MW The Iran war spills over into the U.S. economy: Inflation rises and growth slows.
By Jeffry Bartash
Mideast conflict spawns fresh uncertainty, S&P finds, just as tariffs worries recede
The U.S. economy is facing further strains from the conflict with Iran.
The conflict with Iran has already put fresh stress on the U.S. economy, as businesses are reporting rising prices, fewer orders and a decline in employment.
A survey of service-oriented companies - the sector that employs most Americans - fell to an 11-month low of 51.1 in March from 51.7 in the prior month, S&P Global said Tuesday.
A survey of manufacturing executives rose slightly to 52.4 from 51.6, but it wasn't all good news.
Some companies said tariffs were less of a worry after the Supreme Court struck down the original duties. Yet an increase in orders in March stemmed largely from customers trying to buy energy or other goods before the war with Iran pushed prices up even further.
Any number above 50 signals the economy is expanding, but both surveys are near their lowest points in the past few years.
The surveys "signal an unwelcome combination of slower growth and rising inflation following the outbreak of war in the Middle East," said Chris Williamson, chief business economist at S&P Global.
Key details: Higher oil prices raised the cost of doing business, with companies trying to pass the extra costs onto customers.
Services-oriented businesses also trimmed head count to offset higher costs, S&P found, leading to the first reduction in employment in over a year.
Optimism about the economy largely held steady, but executives said the outlook depended on how long the conflict lasts.
Big picture: The U.S. economy has actually grown at an above-average pace over the past year, despite a series of obstacles - the war in Iran being the latest one.
Still, the economy can only sustain so many blows before it begins to falter.
A short war would only be seen as a temporary hiccup. If the conflict drags on for months, the damage to the economy could be considerable.
Looking ahead: "Companies are reporting a hit to demand from theadditional uncertainty and cost of living impact generated by the conflict," Williamson said.
Market reaction: The Dow Jones Industrial Average DJIA and the S&P 500 SPX fell in Tuesday trading.
-Jeffry Bartash
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(END) Dow Jones Newswires
March 24, 2026 10:57 ET (14:57 GMT)
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