US consumer confidence inches up despite soaring gas prices brought on
by war in Iran
[April 01, 2026] By
MATT OTT
WASHINGTON (AP) — U.S. consumer confidence inched higher in March
despite soaring energy prices brought on by the war in Iran.
The Conference Board said Tuesday that its consumer confidence index
rose modestly to 91.8 in March from 91 in February.
The board said that while rising costs due to tariffs and spiking oil
prices induced by the conflict in the Middle East did not affect the
topline confidence reading, there was increasing pessimism in other
measures of the survey, including expectations of higher inflation.
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.
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Ray Ruda fills his van with fuel at a gas station Wednesday, March
25, 2026, in Brentwood, Tenn. (AP Photo/George Walker IV)
 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.
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