US-Iran war: US consumer confidence slides amid rising costs

The Iran war is adding to the financial pressure on American households, driving up the cost of fuel, travel and everyday expenses at a time when consumers are already struggling with inflation. According to estimates by Moody's, the conflict has cost U.S. consumers around $265 billion since it began in late February. That translates to approximately $2,000 in additional costs for the average American household. Energy prices account for a significant share of this burden. The disruption to shipping through the Strait of Hormuz restricted the movement of crude oil, petroleum products and liquefied natural gas from the Persian Gulf. Higher transportation costs continue to put pressure on energy prices. The national average price of gasoline has climbed to $4.34 a gallon as compared with $2.98 before the war. While American households have incurred around $1,100 in additional energy expenses, with the burden increasing by an estimated $50 every week, diesel prices also remain elevated, raising costs across freight, agriculture and transportation. The impact, in fact, is extending beyond fuel purchases, feeding into the wider cost of living. The economic fallout is extending beyond energy, with higher inflation and borrowing costs putting additional pressure on household budgets. Moody's Analytics estimates that higher interest rates have cost the typical American household around $360. Average rates on 30-year fixed mortgages have climbed to 7.4%, approaching a three-year high. Credit card balances and car loans have also become more expensive. Inflation concerns are also intensifying. Air travel is another area facing a significant cost increase. Higher jet fuel prices have prompted airlines to raise their fares, increase baggage fees, and reduce some less profitable routes. According to the U.S. Bureau of Labor Statistics, data cited in the report, air fares were up 23 percent year-on-year in August. Households that rely on heating oil are also facing higher bills, with the U.S. Energy Information Administration projecting fuel costs to be 21 percent higher than last winter. At the same time, wage growth slowed to a five-year low in September. Inflation-adjusted wages have declined in almost every month since the war began, leaving many consumers with less purchasing power. The rising cost of living is emerging as a political challenge for President Trump ahead of the U.S. midterm elections, with consumer confidence under pressure and public support for his handling of the economy remaining low. As per a September CNN poll, just 27% of Americans approve of Trump's performance on the economy, while 28% describe economic conditions as good. Trump, meanwhile, has defended the military campaign, arguing that higher fuel prices are a price worth paying to prevent Iran from acquiring a nuclear weapon. In fact, the White House has also challenged Moody's assessment, questioning its chief economist's record and highlighting his political affiliations. However, the administration is also facing uncertainty over how to bring the end to this conflict. Speaking at a rally in Youngstown, Ohio, Trump questioned whether the U.S. had gone too far in its military operations. He suggested that the extent of the attacks may have complicated efforts to identify Iranian leaders capable of negotiating an agreement. Vice President Vance has also acknowledged uncertainty over Iran's decision-making structure following months of fighting and leadership losses. Washington has indicated that any agreement would require meaningful concessions from Tehran on uranium enrichment before broader diplomatic progress for sanctions relief. The result is a conflict with consequences extended well beyond the battlefield, Deals, higher household expenses, rising borrowing costs and uncertainty over negotiations are now putting pressure on American consumers. The pace of any economic recovery at the moment remains uncertain.