One Hundred Days After the War, Americans Pay the Price for High Gas Prices and the Cost of Living

One hundred days after the outbreak of the war with Iran, the cost of living for Americans has risen significantly, especially for low- and middle-income families. The war has increased average household spending by about $750, most of which is spent on energy. This means Americans are paying more for gas and grocery shopping, and the Trump administration's tariffs and other policies have already added to the economic burden.

The war is unpopular with the American public. Multiple polls show that most people disapprove of Trump's handling of the conflict with Iran, believing that launching military action was a mistake. The economic pressure is particularly evident among ordinary consumers. Gasoline prices have soared from $2.98 per gallon at the end of February to over $4, and Iran's retaliatory actions, including the blockade of the Strait of Hormuz, have further pushed up global energy prices.

Rising energy costs are a major factor in rising inflation. The latest personal consumption expenditure data shows that energy prices have risen by 5.5%, and the overall inflation rate has also risen from 3.5% to 3.8%, the largest increase in three years. To cope with high gas prices, some Americans are choosing to reduce travel or work remotely more. This behavior reflects declining consumer confidence. A University of Michigan survey showed that the consumer confidence index has fallen for three consecutive months, hitting a two-year low. High prices have forced about two-thirds of Americans to cut back on consumer spending.

Rising fuel prices are not only affecting daily travel but also impacting the airline industry. Low-cost carrier Spirit Airlines announced its closure due to high fuel costs, while other airlines raised fares to cope with rising costs. In addition to energy, food prices are also rising. Food prices rose 0.5% in April, the largest increase since November 2022. Rising fertilizer prices have also increased farmers' production costs, with urea prices expected to rise by 60% by the end of the year, driving further increases in future food prices. Tomato, meat, and fruit and vegetable prices have already seen significant increases, partly due to the combined effects of energy costs and tariffs.

Mortgage rates are also affected by the war. The average interest rate on a 30-year fixed mortgage rose to 6.5% from 5.98% in February. The war has driven up fuel and energy costs, causing Treasury yields to rise, which in turn has led to higher mortgage rates. With inflation expected to continue to worsen, lenders are raising rates to compensate for losses from future currency devaluation. JPMorgan analysts predict that the Federal Reserve will not cut interest rates in the short term and may even raise rates before mid-2027 to address inflationary pressures.

Overall, the energy price increases triggered by the war have not only increased daily expenses for American households but have also had a ripple effect on consumer confidence, food prices, the airline industry, and mortgage rates. Low- and middle-income families are particularly burdened, as a large portion of their income is spent on housing, food, and energy. As the war continues and its impact on global energy markets persists, inflationary pressures are likely to rise further in the coming months, making it difficult to alleviate the economic burden on ordinary American families in the short term.