Consumer confidence tumbled in March as Americans worry about the Iran war’s economic impact

Consumer confidence took a hit in March as tensions in Iran escalated and gas prices continued to rise, impacting Americans’ perceptions of the U.S. economy. The University of Michigan’s preliminary March sentiment index revealed a 5.8% decrease, dropping from 56.6 points in February to 53.3 in March, marking the lowest level since December 2025.

The decline in consumer sentiment was particularly noticeable among middle- and high-income individuals, according to Joanne Hsu, the director of Surveys of Consumers at the University of Michigan. Higher-income households, with more investments in the stock market, felt the effects of the market’s volatility since the onset of the Iran war on February 28. The S&P 500 witnessed a 6% decline during this period.

Elizabeth Renter, a senior economist at NerdWallet, explained that during times of war, people anticipate economic constraints to worsen, leading to higher prices and increased investment volatility. The rise in oil prices has added financial pressure on U.S. consumers, delivery drivers, and farmers, with Brent and WTI crude oil prices climbing significantly.

Gas prices surged to $3.98 per gallon on average, representing a $1 increase since the conflict in the Middle East began, while diesel prices reached $5.38 per gallon. The elevated diesel prices may eventually impact grocery prices as transportation costs increase. Francesco D’Acunto, an associate professor of finance at Georgetown’s McDonough School of Business, highlighted that prolonged exposure to high gas and grocery prices could lead to a sustained decline in consumer sentiment.

The University of Michigan’s consumer sentiment data also reflected a rise in inflation expectations from 3.4% in February to 3.8% in March, the most significant one-month increase since April 2025. This data aligns with recent polling from CBS News, indicating that rising energy prices are contributing to pessimism about the nation’s economy. A large majority of U.S. adults polled expect gas and oil prices to continue rising in the short term due to the ongoing conflict.

In conclusion, the combination of geopolitical tensions and escalating gas prices has weighed on consumer confidence in March. As Americans brace for potential economic challenges ahead, the impact of these factors on the overall economy remains a key concern.