Fed leaves interest rates unchanged as Iran war and oil prices put pressure on economy
The Federal Reserve kept its key interest rates on hold on March 18 as policymakers considered the uncertain long-term economic impact of the Iran war.
As the Iran war spills over into daily life, more Americans say they are worse off now than at any time in the past 25 years. According to the latest Gallup poll, more than half (55%) say their financial situation is worsening. The numbers are similar to the downturn in sentiment that Gallup recorded last year, but the number of dissatisfied people is increasing. Only 47% of Americans are disappointed about the economy in 2024.
The poll also marks the fifth year in a row that Americans are dissatisfied with the situation, saying it’s getting worse, not better. Only during the Great Recession was the national mood so depressed. In the midst of the Iran war, financial instability has surfaced ahead of November’s midterm elections, putting pressure on President Donald Trump and the Republican Party.
Since the beginning of the year, President Trump has urged Congress to pass legislation capping credit card interest rates at 10% and directed the Justice Department to investigate meatpacking companies to lower beef prices.
President Trump inherited an economy in tatters from former President Joe Biden, but he has often said it is “stronger than ever” under his leadership. But Americans remain skeptical, with a recent Reuters/Ipsos poll showing Trump’s approval ratings have fallen to their lowest level in his second term, with only 34% of Americans viewing him as a good steward of the economy and country.
Inflation is lower than its 2022 peak. So what’s keeping Americans up at night? They’re struggling with economic headaches, including years of high prices, a recent spike in gas prices, and rising housing and health care costs. Four in 10 Americans are worried about how they’ll pay their monthly bills, and the number of people worried about minimum credit card payments has increased by 11 percentage points, Gallup said.
Kerrigan Rosado, 29, commutes an hour each way to work as an administrative assistant at Central Michigan University. Her husband drives 30 minutes to work helping people with disabilities.
Rosado said the couple in Saginaw, Michigan, was hit hard by the huge price hikes. In the past few days, a gallon of gas has jumped from $3.99 to $4.29. With the current refinery disruption in the Midwest, it could soon reach $4.70.
“I drive a Chevrolet Equinox, so I probably have a 13-gallon tank, so when it costs $50 to fill up the car, it hurts, it definitely hurts,” she said. “That means we’ve stopped spending in a lot of other areas. We don’t go out anymore. We actually don’t have money to buy most things.”
Rosado said as insecurity increases, preserving essential goods has become a matter of economic survival.
“The economy has really taken a hit over the past year or so, but since COVID-19, since 2020, we’ve seen things skyrocket. As I watch the prices at the grocery store go up and up, I feel like there’s not much I can do,” she said. “The things you have to buy, like food in your fridge, gas to get to work, electricity for your home, are going up in price. It’s not a new flat screen or a game console. It’s these essentials that you have to buy.”
“The fight against affordability”
Nearly one-third of Americans cite the high cost of living as their most pressing financial problem. This number is below the 2024 peak of 41% and similar to a year ago, but still the highest level Gallup has recorded in decades. College costs, transportation costs, childcare costs, and more all add up, making it even more difficult for Americans to make ends meet. “My whole life, it’s been a struggle with affordability,” said Ray Gomez Jr., 67, of Covina. California told USA TODAY. “I feel like everything happened at once,” Gomez said. “I don’t feel any hope.” He has struggled with rising prices for years and feels like everything from food to rent is rising. “It’s becoming more and more frequent,” he said. Prices are rising. The consumer price index, an indicator of inflation, rose 3.3% in March compared to the same month last year. In particular, food prices are soaring. Prices of 11 of the 25 common food items analyzed in a recent Coupon Follower study have declined over the past two years, but the savings have been more than offset by rising prices. The study looked at average food price data from the monthly Consumer Price Index from the Bureau of Labor Statistics over the past two years. “Inflation rose steadily in 2021, reaching 7% by December from 1.4% in January, and peaking at 9.1% in June 2022. Inflation has since receded, recording below 3% in most months since early 2025,” Gallup said. “Yet it has not consistently returned to the sub-3% range typical of the decade ending in 2021, which may be what consumers are expecting.”
What is your second biggest concern?Housing
Housing is a necessity, but it is becoming out of reach for many Americans. The poll ranked it as the second-biggest concern.
No wonder. Of the millions of Americans who live in rental housing, 50% are considered “cost burdened,” meaning they spend more than 30% of their income on housing and utilities. This includes 27% who spend more than half of their income on these expenses.
But in an era when home prices are soaring and mortgage rates remain high, becoming a homeowner is becoming increasingly difficult.
The median home price is five times the median household income in 2024, which is much higher than the long-held rule of thumb for affordability of three times. Going back to 1990, the only time this ratio was this high was in 2005, at the height of the subprime bubble.
Home sales have fallen sharply as many Americans who locked in ultra-low interest rate mortgages during the pandemic have little incentive to let go. As a result, many prospective buyers remain on the sidelines.
Even those lucky enough to become homeowners face cost issues. Property taxes will increase by 15% from 2019 to 2024, and real estate insurance will increase by a mind-boggling 70% between 2019 and 2025 for those who can still get insurance.
In a recent interview, one housing counselor told USA TODAY that this month alone, she referred three homeowners a week to food pantries.
Gasoline prices rise, bringing more pain
Coupled with housing, rising energy costs are keeping Americans up at night. According to Gallup, 13% of Americans say prices are rising, up 10 points from last year and the highest since 2008. Energy costs are now Americans’ second-biggest concern, along with housing costs.
From truck drivers to commuters, gas prices are straining budgets across the country. And the pain at the pump won’t ease any time soon, analysts warned this week.
As peace negotiations between the United States and Iran appear to be at a dead end, the average price of a gallon of regular gasoline has risen to $4.18, the highest level in four years, according to AAA.
Before the war began in February, gasoline was less than $3 a gallon. The last time Americans paid this much to fill a tank was in the summer of 2022 after Russia invaded Ukraine.
Gasbuddy oil analyst Patrick de Haan had a grim prediction for Americans. The national average could soon reach $4.30 a gallon, he told USA TODAY.
Additionally, JPMorgan Chase CEO Jamie Dimon said he is concerned about stagflation, the combination of high inflation, slowing economic growth, and rising unemployment.
In early April, he warned that rising oil and commodity prices due to the Iran war could cause interest rates to rise more than the market expected while inflation remains high.
From routine procedures to serious illnesses, worries increase
According to a Gallup poll, 6 in 10 Americans worry they won’t be able to cover their medical bills if they have a serious accident or become ill. Almost half are concerned about day-to-day costs. What’s the cause? Health care costs are rising faster than wages and inflation.
According to the sound policy nonprofit KFF, the average cost of a family health insurance plan offered through the workplace in 2025 will be about $27,000, an increase of 6% from the previous year.
David Soika, 62, said he plans to retire after nearly 40 years in the import/export industry, but not just to maintain his medical care.
“I’ll be 63 in August and I’m scared of losing my health insurance,” Soika said.
He has a number of serious health issues, including non-Hodgkin’s lymphoma, type 2 diabetes, and high blood pressure. When he broke his ribs two years ago, the hospital bill was $90,000.
“If I didn’t have health insurance, it probably wouldn’t have killed me completely, but it’s a lot of money,” he says.
Soika worries that if her company goes bankrupt or she loses her job, she will have to leave the U.S. and go to a country where she can access low-cost or free insurance.
“Right now I’m fine, but I’m worried about the millions of Americans who aren’t,” he said. “I’m worried about a lot of people, not just friends and family, but people I don’t even know. How are they coping with this? They’re on the verge of going bankrupt with one accident or illness.”
Most working-age Americans have health insurance through their jobs, but millions of people who buy insurance through the Affordable Care Act’s marketplace are paying significantly higher costs because Congress has failed to expand the tax credit.
Without the enhanced tax credit, which is set to expire at the end of 2025, the average cost for the 22 million Americans with subsidized ACA insurance would have more than doubled as of January, according to KFF.
Rising costs likely led many consumers to drop their ACA coverage or seek cheaper minimum coverage that may not provide much coverage. Preliminary numbers released in February showed ACA enrollment decreased by 1.2 million people, but that number is likely to increase when additional numbers are released later this year.
When medical costs increase, health insurance companies raise premiums. Employers cite chronic conditions, prescription drug costs, increased use of medical care and hospital costs as reasons why health insurance costs will rise this year, according to KFF.
Low-income Americans on Medicaid could also expect cuts under the Trump Tax Cuts and Spending Act passed by Congress in 2025. Over the next 10 years, 7.5 million people will lose Medicaid coverage due to changes in the law, the Congressional Budget Office said in an August report. Nondisabled adults receiving Medicaid must work, volunteer, or enroll in school to maintain Medicaid coverage. Additionally, states must reverify Medicaid eligibility up to twice a year.
