Will the Iran War Deliver a Long-Predicted U.S. Recession?SKIP TO CONTENTHarvard Business Review LogoHarvard Business Review LogoEconomic cycles and trends|Will the Iran War Deliver a Long-Predicted U.S. Recession?SubscribeSign InLatestMagazineTopicsPodcastsStoreReading ListsData & VisualsCase SelectionsHBR ExecutiveSearch hbr.orgSubscribeLatestPodcastsThe MagazineStoreWebinarsNewslettersAll TopicsReading ListsData & VisualsCase SelectionsHBR ExecutiveMy LibraryAccount SettingsSign InExplore HBRLatestThe MagazinePodcastsStoreWebinarsNewslettersPopular TopicsManaging YourselfLeadershipStrategyManaging TeamsGenderInnovationWork-life BalanceAll TopicsFor SubscribersReading ListsData & VisualsCase SelectionsHBR ExecutiveSubscribeMy AccountMy LibraryTopic FeedsOrdersAccount SettingsEmail PreferencesSign InHarvard Business Review LogoEconomic cycles and trendsWill the Iran War Deliver a Long-Predicted U.S. Recession? by Philipp Carlsson-Szlezak and Paul SwartzMarch 20, 2026HBR Staff/U.S. Navy/Getty ImagesPostPostShareSavePrintSummary.   Leer en españolLer em portuguêsPostPostShareSavePrintThe post-Covid economy is a study in resilience, shrugging off a series of shocks and crises from surging inflation to the Ukrainian war to U.S. tariffs. It is also a study in false alarms as pundits and analysts have relentlessly predicted an “inevitable recession.” They talked down the Biden economy in 2024 and did the same after President Trump’s tariffs last year, to no avail.Philipp Carlsson-Szlezak is a managing director and partner in BCG’s New York office and the firm’s global chief economist. He is a coauthor of Shocks, Crises, and False Alarms: How to Assess True Macroeconomic Risk (Harvard Business Review Press, 2024).Paul Swartz  is an executive director and senior economist in the BCG Henderson Institute, based in BCG’s New York office. He is a coauthor of Shocks, Crises, and False Alarms: How to Assess True Macroeconomic Risk (Harvard Business Review Press, 2024).PostPostShareSavePrintRead more on Economic cycles and trends or related topics Recessions, Business and society, Business management, Leadership and StrategyPartner CenterStart my subscription!Explore HBRThe LatestAll TopicsMagazine ArchiveReading ListsCase SelectionsHBR ExecutivePodcastsWebinarsData & VisualsMy LibraryNewslettersHBR PressHBR StoreArticle ReprintsBooksCasesCollectionsMagazine IssuesHBR Guide SeriesHBR 20-Minute ManagersHBR Emotional Intelligence SeriesHBR Must ReadsToolsAbout HBRContact UsAdvertise with UsInformation for Booksellers/RetailersMastheadGlobal EditionsMedia InquiriesGuidelines for AuthorsHBR Analytic ServicesCopyright PermissionsAccessibilityDigital AccessibilityManage My AccountMy LibraryTopic FeedsOrdersAccount SettingsEmail PreferencesHelp CenterContact Customer ServiceExplore HBRThe LatestAll TopicsMagazine ArchiveReading ListsCase SelectionsHBR ExecutivePodcastsWebinarsData & VisualsMy LibraryNewslettersHBR PressHBR StoreArticle ReprintsBooksCasesCollectionsMagazine IssuesHBR Guide SeriesHBR 20-Minute ManagersHBR Emotional Intelligence SeriesHBR Must ReadsToolsAbout HBRContact UsAdvertise with UsInformation for Booksellers/RetailersMastheadGlobal EditionsMedia InquiriesGuidelines for AuthorsHBR Analytic ServicesCopyright PermissionsAccessibilityDigital AccessibilityManage My AccountMy LibraryTopic FeedsOrdersAccount SettingsEmail PreferencesHelp CenterContact Customer ServiceFollow HBRFacebookX Corp.LinkedInInstagramYour NewsreaderHarvard Business Review LogoAbout UsCareersPrivacy PolicyCookie PolicyCopyright InformationTrademark PolicyTerms of UseHarvard Business Publishing:Higher EducationCorporate LearningHarvard Business ReviewHarvard Business SchoolCopyright ©2026 Harvard Business School Publishing. All rights reserved. Harvard Business Publishing is an affiliate of Harvard Business School.

The resilience of the post-COVID U.S. economy, characterized by its ability to withstand a series of significant shocks including surging inflation, the ongoing conflict in Ukraine, and persistent U.S. tariffs, has repeatedly prompted pessimistic predictions of an inevitable recession. Recurring pronouncements from analysts and commentators regarding an impending downturn have, thus far, proven inaccurate, highlighting a pattern of “false alarms.” According to Philipp Carlsson-Szlezak and Paul Swartz, in their book *Shocks, Crises, and False Alarms: How to Assess True Macroeconomic Risk*, this tendency to prematurely declare recessionary conditions stems from an overreliance on short-term data and a failure to fully account for the economy’s inherent capacity for adaptation and recovery. The authors argue that economic forecasting often suffers from a bias towards anticipating negative outcomes, leading to an inflated perception of risk.

The core of the article revolves around the potential impact of the ongoing conflict in Iran on the U.S. economic landscape and the possibility that it could finally trigger the long-anticipated recession. While previous crises, such as the conflict in Ukraine, did not result in a recession, the situation in Iran introduces a unique set of vulnerabilities. The disruption of oil supplies, a critical driver of global economic activity, represents a significant concern. Iran’s substantial oil reserves and its status as a major producer mean that any escalation in the conflict, particularly one involving attacks on oil infrastructure, could dramatically increase global oil prices. This, in turn, could fuel inflation, erode consumer purchasing power, and pressure businesses, thereby increasing the likelihood of a downturn.

The authors emphasize that the potential impact is not solely determined by the immediate disruption of oil production. The response of global markets, particularly oil-consuming nations, is a crucial factor. A sharp and sustained increase in oil prices could trigger a cascade of effects, including higher transportation costs, increased manufacturing expenses, and a general tightening of monetary policy by central banks in response. This tightening, with its accompanying effects like increased interest rates, could further dampen economic activity and exacerbate the risk of recession.

However, Carlsson-Szlezak and Swartz caution against assuming that the Iran situation will automatically lead to a recession. The U.S. economy’s past resilience, combined with the possibility of a contained or limited conflict, suggests that the immediate impact might be manageable. They propose a more nuanced approach to assessing the risk, one that incorporates a comprehensive understanding of global supply chains and demand dynamics. Furthermore, they advocate for moving beyond the habit of relying on “false alarms” and adopting a more flexible and adaptive approach to macroeconomic forecasting. The authors, through their work, highlight the importance of challenging established narratives and maintaining a critical perspective when evaluating economic trends, ultimately arguing for a more sophisticated and less reactive approach to predicting future economic outcomes.