American consumers are being squeezed from two directions as rising oil prices and soaring Treasury yields compound the financial toll of the U.S. war with Iran.
Crude prices have reaccelerated in recent weeks as fighting between the U.S. and Iran has intensified, pushing pump prices sharply higher across the country and draining household budgets at an alarming pace.
The total bill per household since the U.S.-Iran conflict began has reached approximately $1,760, according to a Moody’s Analytics analysis as of September 11.
Mark Zandi, chief economist at Moody’s Analytics, said $930 of that total — more than half — stems from higher energy costs, including rising prices for gasoline, diesel, and jet fuel.
Cumulatively, U.S. consumers have spent more than $121 billion extra on energy since the war began, a figure that underscores the conflict’s sweeping economic reach.
Another $425 of the $1,760 household burden comes from higher interest rates since the war broke out, while the remaining $405 reflects higher military spending that consumers will ultimately pay through debt expansion or increased taxes.
The average gallon of gas exceeded $4.32 on Tuesday, up 6% month over month and 36% from a year ago, according to AAA, while per-gallon diesel prices hit all-time highs above $6 in recent days.
The 10-year U.S. Treasury yield climbed to its highest level since 2007 on Tuesday, sitting roughly a full percentage point higher than where it stood a year ago and threatening to raise borrowing costs on homes, cars, and credit cards.
“People experience higher interest rates much like they experience inflation,” said Diane Swonk, chief economist at consulting firm KPMG. “It makes things less affordable.”
The average rate on the 30-year fixed mortgage topped 7% this month for the first time in more than a year, worsening an already severe housing affordability crisis sweeping the country.
The Atlanta Federal Reserve’s home ownership affordability index fell to lows rarely seen on record this summer, reflecting how the combined pressures of higher rates and elevated prices are crushing purchasing power.
Total credit card debt in the U.S. rose to $1.26 trillion in the second quarter, sitting near a record high, according to the New York Fed, as consumers increasingly lean on borrowing to maintain their spending habits.
Inflation is once again rising faster than income as energy prices surge, leaving U.S. consumers with negative earnings growth when adjusted for inflation, according to government data from August.
Luke Tilley, chief economist at M&T Bank and Wilmington Trust, noted that consumers are now drawing on savings, with the personal savings rate in 2026 falling to levels rarely seen since the Global Financial Crisis.
“It’s reflecting the times,” Tilley said. “Costs have gone up and income growth has gone down, so something has got to give.”
Several economists have noted that higher energy costs from the war have more than erased the financial boost many households received from larger tax refunds under President Donald Trump’s “big, beautiful bill.”
Lower-income consumers, who typically spend a larger share of their earnings on energy, have felt the pain most acutely, deepening the so-called “K”-shaped economic divide between income classes.
Nicole Bachaud, a labor economist at ZipRecruiter, warned that higher borrowing costs for companies could slow hiring, making it harder for Americans to enter the workforce or switch jobs in an already tight labor market.
“Consumers are under a lot of financial pressure,” said Mark Zandi, chief economist at Moody’s Analytics, capturing a sentiment that is increasingly reflected in spending data and consumer confidence surveys alike.
