Americans, Hurt by Rising Gas Prices, Curb Spending, Poll Finds
June 26 (Bloomberg) -- Most Americans say they are feeling the pain from rising gasoline prices and many are tightening their belts in response, a Bloomberg/Los Angeles Times survey shows.
``It costs me double to fill up the tank,'' says J.L. Harder, a 75-year-old retiree and poll respondent in Peoria, Texas. ``We don't go on vacation and don't visit the relatives.''
He isn't alone. Seven in 10 of those surveyed say higher gas prices have caused them ``financial hardship.'' More than 1 in 3 respondents say they have cut back on their spending over the last six months as oil and food prices surged and unemployment rose.
That's bad news for the economy. With consumers accounting for 70 percent of gross domestic product, any pullback in their spending would have an outsized impact on the economy. In a note to clients this week, Deutsche Bank AG economists estimate that U.S. annual growth may be cut by a half to a full percentage point if consumers spend less and save more.
``Consumers are facing so many different headwinds,'' says Jonathan Basile, economist for Credit Suisse Holdings Inc. in New York. ``It going to hold back growth for a while.''
Poll respondents pin most of the blame for the 35 percent surge in gas prices over the last year on President George W. Bush, according to the poll. Almost 3 in 10 singled out Bush as the one responsible, followed by the oil companies, identified by 25 percent, and speculators, by 13 percent. Only 9 percent blamed foreign oil producers and the Organization of the Petroleum Exporting Countries.
The poll of 1,233 adults surveyed from June 19 to June 23 has a margin of error of plus or minus 3 percentage points.
Poll respondent Michael King, a 47-year-old Chicagoan who works for an auto-parts supplier, says he is considering selling one of his three cars, a Mazda Millenia, that runs on higher- priced premium gas.
The increase in gas prices has been a double whammy for King. Dearborn, Michigan-based Ford Motor Co., one of his company's major customers, has cut production as demand for gas- guzzling sports utility vehicles and light trucks declined.
``It's not a ripple effect,'' King says. ``It's a tsunami.''
Jody Felton, 48, has found another way to cope with the pain at the pump: her disabled husband has taken to riding his electric cart to go shopping near their home in Cedar Woolley, Washington, rather than going by car.
Faced with climbing prices for gas and food, Americans are spending more of the tax rebates they received from the federal government than they intended to just a few months ago.
Thirty-five percent of those who have received or expect to receive a rebate say they intend to save it all or use it to pay down debt. That's a contrast to a Bloomberg/Los Angeles Time poll in February, when 67 percent said they planned to use the rebate for those purposes. Since then, gas prices have risen 30 percent.
In this month's survey, almost a quarter of those receiving rebates say the money would go to paying for household expenses. Ten percent say they would make new purchases; 2 percent would use the money to finance a vacation.
According to the Treasury Department, the government has already handed out almost $71 billion in rebates, with another $30 billion or so to come.
``It's just paying the gas bill,'' says Harder, the Texas retiree, who received a $600 rebate from the government.
Americans want the government to do more besides the rebates to help the economy, according to the poll. A majority favor the federal authorities allowing more drilling for oil and gas in and offshore the U.S. They also want the government to do more to help homeowners facing foreclosure and to regulate Wall Street in the wake of the subprime-mortgage crisis that exploded in August.
Not surprisingly, Americans are feeling gloomy about the economy. Eighty-two percent of those surveyed describe the economy as performing badly; that's the worst assessment in 15 years. Half of the respondents say it is doing very badly.
And it isn't likely to get better, those surveyed say. Only 18 percent of respondents see the economy improving six months from now. Thirty-one percent say it would get worse. Forty-five percent see conditions as the same.
``I'm starting to understand how my grandfather felt in the Depression,'' says Joyce Wilkinson, a 58-year-old retiree in Lake Barrington, Illinois. ``Do I need to take all my money out of the stock market and put it under the mattress?''