U.S. consumer confidence experienced a slight increase during March, even as energy prices escalated sharply due to the ongoing conflict in Iran. This movement occurred despite widespread concerns about the rising cost of living impacting household budgets.

Consumer Confidence Index Movement

Modest Overall Gain

The Conference Board reported on Tuesday that its key consumer confidence index climbed marginally to 91.8 in March, up from 91.0 recorded in February. This top-line reading appeared resilient to immediate economic shocks.

Underlying Pessimism Emerges

However, the board noted that while soaring oil prices and tariff-related costs did not derail the main confidence figure, other survey metrics showed growing pessimism. Specifically, expectations regarding future inflation levels increased significantly among respondents.

Comments from consumers frequently referenced the war, oil, and gas prices. Furthermore, consumers' 12-month inflation expectations surged to levels not seen since August 2025, a period when tariff anxieties were at their peak.

Impact of Surging Energy Costs

Gas Prices Hit New Highs

U.S. gasoline prices surpassed an average of $4 per gallon for the first time since 2022 earlier this week. This spike is directly attributed to the global fuel price surge caused by the war.

According to AAA, the current national average for regular gasoline stands at $4.02 per gallon. This represents an increase of more than a dollar since the conflict in the Middle East began.

Short-Term Outlook Dims

Conversely, the measure tracking Americans’ short-term outlook—covering income, business conditions, and the job market—declined by 1.7 points, settling at 70.9. This figure remains substantially below the 80-point threshold often signaling impending recessionary conditions.

This marks the 14th consecutive month that this short-term expectations index has registered below the 80-point benchmark.

Current Economic Assessments and Federal Reserve Implications

Positive View of Current Situation

In contrast to future expectations, consumers' assessments of their present economic situation improved. The index reflecting current conditions rose by 4.6 points, reaching 123.3.

Inflation Data and Rate Hike Outlook

Government data released earlier in March indicated that the inflation gauge favored by the Federal Reserve rose 2.8% in January. This provided an early indication of rising price pressures.

Excluding volatile food and energy sectors, core prices increased by 3.1%, up from 3.0% the previous month, marking the highest level in nearly two years. These persistent higher prices, coupled with the prospect of further inflation due to the Iran war, suggest the Federal Reserve is unlikely to reduce interest rates in the near future.