President Trump’s extraordinary gamble in attacking Iran and risking a wider conflagration in the Middle East dials up the economic hazards facing the US economy from “very high” to “extreme.” The point is, this new stress compounds a series of other severe pressures already facing the economy, which is now even more unlikely to emerge unscathed.

The immediate danger is a setback in financial markets that gets out of hand. In many ways, some such reversal was already overdue, given the apparent overvaluation of US equities, the weight that the administration’s tariffs had already put on the economy’s back, a still-deteriorating fiscal outlook and a stubbornly persistent rate of inflation. Now let’s add the possibility of spiking energy prices, interrupted trade flows and global political turbulence.

© Bloomberg