Consumers Finally React To Gas Prices

It seemed for a while that some experts believed that gasoline prices would not affect consumer behavior much. Statistics showed that people would still take summer trips. Car pools and public transportation would help people manage  costs. Those assumptions were probably wrong.

Walmart’s (NYSE: WMT) poor US earnings for the last reported quarter were off and the world’s largest retailer said the cost of gas was partly to blame as people stayed home and made fewer trips to its stores.

A new Gallup poll shows that “The slight majority of Americans, 53%, say they have responded to today’s steep gas prices by making major changes in their personal lives, while 46% say they have not.”

The rising price has been particularly hard  on the poor. Sixty-eight percent said they had made changes. It is possible that some people cannot change their driving habits because of their needs to travel to work or school.

The number of people who have altered their lives because of fuel prices seems low at first. Forty-six percent say that their lives have not been affected. But, once again, some drivers have no choice other than to accept gas prices because of their transportation needs.

There are some alternatives to accepting high gas prices. One is to buy fuel-efficient cars. That may be unrealistic for cash-poor consumers who cannot afford a $25,000 vehicle simply because it lowers driving costs. Alternatively, people can cut the amount of leisure driving. The number of people who simply drive for fun was already probably low compared to those who travel to work, school, or for other daily necessities.

The debate about how much people will curtail spending because of gas prices which are near $4 will go on as long as gas is near $4. But the economy is not buckling from its pressure–at least based on what can easily be seen. Consumer confidence has remained fairly high. Employment data shows a slow improvement in the job market and gas prices have begun to fall recently.

Consumer behavior is as much due to expectations as to reality. Americans have watched the foundation under oil prices crumble. They may believe that gas prices will move back to $3.50 or even lower. This could buy the economic recovery some time. Those consumer expectations may be optimistic, but they may also be sufficient to keep Americans on the road for another few months. If gas has not moved lower by then, whatever hope consumers have today will dry up.

Methodology: Results for this USA Today/Gallup poll are based on telephone interviews conducted May 12-15, 2011, with a random sample of 1,024 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia.

Douglas A. McIntyre