American families are feeling the pinch as consumer confidence fell in July, driven by rising gas prices that followed escalating conflict between the U.S. and Iran. The Conference Board reported Tuesday that its consumer confidence index dropped to 90.8 from 92.2 in June, continuing a pattern of tepid readings since the beginning of the year—a stark contrast to levels well above 100 in late 2024 and early 2025.
The decline comes as the average price for a gallon of gas climbed to $4.10 on Tuesday, according to AAA. That's up from around $3.70 a gallon in June, when consumer attitudes had briefly improved. Gas prices had previously spiked above $4.50 a gallon in late April and early May.
The Human Cost of Geopolitical Conflict
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. The closure caused gas prices to spike, accelerated inflation, and caused Americans' inflation-adjusted incomes to decline. It's working families who bear the brunt of these geopolitical decisions—their paychecks buying less even as prices at the pump and grocery store climb higher.
Americans remained sour on the economy after five years of elevated inflation, a dynamic that could pose a risk to President Donald Trump and Republicans in the midterm elections, which were less than 100 days away. Trump continued to blame inflation on his predecessor, Democrat Joe Biden. But the numbers tell a different story. Inflation had risen since Trump's inauguration last year, to 3.5% from 3% in January 2025. It jumped further after the Iran war began Feb. 28, when it was 2.4%.
Grocery Bills Hit Hard
Write-in responses to the survey, collected from July 1 to July 22, remained pessimistic. The Board said references to gas prices were down slightly but remained elevated, while respondents' mentions of food and grocery prices increased. Government data showed that buying food to bring home had gotten 33% more expensive since the beginning of 2019.
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 has become a symbol of those higher costs 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. These aren't just statistics—they're dinner table decisions about what families can and can't afford.
Labor Market Shows Cracks
References to jobs and unemployment picked up slightly in July and views of the current job market fell. Expectations for the labor market six months ahead 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 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. That's a troubling sign—when workers stop searching, it suggests deeper problems in the job market that official statistics don't capture.
The number of consumers who mentioned war and geopolitics decreased in July, but the Board said recent escalation in fighting between Iran and the U.S. could cause those mentions to rise in the next survey.
Trade and Growth Outlook
The U.S. goods trade deficit contracted less than expected in June and remained a drag on second-quarter GDP growth. Automotive vehicle exports rose 5.1% and exports of consumer goods rose 3.2%. The government was scheduled to publish the advance estimate of second-quarter GDP growth on Thursday.
Why This Matters:
The erosion of consumer confidence reflects real hardship for working and middle-class families who've watched their purchasing power decline over five years of elevated inflation. When geopolitical conflicts drive up energy costs, it's not policymakers or corporate executives who feel it most—it's families choosing between filling the gas tank and buying ground beef that's nearly 80% more expensive than seven years ago. The weakening job market adds another layer of insecurity, with discouraged workers dropping out of the labor force entirely. With midterm elections less than 100 days away, voters will be weighing whether current policies adequately protect them from economic shocks beyond their control. The question isn't just about GDP numbers—it's about whether government can ensure economic security for ordinary Americans facing pressures from global conflicts, corporate pricing power, and a softening labor market.