Energy costs are climbing, but don’t expect an instant shock to the economy

The war in the Middle East has pushed oil and gas prices up, yet Federal Reserve watchers say the real impact on everyday prices will take time. New York Fed chief John Williams told Fox Business that the economy might feel the squeeze in months or even a year, not right away. That delay matters because policymakers need to decide whether to raise interest rates again before the full effect shows up in paychecks or store shelves.

Two big worries sit on the table: higher prices could pinch household budgets, while slower growth could cool hiring. Williams calls it a balancing act. Last year’s rate hikes already gave the Fed a head start, he argues, so the system isn’t starting from scratch. Still, the moment feels trickier than usual—rising energy costs could fan inflation, yet a sharp pullback in spending could tip the economy into a slump. On the jobs front, hiring has stayed cautious: companies aren’t laying off much and aren’t rushing to fill slots either. That steady pattern keeps unemployment low, at least for now. Williams sees no urgent need to change course, even though private credit trouble in other parts of the market is getting attention. He sees those issues as isolated, not enough to topple the whole financial system.

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