The U.S. economy is showing the strain from the nearly three-month conflict with Iran, according to new S&P surveys. A fresh flare-up in inflation has raised business costs and reduced customer demand.
The surveys indicate that rising prices are squeezing company budgets across multiple sectors. Firms report higher expenses for raw materials, energy, and shipping.
These increased costs are now being passed on to consumers. Many businesses note a drop in customer orders as households pull back on spending.
The prolonged conflict continues to disrupt global supply chains. Companies face delays in receiving goods and components, further driving up operational expenses.
Service sector growth slowed compared to previous months. Manufacturers also reported weaker output, with new orders declining for the first time since early last year.
Employment trends are showing mixed signals. While some firms continue hiring, others have paused recruitment due to uncertainty about future demand.
Business confidence has deteriorated amid the ongoing tensions. Many executives express caution about making long-term investments until the conflict resolves.
The Federal Reserve now faces a difficult balancing act. It must manage inflation pressures without choking off economic growth in the process.
