Gas crunch
by March 4, 2011 8:29 am 68 views
One-in-three U.S. consumers (32%) has already significantly reduced discretionary spending because of the increase of rising gas prices, according to the monthly RBC Consumer Outlook Index.
With the national average price at approximately $3.20 per gallon at the time the survey was conducted (Feb. 25-28, 2011) another one-in-five (18%) say they would reduce spending if gas prices climb to $3.75 per gallon, and 41% place their pain threshold at $4 per gallon or more. RBC surveyed more than 1,000 adults.
“There has been quite a lot of debate about the impact of rising gasoline prices on consumption in general," RBC Capital Markets chief U.S. economist Tom Porcelli said in the statement. "Specifically, the conversation focuses on what particular price level of gasoline would lead to a shift away from discretionary spending. The RBC survey finds that this level has already been breached for 32 percent of consumers, and is within range for another 18 percent. Somewhat encouragingly, however, is that 40 percent of Americans place their threshold at or north of $4 per gallon."
OTHER SURVEY RESULTS
• Consumer confidence for March sank for a third straight month, with the RBC Consumer Outlook Index sliding to 42.5, down 2 points from February’s 44.5.
• Nine-in-10 consumers (93%) expect to see higher oil and gasoline prices and 90% expect to see higher food and grocery costs. Consumers had lower inflation expectations for durable goods, with 66% expecting higher prices for clothing, 56% for automobiles and 52% for appliances.
• Nearly half (47%) of Americans think their current financial situation is weak, the highest level since July 2010.
• Nearly two-in-five Americans (39%) think the next month will be a bad time to invest in the stock market, up sharply from 29% last month, and half of Americans (51%) are now less confident of their ability to invest in the future.
• The decline in consumer confidence was mirrored by broader worries, with two-thirds of Americans (67%) saying the country is on the wrong track, up from 60% last month, the 11th-consecutive month at or above the 60% mark.
• Underscoring consumer anxiety about the future, nearly one in three Americans (31%) think that the U.S. economy and their own financial situation will get worse in the next year or so, the highest negative sentiment expressed by consumers in more than a year.