Stocks Sink, Crude Soars, Consumers Fret

War in the Middle East hit financial markets with gusto this week. Stocks dropped, but the bigger story was crude oil, which soared 36 percent for West Texas Intermediate to over $90 per barrel and by 27 percent for Brent, the largest percentage increases on records back to 1983 and 1991, respectively, per the Wall Street Journal.

Even before Friday’s 12 percent jump in oil, gas prices had already gone up by $0.34/gallon, according to AAA. Depending on how long the conflict lasts, and whether it spreads, drivers could see an even larger impact in a matter of weeks. Experts now think that we could see another 40-50 cent increase/gallon, which would push up average prices nationally to almost $4/gallon. Additionally, higher energy prices, along with increased costs of fertilizer, much of which comes from the Middle East, could eventually push up food prices too.

That’s bad news for consumers, a large percentage of whom are still reeling from the impact of four years of higher prices. The good news is that many of these folks will get relief after they file their taxes, because they will receive larger tax refunds. The bad news is that instead of saving or using the fattened refund checks to pay down debt, many will need those extra dollars to spend on the rising costs of necessities.

Well before the fighting broke out, some retirement savers were forced to tap their accounts. Recently, Vanguard reported that while 401(k) balances were up last year, 6 percent of workers in its plans took a hardship withdrawal in 2025, which is a new high. Before the pandemic (and the associated inflationary surge), the numbers were much lower, just about 2 percent invaded their retirement accounts. Avoiding foreclosure or eviction and covering medical costs were the top reasons for the withdrawals and the overall increase indicates “signs of heightened financial stress among certain workers”.

Workers are also stressed about the labor market. The government said that the economy LOST 92,000 jobs in February, a nasty surprise considering expectations for 50-60,000 additions. While the punk report was partly due to a nursing strike in CA and also perhaps bad weather, there was no way to sugar coat the downward revisions to the previous two months, for a total of 69-thousand fewer jobs than originally reported.

For those who are feeling the anxiety of bad headlines and financial market gyrations, take a deep breath and know that taking no action is an action in and of itself! Try to remind yourself that you are saving for a long-term goal, like retirement, which is likely years or decades in the future. Even if you are older and nearing retirement, the money you have invested has to last for another 20-30 years, so you too are a long-term investor.

Of course, if you need your money within the next 12 months, perhaps to make a house down payment, purchase a car or pay a tuition bill, make sure that it is not invested in anything that can fluctuate (stocks, bonds, crypto) and instead, keep it in a safe savings, checking or money market account. If you face the real risk of job loss, put big spending on hold and be sure to beef up your emergency reserves. As a reminder, you should try to have 6 to 12 months of living expenses in a high yield savings or money market account.