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 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.

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.

🔗 https://fortune.com/2026/03/26/trump-iran-war-oil-shock-jobs-goldman-sachs-gen-z/