Impact of U.S.-Iran Conflict on Household Finances Estimated at $1,760

Consumers in the U.S. are experiencing increased financial pressures due to rising oil prices and Treasury yields amid ongoing conflict with Iran. Crude oil prices have risen recently, with U.S. crude oil closing above $105 per barrel, the highest since mid-May. The 10-year Treasury yield also reached its highest level in 19 years, which may lead to higher borrowing costs for consumers. According to an analysis from Moody's Analytics, the total financial impact per household since the conflict began is approximately $1,760 as of September 11. This figure includes about $930 attributed to increased energy costs, $425 from higher interest rates, and $405 from increased military spending. The average price for a gallon of gasoline in the U.S. surpassed $4.32, reflecting a 6% increase month-over-month and a 36% increase year-over-year, according to AAA. Diesel prices have also reached record highs, affecting transportation costs. The University of Michigan's consumer sentiment survey indicated that 29% of respondents mentioned gas prices as a concern in September, up from 12% in 2024. Additionally, airfare prices have increased by over 23% in August compared to the previous year. The rise in the 10-year Treasury yield, which is now about one percentage point higher than a year ago, is largely due to bond investors' concerns regarding inflation and the U.S. government's debt. Higher yields can negatively impact consumer confidence and purchasing power. The average rate on a 30-year fixed mortgage has also exceeded 7%, contributing to housing affordability challenges. Economists warn that increased borrowing costs may slow hiring and exacerbate economic disparities, particularly affecting lower-income consumers who spend a larger portion of their income on energy.