A recent survey by the National Association for Business Economics, a trade group that includes economists from corporations, financial firms and government agencies, underscores increasing concerns about worsening business conditions affecting profits, hiring and investment.
Forty-eight percent of respondents said the Middle East conflict had hurt their business, with 44% reporting higher input costs and 24% planning to downgrade plans for hiring and investment. NSBE said 31% ranked geopolitical hazards among their top three business risks.
“While a majority of respondents expect stable profits over the next three months, only 13% expect profits to rise—the lowest share since 2023,” said NABE President Gregory Daco, chief economist, EY-Parthenon, Ernst & Young LLP.
“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,” Daco said. “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, American Chemistry Council, noted that although sales have remained steady over the past three months, materials cost more and profit margins have declined.
“Looking ahead, expectations softened across several indicators in the May survey, including sales, capital spending, and employment,” Moore said. “Also, expectations for prices and costs have accelerated compared to previous surveys. Recession odds are slightly higher than they were in the January survey.”
Profits
Although 56% of respondents anticipate profit margins will hold steady; only 13% expect profits to improve. Nearly one-third (31%) of those surveyed said profitability will weaken in the coming months.
Sales
The forward-looking sentiment for sales has cooled. NABE said 45% of those surveyed expect sales to increase over the next three months, down from 56% in January. Meanwhile, 43% anticipate stable sales, and 13% foresee declines—the largest share since July 2025.
Recession Odds
Half of respondents (50%) puts the probability of a U.S. recession at 26% or higher, up from the 44% share in the January survey. Forty percent of panelists assess the probability of the U.S. entering a recession over the next 12 months between 26% and 50%, also higher than in January’s survey.
