Middle East tensions show no signs of abating. According to the latest reports, Iran has initiated a new round of missile attacks targeting Israel. Additionally, recently released satellite imagery indicates that a THAAD anti-missile radar at a US military base in Saudi Arabia sustained damage during the Iranian assault.
The US economic outlook has deteriorated rapidly over the past two weeks, impacted by American military actions concerning Iran. A special survey conducted by the National Association for Business Economics reveals that economists anticipate economic growth will slow from this year through 2027 due to energy shocks triggered by the conflict, while inflation is expected to rise further.
On April 3, Iranian media reported that Iran launched a new missile attack against Israel. Concurrently, the Israel Defense Forces issued a statement confirming the detection of missiles fired from Iran towards Israel and that air defense systems were actively intercepting them.
Separately, a report from CNN on April 2, citing newly available satellite images, showed that a critical US radar at the Prince Sultan Air Base in Saudi Arabia was damaged during an Iranian attack on March 1. The radar, identified as an AN/TPY-2 model, is a core component of the US THAAD missile defense system. While previous reports indicated a tent housing the radar was struck, the latest imagery confirms the radar has been moved outdoors, displaying burn marks and significant damage to its antenna. The attack appears aimed at degrading US capability to detect incoming missiles and drones. Iran has previously targeted similar radars in Jordan and Qatar.
The US Missile Defense Agency, responsible for the THAAD program, lists the cost of an AN/TPY-2 antenna at $136 million in its 2025 budget. Neither the US Department of Defense nor US Central Command has yet commented on the incident.
In related news, the Iranian Fars News Agency reported that a Red Crescent warehouse in Bushehr province was attacked on April 3, destroying several pieces of equipment, though no casualties were reported. The attack, which directly hit the humanitarian facility with a drone around 5 a.m., destroyed containers, rescue vehicles, and a bus. Such strikes on humanitarian infrastructure are explicitly prohibited under the Geneva Conventions and international humanitarian law.
Meanwhile, the Israel Defense Forces announced on April 3 that over the past month, they have struck more than 3,500 targets inside Lebanon, resulting in approximately 1,000 militant casualties. Israeli ground operations in southern Lebanon, led by several divisions and supported by air and naval forces, have targeted militants, weapon storage sites, launch positions, and command centers. The military also stated it destroyed five key bridges allegedly used for transporting weapons and personnel, as well as assets linked to the "Charitable Loan Alliance," which is accused of funneling civilian funds to support Hezbollah.
The special NABE survey highlights growing concerns among economists, with over two-thirds fearing a worsening US economic situation. The "flash" survey, conducted urgently after the routine quarterly report, indicated a "rapid and marked" shift in the economic outlook since early March, according to NABE President Gregory Daco. While the regular survey completed on March 13 projected a 2.1% growth rate for the fourth quarter, about two-thirds of economists in the flash poll downgraded their growth forecasts by 0.25 to 0.5 percentage points.
Regarding inflation, most experts now expect core inflation to exceed the previously forecast 2.7%, with an upward revision of approximately 0.25 percentage points. The surge in oil prices due to the conflict has pushed the national average retail gasoline price above $4 per gallon, creating a dual economic impact: fueling inflation while reducing household disposable income and dampening economic growth.
The International Monetary Fund, in its latest annual assessment of the US economy, noted that while US inflation is projected to return to the Federal Reserve's 2% target by the first half of 2027, policymakers have little room to cut interest rates this year. IMF staff anticipate only one rate cut by the end of 2026, with the benchmark rate expected to fall to a target range of 3.25% to 3.5% by year-end, down from the current 3.5% to 3.75%. The full Article IV consultation report, released on Thursday, was largely completed before the US-Israel strikes on Iran on February 28 and thus does not fully account for the impact of the ongoing Middle East conflict.
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