Bucking the usual pattern, gas prices are actually falling as the summer driving season gets going. This week, the Energy Information Administration noted that the average cost-per-gallon at the pump is about $3.43 in the U.S. That’s about 6.5% lower than where prices were in April, when they peaked for the year to date. It’s also lower than the same time last year ($3.60) and much lower than when average gas prices hit $5 this time in 2022.
Though cheaper fuel — especially as Americans hit the road for vacations and other summer travel — might be cause for celebration in some quarters, that typical elation isn’t hitting the data. The University of Michigan’s gauge of consumer sentiment fell to 65.6 from 69.1 this month.
“The decline in the index was a surprise as the low gas prices, strong performance in equity markets, and weaker inflation readings seen over the past month would typically improve consumer sentiment,” the research firm Oxford Economics wrote in a note Friday.
Although people hate high gas prices, falling gas prices in a country where so many people depend on the product is often a bad sign. Globally, the biggest stories in the oil markets that drive gas prices are an abundant supply of U.S. crude overwhelming increasingly less powerful cuts from members of the Organization of Petroleum Exporting Countries and reduced demand from China, the world’s second-largest oil market.
But domestically, falling gas prices might be a sign that economic malaise continues to linger in the American mind.
“For most, household balance sheets remain strong, but between the stubborn inflation seen at the start of the year, still-high interest rates, and weakening income growth, it is not shocking that consumers are worried about their finances,” Oxford Economics wrote in its note.
