May 16, 2011
By: Bruce Berry
Americans say the escalating cost of fuel has caused many to pull back their summer vacation plans and put a damper on their immediate consumer confidence.
The RBC Consumer Outlook Index for May reported 47 percent of Americans have reevaluated or canceled their summer vacation because of the rise in gas prices while 20 percent have done so because airfares are high. The index itself dropped 1.9 points from April to a reading of 42.9. Though fewer cars on the road this summer could lead to fewer car insurance claims, it's also leading to a drop-off in spending that could impact the economy.
"The results highlight the psychological element involved with rising gasoline prices, as people revise their pain threshold according to the reality of what is happening at the pump," said Tom Porcelli, chief U.S. economist at RBC Capital Markets.
At the same time, a recent study by Mississippi State University's Social Science Research Center showed that traffic accidents tend to decrease during periods of high gas prices, suggesting average auto insurance premiums could avoid the types of increases that come as a result of increased claims activity.
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