Americans spend $5,000 a year on gasoline with skyrocketing prices

American families are now spending up to $5,000 on gasoline, according to new research, a staggering increase from just a year ago with higher prices at the pump.

the new Analytics Yardeni’s research shows the increasing burden of rising fuel prices on American families. By comparison, just a year ago, the average American was paying about $2,800 on gasoline. The number has also risen rapidly since March, when Yardeni predicted that gasoline would cost most homes about $3,800 a year.

Inflation Rises 8.3% in April, Approaching Almost 40 Years

“No wonder the Consumer Confidence Index is so low,” Yardeni said in a note. “The wonder is that retail sales were surprisingly strong during April and May.”

Fuel prices at gas stations

Fuel prices at a gas station in New York, US, on Tuesday, May 17, 2022. (Photo: Stephanie Keith/Bloomberg via Getty Images/Getty Images)

Average price per gallon of Gas It was at $4.56 nationally on Wednesday, according to AAA, up from $3.04 a year ago. It is the highest price for gasoline ever. Until the recent inflation spike, prices had not topped $4 a gallon nationally since 2008. Some Americans pay more for fuel: In California, for example, prices are as high as $7 a gallon.

Soaring gas prices are rooted in a faster-than-expected economic recovery from North America pandemicwhich made it hot economic inflation Through decades as a result of strong consumer demand, the influx of government incentives and disruptions in the global supply chain.

The Labor Department reported earlier this month that consumer prices rose 8.3% in April, near a 40-year high and much faster than economists had expected. It highlighted how strong inflationary pressures are in the economy, despite hopes that consumer prices may peak soon.

Rising inflation is erasing the strong wage gains American workers have seen in recent months: Average real hourly earnings fell 0.1% in April from the previous month, as rising inflation eroded total wage gains by 0.3%, according to the Labor Department. . On an annual basis, real earnings fell 2.6% in April.

economic inflation

A customer shops at a store in New York, US, May 11, 2022. (Photo by Wang Ying/Xinhua via Getty Images/Getty Images)

However, Yardeni noted, consumers have accumulated a lot of savings – in part because of trillions of federal stimulus money – and are charging more fees on credit cards.

“When we are happy we spend money,” the note said. “When we feel depressed, we spend more money.”

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Recent government data appears to bolster Yardeni’s argument: The Commerce Department reported earlier this week that retail sales, a measure of how much consumers spend on a number of everyday goods, including cars, food and gasoline, rose 0.9% in April from the previous month.

So-called core retail sales, which exclude cars, gasoline, building materials and food services and which are closely related to the consumer spending side of the country’s GDP, rose 1% in April.

However, with gasoline prices rising in recent weeks, analysts have warned that inflation could surge higher in May and that more expensive prices at the pumps could weigh on consumer spending.

“US consumers continued to spend more in retail stores in April, despite inflation as lower gasoline prices helped increase spending on discretionary items,” said Tuan Nguyen, US economist at RSM. But it won’t last long as gasoline prices hit a record high in May.

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