Gas prices that seemingly go up out of nowhere is one of the consumer's worst nightmares. When we all rely on our cars to get to work and to run all the necessary errands it takes to survive, it can really throw a wrench into our budgeting plans. Of course, it's not just the average car owner who feels the pain, it's often the world at large. See just how much it affects us all when pricing goes up.
Consumer Spending Dips
As you might imagine, this is the first effect you'll see. Every time gas goes up by 20%, consumer spending falls by about 1%. Everyone has to cut back on luxury treats and even sometimes downright necessities when forced to spend more money on gas.
Car Shopping Changes
the more gas goes up, the more import car sales do too. Domestic cars may be making a huge shift today toward hybrids and more fuel-efficient vehicles, but they can't always top the economy that can be brought to you by a Honda or Toyota.
Automakers Spend Less
Car companies start looking at everything and anything they live without. Lay offs aren't unheard of when prices spike, as automakers cut back on practically every operation available. The good news about this fact is that gas prices generally have to spike to really high levels before you start seeing major changes from the automotive industry.
Confidence Plummets
People have a tendency to react when it comes to price surges, and they don't always react in proportion to the actual rise in cost. As the media spreads the story, people really start to worry about what inflation could eventually do to them which makes their faith in the economy a lot more troublesome.
Consumers Changes
Consumers do what they can to start driving less, whether that comes in the form of carpooling or in cutting out unnecessary trips to leisure spots.
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