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ALEXANDRIA, Va. – Rising gas prices caused by the annual transition to summer-blend gasoline has finally driven down consumer optimism about the economy, according to the latest monthly NACS Consumer Fuels Survey, which examines how gas prices affect consumer sentiment. Consumer optimism is now at its lowest level this year.
Overall, 41 percent of consumers say they are optimistic about the economy, a drop from 44 percent one month ago. Likely factors in the decline include poor weather across much of the United States and a 14-cent-per-gallon increase in gas prices.
Meanwhile, 86 percent of consumers say gas prices affect their feelings about the economy, and 79 percent noticed that gas prices increased over the past 30 days, the highest percentage to say so since March 2013. Sixty-six percent believe gas prices will increase over the next 30 days, the highest percentage to say so since NACS began conducting monthly consumer surveys in January 2013.
"Higher gas prices usually mean tighter margins for fuel retailers as they compete for price-sensitive customers," stated NACS Vice President of Government Relations John Eichberger. "Combine that with reduced in-store sales that most retailers have faced because of bad weather, and the first few months of the year have been rough for both consumers and retailers."
However, sentiment is not uniform as strong demographic variations exist in how consumers feel about the economy. A slight majority, or 51 percent, of consumers aged 18 to 34 are positive about the economy, while only 34 percent of those over the age of 50 feel similarly optimistic.
Consumers also believe their purchasing power at the gas pump is decreasing. Self-reported miles per dollar declined again in May, falling 5.7 percent to 6.32 miles per dollar, or 15 cents per mile on average. This is another low mark for 2014 and a potentially worrisome indicator of overall consumer sentiment, according to NACS, the Association for Convenience & Fuel Retailing.
Still, some positive signs persist as the summer driving season draws near. Gas prices have trended downward over the past 10 days, and warmer weather is spreading across much of the country, putting an end to severe winter weather.
The NACS Consumer Fuels Survey is conducted in partnership with Penn, Schoen and Berland Associates LLC to measure consumer perceptions about gas prices and how they relate to broader economic conditions. For this month's survey, 1,113 gas customers were surveyed May 6-7.