There's a term for what's happening right now in the American economy: consumer retrenchment. It doesn't require a recession or mass layoffs—it just requires enough people feeling uncertain enough about the future that they quietly stop spending on things they don't have to spend on.
The Iran conflict has triggered exactly this.
The University of Michigan's Consumer Sentiment Index dropped from 67.2 in February to 57.9 in the first week of March—its largest single-month decline since the early days of the COVID-19 pandemic. The Conference Board's Consumer Confidence Index fell to its lowest reading since November 2023. These aren't just poll numbers. Consumer spending drives roughly 70% of the U.S. economy, and shifts in sentiment reliably show up as actual spending changes within 4–8 weeks.
The news cycle is making it worse. Every time someone checks their phone, there's more coverage—missile strikes, burning infrastructure, diplomatic standoffs, casualty counts. This isn't a regular news week. It's a sustained crisis information environment, and sustained crisis feeds risk-avoidance behavior at a pretty basic neurological level.
The spending data is already confirming what the surveys predicted. OpenTable restaurant reservations in major cities are down 11% week-over-week. Travel searches for domestic vacation packages dropped 19%. Retail foot traffic at non-essential stores fell 8% in the week after the initial strikes, according to Placer.ai. Car dealership visits are down 13%.
This is the part that makes it dangerous: when people spend less, businesses earn less, cut hours or staff, and the economy slows—which then validates the anxiety and pushes the pullback deeper. JPMorgan now puts the odds of a U.S. recession starting within 12 months at 45%, up from 22% before the conflict.
And there's a mental health dimension that rarely gets enough attention in economic coverage. Sustained exposure to crisis news raises cortisol levels, disrupts sleep, and is directly linked to higher rates of anxiety and depression. Mental health providers are reporting a surge in appointment requests, and several telehealth platforms have seen 30–40% more demand for anxiety-related consultations in the past two weeks. The psychological cost of living in "permanent crisis" mode is a real public health issue—it's just harder to put a dollar figure on it.