American shoppers are proving a lot tougher to rattle than the headlines might suggest. Despite a simmering military conflict with Iran and the constant threat of a global energy squeeze, the latest economic data shows that the U.S. consumer is holding steady—and even feeling a bit more optimistic.
According to Morning Consult’s daily Index of Consumer Sentiment released Tuesday, confidence ticked up by 0.6 points this past week.
The shift is largely being driven by a sense of hope in the markets and on the streets that a deal with Iran could be on the horizon. If the Strait of Hormuz—a vital artery for the world’s oil—opens back up, much of the current economic pressure could evaporate.
While the current ceasefire is fragile and a full-blown escalation remains a “medium” to “high” risk depending on income levels, the political clock is ticking.
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Analysts note that the looming midterm elections are putting immense pressure on the Trump Administration to find a diplomatic exit ramp sooner rather than later.
Perhaps the most surprising finding in the April 21 report is how people are handling the pain at the pump. Even with gas prices climbing, three out of four consumers are simply absorbing the cost rather than changing their driving habits or slashing their spending elsewhere.
There is a mathematical reason for this resilience: gas simply doesn’t eat up as much of the American paycheck as it used to. In early 2022, gas accounted for roughly 5.2% of total consumer spending. Today, that number has dropped to 3.3%.
Because the prices of almost everything else have risen over the last few years, the relative “share of wallet” taken by a gallon of gas is smaller. Experts at Morning Consult suggest that prices would likely need to soar past the $5 mark to trigger the kind of lifestyle shifts seen during the Russia-Ukraine crisis.
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Key indicators like inflation expectations and the “Pay Loss Rate”—which tracks how many people are losing income—remained flat this week. For the average adult, inflation expectations are holding at 4.5%, while the overall consumer sentiment score sits at 89.4.
While those earning under $50,000 a year are still facing “high” risk levels regarding sentiment and pay stability, the broader economy is currently navigating the geopolitical storm without veering off course. For now, it seems the American driver is willing to keep the car in gear and wait for a resolution.
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