Expenses mount for companies in the U.S. and Israel's war with Iran - experts foresee grim prospects, preparing for slowdowns in hiring and investment soon

ByWYATTE GRANTHAM-PHILIPS AP business writer

May 11, 2026, 1:42 PM

NEW YORK - Businesses are confronting mounting expenses amid the U.S. and Israel's conflict with Iran - and a majority of economists anticipate worsening conditions, including potential cuts in hiring and capital spending in the months ahead.

Close to half of U.S. business economists surveyed by the National Association for Business Economics report that the war has harmed their operations, per a Monday release, with most (54%) citing higher energy prices. Over two-thirds noted sharper material costs in the past three months, the peak since July 2022 according to NABE.

The conflict, sparked by U.S. and Israeli strikes on February 28, has triggered a global energy crunch. Oil prices climb amid the tense U.S.-Iran impasse in the Strait of Hormuz - intensifying cost surges for firms and families worldwide. Soaring fuel expenses are eroding business operations through elevated transport bills. Disruptions in supplies of essentials like fertilizer add to the pressures.

Shoppers bear much of this burden as companies shift elevated costs downstream, extending past pump price hikes.

About 48% of NABE respondents - economists from corporations, trade groups, and universities - said their organizations are passing some cost hikes to buyers, down from 60% in January. Yet NABE detected a rise, with 16% anticipating price increases over the next six months and zero planning cuts.

Most respondents report robust current sales and steady profit forecasts, mirroring Wall Street's vibe where stellar results from tech giants to oil majors have lifted stocks near all-time peaks.

However, just 13% expect near-term profit growth, NABE's lowest reading since 2023.

Hiring and outlays may face hits shortly. Almost one-quarter of respondents plan to curb investments and staffing in the coming half-year.

"Sales held firm over the last three months, yet materials costs rose and margins shrank," said Martha Moore, NABE survey chair, in a statement - adding that outlooks have "softened" on key metrics as price pressures build.

Moore, chief economist and managing director at the American Chemistry Council, highlighted recession fears. Half the respondents now peg the U.S. recession odds above 25% within a year, up from 44% in January per NABE.