As the Iran war stretches into its fourth month, rising gas prices are pressuring consumer budgets and changing what Americans buy. Retailers report shoppers are still spending, but with sharper limits—cutting back on discretionary items while leaning harder o
For more than three months, the Iran war has sat in the background of everyday life. Now it is showing up at the pump—and retailers are watching what that does to household decisions.
With the conflict stretching into its fourth month, U.S. retail companies that had been counting on a resilient consumer face a tougher seasonal road ahead. Results from Dollar Tree. Walmart. Gap. and others in recent weeks point to a pattern: customers are still shopping. but they are doing it more selectively—pushing toward essentials and value-driven purchases while pulling back on discretionary categories.
As the current earnings season draws to a close, the strain appears most clearly among lower-income customers. During an earnings call on Tuesday. Dollar General CFO Donny Lau said core lower-income customers are cutting back on expenses. including food. He also said dollar stores are increasingly drawing shoppers earning over $100. 000 annually. describing “trading down” as higher earners look for lower-cost alternatives.
Even consumer sentiment reflects the friction. U.S. consumer confidence eased slightly in May as inflation concerns tied to the Middle East conflict and higher fuel costs offset improving labor market sentiment.
Michael Gunther. CFA. senior vice president. Research & Market Intelligence at Consumer Edge. said consumers are “clearly shifting behavior. ” even if they aren’t pulling back “significantly” yet. In his view. gas prices will be the deciding factor—especially if fuel stays high through summer and into back-to-school season. when discretionary spending typically comes under the most pressure.
Iran war gas prices retailers consumer confidence Dollar Tree Walmart Gap Dollar General inflation discretionary spending S&P 500 LSEG