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Monday, March 14, 2011

UPDATE: Another take on the effects of higher gas prices

The Fuel Economy has been a frequent subject of the Elm Street Economics consumer trends blog (click here to see posts tagged in that group), and it is likely to remain a hot topic. This morning, Colleague Jim Hopes pointed out a story that appeared today in Advertising Age, which explains how different companies and industry categories are preparing for the possibility of higher gas prices. Click here to read the story.

Implications: This article wisely points-out that for each increase in the price of gasoline, the amount of money that remains “discretionary” in a household goes down, causing families to sort their purchase priorities differently.

Another important take-away: Both companies and consumers went through a spike in energy costs back in 2008. If fuel prices climb appreciably, there is less likely to be “price panic,” as we all have the clarity of hindsight to our advantage. That was less the case three years ago.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

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