More than a quarter of consumers plan to reduce spending on items other than gasoline in the next month. Are gas prices to blame?
According to a survey of U.S. fuel consumers, only 47% of Americans are currently optimistic about the economy. This minority reflects a five percentage point drop of optimistic consumers over the past month. This study was conducted on behalf of the National Association of Convenience Stores (NACS) by Penn, Schoen and Berland.
The numbers are somewhat surprising because traditionally summer is when optimism grows. Last July, optimism surged 7 percentage points to 46% at a time when gas prices were 80 cents per gallon higher than they are today.
The decline in consumer optimism may be cause for concern among retailers. More than one in four consumers (26%) say they will reduce spending on items besides gasoline this month. That is the highest reading the NACS monthly survey has recorded since the question was added in September 2014.
While a majority (57%) of younger consumers, those ages 18-34, remain optimistic about the economy, they also indicate that they may curtail spending, with 25% saying that they will spend less this month.
Gas prices increased 4 cents this month, with consumers reporting a median price of $2.79 per gallon; gas prices have remained below $3 since November 2014. Because of the relatively low prices, less than three in ten (28%) consumers say gas prices have a “great impact” on their feelings on the economy, compared with two in five (41%) who said so in July 2014 when gas prices were $3.65 per gallon.
Consumers also say that they would cut back on driving if gas prices climbed to $3.65 per gallon — ironically the average price per gallon last July. At that time, consumers said they would reduce their driving if prices climbed to $4.19 per gallon.
“While gas prices remain relatively low, we may be seeing consumer frustration because prices aren’t falling over the summer months. Add to the mix consumers saying they will change behavior — and feel pain — at lower price points, and we may see pessimism linger, which could affect third-quarter sales,” said NACS Vice President of Strategic Industry Initiatives Jeff Lenard.
For the past three months, consumer sentiment has tracked miles per dollar, which calculates consumers’ reported fuel efficiency of their primary vehicle and the gas price in their market.
NACS, which represents the convenience store industry that sells 80% of the gas sold in the country, conducts the monthly consumer sentiment survey to gauge how gas prices affect broader economic trends. The NACS survey was conducted by Penn, Schoen and Berland Associates LLC; 1,101 gas consumers were surveyed July 1-6, 2015.
