Crude Sees New Highs: After seeing their highest levels in more than 80 years, oil stockpiles have fallen recently and coupled with declining US production, have helped to push prices to new 2016 highs. The Energy Department reported declines in US crude inventories and production on Wednesday, and prices increased to over $50 a barrel. The recent surge in prices of over 85% since the lows in February can be attributed to declines in supply in the US and globally as companies have cut spending on new exploration and production. Also, output has seen declines due to unexpected production outages from attacks in Nigeria to power cuts in Venezuela, and wildfires in Canada.
Survey Says: Building upon yesterday’s article on housing and consumer spending, our most recent Consumer Pulse survey report has indicated that consumers are highly in-tuned to changes in gas prices. In fact, our tracker even shows that consumers noticed the lows in February and have followed the recent price increases through April.
Despite the recent spike in gas prices, our survey has seen a sharp drop MoM in the number of Americans reporting that they live “paycheck to paycheck.” In our view, this shift was a key driver of improved consumer sentiment and activity improvement across all categories in our most recent Consumer Pulse report. This shift is also interesting because it goes against the conventional thinking that when gas prices increase, consumers tend to spend less. However, as we noted in yesterday’s article, consumers are the most satisfied with their personal finances relative to a year ago in our survey’s history. So even though gas prices are increasing just in time for the summer (they typically do), consumers are still confident about what is in their bank accounts.
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