Gas prices may still be rising, but with U.S. auto sales for March heading towards a five year high, consumers have not yet begun to change their behaviors, IHS Chief Economist Nariman Behravesh said today.
Nationally, the average price of a gallon of gas is $3.92 and 15 states are dealing with prices above $4 per gallon.
"Sixty-three percent of consumers, when surveyed, say they are worried about high gas prices," Behravesh said today in New York City ahead of the 2012 New York International Auto Show. "Reality: They haven't changed their behavior."
So far, a strengthening U.S. economy is helping the U.S. automotive industry overcome higher gas prices and stands in contrast to 2008, the last time U.S. gas prices spiked above $4 per gallon.
Already today, Chrysler has said its sales in March increased 34% and Ford President of the Americas Mark Fields said on CNBC that Ford's sales increased 5% in March. All other automakers also are expected to report March sales today.
George Magliano, senior economist for IHS, estimates that sales in March for the automotive industry will top an annualized rate of 14.5 million cars and trucks.
"These are tremendous numbers. Way beyond expectations," Magliano said at a forum sponsored by consulting firm IHS and the National Automobile Dealers Association and "We are at the point where we feel the U.S. has turned the corner."
Behravesh said a mild winter, and lower heating costs have helped to offset gas price increases for many consumers. Improving unemployment and growing consumer confidence also is helping. Banks also have loosened credit for car loans.
The biggest risks to the U.S. economy now is Europe's debt crisis and even higher gas prices. Political instability in Iran could cause oil to spike to $240 per barrel and would cause a dramatic shock to the U.S. economy.
Still, Behravesh said the chances of the U.S. economy falling into another recession have dropped from about 40% last year at this time to about 20% today.
