Rising gas prices are impacting all American drivers, and lower-income households are bearing the brunt of pain at the pump.
"Gas prices are of course highly transparent for consumers and this was likely one reason for consumers becoming less optimistic," Bank of America (BofA) economists wrote in a new report. "It appears that the impact of these higher gas prices is felt by the lower-income households in particular."
BofA's aggregated debit and credit card data showed that the average gas spending as a share of total card spending per household surged to 7.8% for the week ending May 28, up from just 6.4% for the month of February. For lower-income households, defined as having an annual household income lower than $50,000, the average share of gas spending has surged to 9.5%.
The national average for a gallon of regular gas is $4.92 as of Tuesday, according to AAA, and 10 states are seeing an average above $5. States including New Jersey, Pennsylvania, and Massachusetts are just pennies away.
The silver lining amid the high fuel costs, BofA found, was that consumers still have a spending buffer coming from excess savings accrued during the pandemic.
"When we look at the current median deposit levels in savings and checking balances, it appears that households continue to have higher ‘buffers’ relative to before the pandemic," BofA stated.
Furthermore, "the share of credit card spending per household to total card spending per household remains around 2019 levels. In other words, it does not appear that households are having to spend more on credit cards to pay rising bills."
Nevertheless, with gas spending takes up larger share of consumer wallet as the national average sits a nearly two dollars per gallon higher than a year ago, BofA noted that "other areas of spending appear to be coming under increasing pressure." Specifically, "durable goods spending, which includes furniture, electronics and home improvement, was down 11% on a [year-over-year] basis for the seven days to May 28."
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv