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How might changes in the labor market and oil prices affect our economy and daily lives?

The 1970s oil-shock playbook needs an update: The inflation costs remain, but the employment risks appear far smaller than they did 50 years ago. Why it matters: As the Iran war continues, there are early signs of renewed strength in the labor market. If energy disruptions pose less of a risk to jobs, the challenge for central banks shifts from managing stagflation risks to guarding against renewed price pressures. That's the takeaway from new Federal Reserve Bank of Boston research that finds an oil shock the size of what the Iran war has produced would push inflation materially higher while having essentially no effect on national employment. What they're saying: "The U.S. economy's vulnerability to oil shocks has not been eliminated, but rather reconfigured," economists wrote in the report. "Oil shocks may now pose less of a challenge for monetary policy, allowing policymakers to focus more on the greater risk to inflation." Driving the news: The researchers estimate that the U.S.-Iran conflict generated a 33% oil price shock — a magnitude that is historically significant, though not unprecedented. The U.S. economy is now structured differently than past energy crises, allowing it to absorb a shock of that magnitude with far less damage to national employment.But with a smaller hit to growth and employment, there is less downward pressure on prices to counteract rising energy costs.The Boston Fed estimates that if an oil disruption like today's hit during the mid-1970s, it would lift the Personal Consumption Expenditures Price Index by 2.2 percentage points and reduce national employment by 1.8 percentage point. What to watch: The oil shock is estimated to create relative winners and losers across the country, with oil-producing states faring better than oil-importing regions — differences that can leave an economic mark for as long as two years after the initial hit. The Boston Fed estimates that employment growth in Texas would be roughly 1.7 percentage point h