The US-Iran war intensifies economic uncertainty, causing American consumer confidence to drop to its lowest level in nearly half a century.

The US-Iran war has pushed up energy prices and exacerbated economic uncertainty, further deteriorating consumer confidence in April to the lowest level in nearly half a century, indicating that geopolitical shocks are beginning to erode household expenditure expectations and economic outlook. According to the final data released by the University of Michigan on Friday, the US consumer confidence index fell from 53.3 in March to 49.8 in April, slightly higher than the preliminary data, but still the lowest level since data has been collected since 1978. At the same time, consumer inflation expectations have significantly increased. The survey shows that US consumers expect prices to rise by 4.7% in the next year, higher than 3.8% in March, marking the largest monthly increase since President Trump announced comprehensive tariffs last year. Inflation expectations for the next five to ten years have also risen to 3.5%, the highest since October last year. Analysts believe that the sharp decline in consumer confidence is mainly due to the impact of the US-Iran conflict driving up oil prices. The continuous rise in fuel costs further exacerbates the burden on American households already under inflation pressure, dragging down consumers' overall economic outlook. Joanne Hsu, director of the University of Michigan survey, said that the war mainly affects consumer sentiment through gasoline prices and other potential price shocks. Compared to that, if military or diplomatic progress cannot alleviate supply constraints or lower energy prices, the effect of boosting confidence will be limited. Although the US and Iran have reached a temporary ceasefire agreement, consumer uncertainty remains high due to the lack of a permanent agreement to end the conflict. Market concerns that even if an agreement is reached later, the current gasoline price of about $4 per gallon may remain high in the coming months, continuing to drag down consumer confidence. The survey also shows that US consumers expect gasoline prices to rise by nearly 50 cents in the next year, with nearly two-thirds of respondents expecting fuel costs to be higher in a year, the highest proportion since 2022. Looking at the sub-item data, the current conditions index reflecting the current economic situation fell to a four-month low, while the expectations index fell to the lowest level in nearly a year. Consumers' assessment of their future financial situation has also dropped to the weakest level since May last year. However, US consumption has not weakened across the board. Previously released retail sales data show that consumers continue to spend in a wide range of categories. Analysts point out that higher tax refund income and some consumers' early purchasing behavior have to some extent supported consumption activity. However, with ongoing high energy costs squeezing household budgets, there is a risk of slowing consumption momentum in the coming months. If high oil prices continue and further push up inflation expectations, the path of Federal Reserve policy and the prospect of a "soft landing" for the US economy may face additional uncertainties.