Lower Prices Could Pump Up Consumer Confidence
It’s pretty much an annual ritual. The summer vacation season
approaches, with Memorial Day weekend serving as its kickoff, and gas prices
go up. In some years past, prices rose to the point that consumers, particularly
those on the lower end of the economic ladder, altered shopping behavior in
a number of ways, including fewer trips to stores, shopping closer to home,
cutting out items not seen as necessities, etc.
Tom Kloza, publisher and chief
oil analyst at Oil Price Information Service, told CNBC, "When
prices go over $3.25, it begins to cause some real damage."
So, how will
American consumers deal with gas prices actually going down at the pump at
precisely the time they usually go up?
They probably won’t change much at all.
According to CNBC, most consumers
do not drive enough to see much difference in their lives when the average
price of gas falls to $2.793 per gallon as it is now. Mr. Kloza is looking
for gas prices to fall between $2.60 and $2.70 per gallon this summer. Essentially
the same price consumers were paying at the pump last year at this time.
a drop in gas prices alone may not be enough to get consumers spending more,
it is another piece of positive news that should add to growing confidence
numbers. The Conference Board has recorded three straight months of rising
Discussion Questions: Why do you think consumers adjust spending when gas
prices go up, but apparently not when it comes down? Do you see lower prices
at the pump providing a boost for consumer confidence levels over the summer