Iran War's Impact on Consumer Confidence and Inflation: Insights from the University of Michigan

Iran War's Economic Fallout on Consumer Confidence

The ongoing Iran war is raising alarm over inflation and consumer confidence across the United States. The latest sentiment index from the University of Michigan reports a 5.8% decrease in consumer confidence, marking a significant drop from 56.6 points in February to 53.3 in March. This downturn represents the lowest consumer sentiment since December 2025.

Effects of Rising Prices

• High-income households, heavily invested in the stock market, are feeling the brunt of the financial turbulence.
• Since the escalation of the conflict on February 28, the S&P 500 has seen a decline of almost 6%.
• Gas prices have surged, climbing to $3.98 — a rise of $1 amid the crisis.

Joanne Hsu from the University of Michigan notes that consumer sentiment has particularly faltered among middle and high-income demographics, who are more affected by the volatile economic landscape.

The Crude Oil Surge

Additionally, crude oil prices are witnessing an upward trend, with Brent crude at $103.72 per barrel, increasing by 1.8%, and West Texas Intermediate (WTI) climbing to $97.35 per barrel, up 3.04%.

This growing inflation coupled with rising gas prices poses severe challenges for U.S. consumers, including delivery drivers and farmers, tightening their financial capacities.