By Teresa Rivas
Pain at the pump may already be casting a pall over the mall.
Gas prices have hit $4 a gallon, the highest since 2022, and oil is only going higher as President Donald Trump's speech has crushed hopes of a quick wrap-up to the Iran war. That's made investors particularly worried about how Americans will handle the added energy cost burden.
"Recently, consumer companies have been using the word 'uncertainty' more often," writes Telsey Advisory Group Chief Executive Officer Dana Telsey on Thursday. "The companies are concerned that a slower pace of spending will occur as higher tax refunds could be offset by higher gasoline prices, which have increased over 30% in the past month, and tariff-related price increases that will not be lapped until late summer/early fall."
On Wednesday, the Census Bureau released its February retail sales report, which saw sales rise at their fastest clip in eight months. That came on the heels of a relatively strong holiday season for retailers in general, with many recording revenue and comparable sales increases in their fiscal fourth quarters.
However, many analysts -- like Bernstein's Ivan Holman -- warn that may not hold, as "the numbers reflect economic momentum that could be interrupted by the Iran war and the rising price of fuel."
The State Street SPDR S&P Retail exchange-traded fund is down nearly 8% since the start of the conflict at the end of February, and the State Street Consumer Discretionary Select Sector SPDR exchange-traded fund is down by nearly as much. That compares with a 4.5% decline in the S&P 500 over the same period. Little wonder, then, that Bed Bath & Beyond shares are falling Thursday after news it will buy The Container Store for $150 million -- investors aren't in the mood to take chances at the moment.
They may be right to be concerned. "Sentiment is beginning to get quite ugly," write consumer analysts at Jefferies, including Blake Anderson on Thursday, calling the firm's latest consumer survey data a "flight to pessimism."
The overall sentiment in this latest reading came in at its lowest since November 2023. The problem is that the energy shock comes after years of inflation eroding Americans' budgets. So while other big declines, like those around Liberation Day a year ago and the government shutdown, saw sentiment snap back near-term, "the general trend for U.S. consumer sentiment for the past 15mo has been one of lower highs and lower lows," Anderson writes.
All five measures of personal finances and business conditions were down in the poll, and although the data only includes a week of March spending, it seems to show a shift in reaction to gas prices. "We see two reasons that the ongoing conflict has something to do with this," the analysts write, as consumers appear to be breaking up purchases -- and lower-income Americans in particular are doing so -- which tracks with that cohort having "less flexibility to cope with sudden price changes for necessities."
Overall skittishness about the consumer would certainly ease if there were a ceasefire: That wouldn't bring gas prices back down to pre-war levels, but it would make it less likely that oil will keep spiraling upward.
For now, however, many retailers remain a show-me story.
Write to Teresa Rivas at teresa.rivas@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 02, 2026 17:07 ET (21:07 GMT)
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