Fearing $5 gas, Americans cut back
New poll shows most Americans think gas prices will continue to rise and that current economic conditions are poor. Still, the outlook for next year is brighter.
NEW YORK (CNNMoney.com) -- As more Americans become resigned to the possibility of paying $5 for a gallon for gas, they are driving less and seriously considering chucking their gas guzzlers, according to a poll released Monday.
The poll, conducted by CNN/Opinion Research, shows that 86% of respondents believe gas prices will top $5 a gallon sometime this year. That compares to 78% in April and 28% in May of last year.
To cope with higher gas prices, 66% of those surveyed said they are cutting back on the amount of driving they do and 71% indicated that they are considering buying a more fuel-efficient vehicle.
But the effects of high gas prices go beyond driving habits. The poll also shows that 55% of respondents are cutting back significantly on household spending.
As household budgets are crimped, many Americans see economy in an increasingly negative light.
The poll also showed that 78% of respondents believe the current state of the nation's economy is poor or very poor. Only 19% think the economy is somewhat good, and a mere 3% say it is very good.
However, the outlook for the near future is brighter. When asked what economic conditions will be like a year from now, 46% of respondents expect conditions to be somewhat good, while 6% expect very good conditions.
The poll results reflect telephone interviews with 1,035 adults conducted June 4-5. The margin of error is plus or minus 3 percentage points.
The nation's economy has been battered by soaring energy prices, a downturn in the housing market and a credit crisis that has wreaked havoc on Wall Street.
The national average price for a gallon of gasoline rose above $4.02, motorist group AAA reported Monday. Gas prices reached the $4 milestone for the first time Sunday following Friday's staggering $10.75 jump in the price of a barrel of oil.
The average price is $4 a gallon or more in 22 states and the District of Columbia, according to AAA.
What's more, gasoline prices in the survey have risen for 32 of the past 34 days, setting records on 30 of those days.
As gas prices rise, demand for large, low mileage vehicles has fallen and some of the nation's largest automakers have been hit hard.
General Motors (GM, Fortune 500) announced plans last week to shut four truck and SUV plants and said it would ramp up producing more fuel-efficient cars. Ford (F, Fortune 500) also recently said it would trim production of large trucks and roll out more small cars and crossovers.
In addition to high gas prices, the slump in the housing market is also contributing to Americans' negative view of the economy.
Last month, a key measure of U.S. home prices in the first quarter fell at the sharpest rate in two decades. Standard & Poor's/Case-Shiller's national home price index fell 14.1% in the first quarter compared with a year earlier - its lowest level since its inception in 1988.
The economy is also challenged by a job market that appears to be shrinking.
Last week, the Labor Department reported that the nation's unemployment rate soared to 5.5% in May from 5% in April. It was the biggest jump in the unemployment rate since 1986 and much higher than economists had forecast.
On Wall Street, credit has become scarce as investors are reluctant to take risks amid the shaky economy. As a result, many major investment firms have reported steep losses.
The brokerage blamed writedowns, trading losses and failed attempts to hedge its position for the loss, which was its first since the firm went public in 1994.
The nation's economic woes have led many economists to believe the country slid into a recession last year, although a consensus has not been reached.
The CNN/Opinion Research Corp. poll released in May found that 79% of respondents - nearly 4 out of 5 - believe the economy is in recession. That measure was up from 74% in March, 66% in February and 46% just a half-year back.