Nearly half of American business economists surveyed by the National Association for Business Economics said the U.S. and Israel’s war against Iran has started to weigh on their companies, as the conflict has contributed to higher energy and other input costs, according to findings released Monday.
The NABE report surveyed business economists from businesses, trade associations and academia, and found that 54% of respondents said they had been affected by rising energy prices. It also said that more than two-thirds reported steeper material expenses over the last three months, the highest level NABE has seen since July 2022.
Economists linked the cost pressure to the war’s escalation into an energy crisis. The survey description said the Iran war began Feb. 28, when the U.S. and Israel carried out attacks on Iran, and that crude oil costs have continued to rise amid the U.S.-Iran standoff in the Strait of Hormuz.
As fuel becomes more expensive, the report said transportation costs are eating further into day-to-day operations for businesses. It also cited supply disruptions for other necessities, including fertilizer, as adding strain that can ripple beyond immediate costs at the gas pump.
The NABE report said some of the burden is reaching consumers as businesses look to pass higher costs along. It found that 48% of respondents indicated their firms were passing on at least some cost increases to customers, though that share was lower than 60% in January. At the same time, NABE said 16% of respondents expect to raise prices over the next six months, while none said they plan to lower prices.
Despite the cost pressure, NABE said respondents’ near-term conditions remain mixed: it reported that most said their firms are seeing strong sales and have stable profit outlooks, aligning with recent trading sentiment after earnings from companies ranging from tech to big oil helped markets approach record highs.
Still, NABE said the outlook for profits is not broadly improving. It reported that only 13% of respondents said they expect profits to rise in the near future, which it said is the lowest share it has seen since 2023.
Moore, chair of the NABE survey, said that “Sales over the past three months were steady, but materials costs increased and profit margins declined,” and noted that expectations had “softened” across several indicators while the outlook for prices continues to accelerate, according to the prepared statement included in the report.
The survey also pointed to downside risks for employment and spending. It said nearly a quarter of respondents planned to scale back investment and hiring in the next six months, and it reported that half of respondents saw a more than one-in-four chance that the U.S. falls into a recession within the next year—up from 44% in January.