the moment", he concluded.

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Source: CNN