As the conflict between the U.S., Israel, and Iran crosses the one-month mark, the American economy is proving unexpectedly resilient.
New data released Tuesday by Morning Consult shows that while consumer sentiment has taken a hit, it hasn’t fallen off the proverbial cliff. Since the end of February, sentiment has dipped 6%, but the latest weekly numbers suggest a public that is holding its breath rather than panicking.
The index of consumer sentiment (ICS) for all adults currently sits at 88.8, a slight week-over-week decline of 0.8 points. Interestingly, the biggest skeptics appear to be high earners; those making over $100,000 saw their sentiment drop by 1.8 points this week, the sharpest decline across all income brackets.
Despite these wobbles, there is a glimmer of cautious optimism regarding prices. Inflation expectations edged down by 0.1 percentage points to 4.7%, a move likely tied to President Trump’s decision to extend a pause on Iranian energy strikes through April 6. With peace talks reportedly ongoing via Pakistani mediators, the immediate fear of a massive energy price spike has softened.
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However, the “deep dive” data reveals a nation sharply divided by political identity when it comes to the war’s finish line.
This partisan split is now a primary driver of how Americans view their financial future. Roughly 24.6% of Republicans believe the conflict will wrap up in under three months, a confidence shared by only 10% of Democrats. This optimism has led Republicans to downwardly revise their inflation expectations, while the trend for Democrats has largely plateaued.
The current economic outlook remains at a “medium” to “high” risk level across most categories. While the pay loss rate improved slightly to 11.7%, the report notes that the persistence of high oil prices and the general uncertainty of the war remain the biggest threats.
“The biggest wild card in evaluating the U.S. economy is estimating the likely impact of the conflict between Iran and the U.S. on gas prices, global supply chains, and global travel,” the report stated.
For now, the data suggests the economy has absorbed the initial shock, but a shift in the perceived duration of the war could quickly rewrite that reality.
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