Recession fears grip U.S., Europe as Iran war sends shockwaves across global ​markets. What to know

Iran war, which began with the U.S. and Israel launching coordinated strikes against Iran in late February, has sent shockwaves across global markets and raised the risk of a worldwide recession, as per reports. U.S. job openings fell last month to 6.9 million and hiring was weak, more signs of sluggishness in the American labor market. The Labor Department reported on Tuesday that job vacancies slid from 7.2 million in January. The Job Openings and Labor Turnover Summary (JOLTS), showed that layoffs rose.

Recession in U.S.?

In U.S., around 2.97 million people quit their jobs in February. Typically, people giving up their jobs is a sign of confidence in their prospects for finding better pay or working conditions elsewhere. The number of people leaving jobs last month was the fewest since August 2020.


A measure of hiring also deteriorated: The JOLTS report showed 4.85 million gross hires in February, fewest since April 2020. The hiring rate — the number of hires as a percentage of employment — dropped to 3.1%, also the lowest since April 2020, at the height of the COVID-19 pandemic that shut down economic activity.

The numbers show the labor market before the Iran war drove up gasoline prices and increased uncertainty.

The U.S. job market has sputtered over the past year, reflecting the lingering impact of the high interest rates and uncertainty over President Donald Trump’s economic policies and the impact of artificial intelligence.

Employers added fewer than 10,000 net jobs a month in 2025 – weakest hiring outside a recession since 2002. This year started out with a decent 126,000 new jobs in January. But in February, the United States lost 92,000 jobs. When the Labor Department releases March jobs numbers on Friday, they’re expected to show that hiring rebounded and that companies, nonprofits and government agencies added 60,000 jobs this month.

Europe Could Face Recession?

The European Union's energy chief has told governments to prepare for "prolonged disruption" to energy markets as a result of the war, ahead of an emergency meeting on Tuesday.

“If ​the Strait of Hormuz remains closed for the next week or two, then I think we’ll be raising our probabilities of recession in our scenario analysis," Robeco's Graham said, adding that this was not yet the case.

Europe ​could face recession ​if the Iran conflict drags on and ‌oil ⁠prices ⁠jump over $150 ​per barrel, European Central Bank policymaker ​Yannis Stournaras told Greek radio on ​Wednesday.

"Right ⁠now, nobody ‌says ​we'll ​have a ⁠recession. But if it (the Iran ​war) continues, if ​we're having scenarios with (oil prices) over $150 per barrel, ‌nothing can be ruled out, ​even ​a recession," ⁠Stournaras, Greece's central banker, said in remarks to ​Parapolitika radio.