Have consumers tightened their belts due to gas prices?

With gasoline now averaging around $4.00 per gallon, well above the long-term average of under $3.00, households are feeling real pressure at the pump. This matters because consumer spending makes up more than two-thirds of the U.S. economy.

Here are some key factors to consider:

• The latest retail sales data published by the U.S. Census Bureau shows that nationwide consumer spending rose faster than expected in March. These figures are not adjusted for inflation, so higher headline numbers are partly due to higher gas prices. However, even when excluding automobile and gasoline costs, spending rose 0.6% month-over-month, faster than expected. The prior month was also revised upward.

• It’s important to not focus too heavily on just one month’s numbers. Still, while elevated gasoline prices are a drag on household budgets, these latest numbers suggest that other factors continue to support consumer spending. These include the rebound in the stock market, more stable interest rates, rising wages, and more.

• If energy costs remain higher for longer, they can ripple beyond the gas station, raising prices for transportation, manufacturing, and distribution, potentially increasing the cost of goods and services across many categories.

• On a year-over-year basis, retail sales have grown 4%, just below the historical average. Non-store sales, which include online sales, have grown even faster. This again suggests that consumers have continued to spend, just in different ways and for different types of items.

The included chart shows these latest figures in the context of historical trends. Consumer spending is an important part of overall economic growth, which is why consumer sentiment, the job market, and many other factors matter.

While elevated energy prices are a real headwind today, keeping a long-term perspective is essential. Economic cycles, consumer adaptability, and policy responses have historically helped markets and households navigate these challenges over time.

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Advisors associated with Spartan Wealth Management may be either (1) registered representatives with, and securities offered through LPL Financial, Member FINRA/SIPC, and investment advisor representatives of Spartan Wealth Management; or (2) solely investment advisor representatives of Spartan Wealth Management, and not affiliated with

LPL Financial. Investment advice offered through Spartan Wealth Management, a registered investment advisor and separate entity from LPL Financial. Registration does not constitute and endorsement by the Commission, nor does it imply a certain level of skill or ability.

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