There have been numerous signs that the economy is under stress, as gas prices rise at a record pace; however, retail sales data, which economists rely on, are also climbing as higher pump prices have translated into higher gas station receipts.
The Iran war has driven global oil prices up by more than 30% in recent weeks, including a 24% increase in March, according to the U.S. Energy Information Administration. Leading Americans to spend more at filling stations in the largest March increase ever, according to the U.S. Census Bureau.
The U.S. economy was relatively healthy before the start of the war on Feb. 28, per Axios. Now that the war is underway, experts expect energy prices to be just one of the casualties, as disruptions to fertilizer supply threaten food prices (the Gulf region provides nearly half of the world’s seaborne urea and 30% of global ammonia demand).
Aluminum shortages (20% from Gulf states) threaten everything from aerospace to automotive manufacturing to construction to consumer electronics, according to the Atlantic Council.
The ceasefire agreed two weeks ago is falling apart, raising the likelihood of prolonged pain at the pump and across the wider economy.
Gas station sales see record growth as driver spending surges
Economists at the Stanford Institute of Economic Policy Research estimate that the war has pushed Americans’ average annual gasoline costs up $857 this year.
Retail sales, which are mostly goods and are not adjusted for inflation, jumped 1.7% in March, the largest increase since March 2025, but that increase was driven by increased gasoline prices. Economists polled by Reuters had forecast a 1.4% advance in March.
The beat was driven by a 15.5% increase in sales at U.S. gas stations, according to the Census Bureau, the largest March increase since the government started tracking the stat in 1992. Service station receipts had only risen 1.3% in February.
Meanwhile, overall sales advanced 4% year over year in March, while economists had expected just a 0.7% increase.
Photo by Gary Yeowell on Getty Images
Consumer sentiment drops on concerns about Iran war, rising gas prices
Consumer sentiment fell nearly 6% in March to its lowest level since December 2025. Perhaps underscoring just how unpopular this war is, the declines were seen across age and political party, noted Silver Bulletin.
Middle- and higher-income consumers, “buffeted by both escalating gas prices and volatile financial markets in the wake of the Iran conflict, exhibited particularly large drops in sentiment,” according to the latest University of Michigan Survey of Consumers.
Related: AAA gas prices reveal a new trend for Americans
UM’s Consumer Sentiment Index fell to 53.3% for its final reading in March, down 5.8% from February and down 6.5% from where it was a year ago. Consumer sentiment fell to its lowest reading since December 2025.
Consumers are feeling even less optimistic about the future of the economy than they are about the present, and it doesn’t take a trusted survey that has been around for 80 years to understand why.
According to Morgan Stanley, every $1-per-gallon increase in gas prices results in a $450-per-year increase in fuel costs for gas-powered vehicles, assuming 27 mpg and 12,000 miles driven per year.
The short-term economic outlook dropped 14%, and year-ahead expected personal finances sank 10%, though declines in long-term expectations were more subdued, according to the Index of Consumer Sentiment.
“These patterns suggest that, at this time, consumers may not expect recent negative developments to persist far into the future. These views are subject to change, however, if the Iran conflict becomes protracted or if higher energy prices pass through to overall inflation,” the survey researchers said.
Related: Rising gas prices force Americans to make unexpected changes
