Americans expressed less confidence in the economy this month as gas prices climbed. The Conference Board reported on Tuesday that its consumer confidence index dropped to 90.8 in July, a slight decrease from 92.2 in June. This index has remained in this low range since the start of the year. In contrast, readings in late 2024 and early 2025 were above 100.
Consumer sentiment had improved slightly in June due to a decrease in gas prices to around $3.70 a gallon, down from over $4.50 a gallon in late April and early May. However, escalating conflict in the Middle East has caused gas prices to rise again. As of Tuesday, the average gas price was $4.10 per gallon, according to AAA.
The conflict in the Middle East impacts fuel prices significantly.
Following attacks by the U.S. and Israel in late February, Iran closed the Strait of Hormuz. Approximately a fifth of the world’s oil passes through this conduit. As a result, gas prices surged, accelerating inflation and reducing Americans’ inflation-adjusted incomes. This economic climate, affected by five years of high inflation, may influence the upcoming midterm elections, posing challenges for President Donald Trump and the Republicans with less than 100 days remaining.
President Trump attributes the inflation to his predecessor, Democrat Joe Biden. However, inflation has increased since Trump’s inauguration last year. It rose from 3% in January 2025 to 3.5% currently and spiked further after the Iran conflict started on February 28, where it was 2.4% before the escalation.
Consumer survey responses collected between July 1 and July 22 remained largely pessimistic. While mentions of gas prices decreased slightly, concerns remain high. There was an uptick in references to food and grocery prices. Government data indicates that at-home food costs have surged by 33% since early 2019. As a response, Americans are turning to using more coupons, comparing prices, and reducing favorite foods purchases in reaction to the largest rise in grocery prices in fifty years. The price of ground beef serves as an example, reaching $6.82 per pound in June, a 79% increase from the beginning of 2019, based on Bureau of Labor Statistics figures.
Mentions of jobs and unemployment increased a bit this month, while views of the current job market became more pessimistic. Expectations for the labor market six months out improved slightly but remain negative. U.S. businesses slowed hiring last month, adding only 57,000 jobs, less than half compared to the previous month. The unemployment rate dropped to 4.2% from 4.3% in May, mainly because many job seekers stopped searching and were therefore not counted as unemployed.
Mentions of war and geopolitical issues decreased this month. Yet, the Board suggests that continued conflict between Iran and the U.S. may increase these mentions in upcoming surveys.