America at 250: The Case for Confidence
“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.”
—Peter Lynch
Although there is currently an unsettled and unsettling conflict in the Middle East, elevated oil prices and stubborn inflation, it is also true that the United States is celebrating the 250th anniversary of the Declaration of Independence on July 4, 2026. This is more than a birthday. It is a moment to remember what this country has been through, what it has overcome, and how often it has emerged stronger than before. America250 describes the anniversary as an opportunity to reflect on the nation’s past, honor the contributions of Americans, and look ahead to the future we want to create. In this uncertain environment, that framing fits especially well. (America250)
From its founding, the United States has faced difficulty. The country began as a small, fragile republic with war debt, uncertain credit and an undeveloped economy. Since then, it has endured the War of 1812, the Civil War, financial panics, the Great Depression, two world wars, the Cold War, Vietnam, the oil shocks of the 1970s, the 1987 market crash, the Gulf War, 9/11, the Global Financial Crisis and the COVID shutdown. Each one of those moments felt and was frightening at the time. Each raised the question of whether America’s best days were behind it. And, each time, the country found a way forward.
The American economy has never moved in a straight line, but, over time, it has moved ahead. While the NBER’s business-cycle work reminds us that recessions are a recurring part of our economic life, it also shows that expansion is the normal state of the economy and that most recessions are brief. The downturns matter and are painful in the moment, but over the long term the country has progressed. (National Bureau of Economic Research)
The Great Depression remains the most sobering example. Federal Reserve History describes it as the longest and deepest downturn in the history of the United States and the modern industrial economy. Banks failed, unemployment soared and confidence collapsed. Yet even that terrible period eventually gave way to reforms that strengthened the financial system and led to a postwar boom that helped make the United States the world’s dominant economic power. The country did not avoid suffering. It adapted, rebuilt and improved. (Federal Reserve History)
After the Yom Kippur War and the Arab oil embargo in 1974, oil prices nearly quadrupled, rising from $2.90 per barrel before the embargo to $11.65. Inflation was already high, confidence was weak and the economy was far more dependent on oil than it is today. That combination produced one of the most difficult investment environments in modern history, but even that environment ended after the Federal Reserve substantially raised interest rates in 1979 and broke the high inflation of the 1970s. (Federal Reserve History)
Today oil still matters. Higher energy prices hurt consumers, squeeze businesses and can keep inflation higher for longer. Because the Strait of Hormuz is such an important shipping route, any disruption there must be taken seriously. That is real risk. If oil prices stay very high for a long time, the pressure on consumers, inflation and the Federal Reserve would grow. The BEA reported that the March 2026 PCE price index rose 3.5% from a year earlier, with core PCE up 3.2%, both still above the Fed’s long-term goal. Energy shocks become more dangerous when they feed into broader inflation and force interest rates to remain higher for longer. (Bureau of Economic Analysis)
But the structure of the world economy is different now. The United States and the global economy use far less oil to produce each dollar of output than they did in the 1970s. The World Bank notes that oil intensity, the amount of oil required to produce one unit of GDP, declined from 0.12 tons of oil equivalent in 1970 to 0.05 in 2022. That does not make the current oil shock painless, but it does make it more manageable than the shocks that hit the economy half a century ago. (World Bank)
The U.S. economy is also more diverse and more innovative than it was in the 1970s. It is less dependent on heavy industry and more driven by services, technology, health care, data, software and intellectual capital. Reuters recently made a similar point, noting that equity markets have been more resilient than many expected because oil plays a smaller role in the economy than it did in earlier decades. (Reuters)
That resilience is visible. The U.S. economy grew at a 2.0% annual rate in the first quarter of 2026, with gains in investment, exports, consumer spending and government spending. Growth has slowed in places, and higher energy prices are a burden, but the economy has not collapsed. (Bureau of Economic Analysis)
The current conflict is dangerous and there is no guarantee of a quick or easy resolution, but history suggests that when the economic pressure becomes too great, the world usually finds a way to adjust. In 1990, after Iraq invaded Kuwait, oil prices jumped, markets fell and investors feared the worst. But once the conflict became more contained and the path toward resolution became clearer, oil prices eased and markets recovered. Today’s situation is different in many ways, but the basic lesson is useful: severe geopolitical shocks can be disruptive without permanently changing the direction of the American economy.
There is another reason for optimism, as summarized above: over the last 250 years the country’s record is not one of perfect calm but it is a record of renewal. America has moved from agriculture to industry, from industry to services, from services to technology, and now toward an increasingly data-driven and innovation-driven economy. Each transformation created uncertainty but also opened new opportunities.
Crises creates the urge to do something. Sell. Move to cash. Wait for clarity. Get back in later. The problem is that clarity usually comes after prices have already adjusted. The market usually begins recovering before the headlines improve.
This is not an argument for complacency. War, oil and inflation are real risks. But it is an argument for perspective — investors should not lose sight of the larger American story. For 250 years, the United States has faced one challenge after another and has kept improving. Not perfectly. Not consistently. Not without painful setbacks. But, over time, the country has become stronger, wealthier, more innovative and more capable and that is worth celebrating.
America’s 250th birthday should be a reminder of resilience. The nation has always had problems, but it has also always had people, businesses, institutions and ideas capable of solving them. That has been true through wars, depressions, recessions, energy shocks and market crashes. America has been tested many times before and, over time, it has improved. It is likely to be true again.
