The U.S.-Iran conflict has disrupted the Strait of Hormuz — a chokepoint for roughly 20% of global oil supply — sending prices surging and accelerating layoffs at KPMG, EY, and other Big Four professional services firms.
U.S. inflation jumped 0.9% in a single month following the disruption. The Federal Reserve has frozen rate policy even as the labor market softens — a stagflation trap last seen globally during the 1970s.
IMF Chief Economist Pierre-Olivier Gourinchas warned the shock could rival the 1973 and 1979 oil crises, which triggered recessions across Europe, North America, and Japan.2 Stagflation — rising prices alongside stagnant growth — erodes the revenue base professional services firms depend on worldwide.
University of Michigan economist Justin Wolfers cautioned that elevated energy costs could persist for years without conflict resolution. "If we don't get a satisfactory resolution, then that concern remains," Wolfers said.1
For the Big Four, whose advisory and consulting revenue is exposed to corporate budgets globally, the calculus is direct. Client discretionary spending is tightening in the U.S. and internationally. Energy costs pressure margins for every firm they serve. Offshoring and layoffs reduce fixed costs when deal flow slows.
Gourinchas flagged downstream risks including elevated unemployment and food insecurity in energy-import-dependent economies — a concern particularly acute across South Asia, Sub-Saharan Africa, and parts of Europe.2 For professional services, that deterioration means deferred mandates and slower transaction pipelines across multiple markets.
Equity markets globally have swung between yearly lows and all-time highs as investors weigh conflict duration. That volatility mirrors the same uncertainty driving Big Four restructuring: the difference between a temporary supply disruption and a structural energy reset.
The Trump administration has put no fiscal countermeasure in place. Professional services firms are restructuring now rather than waiting for client revenue to deteriorate further. Wolfers described cost pressures on Americans as very real — and for firms billing hours to those same corporate clients, that is also a revenue problem.1
