Gas Prices Are Crushing Lower-Income Consumers, and These 3 Stocks Could Take the Hit

Prices at U.S. gas pumps aren't just irritatingly high; they're debilitating. Many Americans are feeling some serious budgetary strain due to the cost of driving their cars. Lower-income households are feeling the most pain, so much so that they're being forced to change their spending habits.

Here are three stocks that could suffer the most if high gas prices continue to take a toll on consumer spending.

Image source: Getty Images.

McDonald's

At first blush, McDonald's (NYSE: MCD) would seem like a beneficiary of tighter budgets. After all, it's a value-priced alternative to more expensive "sit-down" restaurants. The fast-food chain also reported 3.8% growth in last quarter's worldwide same-store sales, confirming it's still drawing a crowd.

Some cracks in the company's marketability are starting to show, however. Much of last quarter's growth was driven by lower-priced value-oriented items on its menu. As CEO Christopher Kempczinski said about the deteriorating economic backdrop, during McDonald's first-quarter earnings conference call: "I think probably it's fair to say that it's getting -- it's certainly not improving, and it may be getting a little bit worse."

It almost sounds like a warning based on what he's seen since the end of March.

Dollar General

Dollar General (NYSE: DG) is another name that superficially seems like it should be a beneficiary of economic malaise, as consumers opt for its lower prices instead of shopping at Target or Walmart.

That's not quite where Dollar General sits in consumers' spending rationales, however. Walmart already offers the lowest prices on most consumer staples. Dollar General's chief appeal is geographical proximity to lower-income shoppers, mostly in rural communities. When money gets tight, a wide swath of its customer base simply stops spending altogether, as there is no viable "trade-down" option for those consumers, or for the retailer.

That was certainly what the company experienced back in 2023, coming out of the pandemic funk into a period of tough inflation. That year's total sales only improved 2.2%, and same-store sales essentially stagnated while many other companies were thriving amid the economic recovery underway at the time.

JetBlue Airways

Finally, while high fuel prices recently forced budget airline Spirit to wind down its operations, it's not the only name in the airline business to operate on the edge of insolvency in an effort to be as price-competitive as possible. JetBlue Airways (NASDAQ: JBLU) is in a similar boat, and likely to show similar strain when it reports the current quarter's results near the end of July.

We're already seeing red flags, in fact. Despite a 5% improvement in total revenue during the first quarter, JetBlue's operating loss widened by 28.5%, to the tune of $224 million, for the three months in question -- mostly due to higher fuel costs, even though only the last one of those three months actually suffered soaring fuel prices because of the conflict in Iran.

Notably, JetBlue Airways no longer engages in the sort of fuel price hedging that would have allowed it to stave off the fiscal impact of the higher fuel costs that it's facing now. If oil prices remain at current levels, JetBlue's losses will almost certainly continue to widen.

James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target and Walmart. The Motley Fool recommends the following options: long January 2028 $320 calls on McDonald's and short January 2028 $340 calls on McDonald's. The Motley Fool has a disclosure policy.