After weeks of war with no end in sight, and gas prices rising faster than they have in decades, U.S. consumers are becoming more worried about the state of the economy than they have been in three months, according to the latest University of Michigan Survey of Consumers.
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.
As the Iran war wraps up its fourth deadly week, the U.S is once again threatening to begin a ground campaign in Iran, according to Fox News, which would ostensibly extend the time horizon for this conflict’s resolution.
Iran has responded not only by closing the Strait of Hormuz, through which about 20% of the world’s oil travels, but also by threatening to close the Strait of Mandeb, The Hill reports. The latter connects the Red Sea to the Gulf of Aden and accounts for another 11% of oil travel.
“Escalating conflict in the Middle East is increasing risk across the global auto supply chain. Tensions around the Strait of Hormuz have heightened energy price volatility and raised concerns about shipping disruptions in oil and aluminum, among other upstream raw materials,” Morgan Stanley analyst Andrew Percoco said in a recent note.
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.
So, as the war rages on and gas prices rise, consumer sentiment will inevitably keep falling. Still, the survey even admits that its reading this month may not truly capture just how anxious American consumers have become.
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.”
Related: Chevron CEO sends worrisome Middle East oil message
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.
