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The Globe & Mail is one newspaper that's carrying a pathetically obvious headline and story: Gas prices beginning to affect consumer behaviour. It would have been insightful to see this kind of story well before the first of the "perfect" economic storms hit the USA. Given that gas at the pumps has gone up someplace in the order of 20% in the past six months or so, it was a matter of time before the effect would be seen on happy consumers. Fuel surcharges and increased grocery prices, the threat of home heating increases this winter (significant here in Canada), and so on caused grumbling. But when a fill costs near $100, it catches attention.
Makes one wonder about the price elasticity of gasoline at the pump: a few cents here and there causes no change in behaviour; a 20-cent hike overnight that lasts a month . . . people start making changes. Most everyone hasn't had relief in the form of an income increase to compensate.
This item from from Newsday.com (Record set for late credit bills) makes the equally obvious observation of how consumers have, completely predicatably dealt with the changing economics. We try to ride it out in the short term without making any changes. But, something has to give:
Credit card delinquencies shot to a record high in the second quarter, as consumers tried to keep up with rising gas prices and increasing interest rates without curtailing spending, a report showed yesterday.Sidebar: that's what happens when you're maxed out living the lifestyle to which you are "entitled."
Anticipate some bigger changes in household economics yet to come.
Posted by Grayson at September 29, 2005 07:33 AM