Pain at Gasoline Pump Cutting Into Consumer Spending
CNBC General Assignment Reporter
Drivers are feeling the pinch.
Gasoline prices added another 11 cents over the past two weeks, putting the national average price at $3.93 a gallon, according to the Lundberg Survey.
At a gas station in Fort Lee, N.J., where the price of a gallon of regular unleaded is $3.73, a number of drivers told us they are cutting back in other areas of their spending in order to make up for the rising gas prices. Their solutions range from considering alternative transportation to work to going out to eat a lot less than before.
If drivers in New Jersey are feeling the pinch, motorists in Chicago are more than squeezed, with the average price in Chicago running $4.56 a gallon. A far cry from filling up in Tulsa, Okla., where drivers are paying $3.58.
The national average for regular unleaded gasoline has risen almost a quarter in a month to the highest level ever for this time of year. Because prices at the pump have jumped 24 percent in the last 52 weeks, drivers are choosing to consume less, evidenced by a 3 percent drop in total consumption over the same period a year ago.
Trilby Lundberg of the famed Lundberg Survey notes that over the past six weeks, each two-week decrease is less than the prior period, but with the national average just 7 cents shy of $4 a gallon, consumers are growing increasingly concerned.
Rising gas prices are the public's No. 1 interest when it comes to news stories, according to a Pew Research Center survey.
Meanwhile, a Gallup poll reveals 85 percent of U.S. adults believe President Barack Obama and Congress “should take immediate actions to try to control the rising price of gas."
Economists have begun to worry as well. Rising gas prices are "the most serious immediate threat to consumer confidence and the broader economy," said Mark Zandi, chief economist at Moody's.
Most economists say it is a question of not if, but when, will consumers begin cutting back on their discretionary spending.
Gas prices have pushed the economy into the early stages of demand destruction, said Richard Hastings, a consumer strategist at Global Hunter Securities. He said he expects to see a mild reduction in retail sales growth starting in May.
Craig Johnson, president of Customer Growth Partners, is even more bearish.
"Gasoline is now 70 cents above December levels...an increase of 70 cents per gallon takes almost $10 billion per month out of [non-energy] consumer spending, equivalent to about 4 percent of total $250 billion a month in retail spend — primarily out of discretionary income," Johnson said.
While the economy certainly isn’t at its mightiest, the last time gasoline prices were at this level was June 2008, and the greater economic environment was much weaker than it is today.
Trilby Lundberg wants to offer some comfort to drivers.
"If crude oil prices stay around their current levels, then retail gasoline prices should peak soon...just shy of $4 a gallon," she said.