Tax refunds and AI investment help US economy absorb high oil prices

The release of the US employment report later this week will serve as a test of whether the economy remains resilient enough to keep the Federal Reserve’s monetary policy on hold, or whether a softening labor market could revive the case for interest ​rate cuts that the war with Iran has all but buried.

Solid economic growth and concerns about war-driven inflation have left markets expecting no rate moves this year, a sharp change ‌since January, when fed funds futures traders were pricing in two 25-basis-point cuts in 2026.