According to an analysis by Moody's Analytics, American households have incurred an average of $447.19 in additional fuel-related expenses since the onset of the Iran War, totaling nearly $60 billion in cumulative costs. This increase is primarily driven by a surge in gasoline prices, which have risen over 47% since early March, with the average price reaching approximately $4.39 per gallon.
Diesel prices have similarly escalated to around $5.52 per gallon, contributing over $20 billion in extra costs, while jet fuel price hikes have led to nearly $10 billion in additional airline expenses. Mark Zandi, Moody's chief economist, warns that if the conflict continues, consumers may become more cautious in their spending, which could further weaken the already soft economy.
Goldman Sachs anticipates that elevated energy prices will diminish consumer spending power through 2026, particularly affecting lower-income households that allocate a larger portion of their budgets to essentials like food and energy.
Despite a reported 0.5% increase in consumer spending from March to April, income growth was flat, and the personal savings rate fell to 2.6%, indicating that consumers are increasingly relying on savings and credit to maintain their spending habits. This trend raises concerns about the sustainability of consumer spending in the face of rising costs and stagnant income growth