Soaring Gas Price Pinches, US Consumer’s Behavior Changes

By ETHAN Markoff

WORLD/BUSINESS NEWS - US in the last three months have witnessed a steady job growth, and moreover, this year’s federal payroll tax cut respites Americans from the tedious energy cost cutting. But the larger picture does sometimes conceal the smaller shades. Economy is gaining its momentum but for Americans they are still digging their way out of the rapid increase of fuel prices.

For example Mark Hauser (name changed on request), a marketing executive in the Hudson Valley of New York admitted the small comfort from economic recovery, but moved to a rental house much closer to his workplace. At $4 a gallon, Mark thought it’s too expensive to commute about 100-mile round-trip five days a week.

The daily commutation by cars has suddenly dropped in many places across US, while people now prefer to travel on buses and ferries.

“If all your customers are paying $50 for a tank of gas that they used to pay $25 for, somebody is not getting that $25,” said William Dunkelberg, chief economist for the National Federation of Independent Business.

In recent weeks, gas prices eased a little, but they are, on average, up about 30 percent over a year earlier. High fuel price amplifies in food price, airfares, taxi fares in some regions, making American consumers conscious in their approach.

The high oil prices have also affected retail and other business. For example, the nation’s largest retailer, Wal-Mart lamented that high fuel price had restrained consumers to involve in shopping, hampering their business. Sales of the retail giant fell 1.1 percent in the first quarter.

Lowe’s one of the largest home improvement chains in US suffered 5.7 downslide in quarterly profit, as customers made less trips. According to Lowe’s chief executive, Robert A. Niblock, chief reason of fewer footfalls is because of rising gas and energy prices, followed by overall inflation.

In a research on consumer spending by MasterCard Advisors’ SpendingPulse, it disclosed 1 percent downslide in many gas pumps in the country over a year earlier.

Some companies have already invested in cloud computing so employees can access all docs and work from home. Even company like Topical BioMedics hands out gas cards as bonuses and birthday gifts and conducts seminar on the importance of energy efficient cars.

The economy of the United States is slowly mending, creating more than 750,000 jobs, which means addition of money into the nation’s economy in the form of more paychecks. But the rising gas price roughly translates into a loss of $75 billion to $100 billion.

There are also some sectors get benefited from the price rise of gasoline. E-commerce sales have risen to 19.2 percent in April over a year earlier. Car sales have also risen as people prefer to buy small cars as compared to old preferred trucks. They are now more inclined toward compact and fuel-efficient cars like Chevrolet Cruze, Ford Fiesta and Focus models and electric driven cars as well.