Drivers Spend More on Fuel Than Cars for First Time Since 1982

[marmar]

from Bloomberg:



Drivers Spend More on Fuel Than Cars for First Time Since 1982

By Margot Habiby

Aug. 15 (Bloomberg) -- Consumers spent more on gasoline than vehicles and parts for the first time in 26 years in May and June, as U.S. pump prices headed for a record.

Gasoline accounted for about 4.4 percent of spending in June, compared with 3.9 percent for autos and motor parts, according to the U.S. Bureau of Economic Analysis. Both were at about 4 percent in May. The last time gasoline exceeded cars and parts as a percentage of spending was in January 1982.

``Prices of cars, particularly on a quality-adjusted basis, have been trending lower for many years, and the price of gasoline is obviously hugely higher over the past few years,'' said Dana Johnson, chief economist at Comerica Bank in Dallas. ``The two trends have crossed.''

Regular gasoline, averaged nationwide, reached a then-record $4.09 a gallon in June, on its way to the all-time high of $4.114 a gallon on July 17, according to AAA, the biggest U.S. motorist group. The average was $3.778 a gallon yesterday.

Record prices at the pump are already affecting U.S. gasoline demand, which sank to a five-year low in the first seven months of the year, according to the American Petroleum Institute in Washington. The decline in demand has slashed sales of automobiles and cut consumer spending.

Auto sales fell to the lowest in 15 years in July and partly accounted for retail sales dropping for the first time in five months. Consumer spending makes up more than two-thirds of the U.S. economy.

``People are spending as much today on gasoline as they did in the 1970s and 1980s,'' George Magliano, an auto analyst for Global Insight Inc. in New York, said in a telephone interview. ``It's one more statistic in what appears to be an unprecedented string of bad news'' for both the economy and the auto industry. .......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=a6yhAux3qDbI&refer=home

[Zenlitened]

1. "What the news says about the consumer is frightening and goes well beyond car sales."

From Bloggingstocks.com:

...What the news says about the consumer is frightening and goes well beyond car sales. If a typical household cannot afford a new car and gas for a year, then many households are probably on the edge when it comes to mortgage and food costs, especially as home loans continue to reset to higher levels. As the economy loses jobs, more people will not be able to cover either car payments or gas.

The statistics on cars are more than a forecast for the industry. They are a harbinger for the broader economic health of the country.

Link:
http://www.bloggingstocks.com/2008/08/15/consumers-spend-more-on-gas-than-cars/

[inanna]

2. I don't drive

Sometimes it can be a real pain not having a car, but when I read news like this, it makes me glad I don't.

Luckily I live quite close to work and major shopping. Unfortunately many don't.