Businesses are facing rising costs during the Iran war, and economists
expect more strains ahead
[May 12, 2026] By
WYATTE GRANTHAM-PHILIPS
NEW YORK (AP) — Costs are piling up for businesses during the U.S. and
Israel's war against Iran — and many economists see a bleak outlook,
with some bracing for a downturn in hiring and investment in the coming
months.
Nearly half of American business economists who responded to a survey by
the National Association for Business Economics say that the conflict
has negatively impacted their operations, according to a report released
Monday, and most (54%) say they've been affected by rising energy
prices. More than two-thirds reported steeper material expenses over the
last three months, the highest level NABE has seen since July 2022.
The Iran war, which began with U.S. and Israeli attacks on Feb. 28, has
plunged the world into an energy crisis. Crude oil costs continue to
rise amid Washington and Tehran's ongoing standoff in the Strait of
Hormuz — worsening price spikes for companies and households around the
globe. As fuel gets more expensive, transportation costs are eating
further into businesses' everyday operations. Supply disruptions for a
range of other necessities, including fertilizer, are also causing
growing strain.
Consumers are footing more and more of that bill as businesses pass
higher costs to their shoppers, beyond the immediate sticker shock at
the gas pump.
Nearly half (48%) of NABE's survey respondents — who are economists from
businesses, trade associations and academia — indicated that their firms
were passing on at least some cost increases to customers, which is
actually down from 60% in January. But NABE found that a growing number
(16%) also expect to raise prices over the next six months, while none
plan to lower prices.
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An American flag is displayed over an entrance to the New York Stock
Exchange in New York, Feb. 12, 2026. (AP Photo/Seth Wenig, File)
 Most of the respondents say their
firms are seeing strong sales now and have stable profit outlooks.
That falls in line with what traders are more widely feeling on Wall
Street, where eye-catching earnings from companies ranging from tech
to big oil have helped propel markets to near-record highs recently.
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.
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