Financial markets are too pessimistic about how the Iran war will affect the U.S. economy. Yes, oil prices have surged, volatility has returned to global equity and commodity markets, and many commentators are warning about either a recession or a long period of stagflation. But these fears are misplaced.

The U.S. economy of today should weather the storm of the Iran war. The United States is a net exporter of oil and natural gas. Domestic oil and gas companies are generating many billions of dollars in profits from the sharp rise in oil and gas prices. Excess profits from the war could be as high as $63 billion. Those profits will be recycled back into the economy. More drilling for oil and gas will take place. Additional jobs will be created. A portion of the additional profits will be returned to shareholders, who will then invest in new profitable ventures. Capital spending will increase. The oil and gas sectors will emerge from the Iran war with strengthened balance sheets and higher production levels. U.S. energy producers will gain share in global oil and natural gas........

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