Middle East conflict pushes US companies into capital investment freeze

US companies have slowed capital investment as the conflict in the Middle East creates uncertainty. The Federal Reserve's latest Beige Book report describes a firm-level posture of waiting and seeing regarding hiring, pricing, and capital investment. This shift in business outlook is the result of a sudden surge in energy prices following Iran's closure of the Strait of Hormuz, which disrupted a fifth of world oil shipments and a third of fertilizer shipments. Higher energy costs have increased the price of shipping, plastics, and fertilizers. Input cost pressures have broadened beyond energy-related increases. The Federal Reserve is expected to leave its benchmark overnight interest rate on hold in the current 3.50%-3.75% range at its next policy meeting on April 28-29.