Gas Pump Economics
Consumer sentiment ticked down a pinch, current conditions took a hit (gas pump economics).
About one-third of consumers spontaneously mentioned gasoline prices and about 30% mentioned tariffs. Taken together, consumers continue to feel buffeted by cost pressures, led by soaring prices at the pump. Middle East developments are unlikely to meaningfully boost sentiment until supply disruptions have been fully resolved and energy prices fall.
Speaking of inflation:
current reading still substantially exceeds the 3.4% reading seen in February prior to the start of the Iran war,
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Only a $0.258 increase in gas prices since this time last week, slipping in under the back-to-back $0.30 mark.
Fun with extrapolation: at this rate we’re looking at $5.00 / gallon gas prices in time for Memorial Day weekend.
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On 4/30, AAA posted this headline: Oil Prices Spike, National Average Up Nearly 30 Cents in One Week
The national average (for regular) was then pegged at $4.300.
Today (5/4), the national average is $4.457. This headline might get recycled this week.
This is Ozempic for wallets.
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UMich’s survey of consumers showed sentiment dropped, specifically post-Iran action. Before that the vibe was looking up.
I think this read from Northbeam captures it:
The vibes are in free fall. Conflict with Iran keeps spiraling, gas prices are about to explode, and the US lost 92,000 jobs in February, with more likely to come.
People have a visceral response to the numbers they see on the gas pump, and right now those numbers aren’t causing positive reactions. Shoppers now have less money to spend on discretionary purchases.
The vibecession continues.
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Some good news buried in all the tariff whiplash
The CPI dropped 0.1% in March (gas dropped 6.3%)
All items less food and energy is the lowest it’s been since 2021
The Fed’s not celebrating though
From the recent meeting:
participants remarked that uncertainty about the net effect of an array of government policies on the economic outlook was high, making it appropriate to take a cautious approach. Emphasizing that uncertainty, a majority of participants noted the potential for inflationary effects arising from various factors to be more persistent than they projected.
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Good news:
Fourth of July gas prices are set for a three-year low
Adjusted for inflation, US gas prices are almost exactly where they were in July 2018, according to federal data.
Bad news:
record high: 5% more than last year and 30% higher than in 2019 before the Covid-19 pandemic.
The biggest driver of the pricier supermarket bills will be the cost of meat, which accounts for about half the total cost.
Maybe double up on beans?
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