NEW YORK – The ongoing conflict involving the U.S., Israel, and Iran is taking a heavy toll on businesses, with growing costs and a murky economic outlook. Many experts anticipate that the coming months may bring a slowdown in hiring and investment.
In a recent survey conducted by the National Association for Business Economics, nearly 50% of American business economists reported that the conflict has adversely impacted their operations. The report, released on Monday, highlighted rising energy prices as a primary concern, affecting 54% of respondents. Additionally, over two-thirds noted an increase in material costs over the past three months, marking the highest level recorded since July 2022.
The conflict, which ignited with U.S. and Israeli military actions on February 28, has triggered a global energy crisis. The ongoing standoff between Washington and Tehran, particularly in the Strait of Hormuz, has driven crude oil prices upwards, causing a ripple effect that impacts companies and households worldwide. Rising fuel costs are inflating transportation expenses, further burdening businesses. Meanwhile, disruptions in the supply of essential items, such as fertilizer, are exacerbating the situation.
As businesses grapple with these challenges, consumers are increasingly bearing the brunt as higher costs are transferred to them, extending beyond the immediate impact of rising fuel prices.
According to the NABE survey, 48% of respondents, including economists from various sectors, have passed on at least some of these cost increases to customers—down from 60% in January. However, 16% of those surveyed now anticipate raising prices over the next six months, while none foresee reducing them.
Despite these pressures, many businesses report robust sales and a stable profit outlook. This sentiment aligns with the general mood on Wall Street, where impressive earnings from tech giants to major oil companies have recently propelled markets to near-record highs.
Still, only 13% of the NABE survey’s respondents said they expect their profits to rise in the near future. NABE says that’s the lowest share it’s seen since 2023.
Employment and spending could see more impacts soon. Nearly a quarter of NABE survey respondents said they plan to scale back investment and hiring in the next six months.
“Sales over the past three months were steady, but materials costs increased and profit margins declined,” Martha Moore, chair of the NABE’s survey, said in a prepared statement — noting that expectations had “softened” across several indicators, while the outlook for prices continues to accelerate.
Moore, who is also chief economist and managing director at the American Chemistry Council, pointed to rising recession concerns. Half of the survey’s respondents see a more than one-in-four chance the U.S. falls into a recession within the next year, up from 44% of respondents who projected such a likelihood in January, NABE found.
