According to Richard Davies, business correspondent with ABC news, the rapid rise in gas prices has become a growing problem for the economic market. The nationwide average for regular gasoline is leveled at $3.70 a gallon, which accounts to a 40 cents increase in the past month. There is a direct correlation to the rise in gasoline prices and less consumer spending, causing the economy to suffer. Higher gas prices means less consumer spending on other goods and services.
Because gas prices are on the continual rise, and because gas has become a key part of our society, it is likely that consumers will make the sacrifice to purchase such gas instead of products that are not of daily use. Every seller in the market in in hopes of earning a profit. It would be impossible for a seller to make a profit if they were not selling, and it would be even more difficult to compete with products that have no similarities; gasoline in this instance. Although high gas prices are increasing and staying that high, the economy always "fixes" itself. If there is a surplus, then the demand will lower, and vice versa with a shortage. Gas prices will not always remain consistently high, and the economy will return to normal after a short period of time. The economy is in constant change, and it is constantly making improvements and adjustments to the world around it.
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Perhaps the idea of "less consumer spending" doesn't make sense. After all, the idea seems to be that people spend more on gasoline each month when the price of gasoline increases, and thus people spend less on other stuff, probably due to having a given monthly budget. But, spending on gasoline is also consumer spending. If the idea is the economy works off of consumer spending, why it it hurt by more spending on gasoline. Monthly budgets are reallocated, not changed.
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