Fed's Beige Book warns the Iran war is rattling U.S. business confidence
Companies are pulling back from hiring and capital investment decisions, the Fed's latest regional economic survey found
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Hiring freezes and deferred capital investment are among the responses businesses have cited as the conflict with Iran upends planning, the Federal Reserve's latest Beige Book shows.
The Beige Book, published eight times per year, compiles qualitative economic conditions across the Fed's 12 regional districts based on interviews and surveys of businesses, community organizations, economists, and market experts. MarketWatch reported that the Beige Book pointed to the conflict as a key factor behind that reluctance.
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The Beige Book's findings fit a wider trend of economic stress linked to the conflict. Gas prices have risen to a national average of about $4 per gallon, up from $2.98 just a month ago, after Iran closed the Strait of Hormuz and pushed oil prices higher. The University of Michigan's monthly consumer sentiment report showed a six percent drop in March compared to February, with people from all income levels and political backgrounds worried about the economy.
The Fed's internal deliberations have reflected similar uncertainty. Minutes from the Federal Open Market Committee's March 17–18 meeting showed policymakers divided over whether the conflict would ultimately require rate increases to combat inflation or rate cuts to support a weakening labor market. Front-month crude oil futures rose about 50% over the intermeeting period, the minutes said, and the one-year inflation swap rate climbed almost 50 basis points.
At that meeting, the FOMC voted 11–1 to leave its benchmark rate unchanged at a range of 3.5% to 3.75%. Federal Reserve Chair Jerome Powell said at the time that the central bank did not yet need to raise rates in response to the oil shock, pointing to stable longer-run inflation expectations as removing the most pressing reason to tighten policy. Most participants said it was too early to assess the war's full economic impact and favored monitoring the situation before adjusting policy.
The committee's next meeting is scheduled for April 28–29, 2026.