Iran Conflict & US Jobs: Rising Risks?

The ongoing conflict in Iran is adding pressure to an already slowing U.S. labor market, raising concerns about potential impacts on job growth. Economists warn that rising oil prices and broader economic uncertainty could lead to further hiring slowdowns.

Unilever Freezes Hiring

Consumer goods giant Unilever, the parent company of brands like Dove and Vaseline, announced a three-month hiring freeze on Tuesday. The company cited “macroeconomic and geopolitical realities, especially in the Middle East conflict” as the primary reason for the decision, according to a memo obtained by Reuters.

Slowing Hiring Trends

Even before the escalation of the conflict in Iran, the U.S. labor market was showing signs of cooling. The February Job Openings and Labor Turnover Survey (JOLTS) reported its lowest level since 2020. Employers shed 92,000 jobs in February, marking a significant setback after a year of anemic growth.

Echoes of Past Uncertainty

Matthew Martin, senior U.S. economist at Oxford Economics, compared the current situation to 2025 with tariffs. He told CBS News, “We’re in a period of uncertainty…Companies weren’t sure what the policy, what their cost structure was going to be, which led them to delay hiring.”

March Jobs Report & Future Outlook

The impact of the Iran conflict may not be fully reflected in the March jobs report, scheduled for release on April 3 at 8:30 a.m. ET. Economists polled by FactSet predict a modest rebound, with an estimated 60,000 jobs added last month.

Healthcare Sector Strength

Heather Long, chief economist at Navy Federal Credit Union, stated in an email that the report is “likely to show modest gains due largely to the ongoing strength of healthcare employment.” She added that the data will be “too early to see the impact from the war in Iran.”

Economic Headwinds & Rising Costs

As the conflict continues, businesses are facing increased transportation costs, and consumers are grappling with higher fuel prices. Airlines are raising fares, and economists anticipate potential increases in food prices due to disruptions in fertilizer supplies.

Higher energy prices could force companies to delay hiring and reduce overall spending. Unilever, for example, may be “looking for ways to reduce overall spend” as it navigates higher production and distribution costs, according to Martin.

Potential Impact on GDP & Unemployment

Soaring energy prices could also negatively impact GDP growth, potentially leading to weaker hiring. Yelena Shulyatyeva, senior U.S. economist at The Conference Board, noted that oil prices would need to reach $140 a barrel to trigger a recession and significantly impact the labor market.

Unemployment Rate Projections

Analysts at Goldman Sachs predict the unemployment rate could rise by 0.2 percentage points to 4.6% by the end of September. They suggest that the arts and entertainment, and accommodation and food services industries are most vulnerable to hiring cuts.

Consumer Spending & Discretionary Purchases

Increased spending on gasoline is leaving consumers with less disposable income for other goods and services. This could lead to reduced spending on non-essential items like travel and luxury goods, as people prioritize essential purchases and build savings.