Americans’ confidence in US economy falls as Iran conflict sends gas prices higher

WASHINGTON (AP) — Americans’ confidence in the economy fell this month as gas prices resumed their climb after the U.S. and Iran stepped up their fighting.

The Conference Board said Tuesday that its consumer confidence index fell to 90.8 in July from 92.2 in June. That’s essentially the same tepid range its been in since the beginning of the year. In late 2024 and early 2025 the readings were well above 100.

Consumer attitudes had improved modestly in June as gas prices came down to around $3.70 a gallon from more than $4.50 a gallon in late April and early May. But as fighting in the Middle East escalated, the average price for a gallon of gas in the U.S. started to rise again. On Tuesday it was $4.10, according to the auto club AAA.

After being attacked by the U.S. and Israel in late February, Iran shut down the Strait of Hormuz, through which about one-fifth of the world’s oil travels, causing a spike in gas prices. That accelerated inflation, causing Americans’ inflation-adjusted incomes to decline.

Americans remain soured on the economy after five years of elevated inflation, potentially posing a risk to President Donald Trump and Republicans in the midterm elections, which are now less than 100 days away.

Trump continues to blame inflation on his predecessor, Democrat Joe Biden. Yet inflation has risen since Trump’s inauguration last year, to 3.5% from 3% in January 2025. It jumped even further after the Iran war began Feb. 28, when it was just 2.4%.

Write-in responses to the survey, which were collected from July 1 to July 22, remained pessimistic. The Board said references to gas prices were down slightly but remained elevated. Respondents’ mention of food and grocery prices increased.

Government data shows that buying food to bring home has gotten 33% more expensive since the beginning of 2019. To navigate those higher prices, Americans have turned to couponing, comparison shopping and cutting back on favorite foods as they absorb the biggest jump in grocery prices in a half-century.

Beef epitomizes out-of-control grocery prices for many Americans. The price of a pound of ground beef reached $6.82 in June — 79% more than at the beginning of 2019, according to Bureau of Labor Statistics data.

References to jobs and unemployment picked up slightly this month and views of the current job market fell. Expectations of how the labor market will be six months going forward improved slightly, but remained in negative territory.

U.S. employers slowed hiring last month and added only 57,000 jobs, less than half the previous month’s total. The unemployment rate declined to a low 4.2% from 4.3% in May, though the drop mostly occurred because many people out of work gave up looking and were no longer counted as unemployed.

The number of consumers who mentioned war and geopolitics decreased this month, but the Board suspects that recent escalation in fighting between Iran and the U.S. could cause those mentions to rise in the next survey.