Three weeks into the U.S.-Iran war, the economic impact is evident in the United States, particularly through a sharp rise in gas prices. On Saturday, the nationwide average for unleaded gas reached $3.93 per gallon, up from $2.98 per gallon on February 26, marking a 24% increase in just three weeks. This surge was triggered by rising oil prices due to an Iranian blockade of the Strait of Hormuz, a critical shipping chokepoint through which about one-fifth of the world’s oil supply passes during peacetime [1].
Economists warn of a 'short-term affordability shock' that could restrain consumption and economic growth, according to Joe Brusuelas, chief economist at RSM. He noted that even if the shock does not end the business cycle, it will still take a toll on the economy [1]. Bank of America Institute data shows gasoline spending was up more than 14% year over year during the second week of March, indicating that higher prices are consuming a larger share of household budgets. Bank of America economists suggest this could dampen consumer spending on discretionary categories [1].
Stanford Institute for Economic Policy Research estimates that the average U.S. household will spend an additional $740 on gas this year due to the jump in oil prices, which is roughly double the $360 average boost to individual households’ federal tax refunds from recent tax law changes. Economists predict the tax refund figure will rise by the end of the filing season, but it will not offset the increased gas costs [1].
The war has also impacted investment and retirement funds, as more than half of American adults own stocks. After several weeks of U.S. stock market outperformance following the start of the Iran war, losses began to mount this week. On Friday, stocks sold off sharply, with major indexes marking their fourth straight weekly decline. For the S&P 500 and Nasdaq Composite, the past four weeks have been their worst since April 2025 [1].
CONCLUSION
The U.S.-Iran war has led to a significant rise in gas prices and triggered a sharp sell-off in the stock market, impacting both household budgets and investment portfolios. Economists warn of a short-term affordability shock that could restrain consumption and growth. The market reaction underscores the high level of uncertainty and concern about the conflict’s ongoing economic effects.