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Gas prices are down, but consumer sentiment is up only slightly. Why?

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A person lifts the nozzle from a gas pump.

A bus driver fills up at a gas station in Brooklyn on August 11, 2022 in New York City. While fuel prices are still historically high, they have fallen below four dollars a gallon in some regions of the country, bringing inflation relief to millions of Americans who depend on their cars for work and other activities. Spencer Platt/Getty Images

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A funny thing happened on the way to the gas station over the past month or so: According to AAA, the average price of regular gas went down by 62 cents, to just under $4 per gallon. 

And another thing happened that’s closely related to that fall in gas prices: Consumer sentiment rose, though not by very much.

The University of Michigan’s consumer sentiment index hit an all-time low in June as inflation soared. Then it ticked up 7% in early August.

“It’s blipped up a little, but sentiment’s still in the basement,” said Robert Frick at Navy Federal Credit Union, who also points out that while gas prices have fallen, prices for other necessities like food and rent are still rising.

And while unemployment remains low, workers are more worried about losing their jobs, said Chris Jackson at polling firm Ipsos.

“There’s a lot of anxiety out there, right, fears about the wider economy and inflation and people talking about there being a recession potentially,” Jackson said.

That anxiety’s playing out among the Navy Federal Credit Union’s members, according to Frick.

“We have seen in our credit card data people spending more on staples, shying away from spending on leisure and entertainment,” Frick said.

He said higher-income members are pulling back from big-ticket purchases and shopping more at discount stores. 

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