Pain at the Pump: Gas Price Impact Update

After learning about how gas price expectations impact behavior, what changes consumers are making as a result, and who they believe is in control, I thought we could take it back to basics this month and dig into where the impact stands today. We know that confidence is up slightly this month but not looking stellar compared to previous years, and the economy continues to play a big role in back-to-school spending plans.  Are pump prices still a pain or are they becoming a slightly more manageable ache? We turn to the Consumer Vital Signs InsightCenter™ to get our answer.

For the third consecutive month, the average gas price* in the U.S. has declined, dropping from $4/gallon in April to $3.42 in July. After hearing about $5/gallon forecasts, $3.42 doesn’t seem so bad. Following suit, the percentage of consumers being impacted by gas prices has declined from 76.3% in April to 71.5% in July, nearly 15 points lower than the 86.0% of Adults 18+ who were being impacted in June of ’08 when the price per gallon was $4.03.

*The average gas price is for the first week of each month to correspond with when the survey is being conducted.

This still means, though, that the majority of consumers are being impacted by fluctuating gas prices and changing their spending habits as a result. After paying $3.25/gallon last week and feeling like I was getting a deal, I quickly came to realize that notion was absurd; $3.25 per gallon is still a lot of money when you remember a day when prices were less than $1/gallon. It seems the majority tends to agree.

While driving less often continues to be the most popular (and logical) habit to conserve fuel, this is down from last year (45.8% in Jul-11 to 41.0% in Jul-12). Reducing dining out, decreasing vacation, spending less on clothing, delaying major purchases, and spending less on groceries are also all down from last year among Adults 18+. Carpooling, however, has seen a very small increase from 7.6% in Jul-11 to 8.3% in Jul-12.

So, is consumers’ pain at the pump excruciating or just a slight annoyance? With the large majority of consumers still being impacted by fluctuating gas prices, it does still seem to cause them a bit of pain. However, Anxiety at the Pump may be a more appropriate name for this ongoing blog. After feeling the pinch of $4/gallon in the midst of the Great Recession, there is always the fear that those prices will become part of the New Normal in the uncertain world we now live in. We may never go back to the days of not being conscious of how much gas we’re using.

To keep updated on fluctuating gas prices and other ways consumers are being impacted, register for the Consumer Vital Signs InsightCenter.

Source: BIGinsight™ Monthly Consumer Survey – JUL-12 (N = 8509, 7/2 – 7/9/12)

© 2012, Prosper®

BIGinsight™ is a trademark of Prosper Business Development Corp.

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Pain at the Pump: Who (or What) is Controlling Pump Prices?

In an election year, gas prices are more than just a concern for consumers. They become a hot topic in debates and fodder for those political ads we all love so much. Consumers’ pain at the pump can quickly turn into a reason for voting (or not voting) for a particular candidate.

In our May American Pulse survey, we asked respondents who or what they believe controls gas prices, and the American people were most likely to indicate that most control is held overseas. Nearly half of Adults 18+ believe that leaders in the Middle East are in control, followed by 44.3% who say that good ol’ supply and demand holds the power, while “International Conflicts” come in third. Under one in four say that Congress (24.4%) or the President (23.1%) are responsible for pump prices.

When breaking this down by generation, the youthful are more likely to spread the power out. While supply and demand tops their list, they are the least likely to say this basic economic principle controls gas prices. They are also the least likely to believe leaders in the Middle East are in control, but more likely than older generations to say the President and Congress are holding the reigns.

When we asked these questions in May, consumers had expected gas prices to be $3.95 per gallon by Memorial Day weekend, only to be pleasantly surprised when they were only at $3.67 per gallon (EIA.gov). With gas prices below expectations and continuing to decline (not to mention those $5/gallon summer forecasts we were hearing about heading into the Spring seemingly by the wayside), we decided to ask consumers in our June American Pulse survey who they believed was responsible for the drop in the average price per gallon, using the same list of available answers. In other words, we know who they think controls them, but who do they give credit to when things are going well?

For Adults 18+, supply and demand tops the list of responsible parties when it comes to prices declining, followed by consumers themselves (the “demand” side of that S+D equation).

As they did with the control, Gen Y was most likely to spread out the credit. Older generations were more likely to focus on supply and demand and consumers. 20.9% of Gen Y indicated that the President was responsible, compared to just 12.6% of Gen X, 6.2% of Boomers, and 4.5% of the Silent Generation. Congress followed the same trend with Gen Y being the most likely to indicate they were responsible for the drop in prices.

So, let’s bring this all back to the election. Will gas prices have a direct impact on who consumers vote for in the November?

If consumers are feeling the pinch (or even anticipating it) because of the dollars draining from their wallets when they fill up their tank, it seems the faces of the incumbents in the Oval Office and at the State House will be flashing in their minds along with the dollar signs. Steep gas prices could be an advantage for those looking to steal a seat in Congress or make Pennsylvania Avenue their new address. On the flip side, with consumers not giving a whole lot of credit to politicians currently holding office, a slight drop in gasoline prices alone probably won’t be the tipping point for incumbents to hold onto their seats.  Either way, Gen Y is most likely to equate pump prices with political offices.

Source: American Pulse™ Survey, May & June 2012, Jun-12 N = 3603

© 2012, Prosper®

Pain at the Pump: Great Expectations

Earlier this month, the Energy Information Administration (EIA) significantly downgraded the forecast for summer (April through September) pump prices by 16 cents per gallon to $3.79. With the EIA changing their expectations for the summer, are consumers doing the same? Will the pain at the pump impact Memorial Day? And how do gas price expectations impact consumer behavior?

Let’s start with the upcoming holiday weekend. Less than half (43.3%) of Adults 18+ indicated that increased gas prices will impact their spending for Memorial Day, down more than 10 points from last year (53.7%) when gas prices were more than 30 cents higher on average. This is on par with May of 2007 (43.2%) when gas prices were $3.10 on average and below May of 2008 (56.4%) when prices were $3.66 per gallon. What a difference a few years can make; $3.10 per gallon would feel like a clearance sale at this point.

Note: The EIA gas price data is from the first week of each month which corresponds with the timing of the survey collection.

What do consumers expect prices to be by the time the holiday weekend has passed? On average, Adults 18+ anticipate that prices will be $3.95 by the end of May. Consumers have lowered their expectations after an increase in April ($4.17). While this is still above the $3.79 average expectation the EIA recently released, it’s important to note that they announced their new forecast on May 8, 2012, the same day we completed fielding the Monthly Survey. Stay tuned for June to find out if consumer expectations continue to lower and if these decreasing pump price forecasts help boost their confidence in the economy after it fizzled in May.

Why all this talk about expectations for gas prices? Do they really matter? In the April BIG Call, we learned that the answer is yes. When gas prices exceed consumer expectations, they make changes quickly. The chart below shows the percentage of consumers who said they are driving less because of gas prices compared to actual gas prices. From February to March of 2012, we see a more than ten point jump in those who are thinking twice before putting their foot on the gas pedal. While there was a 30 cent upswing in the average gas price during this time, the percentage who were driving less remained flat from March to April when prices increased 15 cents per gallon. Wouldn’t we expect to see some sort of increase in consumers driving less often in April if the 30 cent upswing in March had such a dramatic effect?

After taking a closer look, we came across a BIG insight. The differentiating factor from February to March is that gas prices exceeded consumer expectations. In February, consumers had only expected gas prices to be $3.69 per gallon by the end of the month. By the first week of March, they were at $3.85 per gallon. So, the consumer expectation was below the actual gas price. In March, consumers had an expectation of $4.08 per gallon by the end of the month and prices were only $4 per gallon by the first week of April. The expectation was higher than the actual price.

 *The actual gas price data is from the first week of the following month.

To keep a pulse on how gas prices and other economic issues are impacting consumers, sign up for the Consumer Vital Signs InsightCenter™.

Source: BIGinsight™ Monthly Consumer Survey – MAY-12 (N = 8789, 5/2 – 5/8/12)

© 2012, Prosper®

BIGinsight™ is a trademark of Prosper Business Development Corp.

Pain at the Pump: Running on Empty

I have always heard that you shouldn’t let your gas tank run too low on a regular basis because it’s bad for your car (mostly from my dad). In my 10+ years of driving experience, I have let my gas light come on one time and it was in the last month (yes, dad, I listen to you sometimes). When gas is nearing $4/gallon, I’m just less inclined to pull into a station and fill up. I’d rather figure out how many miles I can drive before it is necessary. I’m also one to gamble – filling up when I see prices drop betting that they won’t be any lower when I really need gas.

In this month’s American Pulse survey, we asked consumers what changes they are making regarding their fill-up habits as a result of fluctuating gas prices. More than one-third are filling up less often by letting their tank run close to Empty, just under three in ten are filling up as soon as they see prices drop, and just under one quarter are filling up more often so that the cost isn’t as high each time they go to the pump. When breaking this down by generation, Gen Y-ers are more likely to make changes in general, while this youthful bunch and Gen X are likely the people you will see stranded on the side of the road because they let their tanks get a little too close to empty.

If they don’t run out of gas before they get there, consumers are making many different changes when shopping for groceries. Using coupons more often and purchasing only needed products are at the top of the list for Adults 18+. Boomers are the most likely generation to coupon, stay away from impulse purchases, and buy more store brand and generic. Gen Y and Gen X are the most likely to switch to a different brand because they are cheaper or on sale (hint to CPGers: here’s your chance to steal some share). Gen Y shoppers are much less likely to make a list and stick to it, providing room for some in-store promotion to influence their purchases.

When it comes to clothing, shoes, and accessories, two in five Adults 18+ are only buying sale items because of gas prices. Gen X-ers are least likely to peruse the sale racks while Gen Y-ers are the most likely group to be shopping at discount stores more often and, not surprisingly, shopping at malls less often. More than three in ten Boomers are making clothing, shoes, and accessories a smaller part of their budget.

While gas prices have been flirting with the $4/gallon average, I have yet to see the amount of walkers and stranded cars that were abundant when we first saw that mark in the summer of ’08. I keep thinking of the scene from Forrest Gump where he runs across the country with Jackson Browne’s “Running on Empty” playing in the background. It might not be a bad idea for all of us find some good running shoes (on sale, of course) and hit the pavement.

Source: American Pulse™ Survey, APR-12 #1, N = 3738

© 2012, Prosper®

BIGinsight™ is a trademark of Prosper Business Development.

Pain at the Pump: Are $4/Gallon Fuel Prices Becoming Part of the New Normal?

During the last week in Columbus, OH, it’s been 80 degrees and sunny on consecutive days, the state of Ohio was represented by four teams in the Sweet Sixteen (including my beloved Buckeyes), and gas prices hit $3.99. Which of these does not belong in the realm of positivity? Well, if you have no interest in Ohio basketball (or basketball in general), I guess you could go with the history-making Ohio representation in the March Madness tournament. And I’m sure if you live in Seattle you could care less what the weather is like in the Ohio capital.

But I think I’ll stick with the gas prices.

Even though we saw it coming, the gas price increase is not welcome. It’s hard to imagine that I’ll ever get used to $4/gallon and, according to our most recent American Pulse™ survey, I’m not alone. 73.7% of Adults 18+ somewhat or strongly disagree with the statement, “I have become used to high gas prices and paying more than $4/gallon would not impact by spending in other areas.”

At $4/gallon, it seems that gas prices are making an impact regardless of income level. Just under three in four (74.7%) of those with a household income level below $50K somewhat or strongly disagree, compared to slightly less (72.7%) of those with income levels $50K and up.

When asked how they expect prices to change over the next 6 months, the majority (87.3%) of Adults 18+ feel that gasoline will be somewhat or significantly more, compared to 76.9% who feel the same way about food prices and 62.7% who think clothing prices will be higher when Fall makes its arrival.

Some consumers, though, are trying to see the glass tank half full when it comes to gas prices. Slightly more than two in five (40.5%) Adults 18+ somewhat or strongly agree with the statement, “Higher gas prices will lead to more alternative energy sources in the long run.” Another point of optimism? Despite higher gas prices, people are planning to spend an average of $145.28 on Easter this year, up from $131.04 last year according to our latest research for the National Retail Federation.

In this post-recession economy, we hear the phrase “New Normal” tossed around a lot, meaning that consumers have adjusted to new spending habits and will not return to their pre-recession ways. While gas prices are also causing us to adjust those spending habits, it seems that most of us are not ready to accept $4/gallon as anything close to normal.

For more information on this data, please contact BIGinsight™.

Source: American Pulse™ Survey, MAR-12 #1, N = 3892

© 2012, Prosper®

BIGinsight™ is a trademark of Prosper Business Development Corp.

Pain at the Pump: At Least Gas Prices Aren’t $5/Gallon… Yet

With gas prices like this, who needs really needs a vehicle? A question I’m sure a lot of us have been asking ourselves lately…

Unfortunately, public transportation isn’t always an option and I know the 20 mile bicycle ride to work doesn’t sound like fun to me. (Maybe I’ll change my mind if prices hit the scary expectations for the summer.) So what other changes are consumers making as prices continue to creep upward?

Taking fewer trips, shopping for sales more often, shopping closer to home, and using coupons more are the most recent top responses from consumers when asked what they are doing as a result of fluctuating gas prices. While taking fewer trips, shopping for sales, and shopping closer to home haven’t quite reached the summer of ’08 levels (yet), using coupons more often has certainly remained a popular response, peaking at 42.1% in September 2011.

As a result of fluctuating gas prices, are you doing any of the following?

The dark blue line in the chart shows the actual average gas prices for the first week of each month according to the Energy Information Association.

When comparing these responses to actual gas prices, there is one obvious visual trend to make note of. When gas prices dropped from an average of $3.54/gallon in October 2008 to below $2/gallon in December 2008, the percentage of consumers who were taking fewer shopping trips, shopping for sales more often, shopping closer to home, and using coupons more did NOT take a drastic decline like the prices at the pump did. Instead, after just being slapped in the face by the realities of the recession, consumers began to adjust to the “new normal.”

What will these numbers look like at $5/gallon? Stay tuned and we just might find out (eek!).

To learn more about how consumers are being impacted at the pump and other economic indicators, check out the Consumer Vital Signs InsightCenter™ at www.ConsumerVitalSigns.com.

For more information on this data, please contact BIGinsight™.

Source: BIGinsight™ Monthly Consumer Survey – MAR-07 – FEB-12 (FEB-12: N = 8716, 2/1 – 2/8/12)

© 2012, Prosper®

BIGinsight™ is a trademark of Prosper Business Development Corp.

An Amazonian Sized Challenge: The Smartphone and Tablet Price Check Era

It used to be that in order for a consumer to do a price comparison it required some sort of inconvenience for them. Before the Internet, they had to drive across town or have their newspaper ads handy. Once the Internet came along, they could compare before they came in store but once they were there the options were limited.

In the smartphone and tablet era, not only can consumers compare prices between retailers while standing in a store, they can actually purchase the product from a different retailer while standing in another store.

In a survey we conducted for the National Retail Federation this past holiday season, 25.3% of Adults 18+ shopped for an item in a store and then decided to buy that same item online from a different retailer. The ability to find a cheaper price online was the overwhelming top reason for choosing the online retailer.

The convenience of shopping online was the second most chosen reason for going to a different retailer online and the item being out of stock or unavailable in the store came in third.

Another interesting insight from the January survey was about the Amazon Price Check Application. Of those who have a smartphone, 15.9% used the Amazon Price Check Application this past holiday season. I recently downloaded this app to my iPhone and tried it out. You can scan a barcode, take a picture of an item, type in the product name, or “Say It” and the app will search to find that product and give you the Amazon.com price. I took a picture of my office desk phone and it found it in seconds.

The smartphone and tablet era presents an interesting challenge for retailers that doesn’t look to be going away any time soon. New technology is always just around the corner helping to make consumers’ lives easier. What could possibly be next?

Check out the Prosper Mobile InsightCenter to find the latest smartphone and tablet consumer trends.

Source: BIGinsight™ Monthly Consumer Survey – JAN-12 (N = 9317, 1/4 – 1/11/12)

© 2012, Prosper®

BIGinsight™ is a trademark of Prosper Business Development

Knowledge is Power

In the most recent American Pulse™ survey, we asked respondents to answer questions about both citizenship and pop culture to see which they were more informed about.

Contrary to what some of us thought would happen, there were no shocking results that put pop culture well above citizenship on the radar of these respondents. Surprising to me was that only 20.3% of Adults 18+ knew that “GTL” stood for “Gym, Tan, Laundry” which, of course, has been made famous by the always entertaining MTV hit Jersey Shore.

The citizenship question that stumped people the most was, “Who is the current Speaker of the House of Representatives?” with only 53.0% knowing that it was John Boehner. I found the overall results to be encouraging.

Registered Voters indexed higher for all correct citizenship answers compared to Adults 18+ as a whole. While the nature of my job requires me to be informed about all aspects of consumers and society as a whole, it’s good to know that others are staying informed about the role of their government and the people who run it. When we head to the polls and exercise rights that many in the world do not have, being as informed and up-to-date on what you are voting on is crucial, regardless of your political affiliation or lack thereof.