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Gas prices: A 'troubling sign' emerges on the health of consumers
Sticker price shock at the gas pump may finally be breaking the back of the U.S. consumer, new data shows.
Current U.S. gasoline consumption levels are running 3% lower than a year ago and have been declining at a 3-5% clip the past seven weeks, according to researchers at DataTrek (chart below). DataTrek noted that these declines were not the case prior to April 2022, suggesting that pain at the pump is affecting consumer behavior.
"Given that commuting is the single most common reason Americans drive, we would have thought gas consumption would still be showing positive comps to last year," DataTrek writes. "Office occupancy was barely 20% at this point last year and is double that now (43%). Lower gasoline consumption is therefore a troubling sign about overall consumer spending patterns."
AAA data shows the national average for a gallon of regular, unleaded gas is at $4.76 as of Friday and above $5.00 in seven states.
Inflation — hitting necessities such as food, fuel, and housing — seems to be weighing on the minds of Americans: The University of Michigan's final consumer sentiment measure fell to 58.4 in May, down from 59.1 earlier in the month, marking the lowest level in more than 10 years.
Consumer spending clocked in with a solid 0.9% increase in April, according to data from the Commerce Department, but the increase was fueled by consumers dipping into their savings — the savings rate fell to 4.4% in April from 5% in the prior month.
"The U.S. economy remains strong approaching mid-year," EY-Parthenon Chief Economist Greg Daco wrote in a note to clients, "but cracks are starting to appear in the foundation."
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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