Streaming services more vulnerable than gasoline as consumer wallets tighten
April 8, 2024
Key Observations:
Investors know that nothing is certain, except death, taxes, and an American politician's panic if rising gasoline prices make headlines. In this context, we observe that the U.S. average regular grade price at the pump has advanced in 34 of the past 43 days and now stands at $3.60 per gallon.
Last year's average price was $3.53 per gal. Ytd, this year's average is still only $3.28 (–7.1%).
We have previously noted** that nominal prices would need to surpass $5.00 to match the real (inflation-adjusted) price highs of 2008, 2011, 2014, and 2022.
Moreover, since 2008 American consumers have added a bevy of streaming services into their budgets. These costs are inflating faster than gasoline: Hulu premium is now $17.99 per month. What is the count of stale subscriptions to Apple TV+ ($9.99/m) following the Season 3 finale of Ted Lasso ten months ago? A consumer worried about her job security is going to axe an unwatched streaming channel before altering her commute.
At current prices the average U.S. motorist is paying just $8 more per year for gasoline than the 2023 average. Cutting a single streaming service restores $60 to $275+ of annual purchasing power.
Beneficial for: MPC, VLO, PSX, CVE, FANG
Disadvantages: AAPL, DIS, PARA, CMCSA
Source: BEA, BLS, EIA, Federal Reserve, Blacklight Research. *DPI = Disposable Personal Income. Note: looking backwards over the past twelve months, an average retail price of $6.75 per gallon would have been required to lift gasoline expense to above 4.5% of DPI. In real terms, the ytd observation for 2024 is the third lowest for share of DPI since our sample begins in 1959 (n=65 years). The only lower years are 1998 (Asian Financial Crisis) and 2020 (COVID-19 pandemic). **See, for example: Blind Side: US retail gasoline soon back to $3.33f (13-Feb-2024) and On taking the under and the over (7-Mar-2024).
Comments