In a research note published Thursday, Goldman economist Pierfrancesco Mei laid out a detailed framework for how higher energy prices translate into labor market pain — and the picture isn’t pretty. As explained by the bank earlier in the week, its commodities strategists expect Brent crude to average $105 in March, spike to $115 in April, and then gradually retreat to $80 in the fourth quarter, assuming flows through the Strait of Hormuz remain severely disrupted for roughly six weeks. In an adverse scenario — one where the conflict deepens — Brent could peak as high as $140 a barrel, or $160 in a “severely adverse” scenario.

The U.S.-Israeli war against Iran shows no signs of imminent resolution, even as President Trump signals urgency to wrap it up. White House press secretary Karoline Leavitt has indicated the conflict is expected to last four to six weeks, in line with Goldman’s projections, while Trump told Fox Business that a deal could come as quickly as five days. But experts are far more skeptical: analysts at Brookings warn that without genuine regime change, Iran could rebuild its capabilities and fuel regional instability, while Maximilian Hess of Ementena Advisory told CNBC the situation is a “lose-lose for Washington,” with Iran’s drone advantage and Gulf pressure making a ground war increasingly likely. 

Where the jobs are disappearing

The damage isn’t distributed evenly. Goldman’s sector-level analysis points to leisure and hospitality as the single hardest-hit industry, accounting for roughly 5,000 lost jobs per month, with retail trade shedding another 2,000. The logic is straightforward: when energy prices surge, consumers cut back on discretionary spending first — skipping vacations, eating out less, and trimming shopping trips — while continuing to pay for essentials like healthcare and housing. The oil shock, in other words, hits the working-class service economy well before it touches more insulated sectors.

That dynamic is hitting Gen Z especially hard. A recent Bank of America Institute report found that after nearly two years of lagging other generations in spending, Gen Z’s year-over-year spending growth had actually surpassed Baby Boomers’ by mid-2025 — fueled by slowing rent growth and wages rising roughly 9% year-over-year. But with national gas prices now up approximately 26% year-over-year as of March 23, BofA economists Joe Wadford and David Michael Tinsley warned that the recovery “could be snuffed out before it fully takes hold.” Gen Z carries the highest ratio of gasoline spending to discretionary spending of any generation — and many work in the very leisure and hospitality jobs Goldman now projects will see the steepest cuts. It’s a feedback loop that hits them from both sides: higher costs at the pump and fewer hours at work.

Shock weakened by shale — but not eliminated

Goldman is careful to note that the U.S. economy is far more resilient to oil price shocks than it was in the 1970s. The bank estimates that the effects of a 10% increase in oil prices on unemployment and payroll growth are now roughly one-third as large as they were between 1975 and 1999. Two structural shifts explain the change: the lower oil intensity of U.S. GDP, which reduces the drag on consumer spending and business investment, and the boom in domestic shale production since 2010, which creates an offsetting cushion of energy-sector jobs and capital expenditure.

That cushion, however, is thinner than it used to be. Dramatic productivity improvements in oil extraction mean that even if production ramps up in response to higher prices, the energy sector isn’t likely to add many new workers. Goldman does not expect a meaningful increase in energy capital expenditure, meaning support industries like pipeline construction, oil machinery manufacturing, and oil transportation will see little boost this time around.

Unemployment headed to 4.6%

The cumulative effect is showing up in Goldman’s macro forecasts, which were also adjusted earlier in the week. 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 — with the oil shock accounting for roughly half of that rise and the other half reflecting job growth that was already running too slowly to keep pace with labor supply before the conflict began.

Goldman noted that its unemployment projections align closely with simulations run through the Federal Reserve’s own FRB/US model, lending additional credibility to the estimates. In a severely adverse oil price scenario, however, the unemployment hit could reach 0.3 percentage points above the baseline — a scenario that would push joblessness meaningfully higher and potentially force the Fed’s hand on interest rates.

The findings, authored by Goldman’s U.S. Economics team led by chief economist Jan Hatzius, come as Wall Street is increasingly war-gaming the macroeconomic fallout of the Iran conflict — a crisis that has already prompted Goldman to cut its GDP growth forecast and raise its inflation outlook. For younger Americans — who just months ago were finally catching a financial break — the war’s economic cost may prove a particularly cruel twist. The 10,000-jobs-per-month drag is described as a net figure, accounting for any limited gains the energy sector manages to produce. The bottom line: for American workers, the war in Iran has an economic price tag — and it’s being paid every single month.

For this story, Fortune journalists used generative AI as a research tool. An editor verified the accuracy of the information before publishing.