A jobs report to be released on Friday will provide a key gauge of the United States economy as shoppers withstand a surge of inflation set off by the Iran war.Hiring has proven largely resilient in recent months, despite a historic oil shock that has driven up fuel prices and hiked supply-chain costs for a host of other goods.A government report issued last week showed a steeper slowdown in gross domestic product than expected over three months ending in June, suggesting strain in the underlying economy over the early months of the war.Economists expect the labor market to have remained sturdy in July, adding 83,000 jobs in the month. That figure would mark an uptick from 57,000 jobs added in June.The U.S. added an average of 92,000 jobs per month over the first half of 2026, U.S. Bureau of Labor Statistics data showed. That pace marks an improvement from an average of about 7,000 jobs lost per month over the second half of 2025.The unemployment rate stands at 4.2%, a low level by historical standards.Federal Reserve Board chairman Kevin Warsh responds to a question from the news media during a press conference at the Federal Reserve building in Washington, July 29, 2026.Shawn Thew/EPA/ShutterstockThe Iran war drove up gasoline prices and catapulted inflation to a three-year high in May. A preliminary peace agreement in June offered up some relief, but a burst of on-again, off-again fighting in recent weeks caused crude prices to rise again.Popular ReadsThe combination of elevated inflation and a resilient labor market has raised the chances of an interest rate hike, futures markets show. Investors peg the odds of a quarter-point rate hike next month at about 56%, according to the CME Group's FedWatch Tool, a measure of market sentiment.The Fed opted to hold interest rates steady at its meeting last week, but central bankers appeared divided over the move. Three of the 12 members on the Fed's policymaking board voted in favor of a rate hike, marking the largest number of dissenters casting ballots in the same direction since 2016.A rate increase, however, could risk a slowdown in hiring and economic growth over the coming months as corporations face the prospect of higher borrowing costs.The benchmark rate stands at a level between 3.5% and 3.75%. That figure marks a significant drop from a recent peak attained in 2023, but borrowing costs remain well above a 0% rate established at the outset of the COVID-19 pandemic.Fed Chair Kevin Warsh, who took the helm of the central bank this summer, has repeatedly vowed to dial back inflation."The committee remains resolute -- you’ve heard this before -- that we will deliver price stability," Warsh told reporters in Washington, D.C., last week.