The investment banking giant Goldman Sachs has warned that the ongoing conflict involving Iran could slow economic growth and push inflation higher in the United States this year, adding fresh uncertainty to the global economic outlook as energy prices surge.
In a research note released early Thursday, economists at the Wall Street firm said the war is likely to have a sustained, though relatively modest, impact on the U.S. economy. According to the bank, the conflict could drive up energy costs, increase unemployment slightly and slow the pace of economic expansion, particularly if oil prices remain elevated in the coming months.
The bank’s revised outlook suggests that the Federal Reserve may delay interest rate cuts until September, later than previously expected, as policymakers grapple with inflationary pressures triggered by rising energy costs. The development comes as American households continue to face elevated prices for gasoline, utilities and possibly food items ahead of national elections later this year.
Prior to the outbreak of the war, Goldman Sachs had projected that inflation would gradually ease as the economic effects of tariffs imposed during the administration of Donald Trump faded. However, the bank now expects the Federal Reserve’s preferred measure of inflation to end the year at around 2.9 percent, still above the central bank’s target of 2 percent.
The forecast is based on an assumption that average oil prices will climb roughly 40 percent to about $98 per barrel during March and April. Should the conflict push prices even higher, averaging around $110 per barrel during the same period, Goldman economists estimate inflation could rise to about 3.3 percent.
The outlook reflects growing concern in global financial markets that geopolitical tensions in the Middle East could disrupt energy supplies and fuel price volatility. Rising oil prices often ripple through the broader economy by increasing transportation and production costs, which can eventually translate into higher prices for consumer goods and services.
Economists say the evolving situation will remain closely tied to developments in the energy market and the duration of the conflict. For now, Goldman Sachs believes the economic impact will be manageable but significant enough to influence monetary policy decisions and the cost of living for American consumers over the coming months.
