Goldman Sees $140B Gasoline Price Headwind, Warns of Spending Slump
Goldman Sachs warns US consumers face a roughly $140 billion annualized headwind from a 40% spike in gasoline prices linked to Iran conflict. University of Michigan Consumer Sentiment fell to a record low 47.6, prompting forecasts of weak real consumption growth over coming months.
1. Warning Highlights Consumer Strain
Goldman strategist Ronnie Walker highlighted that what began as a solid year for consumer spending has become more challenging, forecasting weak real consumption growth over the next few months.
2. Gasoline Price Surge and Income Impact
Gasoline prices jumped by nearly 40% since the Iran conflict began, creating an estimated $140 billion annualized headwind to household incomes; even under a scenario where Brent crude returns to $80/bbl by year-end, the headwind remains around $70 billion for 2026.
3. Record Low Consumer Confidence
Consumer confidence plunged to 47.6 in the latest University of Michigan survey, the lowest in 74 years, marking an 11% drop from March and underscoring broad-based pessimism across all income and demographic groups.
4. Implications for Retailers and Earnings
The spending pressures have led analysts to forecast weaker retail sales in March and investors to temper earnings expectations for lower-income–oriented chains, including fast food and discount retailers.