Consumer confidence tumbled in March as Americans worry about the Iran war's economic impact
Consumer confidence slid in March as the Iran war and rising gas prices weighed on Americans' views of the U.S. economy.
The University of Michigan's preliminary March sentiment index, released Friday, showed consumer sentiment fell 5.8% from 56.6 points in February to 53.3 in March. That marks the lowest level since December 2025.
Drop among middle- and high-income consumers
The drop in sentiment was more pronounced among middle and high-income consumers, Joanne Hsu, director of the Surveys of Consumers at the University of Michigan, said in a statement. Higher-income households have more wealth invested in the stock market, which has been highly volatile since the Iran war began on Feb. 28. The S&P 500 has slumped almost 6% since then.
"When we go to war, people anticipate worsening economic constraints, including higher prices. But they also anticipate volatility in their investments," Elizabeth Renter, a senior economist at NerdWallet, said in a statement.
The dip in sentiment comes as oil prices climb, putting financial pressure on U.S. consumers, delivery drivers and farmers.
As of Friday afternoon, crude oil prices were up, with Brent, the international benchmark, rising 2.5% to $104.46 per barrel and West Texas Intermediate (WTI), the U.S. benchmark, rising 4.1% to $98.31.
Higher prices at the pump
Gas was $3.98 per gallon on average on Friday, according to AAA, up $1 since the conflict in the Middle East erupted, while diesel was $5.38 per gallon.
Elevated diesel prices could ultimately translate to grocery prices, given that the trucks that transport American goods run on the fuel.
"The more prolonged the exposure to high gas and grocery prices, the larger and more persistent the drop in sentiment will be," Francesco D'Acunto, an associate professor of finance at Georgetown's McDonough School of Business, told CBS News in an email.
The consumer sentiment data showed Americans' inflation expectations also rose from 3.4% in February to 3.8% this month, the largest one-month increase since April 2025.
The survey data aligns with recent polling from CBS News, which showed that rising energy prices are fueling pessimism about the nation's economy. Of the 3,335 U.S. adults polled, 85% said gas prices in their area have been going up. The vast majority, 90%, also said they expect U.S. gas and oil prices to be higher in the short term due to the war.