Pain at the pump adds up: Rising concerns about higher gas prices impact on spending

Added: 2026-05-31

[00:00:00]New reporting uh this morning on higher gasoline prices and the impact on spending. Senior economics reporter Steve Leeman joins us now. I knew you were going to do this because you you talked about this quite a bit yesterday, right Steve? You gave us sort of a you like foreshadowing like Shakespeare or something.

[00:00:16]>> Deep deep tease in the business, Joe, which I know you haven't been in for a very long time, but that's what it's called. It's called a deep tease. It's a day ahead of time. The gas bill, Joe, from the surge in oil prices is starting to add up for consumers, raising concerns about whether the resilient consumers so far can hang on much longer. Mark Xandandy atmoody's.com, uh, he calculated the total bill so far at the request of CNBC. I asked him for this a couple days ago. That's how I knew it was coming. He finds it equals $59 billion, made it mostly of gasoline.

[00:00:45]Then there's a diesel cost and an implied jet fuel cost, those higher airline fees. That amounts to about $450 per household. A cost that's been manageable in part because you can see there bigger tax refunds have offset it.

[00:00:59]But in midMay, you can see the extra fuel costs outstrip the refunds. That's averaged about $380. So now it's higher.

[00:01:07]Xandandy warning unless the war ends soon, financially pressed consumers will have no option but to turn more cautious in their spending, threatening the already soft economy. and Goldman Sachs had come to a similar conclusion. Uh they wrote in a report, "We believe that the recent resilience in spending largely reflects an outsized boost from the OBBBA related tax cuts and expect that spending headwinds from higher inflation will weigh on spending growth for the rest of the year. Now, the potential offsets to this, you could have better job growth, you could have better wage growth, and also you might have expanded oil production and reinvestment of those petro dollars. In the meantime, for now, real incomes, consumers, uh adjusted for inflation, real incomes have fallen in five of the past seven months. And there's the year-over-year rate, and that includes the past three as inflation has taken a bite. Costco. They said last night that gas is taking a bigger share of their members spending and they see consumers becoming more price sensitive even while non- gas sales stayed strong. Xandy estimating if we go on the way we've been going prices stay at current level it's going to be about a $2,000 hit per household once you do the one-year anniversary of the start of the war.

[00:02:21]Joe, >> why did I cancel that order for that new Ferrari EV? Um, Steve, so what what EV suddenly you got one? I think you got you have one.

[00:02:35]>> I I don't have one yet. I don't have one yet. I'm looking for one.

[00:02:39]>> Well, I'm in a sort of techno paralysis on that one, Joe. I've not quite figured out. Uh, I'm looking for the 400 mile range, and they're all at 300 yet. So, I'm a little bit uh uh they have a name for it in the business. People are range anxiety or something like that. I have that at the moment.

[00:02:58]>> You tell us where we are currently. I don't know where we're going. I mean, the futures, the oil futures did come down. Um, we're in this 60-day thing.

[00:03:07]Uh, I don't I don't know what, you know, it'll take time to get rid of the mines, take time to get things flowing again, take times to get things to refiner. So, >> we're talking six months anyway, aren't we, Steve?

[00:03:19]>> Joe, this is this is really weird. And I've been reporting this other side of it, which is obviously if you want to know what's going to happen to the consumer, you got to know what's happening to oil. So I was talking to our friend Kildoff yesterday and he talked about this idea of the kink in the fire hose. And you know what that kink is? It's $175 million barrels that are sitting loaded on ships in the water. This is why you don't have $150 barrel oil or $200 barrel oil. That's because if you can make that deal with Iran, then that kink opens up and this oil comes flooding onto the market and you're going to have a reasonable response. The weird thing about all this is what you don't have once you get on the other side of that 170, you don't have anything behind it. So, the actual hit could be another year from now.

[00:04:08]Meanwhile, we might get some relief.

[00:04:10]Also, Joe, if you take a look at what's happening to US inventories, they're plunging. So, we're getting close to some kind of reckoning point here if we don't open up the straight relatively soon. And I know that's been said for the last couple months. So, you want to be a little bit wary about that, but the math is the math when it comes to the inventories here.

[00:04:29]>> And we're uh now we know what's happening. We're we're buying four packs of beer and stuff and uh you know, you get Doritos have like three chips now.

[00:04:39]It's like you got to really I mean, it makes them much more deer. I mean, each one that you have is better, but did you read that article? I mean, everybody is is trying to figure out why.

[00:04:48]>> I did. Hang on. There's there's another thing out there that I read the other night that Walmart says the average number of gallon shoppers putting in their vehicles, >> fell below 10 for the first time since 2022.

[00:05:03]>> And and so that's that's another way that people are getting by. We saw it yesterday in the savings rate. We saw it uh uh earlier this month when the New York Fed released their credit card data. So there's these signs of stress and we talked about it and then you know we keep reading these reports from the retailers and the consumers. Okay. And I think that chart that shows what happened with refunds and some of these other ways that people are stretching.

[00:05:27]That explains it. I think the story is it's not going to go on or it can't go on much longer.

[00:05:33]>> Hard to buy a $7 latte. Uh, I would think uh at this point the quote on Starbucks.

[00:05:41]>> Well, you could get a half, right? Could Could you Could you get a half of them?

[00:05:44]That' be 350.

[00:05:45]>> Grande instead of a vente. I can't believe that we even know all these words to order coffee. Anyway, all right, Leafmen, have a good weekend.

[00:05:53]Mistake.