Eric Fine recently joined ABC News In-depth to discuss the current outlook for the global economy and the impact from the escalating conflict in the Middle East. The full interview can be accessed here. Highlights include:

Stagflation Risk Is Back on the Table (4:03)

The U.S. economy is facing a growing risk of stagflation—a toxic mix of slowing growth and stubborn inflation. Long-term inflation expectations have begun to creep higher, fueled by persistent wage pressures, geopolitical fragmentation, and structurally higher energy costs. At the same time, the re-emergence of tariffs as a policy tool introduces an unpredictable new inflationary force. Unlike past cycles, this inflation isn't just cyclical—it's structural. And it’s colliding with a late-cycle slowdown, increasing the risk of stagflationary conditions that are notoriously difficult to manage.

In this environment, the likelihood of a recession in the U.S. is increasing and investors should look to diversify away from credit spreads and U.S. assets.

U.S. Exceptionalism Is Fading—Emerging Markets Are Rising (7:05)

For decades, the U.S. enjoyed a unique combination of economic dominance, policy credibility, and reserve currency strength. But that aura of exceptionalism is being tested by rising policy uncertainty at home. Meanwhile, emerging markets—once dismissed as volatile and unpredictable—are increasingly seen as anchors of global growth. Countries like India are benefiting from demographic tailwinds, pro-growth reforms, and a more multipolar energy and trade landscape. The dollar and U.S. Treasuries will retain their central role, but their monopoly on global safe-haven status may be over.

Middle East Tensions Reshape the Energy Map (8:09)

Escalating conflict in the Middle East remains a wild card for global markets. While the U.S. economy is exposed to higher oil prices through inflation and consumer sensitivity, many oil-exporting nations are set to benefit. At the same time, large emerging markets like India are quietly insulating themselves by securing discounted Russian crude—locking in favorable energy terms and enhancing their competitive position. The result: greater divergence between winners and losers in a bifurcated energy market.

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