Moody’s Analytics raised its recession outlook for the next 12 months to 48.6%, following the same pattern as Goldman Sachs, which now forecasts a 30% risk of recession, and EY-Parthenon, which put recession odds at 40%. The baseline probability of a recession sits around 15% to 20%.

Prior to the U.S.-Israeli attack on Iran at the end of February, economic indicators were already suggesting precarious economic conditions. A dismal February jobs report showed the economy unexpectedly lost 92,000 jobs in the previous month, defying estimations of a 60,000-job increase and dashing hopes of a labor market recovery after the U.S. added just 181,000 jobs in 2025. Moreover, the unemployment rate is eking toward 4.5%, up from 3.4% three years ago, coinciding with decelerating wage growth, particularly for lower-income Americans.

On top of those factors, an ongoing war in the Gulf has raised concern among analysts of an oil shock being the tipping point to send the U.S. into a slump, one top economist warned.

“Even before the conflict, I thought recession and risks were on the rise,” Mark Zandi, Moody’s chief economist, told CNBC on Wednesday. “Recession risks are very high—and unless the hostilities are coming to an end now, the president figures out a way to stand down, declare victory and move on, and Iranians follow suit—I think recession is more than likely by the second half of the year.”

Why the war in Iran is driving up chances of a recession

Zandi warned earlier this week if the cost of oil continues trending upward, a recession is all but imminent. The cost of Brent crude has been hovering at around $97 per barrel, but reached a record-breaking $115 per barrel last week.

“Based on simulations of our global macroeconomic model, oil prices would only need to average close to $125 per barrel in the second quarter of this year,” Zandi said in an X post on Monday. “With tensions still elevated, that’s not a stretch.”

Despite President Donald Trump postponing plans on Monday to strike Iranian energy infrastructure and power plants (a move that added $1.7 trillion to stocks and brought down the price of oil by $17), Iran rejected the U.S. proposal to end the war on Wednesday, according to state television reports, and the Pentagon has reportedly ordered 2,000 Paramilitary troops to be sent to the Middle East.

Today’s rising energy prices—including a $1 per gallon increase at the pump—has prompted comparisons to the 1970s oil shock, when Arab state members of OPEC declared they would slash oil production and exports to countries in retaliation for U.S. support of Israel in the Yom Kippur War. President Richard Nixon subsequently advocated for rationing U.S. oil supplies to keep prices from spiking, but the cost of gas still skyrocketed about 40%.

The Paris-based intergovernmental agency International Energy Agency (IEA), has cautioned the ongoing turmoil in the Gulf has exceeded that of a half century ago. IEA Executive Director Fatih Birol said the world is losing 11 million barrels of oil today compared to 5 billion during the crises in 1973 and 1979.

“The depth of the problem was not well appreciated by the decision makers around the world,” Birol told the National Press Club of Australia this week. “If you want to put in a context, this crisis as it stands now: two oil crises and one gas crisis put all together,” he said.

There’s also evidence the ongoing closure of the Strait of Hormuz is impacting industries beyond energy. The Strait of Hormuz is the chokepoint for about one-third of the world’s global fertilizer. Minimal exports have already hiked fertilizer prices, threatening to impact which crops U.S. farmers grow, and potentially eventually driving up the price of groceries.

“There’s a very strong correlation between the movement of energy prices and the movement of food prices,” Ricky Volpe, an agricultural economist and professor of agribusiness at Cal Poly, told Fortune. “We’ve seen oil top $100 a gallon before and that happened to coincide with significant food price inflation.”