Investopedia Markets News (all except PF)

Shares of Delta Air Lines and other carriers soared Monday.
Credit: Kevin Carter / Getty Images

Key Takeaways

• Falling oil prices reverberated through markets Monday, helping shares of cruise and airline stocks.
• Consumers, who have seen gas prices climb in recent weeks, may see relief in the coming days, experts said.

Airline and cruise stocks are getting a boost today.

Shares of major domestic carriers like Delta Air Lines (DAL), United Airlines Holdings (UAL), and American Airlines Group (AAL) were up 4%, 6.5%, and 5.5%, respectively, in morning trading after President Donald Trump said before the open that he had instructed the Pentagon to postpone threatened strikes on Iranian power plants after "productive conversations" with the nation.

The news led to a pullback in oil prices, lifting shares of companies that depend heavily on fuel. That meant cruise lines, too; both business list fuel as among their top expenses, along with labor. Carnival (CCL), Royal Caribbean Cruises (RCL), and Norwegian Cruise Line Holdings (NCLH) shares rose 7.5%, 6%, and 8.5%, respectively.

Businesses have been eyeing the price of oil, which today fell back to around $90 per barrel, closely. United Airlines last week in a statement said it was preparing for the possibility of a barrel's price staying in the triple digits until well into next year.

"Honestly, I think there's a good chance it won't be that bad," CEO Scott Kirby said. "But there isn't much downside for us to preparing for that outcome."

Consumers, meanwhile, had been watching gas prices rise at the pump for weeks. Some analysts now think they could turn lower in the coming days. Read Investopedia's full coverage of today's markets here.

Gold recently traded at about $4,500 an ounce.
Credit: Getty Images

Key Takeaways

• Precious metal markets took a breather from their weekend tumble after President Trump indicated the U.S. had "good and productive'"talks with the Iranian leadership.
• Gold traded around $4,500 an ounce, and silver at $70, Monday morning.

President Donald Trump seems to have soothed the precious metals market.

Gold had tumbled over the weekend, falling into bear-market territory as it sank to around $4,150 per troy ounce on Sunday, off nearly 25% from its record high. Prices recovered Monday morning after Trump said the U.S. and Iran had "very good and productive conversations" about resolving conflicts in the Middle East. Gold was trading at around $4,500 as of Monday morning, while silver recovered more swiftly; the SPDR Gold Trust (GLD) was recently about flat, while the iShares Silver Trust (SLV) was up about 3%.

WHY THIS MATTERS TO YOU

Global markets are whipsawing following President Trump's latest missive, which raises the prospect of a resolution in Iran that has lifted the stock market. Some Middle East experts, however, are saying the war is far from over.

The pivot echoed price moves across other major asset classes. Crypto markets surged, with bitcoin trading above $71,000 as investors digested the latest news around the war in Iran. What's next, however, remains uncertain, with markets and Middle East experts still harboring questions about whether the Strait of Hormuz might reopen, who will control the trade passageway, and if Israel will agree to a truce.

"There's a lot of uncertainty still, but it's much better for markets than what it looked like just 10 minutes ago," Allianz chief economic advisor Mohamed El-Erian said in an interview with CNBC shortly after Trump's social media post. "The big question for me right now is not only do these talks continue constructively but can you get Israel to buy in as well."

The Trump administration's goals appear to have shifted from regime change to reopening the strait, said former senior Israel defense intelligence officer and analyst Danny Citrinowicz on social media. While a path to a de-escalation has emerged, the "conflict isn't over," he said. "Still, one key question remains—if in five days Iran hasn’t reopened the Strait, it’s unlikely that threats alone will change that." he said.

Meanwhile, the U.S. dollar has retreated, which bodes well for precious metal prices, since gold is usually paid for in dollars, making it more appealing when the greenback softens. A rally in risk assets at large, meanwhile, appears to be putting wind in crypto markets.

Read Investopedia's full coverage of today's trading here.

Tesla CEO Elon Musk told investors earlier this year that Tesla would likely pursue its own chipmaking facility
Credit: Fabrice COFFRINI / AFP / Getty Images

Key Takeaways

• Tesla and SpaceX are set to build a joint chip manufacturing facility, CEO Elon Musk announced over the weekend.
• Musk said the factory will be necessary for Tesla, SpaceX, and xAI to obtain the chips they need.

Tesla could be coming closer to realizing its transformation into an AI powerhouse with plans for a new chip factory.

Over the weekend, Tesla (TSLA) CEO Elon Musk laid out plans for an Austin, Texas "Terafab" to manufacture semiconductors that will be used across the products made by Musk's companies, from Tesla's electric vehicles and Optimus humanoid robots, to SpaceX satellites.

The factory is set to make two different types of chips, Musk said: one designed for the compute needs of Tesla's EVs and Optimus robots, and another high-power chip made for use by SpaceX and xAI in data centers and satellites in space.

Musk said the companies "either build the Terafab or we don’t have the chips," suggesting it will be necessary for Tesla, SpaceX, and xAI to obtain the chips they need.

Why This Matters to Investors

The new chip plant is seen playing an important role in enabling Tesla's AI plans, though it could require billions of dollars and take years to build.

Morgan Stanley analysts last week suggested launching a chip fab could be a "Herculean task" that might cost as much as $35 billion to $45 billion and take years to build. While Musk has not provided a timeline for the Terafab, Morgan Stanley analysts said mid-2028 would likely be the earliest such a facility could be built and start producing chips.

Tesla shares were up about 4% recently amid a volatile morning for markets. Tesla is the only one of Musk's companies that is currently public, though SpaceX is reportedly planning to pursue an initial public offering later this year.

Trump sent a message early Monday that U.S. could be de-escalating the conflict in Iran.
Credit: Shawn Thew / EPA / Bloomberg via Getty Images

Key Takeaways

• President Donald Trump’s announcement that the U.S. had “constructive conversations” with Iran toward ending the war pushed down oil prices and sent stocks rising despite Iran’s immediate denial.
• The reaction highlighted the importance to the U.S. economy of quickly ending the Iran war.
• The conflict has pushed up energy prices, threatening to stoke inflation and drag down economic growth in the U.S. and will worsen the longer the war lasts.

Surging financial markets and cheaper gas could boost the economy if the peace talks President Donald Trump mentioned on Monday materialize.

Trump sent stock futures rising and oil prices tumbling Monday morning when he delayed threats he had made over the weekend to attack Iran’s power plants. Some of those gains were reversed within the hour after Iranian leaders reportedly said no such talks had taken place.

The episode underscored the importance of the Iran war to the trajectory of the U.S. economy. The conflict has kept the crucial Strait of Hormuz closed since Feb. 28, holding 20% of the world’s oil supply bottled up, causing what the International Energy Agency called the “largest supply disruption in the history of the global oil market.”

What This Means For the Economy

The drop in oil prices could benefit the U.S. economy significantly, but the gains could evaporate if the peace talks fail or do not happen.

Higher oil prices have set off a domino effect for the U.S., spiking gas prices and causing economists to project higher inflation and slower economic growth in the months ahead. Many of those forecasts still assume that the war will be over in a matter of weeks, and economists have warned that the risk of a serious downturn increases the longer it drags on.

A sustained drop in oil prices on Monday could reduce those effects.

“IF this holds true, gas prices could start sinking in a few days—again if this holds up,” Patrick DeHaan, head of petroleum analysis at GasBuddy, posted on social media platform X Monday.

The morning’s exchange of social media posts left traders and economists scrambling to decode mixed signals. Early Monday morning, Trump posted on social media that he was having “constructive conversations” toward “complete and total resolution of our hostilities” with Iran.

It was a reversal from the weekend, when he had given Iran a 48-hour deadline to reopen the strait or else the U.S. would “hit and obliterate” the country’s power plants. Trump has sent seemingly conflicting signals about his intentions for the war in recent days, at various times suggesting the U.S. attack was winding down and at other times saying he was not interested in a cease-fire, all while sending more forces to the region.

Less than an hour later, Iranian officials reportedly denied that any such talks had taken place, saying they were keeping the Strait closed, according to Iranian news outlets.

Whether drivers in the U.S. get any relief at the pump later in the week depends on whether the cease-fire talks actually take place.

“Oil markets will eventually sniff out the truth and react accordingly,” DeHaan wrote.

News of the day for March 23, 2026

The major stock indexes fell on Friday, sending markets to a fourth straight week of losses.
Credit: Michael Nagle / Bloomberg / Getty Images

Stocks pointed to a higher open Monday as markets enter the week on a four-week losing streak; Crude oil futures are sliding as President Trump cited "productive conversations" with Iran that followed an exchange of threats; Gold and silver futures are tumbling this morning, erasing their gains for the year; Tesla and SpaceX will build a new chip manufacturing facility in Texas, CEO Elon Musk confirmed over the weekend; and LaGuardia Airport is set to be closed for much of the day after a Sunday night crash killed two pilots when an Air Canada plane hit a fire truck.

Here's what you need to know today.

Stocks Higher as Markets Seek to End 4 Straight Weeks of Losses

Stock futures are rising premarket Monday amid fresh optimism about the Iran war headed into a new week. Futures tied to the Dow Jones Industrial Average, S&P 500, and Nasdaq 100 were recently up 1.3%, 1.2%, and 1.1%, respectively. The major indexes sank on Friday to log a fourth straight week of losses, with the Dow and Nasdaq briefly entering correction territory before recovering Friday. President Donald Trump's Monday-morning comments reporting a five-day pause on attacks on energy infrastructure and "good and productive talks" encouraged investors before the open, reversing what had looked like a downward start to trading. Gold futures were down some 5% to around $4,300 an ounce, erasing much of the precious metal's rally to start the year. The 10-year Treasury yield, which influences interest rates for a range of consumer loans, was at 4.436%, down from its late-Friday level.

Oil Prices Retreat After Trump's Comments

West Texas Intermediate futures, the U.S. crude oil benchmark, are trading under $90 a barrel, with Trump's latest statements following recent threats between the U.S. and Iran. Trump had said Saturday that if the Strait of Hormuz was not reopened by Monday night, the U.S. would bomb a number of power plants around the country. In response, Iran said it would attack other energy facilities in the region that supply power to U.S. military bases, and place mines across the Persian Gulf.

Gold, Silver Extend Slump

Gold and silver are tumbling, extending a recent pullback for the precious metals. Worries about the war's effect on oil prices have raised concerns about inflation across the economy, which if it picks up could motivate the Federal Reserve to keep rates steady or even raise them at upcoming meetings. Recently, gold and silver futures were down to aroud $4,300 and $69 an ounce, respectively, with each precious metal erasing their gains from earlier this year. Bitcoin is trading around $71,000 this morning.

Tesla, SpaceX Look to Build Chip Factory Amid AI Ambitions

Tesla (TSLA) and SpaceX will look to build a new facility, the "Terafab," that will manufacture semiconductors to be used across the companies' products, from Tesla's electric and potentially soon-to-be autonomous vehicles and humanoid robots, to SpaceX satellites. CEO Elon Musk said at an event Saturday that the companies face a dilemma of "either build the Terafab or we don’t have the chips," per The Wall Street Journal. Morgan Stanley analysts last week called building a chip fab a "Herculean task" that will take years and big spending. Tesla shares edging higher premarket.

LaGuardia Airport Closed After Fatal Crash

A major U.S. airport will be closed for much of Monday after an Air Canada plane crashed into a fire truck on the ground at LaGuardia Airport in New York Sunday. The pilot and co-pilot of the plane were killed, and dozens of passengers and crew from the fire truck were taken to a hospital with injuries, according to The Associated Press. The airport will remain closed until at least 2 p.m. ET Monday as the accident is investigated. Travelers across the U.S. have faced long lines in recent days at security checkpoints with a shortage of Transportation Security Administration agents caused by the partial government shutdown impacting the Department of Homeland Security. Air traffic controllers are not impacted by the shutdown.

Video game retailer GameStop reports this week amid a surge in its stock price.
Credit: Jim Watson / Contributor / Getty Images

Earnings from a well-known meme-stock retailer and a consumer sentiment reading are among the week's top scheduled events, with investors also keeping watch on events in the Middle East and its effects on markets.

With its share price on a tear so far this year, original meme stock GameStop reports quarterly financials after recently getting support from a key investor. Pet supplies retailer Chewy, homebuilder KB Home, and a pair Chinese robotaxi providers are also set to report. Friday's consumer sentiment report could provide insight into how the economy is reacting to the conflict in the Middle East amid a rise in gas prices set off by a disruption of oil flows. The import price index could provide a look at how tariffs are impacting prices after investors last week saw a surprising jump in wholesale prices.  

The major U.S. equities indexes finished last week on a down note, recording their fourth straight week of losses. The Dow Jones Industrial Average and Nasdaq briefly dipped into correction territory before finishing Friday's session slightly above the zone.

Read to the bottom for our calendar of key events—and one more thing.

GameStop Reports Earnings Amid Stock Surge

GameStop is scheduled to report earnings on Tuesday. GameStop’s stock surge—up 13% so far in 2026—comes after it reported sales slipping in its prior quarterly report and as famed “Big Short” investor Michael Burry said that he had made a significant investment in the company. Online pet supplies retailer Chewy and human resources and payroll services provider Paychex are also due to report amid substantial declines in their shares this year.

Chinese robotaxi providers Pony AI and Weride will deliver their reports this week, giving investors insight into the growing robotaxi industry. Pony AI, a partner with ride hailing app Uber, and WeRide have both seen their shares decline close to 30% this year. Homebuilder KB Home's report follows a study indicating that the U.S. housing market needs to add 4 million new homes to meet the demand from buyers. 

Consumer Sentiment Arrives as Gas Prices Tick Higher

Investors will be closely watching Friday’s consumer sentiment report for clues on how the public is reacting to the conflict in the Middle East. Consumer sentiment has been muted for several months, and shoppers who have been concerned with the impact of tariffs are now facing rising gas prices from the conflict.

The import price index release on Wednesday could provide insight into how tariffs are affecting prices. Last week’s wholesale inflation report showed a surprising rise in producer prices. 

Initial jobless claims on Thursday will offer a look at the health of the U.S. labor market. Revisions to fourth-quarter productivity measurements arrive as worker productivity has soared recently, even as paychecks have failed to keep pace.

This Week’s Calendar

Monday, March 23

• Construction spending (January)
• Key Earnings: WeRide (WRD)

Tuesday, March 24

• U.S. productivity - revision (Q4) 
• S&P flash U.S. Purchasing Managers Index (PMI) (March)
• Key Earnings: GameStop (GME), Core & Main (CNM), Smithfield Foods (SFD), AAR Corp. (AIR), KB Home (KBH)

Wednesday, March 25

• Import price index (February)
• Key Earnings: Paychex (PAYX), Karman Holdings (KRMN), Chewy (CHWY), Jefferies Financial Group (JEF), Ondas (ONDS)

Thursday, March 26

• Initial jobless claims (March 21)
• Key Earnings: Commercial Metals (CMC), Argan (AGX), Pony AI (PONY), BRP (DOO)

Friday, March 27

• Consumer sentiment (final) 
• Key Earnings: Legence (LGN)

One More Thing

Are you a saver? Investopedia’s Sabrina Karl has more on why last week’s Federal Reserve interest rate decision could be good news for your savings account.

GameStop shares have gained close to 13% since the start of the year
Credit: Jeffrey Greenberg / Universal Images Group / Getty Images

Key Takeaways

• GameStop is slated to post earnings Tuesday afternoon, with traders anticipating a big swing in its stock following the results.
• The retailer's stock has rallied this year after some encouraging news, including support from "The Big Short" investor Michael Burry.

GameStop is scheduled to report earnings after the market closes Tuesday, with traders anticipating a big swing in the video game retailer's stock following the results.

Based on current options pricing, GameStop (GME) stock is seen moving up to 8% in either direction by the end of the week following the release. A shift of that size from Friday's close could lift shares above $24, or drag them back below $21, erasing some of their recent gains.

GameStop's stock has surged close to 13% since the start of the year after a string of encouraging news, including an endorsement from "The Big Short" investor Michael Burry, and statements from CEO Ryan Cohen suggesting a major deal could come soon. Cohen told CNBC in January that he's looking to make a “very, very, very big” acquisition of a larger consumer company.

Why This Matters to Investors

Investors will likely be watching closely Tuesday for updates on what next steps could be for GameStop, which has struggled to reinvent its business.

Some of GameStop's efforts to redefine its strategy so far have included expanding its collectibles business and buying up Bitcoin, as sales from its core business continued to slide and the retailer shuttered stores.

While the winter holiday quarter tends to be the strongest of the year for many retailers, GameStop could still record another decline in sales for the fourth quarter, as it did in the third quarter and year-ago period. This time last year, GameStop posted adjusted earnings of 30 cents per share on a nearly 30% year-over-year drop in sales to $1.28 billion for the fourth quarter.

Despite its recent gains, shares of GameStop are down some 12% from a year ago and remain well off their 2021 highs in the height of the meme stock craze.

Federal Reserve officials kept their interest rate steady at the last meeting--but that may not be the case moving forward.
Credit: Al Drago / Bloomberg via Getty Images

Key Takeaways

• Financial markets are increasingly convinced the Fed's next move will be to raise interest rates, not cut them.
• The threat of inflation has worsened this month since the U.S. attacked Iran, driving up energy prices, putting pressure on the Fed to keep rates higher for longer or even raise them.
• President Donald Trump's efforts to oust Fed Chair Jerome Powell could backfire, delaying the day that a Fed chair more favorable to rate cuts takes charge of the central bank.

Two conflicts are dashing hopes that the central bank will lower its key interest rate anytime soon.

The war in Iran has pushed up oil prices, stoking inflation fears and pressuring the Fed to scrap its recent plans to cut interest rates in the year ahead.

Meanwhile, the administration is investigating Fed Chair Jerome Powell over renovations to the central bank's building, in a move some say is an attempt to strongarm officials into cutting rates. Some traders expect the move may backfire, keeping Powell in charge of the central bank past the end of his term in May, and delaying his replacement by his more dovish successor, Kevin Warsh.

Amid all the tumult, financial markets are now pricing in around about a 27% probability that the Fed will raise its key interest rate at some point in 2026, according to the CME Group's FedWatch tool, which forecasts rate movements based on fed funds futures trading data. That's compared to just an 9% of at least one cut.

Just a month ago, experts were speculating about how many times the Fed would cut rates to lower borrowing costs, encourage hiring, and prevent a serious rise in the unemployment rate.

The Fed opted to keep its key interest rate flat at a range of 3.5% to 3.75% at its meeting last week. After the meeting, Powell emphasized the central bank is facing risks on both sides of its dual mandate to keep inflation at a 2% annual rate and the unemployment rate low.

The Fed has been torn between cutting rates to prevent the job market from collapsing as hiring has slowed to a crawl last year, and keeping rates higher for longer to subdue inflation that's still running about a full percentage point above the Fed's target rate.

What This Means For The Economy

Higher interest rates mean higher borrowing costs, less consumer spending, and less hiring and business expansion: in other words, a slower economy.

Three things would have to happen for a rate hike to become a serious possibility, according to economists at Bank of America.

First, core inflation would have to rise. While economists expect overall inflation to rise because of soaring gas prices, core inflation measures deliberately exclude those volatile costs to provide a clearer picture of underlying trends. The Fed would likely need evidence that higher fuel costs are driving up transportation costs and pushing inflation across the board to seriously consider a hike, US economist Aditya Bhave wrote in a commentary.

Second, the job market would have to stay afloat. Otherwise, the Fed would face pressure to cut interest rates to bolster hiring and prevent the unemployment rate from spiking. The U.S. economy lost 92,000 jobs in February, suggesting the job market is in some trouble.

Fed Governor Christopher Waller said in an interview on CNBC Friday that he had been in favor of cutting rates last week after the dismal jobs report, but changed his mind after the Iran war broke out and oil prices spiked.

Lastly, Powell would likely still have to be governor, Bhave wrote. The Fed chair has so far resisted repeated demands from Trump to sharply lower interest rates. Trump's pressure campaign against Powell has included insults and threats to fire him. The Justice Department, which is part of the administration, also opened a criminal investigation into Powell over alleged cost overruns on a renovation project at the Fed's headquarters, which the chair and his allies have described as an attempt at intimidation.

Powell's term as chair ends in May, and Trump has nominated former Fed Governor Kevin Warsh, to take over the role. Warsh has advocated for rate cuts.

However, Republican Senator Thom Tillis has said he would block the nomination if the White House does not drop the charges against Powell. Powell said this week he would stay on as Fed Chair Pro Tempore until his successor is confirmed.

"We view Chair Powell as a moderate dove, who will prioritize the labor market over inflation if risks to the two are roughly balanced," Bhave wrote. "But he isn't nearly as dovish as Fed Chair nominee Warsh is likely to be. Therefore, we think the bar for hikes would be much higher under Warsh than Powell."

Gas Prices in the U.S. Have Risen Every Day Since March 1

The price of crude oil accounts for more than 50% of the cost of gasoline, making oil a primary driver of inflation.
Credit: shaunl / Getty Images

Key Takeaways

• Goldman Sachs analysts warned that oil infrastructure damage and efforts to refill strategic oil reserves could keep prices elevated longer than many expect, even if the Iran war winds down soon.
• Market watchers are increasingly pessimistic about a swift return to normal for oil markets given Iran's incentive to target infrastructure and halt trade in order to inflict maximum economic pain.

Three weeks into the “four to five week” U.S.-Israeli war in Iran, the long-term implications for oil markets and economies are coming into focus.

“The risks to oil prices remain skewed to the upside on net both in the near-term and in 2027,” wrote Goldman Sachs oil analysts in a note on Thursday. Goldman’s analysts say the conflict in Iran could shift oil demand and supply enough to keep oil prices higher long-term, even if the Strait of Hormuz, the critical chokepoint that Iran has effectively closed, reopens next month. 

That could have far-reaching consequences for the economy and consumers. The price of crude oil accounts for more than 50% of the cost of gasoline, making oil a primary driver of inflation. The national average gas price rose for a 19th consecutive day on Friday, and is now more than 30% higher than before the war. Brent crude, the global oil benchmark, recently traded at $112 a barrel, up 55% since the war began.

Why This Is Important

Inflation was already elevated before conflict in the Middle East caused prices for oil and many other key industrial inputs to surge this month. Economists worry the war's inflationary pressure, coupled with a frozen labor market, raises the risk of stagflation, the economic equivalent of being stuck between a rock and a hard place.

The Trump administration, aware of Americans’ sensitivity to gas prices, is considering a number of ways to boost global oil supplies. The U.S. has lifted sanctions on Russian oil at sea, and Treasury Secretary Scott Bessent this week floated the idea of doing the same for Iranian oil. The Pentagon has reportedly ramped up strikes on Iranian naval vessels and drones around the strait, potentially clearing the way for naval escorts.

One of the biggest risks to oil prices, regardless of what happens in the strait, is that infrastructure damage causes a large and prolonged decrease in supply. The countries surrounding the Persian Gulf accounted for about 30% of global oil production last year, but their operations have been significantly disrupted this month by Iranian drone and missile strikes. 

Energy infrastructure has become a prime target for both sides of the conflict. Israel on Wednesday bombed Iran’s South Pars gas field, prompting Iran to strike the world’s largest liquefied natural gas (LNG) export facility in Qatar. The CEO of state-owned QatarEnergy told Reuters on Thursday that attack had taken out 17% of the facility’s export capacity. He said repairs could take up to five years, disrupting the flow of nearly 13 million tons of LNG annually.

“What started as a large but transitory disruption has now escalated to a larger multi-year shift to the supply-demand outlook,” said Morgan Stanley analysts of the attacks on LNG infrastructure. Before the war, Morgan Stanley estimated a global LNG surplus of 8 million tons; after this week, they expect a 15 million ton deficit.

According to Goldman Sachs, the post-war supply crunch will likely be exacerbated by a race across the globe to replenish depleted oil reserves. Members of the International Energy Agency agreed earlier this month to release 400 million barrels from their strategic reserves to ease prices. Policymakers are likely to replace those barrels and increase their reserve targets “as they recognize how uncertain oil supply is in this geopolitical environment,” according to Goldman. 

Only a few factors are likely to put downward pressure on prices. Once geopolitical risks recede, OPEC could activate spare production capacity. In past supply crises, Saudi Arabia and the United Arab Emirates have increased production enough to offset 70% to 90% of losses in just half a year, according to Goldman. Higher oil prices could also drive a shift toward alternative energy sources or persistent changes in consumer behavior that reduce oil demand over the long run. 

To be sure, it’s not guaranteed that traffic through the Strait of Hormuz returns to normal anytime soon. “We believe investors should be cautious about assuming a swift resumption of energy flows, which we think could only be fully restored by a combination of military and political means,” wrote UBS’s chief investment office on Friday. 

And many market watchers see little incentive for Iran to back down militarily or compromise politically. Its stockpile of low-cost drones are still capable of damaging critical infrastructure across the region, increasing the cost of war for the U.S. and its Gulf allies. 

The efficiency of Iran’s economic warfare is one reason some on Wall Street worry there’s no going back to normal. “This is not an oil shock,” said Mark Malek, chief investment officer at Siebert Financial on Friday, “it is a structural shift in how energy risk is priced globally.” 

The ongoing conflict in the Middle East has significantly changed the outlook for the U.S. economy.
Credit: Win McNamee / Getty Images

Key Takeaways

• Economists are revising their economic forecasts as the war in Iran continues to push up energy prices.
• Forecasters now expect higher inflation and lower economic growth this year than they did before the war began.
• Some economists are seeing an increased likelihood of a recession as a result of the war's disruption.

As the war against Iran enters its fourth week, the conflict is causing some economic setbacks.

Several economists downwardly revised their forecasts on Friday as the war dragged on. Forecasters penciled in higher inflation, slower economic growth, higher unemployment, and lower consumer spending in the U.S. and global economies in the months ahead than they expected before the war.

For example, inflation as measured by Personal Consumption Expenditures will likely surge to a 3.7% annual increase in April, up from 2.5% in February, Samuel Tombs, chief economist at Pantheon Macroeconomics, wrote. He also expected the unemployment rate to peak at 4.7% this year, up from 4.3% in January.

The new forecasts aim to estimate the damage caused by the war. Fighting has closed the crucial Strait of Hormuz, choking off 20% of the world's oil supply, and destroyed oil and gas facilities in the region, sending energy prices soaring. The crisis is "the largest supply disruption in the history of the global oil market," the Energy Information Association said Friday.

Rising gas prices are causing a ripple effect across the U.S. economy that's likely to worsen the longer the Strait of Hormuz remains closed.

"The near-term outlook for the US economy has worsened following the conflict in Iran," Tombs wrote. "The current level of oil prices suggests that gasoline prices will jump to about $4.20. ...Meanwhile, financial conditions have tightened, the 'wealth effect' supporting high-income households’ spending has withered, and consumers’ confidence has tumbled."

What This Means For The Economy

The Iran war is a significant setback for an economy that just a few years ago was poised for a "soft landing" from the post-pandemic surge of inflation.

In the U.S., the most serious economic consequences of the conflict stem from the skyrocketing price of oil. Brent crude, the international benchmark, hovered around $110 a barrel on Friday, up from $67 last month before the bombing began in late February.

Gasoline prices have risen nearly a dollar a gallon since then, and diesel is up even more, pushing up transportation costs and causing a domino effect on other prices. Forecasters at Oxford Economics don't expect oil prices to return to their pre-war trajectory until 2028.

Higher gasoline prices have hit household budgets, especially for people with lower incomes, who tend to spend a larger share of their income on fuel. Economists estimate that higher gas prices have wiped out any income gains from tax cuts included in the One Big Beautiful Bill, President Donald Trump's tax and spending law that is boosting tax returns this year.

"The extra refunds are equivalent to two-thirds of the extra money households likely will be spending on gasoline, though low-income households will be substantially worse off on net," Tombs wrote.

Last week, Goldman Sachs forecasters similarly scaled back their economic growth expectations and raised their inflation forecast. They now anticipate the economy will grow an inflation-adjusted 2.2% in 2026, down 0.3 percentage points from their previous forecast. They expect sharply higher inflation, with the PCE price index rising 2.9% over the year in December instead of the 2.1% they had previously projected.

The energy shock has some economists seriously considering the possibility of a recession. Mark Zandi, chief economist at Moody's Analytics, put the probability of a recession this year at 49%, based on the investment bank's AI-powered model.

The renewed threat of a recession is a sharp turnaround for an economy that had proven resilient through the energy shock spurred by the war in Ukraine in 2022, the post-pandemic surge of inflation, and President Donald Trump's tariffs in 2025.

Before the war, inflation had subsided from its 2022 peak but was above the Federal Reserve's target of a 2% annual rate by all major measures. Forecasters had mainly been expecting healthy economic growth despite a dismal job market. Not anymore.

"Recession is once again a serious threat," Zandi posted on social media platform X. "Almost all the economic data have turned soft since the end of last year."