The conflict in Iran has significantly influenced crude oil prices, leading to rising gasoline costs. As of Wednesday, the national average price for petrol in the US reached $4.53 per gallon, according to AAA.
The economic impact of these price increases reveals a distinct K-shaped recovery within the US economy, as highlighted by economists from the New York Federal Reserve. They noted that American households are experiencing divergent effects from rising gasoline prices, with lower-income groups facing increased strain.
Bank of America indicates that lower-income households are more vulnerable to spikes in energy costs since such expenses constitute a larger portion of their income. This disparity in economic impact was particularly evident in March 2026, as outlined by Liberty Street Economics.
The data shows an increase in nominal gasoline spending, which surged following the onset of the war in Iran. However, real growth in gasoline consumption revealed that low-income households curbed their fuel usage more than high-income households, who have shown a reluctance to reduce consumption despite higher costs.
Similar patterns occurred during the 2022 energy crisis initiated by Russia’s invasion of Ukraine, which disrupted global natural gas supplies. Historically, when energy prices escalate, lower-income families typically reduce their consumption significantly, while those with higher incomes may only slightly adjust their habits.
Bank of America economists caution that the ongoing increase in energy prices could further erode the already diminished purchasing power of lower-income households, potentially leading to higher rates of credit card and auto loan delinquencies. Such financial strain could hinder these households’ access to credit, affecting their future spending capabilities.
During a recent statement at the White House, National Economic Council Director Kevin Hassett asserted that American consumers are “really, really firing on all cylinders,” pointing to soaring credit card expenditures and increased spending across all sectors, including gasoline.
Economic data released on April 30 showed that overall prices rose by 0.7% in March compared to February, with core PCE—excluding food and energy costs—up by 0.3%, reflecting steady annual growth rates of 3.5% and 3.2% respectively.
In summary, while the American economy displays some signs of resilience, the ramifications of rising energy prices are disproportionately affecting lower-income households, creating potential long-term financial challenges amid a complex recovery landscape.
