High Gas Prices Won’t Slow US Consumers Down
Original release date: March 16, 2022
Despite decreasing consumer confidence and ever-increasing gas prices, February saw vigorous growth of almost twenty percent. All Stores grew by 17.7% year-over-year, with All Stores Less Automotive growing 15.7% and All Stores Less Automotive, Food, Pharmacies growing by 18.5%.
Gasoline Stations was unsurprisingly the largest category this month at a whopping 36.6% year-over-year. Gas prices are top of mind for American consumers right now, and as workers return to offices, those with long commutes could keep their wallets closed. Based on the positive growth across all categories this month, it is more likely that consumers are taking less trips with bigger basket sizes. Additionally, the strength of the growth in certain categories such as Food and Beverage Stores (8.0% year-over-year) and General Merchandise Stores (12.6% year-over-year, nearly double from January) could mean that they are stocking up on things they might not normally buy rather than risk having to make another trip.
The other particularly strong category is Clothing and Accessories Stores, which grew by 31.0%, significantly higher than what we have come to expect from the category. There are a number of factors at play here, most notably the fact that this category has not been impacted by the same supply chain issues that many other categories have been. For example, while the U.S. imports many of its goods from China (which has been suffering ongoing shutdowns and breakouts), clothing is sourced from a larger variety of countries, including Vietnam, India, and Bangladesh. Other factors include the move away from formal office wear, the return to in-person formal events such as weddings and graduations, and fitness wear. The latter goes hand in hand with Sporting Goods, Hobby, Musical Instrument, and Book Stores (11.6%), which has been able to maintain its growth all this time. Losing “lockdown weight” and a renewed interest in New Years’ resolutions could be a driving force along with an increased comfortability and affordability of at-home gym programs.
The category that struggled the most this month was predictably Electronics and Appliance Stores, which grew by a meagre 2.6% over February 2021. With over 90% of U.S. semiconductor-grade neon supplies (necessary for producing computing chips) coming from Ukraine, this category has a long road ahead of it. Even if manufacturing is moved onshore, it will be a long while before shelves are fully stocked again. Overall, February was a strong month, and while consumers might be worried for the future (as evidenced by decreasing consumer confidence), the outlook is good for US retail. Will even higher gas prices change that outlook?