U.S. consumers reassess spending as Iran war drives up fuel costs

In recent earnings calls with analysts, executives from some of America’s largest retailers described a consumer that remains broadly resilient yet is beginning to make careful choices. Walmart CFO John David Rainey, McDonald’s CEO Chris Kempczinski, and Dollar General CEO Todd Vasos each noted that while overall spending has held up, lower-income customers are increasingly pulling back. The behavior changes remain subtle for now — altered gasoline-buying routines, fewer visits to clothing and furniture stores — but the pattern is emerging across the sector.

Costco CFO Gary Millerchip echoed similar observations during his company’s quarterly call, and National Association of Convenience Stores spokesperson Jeff Lenard told the AP that consumer habits are shifting in real time as pump prices eat into household budgets. Retail analyst Sophie Tolsdorf also cited the uneven nature of the pullback, with higher-income households largely unaffected while those at the bottom of the income ladder feel the most strain.

The cumulative effect of elevated gas prices is playing out against a broader rise in the cost of food, insurance, and other goods and services. What has kept spending afloat, several analysts said, is a wave of generous income tax refunds that arrived in the spring, temporarily boosting disposable income.

But those refunds are largely spent. Some economists and analysts now expect a wider retrenchment when the refunds are exhausted and consumers face the full weight of higher prices across nearly every spending category. The Associated Press reported that the new signs of strain cited by major retailers make a broader pullback more likely in the coming months.

The National Association of Convenience Stores has already tracked a measurable shift in gasoline purchasing patterns — customers buying less per visit, switching to cheaper stations, and consolidating trips. Such micro-adjustments, while small individually, add up to a meaningful slowdown in consumption when multiplied across millions of households.

For now, the overall picture remains one of resilience mixed with strain. The coming months will determine whether the adjustments are temporary accommodations or the start of a deeper retrenchment as the Iran war continues to keep energy prices elevated.