U.S. consumers just don’t trust those low prices at the gas pumps, which have edged higher in recent weeks but remain more than a dollar per gallon, on average, below a year. They’re so skeptical that most are saving or paying off debt, instead of increasing their spending.
Consumer spending rose only modestly in February, the Commerce Department said Monday as part of its broad measure of purchases — from groceries to lesser necessities. Spending increased a seasonally adjusted 0.1 percent from the prior month. Spending had dipped down 0.2 percent% in January and fell a revised 0.2 percent in December.
When adjusted for inflation, consumer spending fell 0.1 percent in February, the first monthly decline in real spending since last April. Consumer spending generates more than two-thirds of U.S. economic output.
CNNMoney added this tidbit about the consumer mindset when it comes to fuel prices: If you type “why are” into Google search, the top two auto-complete results are: “gas prices so low” and “oil prices falling.” The next most popular: “why are gmos bad” and “why are gas prices going up.”
The point of CNN’s article: Even the smartest pundits on Wall Street couldn’t predict the massive supply glut that sent oil prices plummeting from $107 a barrel in June to about $49 today. Now, there is not a whole lot of agreement as to the near-term direction of prices.
AAA’s Fuel Gauge report today puts the national average price per gallon of regular gasoline at $2.42. It didn’t move much from last week’s figure. A month a go it was at $2.39.
A year ago, the per-gallon national average was $3.54.
Experts are not too certain about gas prices moving forward. However, there is general consensus that that oil’s vast oversupply will not dwindle much in the foreseeable future, and demand remains sluggish. These factors, though, probably wont’ do much to ease the cynicism of the American public, which has seen gas prices collapse before, only to see them rebound over a short period of time.
“Perhaps people are trying to first understand the nature of this rapid fall before spending extra cash on discretionary purchases, such as at the mall or car dealer,” according to a report from brokerage Convergex that featured the Google search results.