One hundred days into the Iran war, the average US household has paid $750 more -- most of it on energy as gasoline hits $4.22 a gallon

One hundred days into the US-Israel war on Iran, the conflict's cost is landing on American households already strained by tariffs and other pressures. An analysis by Moody's Analytics found that the average household has spent $750 more because of the war, roughly $447.19 of it on energy. "This is a big economic blow," Moody's chief economist Mark Zandi wrote on X, adding that the burden falls on "already hard-pressed middle- and lower-income households." Michael Klein, a professor of international economic affairs at Tufts University's Fletcher School, noted that lower-income Americans "spend more of their income on housing and food. And the prices of these have been going up by a lot."

Energy is the engine of the squeeze. Regular gasoline hit $4.22 a gallon on Friday, up from $2.98 on February 28, the day the US and Israel first struck Iran, according to AAA. Iran has retaliated by attacking regional energy infrastructure and throttling traffic through the Strait of Hormuz, from which a fifth of the world's oil and gas is exported. Energy prices jumped 5.5 percent in the latest Personal Consumption Expenditures report, and overall inflation rose to 3.8 percent from 3.5 percent the month before -- the biggest increase in three years.

Households are changing their behavior. A survey by American Muscle found 12 percent of Americans are working from home more often to avoid fuel costs, while a Washington Post/ABC News Ipsos poll found 44 percent are driving less. The University of Michigan's consumer sentiment index fell to 44.8 in May from 49.8 in April and 52.2 a year earlier, which the university attributed to "supply disruptions in the Strait of Hormuz." A McKinsey survey put sentiment at a two-year low, and the Conference Board reported two-thirds of consumers pulling back on spending.

The fuel shock has battered airlines. Spirit Airlines ceased operations last month after more than three decades, citing higher fuel prices in court filings, and United Airlines said in late April it would raise fares by up to 20 percent. Airfares rose 2.7 percent in March and 2.8 percent in April, according to the Bureau of Labor Statistics.

Food costs are beginning to follow. Prices rose 0.5 percent in April, the biggest jump since November 2022, with meat up 1.3 percent, fruit and vegetables up 1.8 percent, and tomatoes up 15 percent in March alone. The World Bank projects fertiliser prices will rise 31 percent by year-end and urea 60 percent -- a particular risk because the Gulf produces 36 percent of the world's urea exports. Jonathan Ernst, an economics professor at Case Western Reserve University, called it "a double whammy for US farmers," who pay more for diesel and for crop inputs, warning the effect "might not materialise in terms of higher prices until later in the fall."

The war has also pushed borrowing costs up: the average 30-year fixed mortgage rose from 5.98 percent in February to 6.5 percent late last month as higher energy costs lifted Treasury yields. With inflation rising, the Federal Reserve is unlikely to cut rates; a JPMorgan Chase analyst expects no change until mid-2027, and then an increase. Kevin Warsh, confirmed last month to the Fed's Board of Governors and as chair, faces his first policy meeting on June 16-17, under pressure from Trump to lower rates.

The war remains deeply unpopular: 66 percent of Americans disapprove of Trump's handling of the conflict in a CBS News poll, and 61 percent called the military action "a mistake" in an ABC News/Washington Post Ipsos poll. Even so, the Pentagon -- estimated by the Harvard Kennedy School to be spending $2 billion a day on operations in Iran -- requested $200 billion in supplemental funding in March, of which the White House sought $98 billion. The administration's fiscal 2027 budget request calls for $1.5 trillion in spending, up 42 percent from 2026, paired with a 10 percent, or $73 billion, cut to non-defence programs including education, agriculture and the IRS.