American consumers are being squeezed from two directions at once, facing rising oil prices and surging Treasury yields as the U.S. war with Iran intensifies.
Crude prices have reaccelerated in recent weeks as fighting between the U.S. and Iran has ramped back up, pushing fuel costs sharply higher across the country.
The total financial toll per household since the U.S.-Iran conflict began stands at around $1,760, according to an analysis from Moody’s Analytics as of September 11.
Mark Zandi, chief economist at Moody’s Analytics, said $930 of that figure, more than half, stems from higher energy costs including gasoline, diesel, and jet fuel.
Cumulatively, U.S. consumers have spent more than $121 billion extra on energy since the war began, with another $425 attributable to higher interest rates.
The remaining $405 of the household bill comes from higher military spending, which Zandi said consumers will pay for through either national debt expansion or increased taxes.
“Consumers are under a lot of financial pressure,” said Zandi, capturing the mounting anxiety felt by millions of Americans navigating sharply higher costs.
The average gallon of gas in the U.S. exceeded $4.32 on Tuesday, up 6% month over month and 36% from a year ago, according to AAA.
Per-gallon diesel prices hit all-time highs above $6 in recent days and were roughly 70% higher than the same day a year prior, per AAA.
Slightly over 29% of respondents to the University of Michigan’s closely followed consumer sentiment survey mentioned gas prices in September, up from around 12% and 6% in the same month of 2024 and 2025 respectively.
Airfare prices have jumped more than 23% in August from the same month a year before, per the latest data from the Bureau of Labor Statistics, making it one of the fastest-accelerating categories in the consumer price index.
The 10-year U.S. Treasury yield climbed to its highest level since 2007 on Tuesday, sitting roughly a full percentage point higher than where it stood a year ago.
Michigan’s consumer survey found 44% of respondents expect borrowing costs to rise in the next year as of July, up 10 percentage points compared with a year prior.
The average rate on the 30-year fixed mortgage topped 7% for the first time in more than a year this month, following longer-term bond yields higher since the war broke out.
“People experience higher interest rates much like they experience inflation,” said Diane Swonk, chief economist at consulting firm KPMG. “It makes things less affordable.”
Total credit card debt in the U.S. rose to $1.26 trillion in the second quarter, sitting near a record high, according to the New York Fed.
Several economists have said that higher energy costs from the war have more than erased boosts from loftier tax refunds resulting from President Donald Trump’s “big, beautiful bill.”
Inflation is once again rising faster than income is increasing, leaving U.S. consumers with negative real earnings growth and diminished purchasing power, according to government data from August.
Luke Tilley, chief economist at M&T Bank and Wilmington Trust, said consumers are drawing on savings, with the personal savings rate falling to levels rarely seen since the Global Financial Crisis.
“It’s reflecting the times,” Tilley said. “Costs have gone up and income growth has gone down, so something has got to give.”