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The Federal Reserve's preferred inflation gauge rose 3.8% in April, the highest since 2023, driven mainly by a 5.5% surge in gasoline prices amid geopolitical tensions with Iran. Consumer spending increased 0.5%, and the saving rate fell as households tapped savings. Analysts expect the Fed to keep rates elevated until at least 2027.
Only 16% of Americans rate the economy positively as Gallup's confidence index sinks to -45, driven by surging gas prices and inflation linked to the Iran conflict. The poll shows 76% expect further deterioration, and a majority disapproves of President Trump's handling of the war.
US gas prices have surged 50% since the US and Israel launched military operations against Iran, with the average reaching $4.48 per gallon. A blocked Strait of Hormuz has exacerbated global energy shortages, driving crude oil prices higher. Despite a brief ceasefire in April, prices continue to climb, fueling inflation and political pressure on President Trump.
Average US gasoline prices hit $4.30 per gallon, a four-year high, as the standoff with Iran and closure of the Strait of Hormuz drive crude above $100/barrel. President Trump insists prices will fall sharply after the war ends, but analysts warn oil costs don't automatically cool with a ceasefire. California saw prices exceed $6/gallon, and the spike has dented Trump's approval ratings amid rising public discontent.
