While the long-term outlook for economic performance appears robust, recent data suggests that our economy may be grappling with immediate challenges. Key indicators such as economic growth, job creation, and inflation present a somewhat troubling picture for the near future.

Reflecting on 2025, the economy experienced negative GDP growth in the first quarter, but then rebounded impressively, showcasing 4% growth in both the second and third quarters. Yet the momentum faltered significantly in the fourth quarter.

According to figures released by the Commerce Department, GDP growth in the fourth quarter was a mere 1.5%. This may seem weak, but we must consider that the government faced a shutdown for nearly half of the quarter.

Economists from the Trump administration have posited that this shutdown reduced economic growth by approximately 2%. If not for that disruption, GDP growth could have realistically been around 3.5%, aligning more closely with the forecasts provided by many economists.

As we embark on the first quarter of this year, most analysts predict growth will hover in the vicinity of 3.5%. While this signifies healthy growth, it does fall short of the 4% target set forth by the Trump administration.

January’s job numbers initially painted a favorable picture, with the economy adding 126,000 new jobs, signaling growth and a decline in unemployment.

However, the February report reflected a concerning loss of 92,000 jobs. Such a substantial drop could signal a slowdown, yet there are mitigating factors at play. The California nurses' strike alone accounted for 31,000 job losses, and harsh winter weather likely caused temporary layoffs in several sectors.

It’s important to remember that monthly employment data can be volatile. The surge in January's job creation was significant, while February’s losses were pronounced. Averaging both months showcases a net positive in job creation despite the external disturbances from strikes and severe weather.

On the inflation front, the most recent Consumer Price Index (CPI) number indicated a favorable drop to an annualized rate of 2.4%. Nevertheless, the Producer Price Index revealed a 2.9% annual increase, exerting upward pressure on consumer prices and raising potential concerns.

Further complicating the inflation landscape, energy prices, which directly constitute approximately 7% of the CPI, are on the rise again. This uptick is being driven by a combination of factors, particularly diminished oil supplies from Venezuela and the ongoing constraints in the Middle East.  These events have pushed oil prices above $90 per barrel.

Just a year ago, oil was priced around $75 per barrel. Thanks to the pro-energy policies of the Trump administration, domestic oil production surged, lowering prices to below $60 per barrel. Predictive models from the Trump administration anticipate a return to the $50 per barrel range by year-end. However, for the near term, supply constraints are likely to drive energy prices upward, consequently increasing the CPI.

The cause of the Middle Eastern supply disruptions is the Iranian military's aggressive maneuvers to control the Strait of Hormuz, through which around 25% of the world’s oil supply traverses. The Trump administration is taking decisive action to protect this critical supply route.

Efforts have included neutralizing large Iranian naval ships and coordinating with Israeli forces to dismantle missile launch sites in Iran. Additionally, new, cost-effective laser defense technologies are being deployed to counter drone threats against shipping.

Despite these concerted efforts, some oil companies remain hesitant to navigate through the Strait due to insurance liabilities arising from potential losses. In response, Trump has proposed that the U.S. government step in to provide reinsurance, promising that any significant losses borne by insurers would be covered by US. This measure is aimed at restoring confidence in maritime transport.

Even if these maneuvers provide only temporary relief, the current spike in energy prices appears to be short-lived. An operation dubbed "Epic Fury," aimed at decisively defeating Iran, is expected to restore free-flowing oil supplies within weeks. Post-conflict, we can anticipate a sharp decline in oil prices.

While certain indicators may point toward impending economic challenges, by late April, we should expect a return to lower energy costs, diminished overall inflation, and a resumption of the long-awaited high economic growth, complete with job increases.

We may endure some short-term pain, but brighter days are on the horizon, heralding substantial long-term gains for our economy.

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Michael Busler is a public policy analyst and a professor of finance at Stockton University in Galloway, New Jersey, where he teaches undergraduate and graduate courses in finance and economics. He has written op-ed columns in major newspapers for more than 35 years.