What's happened
Nearly half of American business economists surveyed by NABE say the conflict has hurt operations, with energy costs rising and materials expenses up. Firms are passing costs to customers, while recession fears climb and hiring plans slow. The Iran war has sharpened energy spikes amid tensions in the Strait of Hormuz.
What's behind the headline?
Brief
- The NABE survey has seen energy costs rise and materials expenses increase, with many firms reporting the need to pass higher costs to customers.
- Expectations for price increases over the next six months have risen, while profit outlooks have cooled.
- A notable share of respondents project a recession risk within the next year, and many plan to scale back investment and hiring in the near term.
Why it matters
- The energy shock amplifies costs across transportation and production, potentially slowing growth as firms adjust pricing and investment.
- If wage growth remains subdued and demand holds, the economy could stabilize; otherwise, higher costs could dampen hiring and cap consumer spending.
How we got here
The National Association for Business Economics surveyed economists from businesses, trade associations and academia after the Iran conflict began with Feb. 28 US-Israeli attacks. The report notes rising energy costs, supply disruptions (fertilizer and other materials), and a shift in pricing as firms pass higher costs to consumers. Analysts say profits and hiring plans are under pressure as recession risks edge higher.
Our analysis
The Independent reports on NABE findings, with corroborating details from AP News; both outlets note the same core figures: ~50% say conflicts have hurt operations, 54% affected by energy prices, 16% anticipate price rises, 13% expect profit growth, and 25% plan to cut investment/hiring. The NABE chair Martha Moore emphasizes softening expectations across indicators and rising recession concerns, while AP News mirrors those conclusions.
Go deeper
- How long will energy prices stay elevated?
- Which sectors are hit hardest by input costs?
- What does this imply for hiring in the next quarter?
More on these topics
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National Association for Business Economics - Professional association
The National Association for Business Economics is the largest international association of applied economists, strategists, academics, and policy-makers committed to the application of economics.