One of the long-awaited events on the road to economic recovery is the return of robust consumer spending. Post-crash consumer habits have veered toward saving money and paying down debt rather than spending. The sudden spike in gasoline prices has over half of America spending less on other items.
According to The Harris Poll, 55% of Americans have cut back on one thing or another, or on many things, because they are pumping more cash into their vehicles.
The percentage spikes to 67% in households with $35K or less in annual income.
Congress has been fairly immune from blame for the situation, according to the poll. Oil companies get the most – 37% lay the blame at their doorstep, and 25% blame unrest in the Middle East. President Obama is cited by 17%, and Congress only gets the blame from 9%, with 5% picking the Democrats and 4% picking the Republicans.
“Nearly nine-out-of-ten Americans say they expect gas prices to be higher as we enter the summer months. The impact of this kind of price hike is nearly universal and is felt every time an individual gets behind the wheel of their car. Many Americans are making real cuts in their budget to accommodate for the increase in the gas they need to get to work, school and run essential errands,” says Sarah Simmons, Senior Research Executive and Thought Leader. “As our national economy starts to show signs of recovery, Americans are looking to the federal government and to the oil and natural gas industry to help find workable solutions.”
From the poll, here are what Americans are scrimping on (respondents were allowed to select multiple options):
75% Dining Out
73% Driving in general
65% Entertainment
65% Weekend trips/day trips
62% Reducing extras, such as luxury items
59% Vacations
55% Clothing
54% Movies
38% Groceries
37% Personal grooming, such as haircuts or manicures
24% Auto repairs/upkeep
11% Something else
Source: The Harris Poll
RBR-TVBR observation: When it comes to blame, we are somewhat encouraged to see that few are tagging political figures, because we believe that ultimately fuel prices follow the laws of supply and demand, not public policy prescriptions.
We are not experts in this field, but from what we’ve seen, we subscribe to the theory that new industrial powerhouses in China and elsewhere are far beyond the days when they could have been called “emerging,” and they are adding a huge demand factor to a supply that isn’t increasing at the same rate. That is a combination that spells higher prices.
