Business leaders and analysts are expressing concern over diminishing business sentiment as President Donald Trump hints at intensifying military actions against Iran. On Tuesday, Trump gave the Iranian government until 8:00 p.m. EDT to reopen the Strait of Hormuz—an essential shipping corridor—or face U.S. bombings targeting critical infrastructure like power plants and bridges. Recent surveys and insights from executives, including JP Morgan Chase’s Jamie Dimon, reveal a grim outlook among market participants regarding the economy as the conflict persists.
In a letter to shareholders, Dimon outlined numerous challenges, highlighting the ongoing war and violence in Ukraine, the current Iran conflict, escalating tensions in the Middle East, and growing geopolitical uncertainties with China. He acknowledged these issues as significant concerns for businesses.
The impact of rising oil prices, stemming from the conflict that has disrupted shipping through the Strait of Hormuz, is deeply concerning to market players. The Institute for Supply Management’s monthly service sector index showed a substantial rise in prices, the highest since October 2022, while the supplier deliveries index dropped from February due to increased fuel costs and shipping delays.
An anonymous wholesale trader in the monthly survey mentioned that U.S.-Israeli military actions against Iran have created considerable uncertainty for imports of Omani frankincense, stressing that threats to shut the Strait of Hormuz and rising war-risk surcharges are significantly increasing logistics costs.
Mark Zandi, chief economist at Moody’s Analytics, also pointed out a decline in business sentiment, noting volatility in global sentiment week by week, but stating that it has worsened since the Iran conflict started over a month ago. He mentioned that rising energy prices, higher interest rates, and dropping stock values are adversely affecting confidence.
Consumers are feeling the strain as well, with the University of Michigan’s Consumer Sentiment Index reflecting a 6% drop in March. This decline is evident across all demographics and political affiliations.
The war’s repercussions extend into the housing market too. Real estate agents have reported consumer worries about the economy and climbing mortgage rates—mortgage rates dipped to 5.99% right before the conflict started, but currently, they’re around 6.5%.
With jet fuel costs rising, airlines are reacting by increasing fees. Delta announced on Tuesday that checked bag fees would rise starting Wednesday, echoing similar moves by Jet Blue and United Airlines to manage soaring fuel expenses.
On a nationwide scale, the average gas price hit $4.14 per gallon on Tuesday, prompting Goldman Sachs to warn that some Southeast Asian nations might run out of oil entirely, and the U.S. could potentially lose 60% of its fuel oil capacity.
Nevertheless, despite the bleak business sentiment, there are some encouraging developments. A robust jobs report released by the Bureau of Labor Statistics indicates that employers added 178,000 jobs, and the unemployment rate fell to 4.3%. Dimon remarked on the resilience of the U.S. economy, noting that consumers are still earning and spending, albeit with some recent signs of weakening.
In a rather striking message on Easter Sunday, Trump declared that Tuesday would be “Power Plant Day, and Bridge Day, all wrapped up in one” in Iran, urging the Iranian government to act swiftly or face severe consequences.
