- Gas prices are climbing rapidly, unsettling Americans' economic perceptions.
- The Consumer Sentiment Index, which gauges how people feel about the economy, hit a new low in March.
- Geopolitical tensions and inflationary pressures are heightening Americans' concerns over gas prices.
Americans are feeling despondent about gas.
It's a dour time for consumers — in April, the University of Michigan's Consumer Sentiment Index, which surveys consumers on how they feel about current and future economic conditions, hit an all-time low.
It turns out that one small (or not-so-small) number has a lot of sway over how Americans feel about the economy: Gas prices. In recent years, there's been a pretty solid relationship between gas prices and consumer sentiment: When it's more expensive to fill up the tank, Americans tend to report more dire feelings about economic conditions and where they're going. A Business Insider analysis of retail gas prices from the Energy Information Administration and consumer sentiment from the University of Michigan showed a moderate negative correlation between the two.
Gas prices are a hyper-visible economic marker for many Americans, who might experience immediate sticker shock every time they drive past their local gas station or stop to refill on the way to work. After all, only a small share — under 4% — of Americans use public transportation to get to work, according to Census Bureau data on commuting. A touch over 69% of workers drove alone to work in 2024, meaning that gas prices are likely omnipresent in calculating their commutes and daily expenses.
"Prices at the pump hold a very uniquely salient point in people's minds," Matt Colyar, an economist at Moody's Analytics, told Business Insider. "Maybe it's the big signs with the big luminescent numbers that everyone drives by constantly. They're very aware of these prices."
The last time sentiment was close to being this low was in June 2022. That might seem counterintuitive; it would stand to reason that the depths of the COVID-19 pandemic or the 2008 financial crisis and its aftermath might trump the current fluctuations. But June 2022 marked record-high gas prices amid soaring inflation and the fallout from Russia's war in Ukraine.
Now, as sentiment hits that record low, gas prices are rising at the fastest pace on record, with last week's consumer price index report showing a 21% month-over-month increase. As of the week ending April 6, the most recent date for which the Energy Information Administration has data, gas prices hit $4.12 a gallon; as of April 13, they were hovering around the same level, and up 50 cents over the month, per AAA.
The bad vibes might only continue, especially as President Donald Trump signaled that prices might remain high through the November 2026 midterms and tensions between the US and Iran remain high over the Strait of Hormuz and the roughly 20% of global oil production that passes through it.
"Gas prices are highly visible, highly salient prices that consumers use to gauge their feelings about the economy," said Alex Jacquez, the chief of policy and advocacy at the left-leaning think tank Groundwork Collaborative. "People have to fill up weekly; they often don't have much of a choice whether they pay or not."
Indeed, pump prices are top of mind for Americans as the Iran conflict drags on: 69% of 3,507 Americans surveyed by the Pew Research Center at the end of March said they were very or extremely concerned about higher gas or fuel prices when thinking about US military action in Iran.
That's already led to changes in how American workers are navigating daily life — rideshare drivers, for instance, are prioritizing the most profitable trips to make their gas expenditures worthwhile. EV owners have taken a victory lap as they plug in. One Business Insider reporter strategically switched to the Costco credit card for gas savings.
Of course, there are plenty of factors that weigh on how Americans view the overall economy, and gas prices alone don't determine sentiment. For example, the job market has been locked in a low-hire, low-fire "great freeze" for over a year, and the difficult prospects for job seekers are likely weighing on economic opinion as well.
Gas is still likely a looming factor, though. Jacquez said research has shown that "gas prices, consumer sentiment, and political approval all tend to move together, so it's not surprising to see a sudden rise in gas prices coincide with a crash in consumer sentiment."
Do you have a story to share about how rising prices and volatility are affecting your economic outlook? Contact these reporters at [email protected] and [email protected].
