The US economy remains on track to expand at a moderate pace in the final three months of 2019. The outlook is based on a median nowcast for the initial estimate of the fourth-quarter GDP report that’s scheduled for release by the Bureau of Economic Analysis on Jan. 30. If correct, output will rise at or near Q3’s pace, which suggests that recession risk remained low through the end of last year.

Today’s revised data points to a 1.9% increase in GDP for Q4 via the median nowcast for a set of estimates compiled by The Capital Spectator. The projected gain is unchanged from the median nowcast published on Dec. 26. The current Q4 estimate is slightly softer vs. Q3’s 2.1% rise. Given the standard amount of uncertainty that accompanies any nowcast, it’s reasonable to view today’s median projection as more or less anticipating a continuation of the recent growth trend in the July-through-September period.

A similar estimate for Q4 GDP growth is reflected in the recent update of US Composite PMI Output Index. This survey-based indicator, which includes data for the services and manufacturing sectors, is projecting a moderate increase in economic activity, based on the year-end profile. “The overall survey results are indicative of GDP rising at a relatively modest annual rate of 1.8% in December,” says Chris Williamson, chief business economist at IHS Markit, which publishes the PMI numbers.

Although the Q4 data is expected to show that a softer-but-still-persistent expansion continued through the end of 2019, the wild card for this year is the recent surge in geopolitical risk linked to the escalating conflict between the US and Iran. The situation remains volatile: Iran fired missiles at US military bases in Iraq earlier today in retaliation for the death of an Iranian general by a drone strike authorized by President Trump last week.

The economic outlook may be precarious, depending on how the US-Iran conflict unfolds in the days and weeks ahead. The main risk is that the tit-for-tat military strikes in recent days expand into a wider battle that shuts down the Strait of Hormuz, a critical choke point for Middle East oil exports. In that scenario, oil prices could spike higher, creating substantial headwinds for the global economy.

“The broader, strategic situation of all this is awful,” says retired US Army Lt. Gen. Mick Bednarek, who is a former chief of the Office of Security Cooperation in Iraq . “While many of our diplomats are urging restraint, that is simply not Trump’s persona. I am very concerned about where all this is leading.

The future, in short, is uncertain, more so than usual. Based on data in hand, however, the economic outlook still points to a moderate growth trend. Note, however, that a mild downside bias prevails for 2020, based on looking at GDP changes through a rolling one-year lens via The Capital Spectator’s average point estimate that draws on a set of combination forecasts. Today’s projection shows output ticking up to 2.2% in Q4, slightly above the annual 2.1% increase through Q3. For this year, however, the trend is expected to modestly weaken—a downshift that may be exacerbated if the US-Iran conflict worsens.

“While tensions between the US and Iran are likely to continue, our base case does not assume significant and serious escalation as both sides do not have an interest to pursue a broader military conflict,” advises Mark Haefele, global chief investment officer at UBS Wealth Management, in a note to clients.

By that reasoning, there’s still a case for expecting moderate US growth remains for Q4 and early 2020. But this outlook comes with substantial caveats. The economic forecast, in short, remains closely tied to military decisions in Washington and Tehran. Deciding what that means for macro analysis remains a work in progress.