Incoming data shows U.S. economy is taking gasoline spike in stride, but doesn’t like it

Note: As always, there is a separate Economic Commentary discussing the monthly jobs report, which was published on May 8th.

Trend watch

The weekly air passenger count dipped 1.0% to 17.0 million in the past seven days. Still, it’s at an all-time high on a year-to-date basis, up 1.0% compared to 2025. However, activity should pick up in the coming week as college and high school graduation season ramps up.

We’ve continued to include the personal tax refunds chart (slide 7, available to clients in the full report), which we’ll keep for one more week as tax filing season is completed.

We’re also keeping a keen eye on gasoline prices. On slide 8, we updated the state-level gasoline price map. 

Our take

The fragile Middle East cease‑fire agreement is largely holding, though there have been skirmishes. U.S. crude oil prices have pulled back to about $95 per barrel this week.

However, gasoline prices have continued to climb as the national average topped $4.50 per gallon, which is the highest since July 2022. Alas, the pain at the pump remains an ever-present real-time reminder for Americans that the Iran War and the Strait of Hormuz issue isn’t resolved. That’s reflected in the further decline in consumer sentiment (see slide 18).

Meanwhile, the vast majority of economic data has been stable-to-improved since the onset of the Iran War. Similarly, corporate earnings have continued to improve based on first quarter earnings reports. Moreover, a significant chunk of companies have increased earnings guidance for the coming quarters.

That doesn’t mean that the U.S. won’t feel any impact, but it does reinforce our view that the Iran War and crude oil prices matter, but other things matter more to the U.S. economy. 

Bottom line

The U.S. economy continues to power through the uncertainty caused by the Iran War and the subsequent spike in gasoline prices. Important drivers – such as AI-led tech investment – have taken the lead as a key growth engine, while improving corporate earnings and rising guidance suggest oil risks matter, but aren’t the dominant force shaping the U.S. economy.