American consumer confidence edged up modestly in April even as soaring energy costs from the war in Iran threaten to stretch household budgets and deepen economic inequality, according to the Conference Board's latest survey released Tuesday.
The consumer confidence index rose to 92.8 from 92.2 in March, beating estimates reported by several outlets. Yet the reading remains near its lowest level since the COVID-19 pandemic, reflecting persistent anxiety about affordability and the economic pressures facing working families.
Energy Crisis Hits Working Families Hardest
The national average for a gallon of gas in the U.S. rose to $4.18 this week, up more than a dollar since before the war began. Respondents' comments about prices, oil, gas and the war increased in April as Americans grapple with costs not seen since nearly four years ago, following Russia's invasion of Ukraine in the fifth year of the conflict.
The surge in gas prices will stretch the budgets of lower- and middle-income households as it erodes their incomes, making it harder to afford other necessities such as food and rent. The largest monthly jump in gas prices in six decades caused a sharp spike in inflation last month, creating challenges for the inflation-fighters at the Federal Reserve.
Consumer prices rose 3.3% in March from a year earlier, up from 2.4% in February and the biggest yearly increase since May 2024. On a monthly basis, prices rose 0.9% in March from February, the largest such increase in nearly four years. It was the first read on inflation to capture the effects of the Iran war.
Recession Warning Signs Persist
Heather Long, chief economist at Navy Federal Credit Union, said, "Consumers are singing the blues. They aren't happy with high prices for gas, housing, electricity and many other items. It's clear consumers aren't going to feel much better until there's an end to the Middle East conflict."
A measure of Americans' short-term expectations for their income, business conditions and the job market rose 1.2 points to 72.2 in the Conference Board's report Tuesday, but remained well below 80, a marker that can signal a recession ahead. It was the 15th consecutive month that reading came in under 80. The index for consumers' assessments of their current economic situation fell by 0.3 points to 123.8.
Federal Reserve Decision Looms
Government data from earlier this month showed that the inflation gauge closely monitored by the Federal Reserve moved 2.8% higher in February from a year ago, a sign that prices were persistently elevated even before the Iran war caused spikes in oil and gas costs. Those higher prices and the prospect of even higher inflation due to the Iran war make it unlikely that the Federal Reserve will cut its benchmark interest rate when it wraps up its two-day meeting on Wednesday.
The improvement in sentiment was also linked in one report to a better-perceived labor market and job outlook, while another report said the mood was helped by a ceasefire-related optimism that boosted stock prices. Another report said the confidence rise came despite high gasoline prices and ongoing conflict with Iran.
Why This Matters:
The modest uptick in consumer confidence masks a deeper crisis of affordability that disproportionately affects working and middle-class families. With gas prices eroding household budgets and inflation squeezing essential purchases like food and rent, economic security remains fragile for millions of Americans. The 15th consecutive month of recession-warning signals underscores the vulnerability of working families to external shocks like the Iran war. The Federal Reserve's likely decision to hold interest rates steady means relief from high borrowing costs remains distant, even as energy costs strain family finances. The conflicting signals—slight optimism paired with persistent affordability concerns—highlight how economic recovery depends not just on market indicators but on ensuring working families can meet basic needs without financial distress.