Us families spending $5,000 on gasoline

American families are spending $5,000 on gasoline, an increase from a year ago when prices are going up at the pump, according to new research.

The new analysis from Yardeni Research shows the growing burden of rising fuel prices on U.S. households. The average American was spending $2,800 on gasoline a year ago. In March, the figure has climbed rapidly when Yardeni projected that gasoline cost most households about $3,800 annually.

In a note, Yardeni said that the consumer sentiment index is so depressed. Retail sales have been surprisingly strong during April and May. The average price for a gallon was $4.56 nationwide on Wednesday, up from $3.04 a year ago, according to AAA. It was the steepest price for gasoline on record, and until the recent inflation spike, prices had not topped $4 a gallon nationally since 2008. Some Americans are paying more for fuel: in California, for instance, prices are as high as $7 a gallon.

The hottest economic recovery in decades has resulted in a sky-high gas prices, a result of strong consumer demand, a influx of government stimulus and disruptions in the global supply chain.

The Labor Department reported earlier this month consumer prices went up 8.3% in April, close to a 40 year high and much faster than economists expected. It highlighted how strong inflationary pressures are still in the economy despite hopes that consumer prices could peak soon.

Inflation is eating away at strong wage gains that American workers have seen in recent months: Real average hourly earnings fell 0.1% in April from the previous month, as the inflation increase eroded the 0.3% total wage gain, according to the Labor Department. Real earnings dropped by 2.6% in April.

According to Yardeni, consumers have saved a lot of money because of the trillions in federal stimulus money, and are charging more on credit cards.

When we are happy, we spend money, the note said. We spend more money when we are depressed. Recent government data appears to support Yardeni's argument, as the Commerce Department reported earlier this week that retail sales, a measure of how much consumers spend on a number of everyday goods, including cars, food and gasoline, increased by 0.9% in April from the previous month.

The core retail sales, which excludes automobiles, gasoline, building materials and food services, were most closely correlated with the consumer spending aspect of the nation's gross domestic product in April.

With gasoline prices soaring higher in recent weeks, analysts have warned that inflation could creep higher in May and that more expensive pumps could weigh on consumer spending.

American consumers spent more at retail stores in April, despite inflation as lower gasoline prices helped boost spending on discretionary items, said Tuan Nguyen, a U.S. economist at RSM. It won't last long as gasoline prices reached a record high in May.