American consumer confidence fell in July as renewed fighting between the United States and Iran pushed gasoline prices higher, reversing modest gains from earlier in the summer and leaving households deeply pessimistic about the national economy with midterm elections approaching.
Consumer Confidence Retreats Amid Energy Pressures
Americans’ economic confidence slipped back downward this month after a brief respite, driven primarily by cost-of-living pressures tied to escalating conflict in the Middle East. The Conference Board reported that its consumer confidence index decreased to 90.8 in July, dropping from 92.2 in June, according to data released by Bloomberg.
That reading keeps confidence pinned in the tepid range that has defined much of the year. In late 2024 and early 2025, index readings sat comfortably above 100 before persistent inflation and geopolitical oil shocks took a heavy toll. Consumer appraisals of current business conditions were slightly more positive compared to last month.
However, perceptions of the current labor market softened measurably.
The Gasoline Price Rebound and Geopolitical Fallout
The primary driver behind the economic gloom remains the cost at the pump. Following military strikes by the U.S. and Israel in late February, Iran shut down the Strait of Hormuz—a vital maritime chokepoint carrying roughly one-fifth of the world’s petroleum—triggering an immediate oil and gas price spike that accelerated national inflation.
National average gasoline prices had spiked above $4.50 per gallon in late April and early May before easing down to around $3.70 in June, providing a temporary cushion for household budgets. But as hostilities in the Middle East escalated again, prices climbed. According to the auto club AAA, the average price for a gallon of gas in the U.S. reached $4.10, as reported by AP News.
While Gallup’s separate Economic Confidence Index showed a modest uptick from its low of -45 in May to -31 in July, Americans remain broadly pessimistic. Only Republicans held positive economic sentiment territory at +41, while independents registered at -38 and Democrats at -76, according to Gallup polling data. Government issues and inflation remain top concerns for voters as the midterm elections sit less than 100 days away.
Grocery Inflation and Labor Market Strains
Beyond energy costs, everyday household necessities continue to strain personal finances. Government data shows that purchasing groceries for home preparation has risen 33% in cost since the beginning of 2019. To cope, consumers have increasingly turned to couponing, comparison shopping, and cutting out favorite items.
At the same time, the labor market showed signs of cooling. U.S. employers added just 57,000 jobs last month, down by more than half from the prior month’s total, while the unemployment rate ticked down to 4.2% largely because discouraged workers stopped looking for employment.
Diverging Sentiment Measures and Economic Outlook
While The Conference Board’s gauge captured a pullback in July, other measures presented a more nuanced snapshot depending on survey timing. However, analysts pointed out that the Michigan survey was conducted between June 23 and July 13, capturing consumer views mostly before the latest round of military strikes and subsequent energy price jumps fully registered in public awareness.
With inflation sitting at 3.5%—up from 3% in January 2025 and 2.4% right before the Iran conflict began—the trajectory of energy markets will likely dictate whether the modest economic improvements observed in early summer can survive the fall.
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