The National Association for Business Economics reported on May 15 that business confidence has declined, with many companies expressing concern about the impact of the ongoing Middle East conflict on profits, hiring, and investment plans.
The survey results highlight that nearly half of respondents said their businesses have been negatively affected by the conflict. Many also reported increased input costs and are reconsidering their plans for hiring and investment. These findings come as economic uncertainty continues to shape decision-making among U.S. employers.
Forty-eight percent of respondents said the Middle East conflict had hurt their business, while 44% noted higher input costs and 24% planned to downgrade hiring and investment efforts. The association said that “31% ranked geopolitical hazards among their top three business risks.” NABE President Gregory Daco, chief economist at EY-Parthenon, Ernst & Young LLP, said: “While a majority of respondents expect stable profits over the next three months, only 13% expect profits to rise—the lowest share since 2023.” Daco continued: “More than two-thirds of respondents report rising materials costs over the past three months, the largest share since 2022, while 44% note that costs have risen moderately to significantly. To date, nearly half of respondents report a negative business impact from the conflict, with nearly one-quarter reporting plans to scale back investment and hiring over the next six months.”
Survey Chair Martha Moore, chief economist and managing director at American Chemistry Council said: “Looking ahead, expectations softened across several indicators in the May survey, including sales, capital spending, and employment. Also, expectations for prices and costs have accelerated compared to previous surveys. Recession odds are slightly higher than they were in the January survey.” Moore also noted that although sales remained steady recently,”materials cost more and profit margins have declined”.
Profit outlooks remain subdued; while most anticipate stable margins (56%), only a small fraction (13%) expect improvements soon. Nearly one-third foresee weaker profitability in coming months. Sales projections have cooled as well; just under half (45%) expect increases in sales over the next quarter—down from earlier this year—with more anticipating declines than previously recorded.
Half of those surveyed now estimate at least a one-in-four chance (26% or greater) of a U.S recession within twelve months—a higher proportion than seen in January’s poll results.
The New Jersey Business and Industry Association serves as the nation’s largest statewide employer association representing private-sector employers throughout New Jersey; it advances members’ competitive excellence through advocacy initiatives as well as practical information services facilitating partnerships among businesses government entities academic institutions according to its official website.
