Gasoline Prices Continue To Fall, But So Does Confidence

Fortunately, gasoline prices fell again last week for the fifth consecutive week, but the declines haven’t cheered up consumers very much.

The U.S. Energy Information Administration reported the average price for a gallon of gasoline fell another 6.8 cents to $3.7113 for the week ended June 13. Other reports from AAA and Toby Lundberg also recorded continuing gasoline-price declines. And with oil averaging closer to $90 a barrel than $100, most analysts believe Americans have already seen the highest gas prices for this year. On the other hand, EIA said diesel-fuel prices, which had been mirroring the gas-price declines, rose 1.2 cents to an average $3.954.

The drop in gas prices is expected to help consumer spending going forward. And consumers do appear to recognize the change. One research firm reported that after cutting back on their driving as prices soared March through May, Americans began driving more again in June so far. And in the preliminary June numbers on consumer sentiment from Thomson/Reuters University of Michigan Surveys of Consumers, released June 17, inflation expectations diminished.

But that didn’t appear to boost consumers’ overall mood much, as the preliminary Consumer Sentiment Index for June fell to 71.8 from May’s final 74.3. “The majority of consumers are as convinced today as they were two-and-a-half years ago that their incomes will not increase and…that the unemployment rate will remain stuck at its current level,” said Richard Curtin, who oversees the surveys. In other words, things aren’t getting worse, because they never got much better.