Gas prices are higher again, hitting consumers ‘very directly and very profoundly’
Gas prices are just plain high, and consumers are taking notice.
As of Wednesday, the national average gas price stands at $3.83 per gallon, per AAA. That’s lower than the average price this time last year, at $4.06, but slightly higher than last week’s average price at $3.78.
And that may have larger implications on consumer spending and how Americans feel about the economy, especially heading into the important back-to-school shopping season.
“[Consumer] sentiment is very directly and very profoundly affected by gas prices,” Michael Zdinak, economist at S&P Global Market Intelligence, told Yahoo Finance (see chart below). He added that there’s a roughly 70% correlation between gas prices and sentiment over the time period shown below.
One reason for that is consumers see gas prices and food prices move in real-time, he said.
According to eToro global market strategist Ben Laidler, the move in gas prices from $3.09 in December 2022 to the national average price on Monday at $3.83 is an extra annual cost of roughly $101 billion for US consumers in total (based on the estimate that Americans use roughly 375 million gallons of gas each day).
With where gas prices stand — and they should remain elevated — that means consumers have less money to spend elsewhere, such as discretionary purchases.
It’s Jim Bianco’s work. See https://www.biancoresearch.com/
Watch his explanation here:
He explains (in that video) exactly what’s happening