00:00How did that materialize in the reactions, at least in the beginning stages of a war in Iran?
00:05For this preliminary read in March, we can't really break out the before and after reaction.
00:12But what I can say is that, as an example, one of the reasons sentiment declined was because we had
00:18a 7.5% month-over-month decline in expected personal finances.
00:23And that was something that was seen across the board, across incomes and across the political spectrum.
00:30And so, you know, consumers are pretty concerned that a year from now, over the next year, their personal finances
00:37are going to deteriorate in large part because of real incomes declining.
00:41How big a piece is the gas price?
00:43I mean, we see the price of the pump, as measured by AAA, climb now over $3.60 a gallon.
00:52That, you know, sounds bad compared to the $2.80 that we saw at the end of last year, but
00:57not compared to the $4 that we saw during the Biden administration, $4 plus.
01:03So what do consumers think about this?
01:06So in recent months, the people who spontaneously mentioned gas prices on the surveys have been a mix.
01:13They've been a mix of people who have noticed that gas prices are more moderate than they were in previous
01:18years.
01:18And then there are other consumers who are telling us that gas prices remain quite a burden for them.
01:24As soon as the conflict in Iran started, we saw things really tilt toward high prices, high gas prices.
01:33So, again, we saw a surge in gas prices.
01:36Gas price expectations for the year ahead were at the highest reading now since 2022.
01:41Looking at long-run expectations for gas prices, that also surged.
01:46It doubled before and after the conflict started.
01:49But that average after the conflict started is still below the historical average that we've seen.
01:55So consumers are expecting some short-term pain with gas price expectations as of March 9th.
02:01They're not necessarily expecting a similar surge in the long run.
02:04Joanna, is there any historical corollary you would look at at this moment?
02:08Can you look back to the University of Michigan sentiment surveys from 2022, for example?
02:13Are you using anything as a frame of reference to understand how sentiment evolves from here if we are about
02:18to get continuously high prices in energy?
02:22So what we've seen historically is that gas prices have some impact on inflation expectations, but it's not nearly –
02:34Inflation expectations are nowhere as volatile as gas price expectations.
02:37So inflation expectations are more stable than the volatility that we see in gas price expectations.
02:43In recent years, we have seen sentiment move quite a bit with gas price expectations.
02:48And so we saw that in 2022, and we're probably going to be seeing that in the months ahead.
02:58When we look back to 2022 and the spike in gas prices and Russia's invasion of Ukraine,
03:07that was coinciding with the time when CPI inflation, consumer-facing inflation, was hitting its peak in the spring, early
03:14summer of 2022.
03:15So it's really hard to disentangle just gas price increases with the fact that inflation overall was extremely high during
03:24that period.
03:25So I think whether or not those gas prices pass through to consumer-facing prices more generally is going to
03:32be a big question.
03:33Let guess what's happening today?
03:33Okay!
03:33Let's see.
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