https://www.wsj.com/economy/economic-tail-risks-in-2026-65187567?mod=finance_lead_pos3
The Economy Is on the Edge. What Could Tip It Over, or Help It Pull Through.
The economy has several vulnerabilities that could erupt as high oil prices bite
Wall Street Journal, April 1, 2026
…
Though recessions have regularly followed spikes in the price of oil, economists don’t expect one this time…Why are economists calm? Adjusted for inflation, $146 is 33% lower now than in 2008. The U.S. economy is less oil-dependent…
The Wall Street firms behind private credit—roughly $1.3 trillion in the U.S., and more than $2 trillion worldwide—are under new pressure. The firms raise money from investors, big and small, and lend it out to companies that historically had a harder time getting bank loans…Wall Street banks lend to private-credit firms, with the loan funds as collateral. … [The regulated banks are lending to the unregulated “shadow banks.” This could threaten the regulated banks as defaults rise and even more so the shadow banks if lenders pull their money as with Lehman in 2008. – W]
The top nine U.S. companies by market capitalization, all tech giants, make up about 35% of the S&P 500 index, and most have bet their futures on AI. … Alphabet, Amazon, Meta Platforms, Microsoft and Oracle are projected to spend more than $2 trillion combined in the next three years, mostly on data centers and chips… [And mostly to each other. – W] AI has begun to look frothy to some, with investment—much of it debt-financed—running ahead of revenue. … Anything that brings the data-center build-out to a halt could kick the props out from under the economy. [And the SPX. – W]…
Credit-card delinquency rates for low- and medium-income borrowers are now higher than at the prepandemic economic peak…A stock selloff could take the wind out of affluent families’ spending, as higher gas prices push lower-income families over the edge. …
A loss of investor confidence in Treasurys could cause interest rates to rise sharply, hitting housing, business investment, and stock markets—and potentially causing a recession…Annual interest costs consume nearly 20% of revenue. Debt as a share of the economy is approaching a record. Social Security will be insolvent in 2032. …
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Some of these risks are relatively short-term (price of oil).
Some are medium-term (AI crash similar to dot-com crash, credit crisis in private lending spreading to banks).
Some are long-term and based on demographic trends that can’t be reversed.
Every METAR needs to choose their path forward based on their personal risk tolerance.
Wendy