Gas prices have unexpectedly jumped, but so has the University of Michigan’s latest survey of consumer confidence. Both are actually good news.
Somewhat surprisingly, the price at the gas pump has hit a new high for 2015, nationally averaging 10 cents more than a month ago. And while, according to AAA, it’s primarily attributable to a decline in gas stocks caused by high fuel demand and persistent refinery problems, we can expect to see the prices drop again shortly.
But the real story isn’t the price increase at all. It’s that even at current prices (national average $2.80), consumers continue to pocket an average savings of 86 cents per gallon year-over-year. Even better, in many areas, the average pump price is actually as much as 20 cents below the average. (California is highest at $3.49, while South Carolinians at $2.48 are saving more than $1 compared to Californians.)
So the current low gas prices should continue to result in boaters doing more boating as summer rolls along. Supporting that, Bob Musselman at Admiral/CD Propeller in Tampa says he has already seen a big increase in prop repairs and sales this year.
Meanwhile, the latest survey of consumer confidence by the University of Michigan indicates that the rising gasoline prices and even a higher cost of food hasn’t dulled consumers’ outlook. The confidence index rose to 94.6 in early June from 90.7 in May.
Specifically, Michigan researchers found consumers’ expectations regarding their own financial prospects have reached the highest since 2007. Separately, the Labor Department reported Friday that its producer price index, or PPI, for final demand was up 0.5 percent in May, the biggest gain in nearly three years. But the Labor Department’s PPI data reflects the 17 percent rise in gasoline prices and an unusual 56.4 percent “surge” in egg prices because of an avian influenza outbreak.
The generally good consumer feelings is likely why retail sales rose 1.2 percent nationally in May, according to the U.S. Commerce Department statistics. Consumers increased their purchases of durable hard goods, in particular.
Bottom line: Business should continue to be up for the marine industry. When you view a combination of the increased retail sales, recent job growth, rising wages and a reported stabilization of manufacturing activity, it’s not hard to believe the economy will reflect a definite pickup in the third quarter following a somewhat disappointing but still positive second quarter.
Statistically speaking, boat dealers should expect to see a continuing increase in boat and engine sales heading into the new model year.