Gas prices have eased in recent weeks, but at almost $3.69 per gallon on average, the price at the pump is still putting the pinch on household budgets.
Nearly 60 percent of Americans have cut back on non-essential spending—such as dining out and trips to the movies—due to high gas prices, according to a new survey from Bankrate.com.
"Even though gas prices have pulled back, they're still at elevated levels," says Greg McBride, senior financial analyst at Bankrate.com. "So many households are dealing with stagnant incomes that the elevated price for gasoline is squeezing budgets."
Those most adversely affected by high gas prices are those with lower levels of income and education, because money is even tighter in those households, McBride adds.
As breathing room in budgets tightens, Americans keep a firmer hold on their wallets and spend less on things they don't absolutely need to survive. The problem is, that spending is what drives about 70 percent of the U.S. economy.
"The more money that goes into the gas tank, the less money left over for other spending," McBride says.
The pullback in consumer spending adds more uncertainty to the economic recovery, which has already been faltering in recent months. Whether gas prices rise or fall over the coming months continues to be another wild card.
"It's a bit of a red flag," McBride says. "If gasoline prices pull back in a measurable and sustained way, that is a nice boost for consumer spending, but on the other hand, elevated gas prices are another reason why economic growth can't get out of first gear."
Still, there is a silver lining. For the first time since December 2010, Americans are feeling more secure about their finances and job prospects, which could help loosen the iron grip on the household purse strings.
"I think a lot of how consumers feel is contingent on the path the economy takes going forward," McBride says.
Meg Handley is a business reporter for U.S. News & World Report. You can reach her at firstname.lastname@example.org and follow her on Twitter.