3 ways the Iran war is hitting Americans’ pocketbooks
(CBS NEWS) — The economic fallout from the Iran war is starting to ripple through the U.S.
“The impact is really widespread and affects everything from mortgage rates to travel to grocery prices and on down the line,” Matt Schulz, chief consumer finance analyst at LendingTree, told CBS News. “Things were already challenging for a lot of Americans on pretty tight budgets, and this certainly doesn’t help.”
A swift end to the war — specifically, reopening the Strait of Hormuz to facilitate oil flows and other ship traffic traversing the Persian Gulf — could help soften the blow for U.S. consumers.
But experts told CBS News prices would not recede immediately, an unexpected financial strain for the millions of Americans still recovering from the inflationary blast that followed the pandemic.
“Many parts of the economy are just starting to really feel the effects of some of these added costs,” said Kate Wood, a lending expert at NerdWallet.
Here are three ways the Iran war is hitting U.S. households.
Travel and transportation
The average price of gas in the U.S. rose to $4.09 a gallon on Friday, up more than $1 from just before the war and the highest level since August 2022, AAA data shows. Beyond costing motorists more at the pump, the increase could consume the larger tax refunds many Americans are likely to receive this year.
“If transportation costs start rising, it’s going to bleed through in other prices,” said Austan Goolsbee, president of the Federal Reserve Bank of Chicago. “So I think it’s in the near term, but not immediate, that you would start to see that weighing down of the consumer — they would just get sticker shock. People were already highly concerned about affordability and the cost of living, and this would just be piling onto it.”
Diesel, widely used in farming, construction and trucking, among other industries, has risen even more sharply than gas, with the U.S. average this week hitting $5.53 a gallon, up from $3.64 a year ago, according to AAA.
“It got to the point where I was, like, how much should I be doing this at all?” Phil Hampton, who works as a part-time delivery driver near Dallas to make extra money for his family of six, recently told CBS News.
Higher global oil prices are also pushing up the cost of flying as airlines look to offset spiking jet fuel prices, which account for roughly one-fifth of their expenses.
Average global airfare costs rose to $465 the week beginning March 9, up 24% compared with the same time last year, according to OAG, a platform that provides aviation data. Meanwhile, airlines like JetBlue and United also recently hiked their baggage fees.
According to a recent LendingTree study, nearly a third of Americans said they have reduced their spending and savings due to higher fuel costs. Although data shows that consumer spending, which accounts for roughly two-thirds of economic activity, is holding up, economists warn that rising energy and other costs could take a toll.
“If either through a drop in consumer confidence or for other reasons, the consumer started scaling back, that would not bode well for the unemployment rate. That would not bode well for growth,” Goolsbee told CBS News.
Shipping costs
Delivery companies have started tacking on fuel surcharges as the Iran war drives up global oil prices — costs they are likely to pass on to customers.
Citing higher energy costs, the United States Postal Service announced last month that it’s planning to impose an 8% surcharge on Priority Mail Express, Priority Mail, USPS Ground Advantage and Parcel Select services.
E-commerce giant Amazon also said that, beginning April 17, it plans to add a 3.5% fuel surcharge on third-party sellers, while FedEx and UPS have also recently introduced fuel surcharges, according to the Associated Press.
Mortgages
Another way the war is hitting Americans’ pocketbooks is in the housing market, where mortgage rates have risen for five straight weeks after briefly dipping below 6% in late February.
The rate for a 30-year fixed mortgage hit 6.46% on Thursday, according to Freddie Mac, the highest level since September 2025 and a blow for house hunters.
Mortgage rates tend to move in tandem with U.S. government bonds, where yields have risen as investors demand higher returns to offset the inflation they expect to be unleashed by the Iran war. The 10-year Treasury yield, which mortgage rates follow the most closely, was 4.35% on Friday, up from 3.96% just before the war started on February 28.
“Given how high home prices are in much of the United States and how much, particularly first-time home buyers are having a stretch to kind of reach those prices, for folks who are already kind of at the outer limit of their potential homebuying budget, an increase to your monthly payment could be a borderline deal breaker,” NerdWallet’s Wood said.
The war could also impact other borrowing costs, as the Federal Reserve weighs whether to cut interest rates. The central bank indicated in March that it will hold rates steady as it assesses the economic impact of the Iran war. Amid ongoing concerns about rising inflation, some economists believe the central bank will hold off on rate cuts for all of 2026.
