Average U.S. household paying $450 more on gas and energy
Americans have felt the financial strain of rising energy costs during the Iran war, with the average household spending nearly $450 extra on fuel-related expenses since the conflict began on Feb. 28. This analysis, provided exclusively to CNBC by Moody’s Analytics, reveals that consumers have collectively shelled out nearly $60 billion as gas prices and airline fares have surged.
According to Moody’s data, higher energy costs have forced many consumers to dip into their savings or rely more heavily on debt to cover expenses. Mark Zandi, Moody’s chief economist, warns that unless the war comes to an end soon, financially strained consumers will have no choice but to cut back on spending, which could further weaken the already delicate economy.
If energy prices remain at current levels, the average household could face a hit of almost $2,000 by the one-year mark of the war, Zandi predicts. Gasoline prices have seen a significant increase, with the average unleaded gallon in the U.S. costing about $4.39, up more than 47% since March. Diesel prices have also soared, resulting in over $20 billion in additional expenses for consumers. The price of diesel has spiked roughly 47% to around $5.52 a gallon.
Consumers have also had to contend with higher costs for jet fuel, giving up nearly $10 billion due to the surge in airline fares. In April, airline fares climbed more than 20% compared to the previous year, according to federal government inflation data.
The impact of these rising energy costs has more than offset the benefits from larger tax returns under President Donald Trump’s tax cuts. Goldman Sachs anticipates that higher energy prices will continue to erode consumers’ spending power throughout the remainder of 2026, particularly affecting lower-income households that allocate a larger portion of their budgets to food and energy.
Costco reported “record-breaking” gas volumes at the end of its fiscal quarter as drivers sought out its lower-priced fuel. McDonald’s CEO Chris Kempczinski cautioned that consumer spending, especially among lower-income groups, may worsen as energy prices put pressure on wallets.
Despite a 0.5% increase in consumer spending from March to April, government figures released on Thursday show that income growth remained flat, falling short of economists’ expectations. The personal savings rate dropped to 2.6% in April, one of the lowest levels since the global financial crisis, indicating that consumers have been tapping into their savings amid inflationary pressures.
Additionally, American credit card debt reached $1.25 trillion in the first quarter, up nearly 6% from a year ago, nearing the all-time record set in 2025. Gregory Daco, chief economist at EY-Parthenon, notes that consumers are facing an income squeeze, leading them to use savings, credit, and wealth to sustain their spending habits.
In conclusion, the ongoing Iran war and subsequent rise in energy prices have significantly impacted American consumers, prompting many to reassess their spending habits and financial strategies. The repercussions of these escalating costs are likely to continue affecting households across the country in the months to come.
