(Yahoo! Finance) - The war in Iran has sent crude oil — and therefore gasoline — prices surging. On Wednesday, the national average price for Americans to fill up their cars was $4.53 per gallon, per AAA.
How those price hikes are affecting Americans is split along the K-shaped dynamic bisecting the overall US economy right now, according to economists at the New York Fed.
“Households had very different experiences with gasoline spending,” the economists wrote.
Lower-income households tend to be more exposed to energy price hikes, because spending on electricity, gasoline, and other energy-driven necessities takes up more of those households’ income, according to Bank of America.
The K-shaped consumption pattern in both nominal and real gasoline spending was strongly evident in March 2026, according to Liberty Street Economics.
The left-hand chart above shows nominal gasoline spending, which has spiked since the war in Iran began raising crude oil prices in late February and early March, while the chart on the right shows real growth in gasoline consumption.
Low-income households have seen the lowest increase in nominal gas spending because they have cut down their consumption by the largest margin. Conversely, high-income households have seen the largest jump in spending because they have done the least to reduce their consumption.
The analysis noted that the same pattern showed up on a smaller scale during the 2022 energy crisis kicked off by the Russian invasion of Ukraine, which stymied global natural gas supply.
The same economic movements are holding true now, the analysis said. When energy prices skyrocket, low-income households reduce their consumption, while higher-income households may only slightly moderate their own consumption.
“[Lower-income] households are already struggling, so further erosion of their real spending power from surging energy prices could cause another leg up in [credit card and auto] delinquencies,” BofA economists wrote in a recent client note.
“In turn, this could have a lasting impact on their ability to spend, if it constrains their access to credit.”
In comments at the White House on Wednesday, National Economic Council director Kevin Hassett said the American consumer is “really, really firing on all cylinders,” noting that credit card spending is “through the roof” and that Americans are “spending more on gasoline, but they’re spending more on everything else too.”
PCE data released April 30 showed that headline prices rose by 0.7% in March over the previous month, while "core" PCE, which excludes the more volatile food and energy categories, rose 0.3% on the month. On an annual basis, the headline and core PCE price indexes rose 3.5% and 3.2%, respectively, in March from the previous year, in line with expectations on both measures.
By Jake Conley
May 6, 2026
