Usually, when gas prices surge, the first thing to go is the “extra” stuff—the movie tickets, the collectibles, the impulse buys. But the current spike in fuel costs is defying the usual economic script. Despite average U.S. Gas prices crossing the $4-a-gallon threshold last week, consumers aren’t pulling back on discretionary spending with the urgency analysts typically expect.
The surge is no accident. Prices have climbed more than a dollar in a single month, driven by a war between the U.S., Israel, and Iran that has disrupted critical oil shipments through the Strait of Hormuz. For many, this is a textbook gas price shock, yet the data suggests a strange resilience in the American wallet.
The Pokémon Card Index
David Bellinger, a Director and Senior Analyst at Mizuho who specializes in consumer growth and eCommerce, has been tracking unconventional signals to gauge the actual impact of these prices. According to Bellinger, the evidence of consumer stability isn’t found in spreadsheets, but in the toy aisle and the cinema.
Spending on non-essential items—specifically Pokémon trading cards and Needoh sensory toys—remains robust. In some cases, Pokémon cards are even facing purchasing limits at retailers, a sign of a clear uptick in demand. This trend extended to the entertainment sector, where box office returns over the Easter weekend broke records.
This disconnect between the pump and the pocketbook may be fueled by timing. The gas price shock has coincided with tax season, and data from the Internal Revenue Service suggests that the average tax refund is up by double digits over last year, providing a temporary financial cushion for many households.
JPMorgan CEO Jamie Dimon echoed this sentiment of current stability in his annual shareholder letter, noting that consumers are “still earning and spending.” However, Dimon added a cautionary note, warning that a leisurely climb in inflation could eventually erode consumer sentiment and weigh down the markets this year.
The $5 Threshold
The current optimism may be fragile. Analysts at JPMorgan have warned that if the conflict with Iran continues, gas prices could hit $5 a gallon this month. While tax refunds provide a short-term buffer, a sustained climb to $5 could shift the narrative from resilience to retraction.
For now, the “shock” has remained muted in the discretionary sector, but the rising cost of staples—from produce to fuel—suggests that the pressure is simply shifting from the toy store to the grocery store.
Why aren’t gas prices slowing down spending yet?
A combination of factors is at play, most notably a double-digit increase in average tax refunds according to IRS data, which has boosted immediate spending power just as fuel costs rose.
Which specific goods are already seeing price increases?
Fresh produce is feeling the impact most acutely due to rising diesel costs. This is particularly evident in temperature-sensitive items like raspberries and produce shipped from long distances, such as Mexican limes.
What is the potential ceiling for gas prices this month?
Analysts at JPMorgan suggest that prices could reach $5 a gallon if the war with Iran continues and disruptions in the Strait of Hormuz persist.
Is this spending trend sustainable?
It remains to be seen. While Jamie Dimon noted that consumers are currently “earning and spending,” he warned that creeping inflation could eventually pull down consumer sentiment and markets.
As the geopolitical situation evolves, will the “Pokémon index” hold, or will the $5 gallon finally force a pullback in discretionary spending?
