US consumer confidence inches up despite soaring gas prices brought on by war in Iran

Respondents’ comments about oil, gas and the war spiked and consumers’ 12-month inflation expectations surged to levels last seen in August 2025 when anxiety over tariffs peaked.

U.S. gas prices jumped past an average of $4 a gallon for the first time since 2022 on Tuesday as the war caused fuel prices to soar worldwide.

According to motor club AAA, the national average for a gallon of regular gasoline is now $4.02 — up more than a dollar before the war began. The last time U.S. drivers were collectively paying this much at the pump was nearly four years ago, following Russia’s invasion of Ukraine.

“This is the key concern as the war in Iran enters the second month – will the oil price shock turn into a demand destruction shock?,” wrote Heather Long, chief economist at Navy Federal Credit Union.

Long said that Navy Federal’s credit card data from March showed that consumers were still making purchases across categories even as gas prices rose. But she said that could change in the second quarter “as the worst of the inflation shock hits consumers.”

A measure of Americans’ short-term expectations for their income, business conditions and the job market fell 1.7 points to 70.9, remaining well below 80, a marker that can signal a recession ahead. It’s the 14th consecutive month that reading has come in under 80.

The index for consumers’ assessments of their current economic situation rose by 4.6 points to 123.3.

Government data from earlier in March showed that an inflation gauge closely monitored by the Federal Reserve moved 2.8% higher in January in the latest sign that prices were persistently elevated even before the Iran war caused spikes in oil and gas costs.

Excluding the volatile food and energy categories — which the Fed pays closer attention to — core prices rose 3.1%, up from 3% in the prior month and the highest in nearly two years.

Consumer prices and prices at the wholesale level also remain elevated.

Those higher prices and the prospect of even higher inflation due to the Iran war makes it unlikely that the Federal Reserve will cut interest rates any time soon.

The Fed cut its benchmark interest rate three times to close 2025 in an attempt to support a flagging labor market. However, because lower rates can exacerbate inflation, which remains above the Fed’s 2% target, the Fed has left its overnight lending rate alone at its past two meetings.

While consumers' views of current employment conditions improved slightly, perceptions of the labor market six months from now edged downward.

The Labor Department reported earlier in March that U.S. employers unexpectedly cut 92,000 jobs in February, a sign that the labor market remains under strain. Economists had expected 60,000 new jobs in February. The unemployment rate rose to 4.4%.

Another report Tuesday showed that U.S. job openings fell slightly in February to 6.9 million from 7.2 million in January.

The surprisingly weak employment picture in February adds to the economic uncertainty sparked by the war with Iran, which has caused oil prices to surge and saddled business and consumers with unforeseen costs.

The country’s labor market has been stuck in a “low hire, low fire” state, economists say, as businesses stand pat due to uncertainty over President Donald Trump’s tariffs and the lingering effects of elevated interest rates.

U.S. economic growth slowed to 1.4% in the final three months of last year, following two surprisingly strong quarters. Growth in the fourth quarter was dragged down by the six-week shutdown of the federal government and a pullback in consumer spending.

According to the Tuesday’s survey results, consumers’ plans to buy cars continued to rise in March, with used cars remaining the clear preference.

Homebuying expectations fell in March as the spring buying season kicks off in the midst of a yearslong housing market slump.

Expectations that stock prices will be higher a year from now plunged, the board said.