STEVE INSKEEP, HOST:
OK. We heard that people in Alabama are spending an extra $52 per month on gas, to give one example. Some people have got that 52 bucks. Some people don't. So we've called Jill Schlesinger, who is a business analyst for CBS News, host of the podcast "Jill On Money," and a weekly guest with our colleagues at NPR's Here & Now. Jill, good morning.
JILL SCHLESINGER: Good morning.
INSKEEP: OK. When you look at consumer data, how are people responding to everything being just a little more expensive?
SCHLESINGER: Well, I think first of all, we know that we feel terrible. We saw the University of Michigan Consumer Sentiment Index falling to its lowest level ever. And when I mean ever, just think back what that really does cover. This is a 50-, 60-year-old survey. So we're talking about we feel worse today than we felt at the height of COVID.
INSKEEP: Wow.
SCHLESINGER: We feel worse today than the Great Recession, when the banking crisis had just spurred a terrible recession. So we feel bad. And that's understandable because we have a real sense that bad news just keeps multiplying, and we have more access to it. And yet, we're still spending. I mean, we're not spending wildly freely, but we are spending. And it is true that when we look at, like, a retail sales report that we just got out, we see that in March, people were spending money despite the war, despite the higher prices at the gas stations, and they were spending on things other than gas. So whether or not people are going into debt to get there, they are still not so freaked out about what's going on that they're pulling back the reins.
INSKEEP: Yeah. Well, I mean, a lot of expenses are not optional. I mean, people, you know, can talk about driving less, but, you know, you live where you live. You got to get where you get, and you end up driving. You end up paying a little more for groceries. You got to eat. If flights are part of your life on the higher end, they're just more expensive. But is there some point where this does become too much for people?
SCHLESINGER: Well, I think it is starting to creep in. We got a report yesterday from the government that kind of measures the economy, the gross domestic product. And in that report, just sliding in there, we do see that consumers - their spending came down a tiny bit in the first quarter from the fourth quarter. And so we're keeping an eye on this. But I believe that the Federal Reserve - when they met this week, one of the things that Jerome Powell, the Fed chair, said was, hey, we got to keep an eye on this because even if it is temporary in nature, if people are changing their habits because of what's going on at the gas station, then that's going to have bigger implications for the overall economy.
You know, it's sort of a weird thing when you consider this. You pay more at the pumps, but maybe that means that you'll not go out to lunch with your buddies at work once a week because you want to save that money. Well, not going out to lunch is going to dent economic growth because you're not spending that money freely elsewhere. So the Fed's got this balancing act that they're trying to strike, and it's really tough. And, of course, we know that there are a lot of Americans that 50 or a hundred bucks a month - that is a huge number if they're already living paycheck to paycheck. I think some of these people are actually being helped out in a big way by these larger tax refunds that we saw this year - about 10 or 11% higher. So maybe once the tax refund kind of wears off, people will start changing their habits and the rest of their economic spending.
INSKEEP: I'm also thinking about somebody who maybe is just putting a little more on the credit card, and that can really accumulate over time. So let's get the best advice we can. What would you have people do if the budget is not quite coming together?
SCHLESINGER: Well, as always, I would always try to remind people to avoid the credit card, if possible. I'd rather pull back on spending. I'd rather hurt the economy than put money on your credit card. But I also think that it is important to just budget in for this. Just know, 50 - find - if you can, find 50 or a hundred dollars somewhere for every month that you could pull back, even if it means a little bit less fun. Be prepared. This is not going away anytime soon.
INSKEEP: Business analyst Jill Schlesinger. Thanks so much.
SCHLESINGER: Great to be with you. Thank you.
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