American consumers are nervous. That much is not in dispute. What business leaders, economists, and policymakers continue to wrestle with is how much of that nervousness traces back to the ongoing conflict in the Middle East, and whether the anxiety will harden into a durable pullback in household spending.
The data offers a sobering picture. The Conference Board Consumer Confidence Index fell to 92.9 in March 2025, its fourth consecutive monthly decline and the lowest reading since January 2021. Meanwhile, the University of Michigan’s Survey of Consumers registered a preliminary sentiment reading of 57.0 in March 2025, down from 64.7 in February, with respondents citing both domestic economic policy uncertainty and international instability as contributing factors. Year-ahead inflation expectations among survey participants reached 4.9%, a level not seen since the early post-pandemic inflation surge.
Geopolitical conflict, historically, feeds into these numbers through two distinct channels. The first is the energy market. Crude oil prices have shown sustained sensitivity to escalation risk in the Middle East since the conflict widened in late 2023, with Brent crude oscillating between $75 and $90 per barrel through much of 2024 and into 2025. For U.S. consumers who still spend a meaningful share of their monthly budgets on fuel and utility costs, price volatility at the pump translates almost directly into shifts in discretionary spending. The second channel is psychological. Protracted foreign conflict, particularly one with high civilian visibility, generates a diffuse sense of uncertainty that shows up in consumer surveys even when individuals have no direct economic exposure to the affected region.
What the Numbers Signal for Business Decision-Making
For executives managing consumer-facing companies, the challenge is less about reading the macro data than deciding how to act on it. A soft confidence number does not automatically mean consumers stop buying. Spending behavior and sentiment surveys frequently diverge, particularly at the mid-market level, where shoppers may express pessimism in a poll while still making discretionary purchases in the same month. What tends to shift first is the composition of spending, not its volume. Premium categories compress; value-oriented products gain share; consumers defer big-ticket purchases and reallocate toward essentials and experiences with immediate perceived payoff.
Michael Polk, CEO of Implus LLC and former CEO of Newell Brands, has overseen consumer goods portfolios through multiple cycles of geopolitical disruption, including the post-9/11 contraction, the 2008 financial crisis, and the compound volatility of the 2020 through 2024 period. His framework for these moments centers on what he describes as acting on facts rather than speculation.
“One of the most important things to do in environments where things become volatile or unpredictable is to be clear — to act on what you know, not on what people are speculating about.”
That discipline, he argues, has particular value when external events generate noise that is disproportionate to their actual business impact.
“Consumer sentiment and actual consumer behavior are not the same thing, and conflating the two is where companies make expensive mistakes. When geopolitical uncertainty drives headlines, you have to look hard at your own data, your sell-through numbers, your replenishment rates, and ask whether the fear in the market is showing up in your actual results. Sometimes it is. Sometimes it is not. Your response has to fit the facts, not the narrative.”
Supply Chains, Adaptability and the Hidden Cost of Hesitation
Middle East instability carries a more direct operational risk for companies with exposure to maritime shipping routes. The Bab el-Mandeb Strait, which connects the Red Sea to the Gulf of Aden, handles an estimated 12% of global trade volume according to the U.S. Energy Information Administration. Disruptions to that corridor, whether from Houthi attacks on commercial vessels or broader regional escalation, have already pushed some shippers toward the longer Cape of Good Hope route, adding time and cost to supply chains that had barely recovered from pandemic-era dislocations.
Polk’s company sources products across multiple international markets, and his experience navigating tariff shifts, pandemic-driven port backlogs, and inflation surges gives his perspective on supply chain management particular credibility. His counsel to fellow executives tracks with what supply chain economists have been arguing since mid-2024: companies that built optionality into their sourcing networks before crises materialized have fared measurably better than those that relied on single-origin production.
“Leaders who build adaptability into their supply chains are better insulated from policy volatility. The companies that are struggling right now are often the ones that optimized purely for cost in stable conditions and had no contingency when conditions changed. Resilience costs something up front. It pays back many times over when disruption arrives.”
That calculation looks increasingly relevant as the Middle East conflict has introduced a sustained, non-cyclical layer of uncertainty into global trade. Unlike a demand-driven recession, which businesses can model with reasonable confidence, security-driven supply disruption is harder to forecast and slower to resolve. Executives who treat it as a temporary aberration rather than a structural variable risk being caught flat-footed when the next disruption compounds the last.
Reading the Consumer When the Picture Is Blurred
For companies selling into the U.S. consumer market, the coming quarters will test whether the confidence decline visible in survey data translates into observable spending contraction. The gap between sentiment and behavior has widened considerably since 2022, as consumers absorbed persistent inflation while continuing to spend at higher nominal rates than the headline mood suggested. That divergence may be narrowing. The U.S. Bureau of Labor Statistics has reported moderating retail sales growth in early 2025, and categories most sensitive to discretionary income, including sporting goods, home furnishings, and apparel, have shown the sharpest deceleration.
Michael Polk draws a pointed distinction between companies that track sentiment as a proxy for demand and those that build consumer insight capacity robust enough to tell the difference between a worried consumer and a consumer who has actually changed buying behavior.
“The instinct to react to every macro signal is understandable, but it can introduce even more volatility and destroy value. You do not want to churn your organization responding to speculation and media headlines. Wait until the signal shows up in your data, and then move with conviction. Speed matters, but the scope of your response has to fit the facts you actually have, not the fears you are reading about.”
Whether the current cycle of geopolitical uncertainty ultimately depresses U.S. consumer spending in a measurable way remains an open question. What is clear is that companies with strong consumer insight, supply chain flexibility, and the organizational discipline to distinguish real signals from noise are better positioned to navigate it regardless of how conditions develop.