Americans' confidence in the economy fell in July as gas prices climbed following escalated tensions between the U.S. and Iran. The Conference Board reported its consumer confidence index dropped to 90.8 from 92.2 in June, marking the third consecutive monthly decline in perceptions of current business and labor market conditions, which fell by 3.6 points to 114.9. Views on near-term economic prospects remained steady at 74.7.
The decline follows a brief improvement in June when gas prices dipped to around $3.70 per gallon from over $4.50 in April and May. However, rising Middle East tensions pushed prices back up to $4.10 by mid-July, according to AAA. Iran's closure of the Strait of Hormuz—through which 20% of global oil flows—after U.S. and Israeli strikes in February exacerbated inflation, eroding inflation-adjusted incomes.
Survey responses collected from July 1 to July 22 reflected persistent pessimism. While mentions of gas prices slightly decreased, concerns about food and grocery prices rose. References to war and geopolitics declined but may increase in future surveys due to recent escalations.