Iran war – A new survey finds nearly half of business economists say the U.S.-Iran conflict is hurting operations, driven by higher energy and materials costs.
Businesses across the United States are finding it harder to absorb the fallout from the U.S. and Israel’s war against Iran, and economists are warning the squeeze may deepen in the months ahead.
In a survey released Monday by the National Association for Business Economics. nearly half of the economists who responded said the conflict has negatively affected their operations.. The survey points to a cost picture that is worsening not only at the fuel pump. but across supply chains as energy. transportation. and other inputs become more expensive.
Energy costs are at the center of the problem.. The report found that 54% of respondents said they’ve been affected by rising energy prices.. The impact is broad enough to show up in day-to-day budgeting. not just energy-intensive industries. as higher fuel costs feed into transportation expenses that businesses rely on to move goods and materials.
Material costs are also climbing sharply.. More than two-thirds of respondents reported steeper material expenses over the last three months. marking the highest level NABE has recorded since July 2022.. That suggests companies are confronting higher prices for the raw inputs they need to produce everything from industrial goods to consumer products.
Several economists tied the worsening cost pressures to the Iran war’s effect on global energy markets and disruptions connected to the wider conflict.. The report describes the conflict, which began with U.S.. and Israeli attacks on Feb.. 28, as having plunged the world into an energy crisis.. Crude oil prices have continued to rise amid Washington and Tehran’s standoff in the Strait of Hormuz. a strategic chokepoint that can influence shipping and supply.
As fuel becomes more expensive, transportation costs rise as well, further straining operating budgets.. The report also points to supply disruptions for other essentials. including fertilizer. which can ripple through downstream industries and make it more difficult for firms to maintain stable input costs.
While businesses are dealing with the burden, the survey indicates that customers are increasingly feeling it too. Consumers are paying more as companies pass higher costs along to shoppers, with the added pressure showing up beyond the immediate sticker shock at gas stations.
According to NABE, 48% of survey respondents said their firms were passing at least some cost increases to customers.. That share is lower than earlier in the year. when 60% reported doing so in January. but the direction is concerning given that the report also found companies are preparing to adjust prices further.
In particular, the survey found 16% of respondents expect to raise prices over the next six months, while none said they plan to lower prices. Even for firms that aren’t changing prices right away, the expectation of additional increases signals that cost relief may not be close.
Despite the mounting cost pressures, many respondents described near-term demand as holding up.. Most said their companies are seeing strong sales now and have stable profit outlooks. a view that aligns with recent market sentiment.. Wall Street has been buoyed by prominent earnings results from companies across sectors. including technology and large oil firms. contributing to markets reaching near-record highs recently.
Yet the survey suggests that profit expectations are not keeping pace with sales.. Only 13% of respondents said they expect profits to rise in the near future. a figure NABE described as the lowest share it has seen since 2023.. That gap between sales conditions and profit expectations reflects how quickly higher materials and other operating expenses can erode margins.
Moore. who chairs the NABE survey and is also chief economist and managing director at the American Chemistry Council. said in a prepared statement that while sales over the past three months were steady. materials costs increased and profit margins declined.. She also noted that expectations had softened across several indicators, while the pace of pricing pressures continues to accelerate.
Looking ahead, hiring and investment may come under renewed strain.. Nearly a quarter of respondents said they plan to scale back investment and hiring over the next six months.. That prospect matters because it signals how cost pressures. if persistent. can affect not just corporate balance sheets but the broader labor market and business expansion plans.
Recession concerns are also rising in the survey results.. Half of the respondents see a more than one-in-four chance the U.S.. falls into a recession within the next year, compared with 44% who projected such a likelihood in January.. The shift highlights how the cost shocks tied to the conflict are increasingly viewed as potential risks to economic growth.
For companies attempting to plan budgets. the combination of higher energy costs. rising transportation and material expenses. and additional supply disruptions creates a difficult environment for forecasting.. Even when demand remains steady. the survey suggests businesses may have limited flexibility to protect margins. which can translate into tougher choices on prices. investment. and employment.
Iran war costs US business economists energy prices material expenses hiring outlook recession risk