Consumers might be feeling less pain at the pump this year, but it's not spurring them to open up their wallets and spend more, which is bad news for a still-sickly economy.
About 80 percent of those recently surveyed by financial information site Bankrate.com said that despite forking over fewer dollars at the gas station, they're not speeding over to the mall to spend those savings. Last year, about 60 percent of Americans said they cut back on nonessential spending due to high gas prices.
But why? Historically, consumer spending has benefited from lower gas prices as Americans feel wealthier and household budget purse strings loosen thanks to cheaper fuel costs.
But "cheaper" is a relative term, according to Greg McBride, senior financial analyst at Bankrate.com. While gas prices have fallen a bit over the past year, they're still expensive in the minds of most consumers. According to AAA's Daily Fuel Gauge, gas prices still averaged around $3.65 per gallon as of Monday, much higher than $3 per gallon mark consumers are more comfortable with, McBride says.
"You're bombarded by gas prices every time you drive down the road and filling up the tank, there are some pretty visible reminders of how much gasoline costs," McBride says. "It sticks in people's minds."
Prices have also been super volatile. After a steep climb of more than 30 cents at the beginning of the year, prices at the pump fell nearly 7 percent between February and April. More recently, prices have been on the rise, jumping 11 cents just in the past two weeks.
Though prices are still cheaper than they were a year ago, the savings doesn't translate into the kind of windfall it would take to make consumers spend more.
It's kind of like the stock market, McBride says.
"You get more pain from a loss than joy from a gain," he adds. "While higher gas prices are a definite headwind to the economy, recent declines have added very little economic benefit."