The Price to U.S. Households for Iran War

American consumers are facing a one-two punch of jumping oil prices and Treasury yields amid the U.S. war with Iran that is leaving them increasingly cash-strapped, CNBC reports. “Consumers are under a lot of financial pressure,” said Mark Zandi, Chief Economist at Moody’s Analytics told the news service.

Here’s what’s driving that:

• Crude oil prices have reaccelerated in recent weeks as fighting between the U.S. and Iran has ramped back up, a development has led to higher prices at the pump.
• On top of that, the 10-year Treasury yield jumped this week to its highest level in 19 years, threatening to intensify affordability challenges for consumers as borrowing costs rise for items like homes and cars.

And here’s how much those factors have cost every household since the U.S.-Iran conflict began: $1760, according to an analysis from Moody’s Analytics as of Sept. 11.

$930 — or more than half of that total — total comes from higher costs for energy, gasoline, diesel and jet fuel. Cumulatively, Moody’s found that U.S. consumers have spent more than $121 billion extra on energy since the war began in February.

Another $425 of the household total stems from higher interest rates since the war broke out. The final $405 comes from higher military spending, which Zandi said consumers will pay for either through an increased national debt or higher taxes.

The above factors are driving consumers to start drawing on savings, Luke Tilley, Chief Economist at M&T Bank and Wilmington Trust told CNBC. Eventually, Tilley said, U.S. consumers may need to pull back on their spending, a worrisome outcome considering it accounts for the majority of the country’s gross domestic product.

“It’s reflecting the times,” he said. “Costs have gone up and income growth has gone down, so something has got to give.”