Experts Warn US Recession Odds Rise Amid Iran War Escalation

Conflict's impact on energy prices heightens risk of economic downturn, analysts say.

Mar. 28, 2026 at 5:26pm

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Experts and financial institutions are warning that the economic fallout from the ongoing conflict with Iran, including disruptions to global energy production and surging commodity prices, have heightened the risk of the U.S. sliding into a recession. Analysts say recession odds have climbed to 'elevated' levels and could cross the 50% threshold if the conflict does not end soon.

Why it matters

The Iran war has already carried significant economic consequences globally, primarily in energy markets but also across American equities. All three major U.S. stock indexes have sunk by over 7% in the last month, while the price of oil continues to approach levels last seen during the 2022 energy crisis. Higher energy costs feed through into business expenses, consumer spending, and inflation expectations, raising recession risks.

The details

RecessionPulse, which aggregates dozens of indicators to assess the current health of the U.S. economy, reports that the 'recession risk score' has climbed to 44 out of 100, classified as 'elevated.' Moody's Analytics chief economist Mark Zandi said recession risks were 'already high prior to the conflict' and could 'cross the key 50 percent threshold unless the conflict ends in the next few weeks, if not days.' Analysts at Goldman Sachs have also raised the probability of a recession within the next year to 30% from an earlier estimate.

  • On Wednesday, BlackRock CEO Larry Fink said he could see the conflict resolving in one of 'two very extreme outcomes': A sustained period of 'abundance and growth,' or the world sliding into a 'stark and steep' global recession marked by oil prices soaring to $150 a barrel.
  • During a cabinet meeting on Thursday, Trump said the oil and stock market reactions had been less significant than expected, stating that energy costs were 'all going to come back down to where it was and probably lower.'

The players

Mark Zandi

Chief economist at Moody's Analytics.

Larry Fink

CEO of BlackRock.

Donald Trump

President of the United States.

Abbas Araghchi

Foreign minister of Iran.

Gregory Daco

Chief economist at EY-Parthenon.

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What they’re saying

“Recession risks are uncomfortably high and rising due to the hostilities with Iran, severe disruptions in global energy production, and surging oil and other commodity prices.”

— Mark Zandi, Chief economist at Moody's Analytics

“At present, our policy is the continuation of resistance and the continuation of defending the country. We do not intend to negotiate. So far, no negotiations have taken place.”

— Abbas Araghchi, Iran's foreign minister

“The combination of tighter financial conditions, more uncertainty and higher inflation is going to erode growth. We've curbed our growth forecast down and increased the odds of recession on the basis that if this conflict becomes more severe or prolonged, then you would see a more visible risk of a downturn in the economy.”

— Gregory Daco, Chief economist at EY-Parthenon

What’s next

The administration has talked down the economic consequences of the Iran conflict, with President Trump stating that energy costs are 'all going to come back down to where it was and probably lower.' However, analysts warn that the conflict's impact on energy prices and broader economic uncertainty could push the U.S. into a recession unless the situation is resolved quickly.

The takeaway

The escalating conflict with Iran poses a serious threat to the U.S. economy, with experts warning that the disruption to global energy supplies and surging commodity prices have heightened the risk of a recession. Policymakers will need to carefully navigate this crisis to avoid a broader economic downturn.