Goldman Sachs estimates the U.S. military conflict with Iran suppresses payroll growth by roughly 10,000 jobs per month. The oil price shock triggered by the war will drive this toll through the end of the year. Service sectors face the steepest decline as consumers cut discretionary spending and shift budgets toward essentials.
In a research note published Thursday, Goldman economist Pierfrancesco Mei outlined how higher energy prices translate into labor market pain. The bank expects Brent crude to average $105 in March before spiking to $115 in April, and then gradually retreat to $80 in the fourth quarter. Flows through the Strait of Hormuz remain severely disrupted for roughly six weeks, impacting global supply chains.
An adverse scenario sees Brent crude peak as high as $140 a barrel in a severely adverse outlook. White House press secretary Karoline Leavitt indicated the conflict is expected to last four to six weeks. President Trump told Fox Business that a deal could come as quickly as five days, though experts doubt this timeline.
Experts remain skeptical about a rapid resolution without genuine regime change in Tehran. Analysts at Brookings warn that Iran could rebuild its capabilities and fuel regional instability. Maximilian Hess of Ementena Advisory told CNBC the situation is a lose-lose for Washington.
Goldman's sector-level analysis points to leisure and hospitality as the single hardest-hit industry. This sector accounts for roughly 5,000 lost jobs per month according to the bank's data. Retail trade sheds another 2,000 jobs as national gas prices surge 26% year-over-year, while consumers continue to pay for essentials like healthcare.
The damage hits Gen Z especially hard due to their high ratio of gasoline spending to discretionary spending. A recent Bank of America Institute report found that Gen Z spending growth surpassed Baby Boomers by mid-2025. BofA economists warned that the recovery could be snuffed out before it fully takes hold, affecting future earnings.
Goldman notes that the U.S. economy is far more resilient to oil price shocks than it was in the 1970s. Structural shifts include lower oil intensity of U.S. GDP and the boom in domestic shale production. The cushion, however, is thinner than it used to be despite these gains. Productivity improvements mean the energy sector is not likely to add many new workers.
The bank said it expected the U.S. unemployment rate to climb 0.2 percentage points to 4.6% by the third quarter of 2026. The oil shock accounts for roughly one-third of that rise while job growth was already running too slowly. In a severely adverse scenario, the unemployment hit could reach 0.3 percentage points above the baseline. Goldman noted its unemployment projections align closely with simulations run through the Federal Reserve.
Wall Street is increasingly war-gaming the macroeconomic fallout of the Iran conflict after Goldman cut its GDP growth forecast. The 10,000-jobs-per-month drag is described as a net figure accounting for any limited gains the energy sector produces. For American workers, the war has already established a significant monthly economic price tag that impacts household budgets.
This cumulative effect shows in Goldman's macro forecasts which were adjusted earlier in the week. A severely adverse oil price scenario could push unemployment meaningfully higher and potentially force the Fed's hand on interest rates. What comes next depends heavily on whether oil flows through the Strait of Hormuz remain disrupted.
