Americans’ Economic Confidence Falls as Gas Prices Surge
Rising fuel and grocery costs are squeezing household budgets as the U.S.-Iran conflict disrupts global energy markets.
Americans’ economic confidence weakened in July as renewed fighting between the United States and Iran sent gasoline prices back above $4 a gallon. The decline was modest, but the reasons behind it are hitting families directly. Higher fuel costs, expensive groceries and growing concerns about the job market are leaving many households with less room in their budgets.
The Conference Board reported Tuesday that its Consumer Confidence Index fell 1.4 points, from an upwardly revised 92.2 in June to 90.8 in July. The index remains well below the levels recorded in late 2024 and early 2025.
The latest numbers show that consumers are not necessarily expecting an immediate economic collapse. However, many are increasingly dissatisfied with the economy they are experiencing today.
Consumer Confidence Slips as Daily Costs Rise
Consumer confidence is a measure of how people feel about current economic conditions and what they expect the economy to look like over the next six months.
When confidence declines, consumers may postpone major purchases, cut discretionary spending or increase their savings. Those decisions can eventually slow economic growth because consumer spending drives a large share of the U.S. economy.
The Conference Board’s Present Situation Index, which measures views of current business and labor market conditions, fell from 118.5 to 114.9 in July. It was the third consecutive monthly decline.
The Expectations Index remained unchanged at 74.7. That reading measures consumers’ six-month outlook for income, employment and business conditions.
An Expectations Index below 80 has historically been associated with recession risks, although it does not guarantee that a recession will occur.
“Consumer confidence moderated slightly in July, continuing a general downward sloping trajectory since late 2021,” said Dana M. Peterson, chief economist at The Conference Board.
Peterson said consumers saw current business conditions and the labor market less positively. They also expected little improvement in business conditions during the next six months.
What Consumers Said About the Economy
The survey was conducted online from July 1 through July 22. Write-in responses remained largely pessimistic.
The Conference Board reported several clear concerns:
- References to oil and gasoline prices remained elevated.
- Complaints about food and grocery prices increased.
- Mentions of jobs and unemployment rose slightly.
- Concerns involving war and geopolitics declined during most of the survey period.
- More recent fighting could cause geopolitical concerns to rise in revised survey results.
The timing matters. Some of the latest escalation between the United States and Iran occurred near or after the survey’s cutoff date. That means the full effect on consumer confidence may not yet appear in the July reading.
Gas Prices Return to the Center of the Economic Debate
The national average price for regular gasoline stood at about $4.10 per gallon on July 28, according to AAA. That was up from approximately $3.87 one month earlier and about $3.14 one year earlier.
AAA reported on July 23 that the national average had climbed 15 cents in one week to $4.09. The organization connected the increase to higher crude-oil prices and instability around the Strait of Hormuz.
The effect reaches far beyond the gas pump.
Higher fuel prices can increase the cost of:
- Shipping groceries and household products
- Operating farms and construction equipment
- Running school buses and public transportation
- Delivering packages
- Manufacturing products
- Traveling to work, school and medical appointments
Businesses often pass at least part of those costs to customers. Families then pay more not only when they fill their vehicles, but also when they shop for food, clothing and other essentials.
For workers in rural areas and communities with limited public transportation, cutting gasoline use may not be practical. Driving is often required to reach a job, grocery store, doctor or child-care provider.
The Strait of Hormuz Disruption Explained
The Strait of Hormuz is a narrow waterway connecting the Persian Gulf with the Gulf of Oman and the Arabian Sea. Before the conflict, roughly one-fifth of the world’s oil and liquefied natural gas shipments traveled through the route.
The United States and Israel launched attacks against Iran on February 28. Iran responded by restricting and disrupting shipping through the strait, creating uncertainty about global oil supplies.
Reuters reported that Iran declared the waterway closed in July after striking a vessel it said was traveling without authorization. U.S. officials disputed Iran’s authority over the strait and said an expanded route near Oman remained available. Commercial traffic, however, continued to face serious security risks.
That distinction is important. The strait has not always been physically sealed to every vessel, but threats, attacks, insurance costs and shipping restrictions have greatly reduced normal traffic.
Oil prices can rise even before an actual shortage reaches consumers. Traders react to the possibility that future supplies could be interrupted. Shipping companies may also avoid dangerous routes, pay higher insurance premiums or use longer alternatives.
Those additional costs eventually work their way through the economy.
Grocery Inflation Adds to the Pressure
Gasoline is not the only source of frustration.
Government data cited by The Associated Press showed that food purchased for home use had become about 33% more expensive since the beginning of 2019. The average price of a pound of ground beef reached $6.82 in June, about 79% higher than at the beginning of 2019.
These increases help explain why many Americans remain unhappy even when broader economic reports contain positive indicators.
A family may hear that inflation has slowed, but slower inflation does not mean prices have returned to earlier levels. It means prices are rising at a slower rate.
For households already stretched by rent, insurance, utilities and food, another increase in gasoline can force difficult choices.
Families may respond by:
- Combining errands to reduce driving.
- Buying less meat or switching to lower-cost foods.
- Delaying home or vehicle repairs.
- Canceling travel and entertainment.
- Using credit cards for basic expenses.
- Postponing major purchases.
Those decisions can protect a household temporarily, but widespread cutbacks may weaken local businesses and the broader economy.
Labor-Market Confidence Is Also Softening
Consumers were also less positive about employment conditions.
In July, 24.6% of respondents said jobs were plentiful, down from 25.5% in June. About 21.5% said jobs were difficult to find, a slight improvement from 21.7%.
Looking six months ahead, 16.7% expected more jobs to become available, while 25.3% expected fewer jobs.
The labor-market outlook was slightly less negative than it had been in June, but it remained weak overall.
Employment growth had also slowed. U.S. employers added 57,000 jobs in June, less than half the previous month’s gain. The unemployment rate fell from 4.3% to 4.2%, but much of the decline occurred because some people stopped looking for work and were no longer counted as unemployed.
This combination creates an uneasy picture. Many people still have jobs, but fewer believe employment opportunities are plentiful.
Is the Economy Heading Toward a Recession?
The July confidence report does not prove that a recession has begun.
Some parts of the survey offered signs of resilience. Consumers remained somewhat optimistic about household income, and plans to purchase homes and vehicles continued to improve on a six-month moving average. Travel intentions also increased.
Still, warning signs deserve attention:
- Current economic assessments have declined for three months.
- Expectations remain in historically weak territory.
- Gas and grocery prices are straining household budgets.
- Hiring has slowed.
- International conflict continues to threaten energy supplies.
Those who argue that consumer pessimism is exaggerated can point to continued spending, relatively low unemployment and improving plans for some major purchases.
But confidence surveys measure more than economic output. They capture how secure people feel. A household can continue spending while becoming less confident, especially when much of that spending goes toward necessities rather than improved living standards.
Economic Pressure Carries Political Consequences
The renewed pressure at the pump is arriving less than 100 days before the November congressional elections.
President Donald Trump has blamed much of the country’s inflation problem on former President Joe Biden. However, inflation has increased during Trump’s current term and rose more sharply following the beginning of the Iran conflict, according to federal data cited by AP.
Voters may debate which president, party or international actor bears the most responsibility. Yet families tend to judge the economy through immediate experiences.
They notice the total on the gas pump.
They notice how many groceries fit inside a $100 budget.
They notice whether employers are hiring and whether wages are keeping pace.
That makes gasoline prices especially politically powerful. They are displayed in large numbers on nearly every major road, giving consumers a daily reminder of changing costs.
What Families and Policymakers Can Do
Households cannot control global oil markets, but they can take limited steps to reduce the immediate damage:
- Compare local fuel prices before filling up.
- Keep tires properly inflated to improve fuel economy.
- Combine trips and use carpooling when practical.
- Review grocery unit prices rather than package prices.
- Use store loyalty programs and manufacturer coupons carefully.
- Contact utility, food and transportation assistance programs when necessary.
Policymakers face a larger responsibility.
Congress and the administration should provide clear information about the goals, costs and expected duration of U.S. military involvement. They should also protect emergency energy supplies, strengthen public transportation and avoid policies that place the heaviest burden on low-income and working families.
Long-term investments in domestic energy, renewable power, efficient vehicles and reliable public transit can reduce America’s exposure to foreign oil disruptions. Those policies will not immediately lower every family’s gasoline bill, but they can make future conflicts less economically damaging.
The Warning Behind the July Numbers
The July decline in consumer confidence was not dramatic. The index fell only 1.4 points.
But behind that small movement is a much larger warning.
Families are absorbing the cost of international conflict through gasoline, groceries and other daily expenses. Their outlook for the future has not collapsed, but their view of present economic conditions is getting worse.
Elected leaders should treat that frustration seriously. Americans deserve transparency about military decisions, practical relief from rising living costs and an energy strategy that protects families from the next overseas crisis.
Consumers should continue comparing prices, protecting household budgets and asking public officials direct questions about how policy decisions affect the cost of everyday life.
