Last week, the Conference Board reported that the consumer confidence index for April hit its highest level since May 2002. "The rising prices on the pump didn't have an impact on consumer confidence at all," said Lynn Franco, director of the Conference Board Consumer Research Center.Gross crunches some more numbers with the help of a few economists. For instance, "John Felmy, chief economist at the American Petroleum Institute in Washington, estimates that in 2006 the average household will devote $2,150 of its $46,302 in consumer expenditures to gasoline — or 4.6 percent." Which means, according to Carl Steidtmann, chief economist at Deloitte Research, "that the difference in spending on gasoline from 2004 to 2006, then, is an extra $10.62 a week, about the cost of going to a movie. In 2004, for comparison, the typical household spent significantly less on gasoline than on discretionary things like entertainment ($2,218), or food away from home ($2,434), according to the Bureau of Labor Statistics."
These data point to the enormous resilience of the consumer. But they also bring into focus a truism lost in the miasma of media coverage and political rhetoric surrounding energy: while the price of gasoline may be highly visible and symbolic, filling up the tank simply doesn't eat up that much of most families' budgets.
Of course, lower-income households will be bearing more of a burden than wealthier ones, but, it looks like wealthier households tend to be those who use the most gasoline. And the high cost of gas doesn't appear to make too much of a dent in their budgets. Writes Gross:
"In 2004, according to the Bureau of Labor Statistics, the 26.4 percent of households with more than $70,000 in annual income bought about 40 percent of all gasoline and motor oil. The 41.4 percent of households that earned more than $50,000 accounted for 58.4 percent of total expenditures. Even at the higher prices, these comparatively better-off households — which account for 64 percent of overall consumer spending — are still devoting only a small fraction of their total spending to gas."The whole article is worth a read -- and not just because the phrase "pain at the pump" is conspicuously absent.