Maybe it was because of the drop in gas prices. Studies of consumer spending suggest that 80% of the average savings of $700 this year from lower gas prices went to other purchases such as restaurants (20%), department stores, entertainment, electronics and appliances.*
This drop has done as much for the average consumer as the Recovery Rebates authorized by the Economic Stimulus Act of 2008 which lowered the taxes collected from wages for several years. Extra bonus-No increased federal deficit to address.
In a study done on Chase credit and debit card users, savings at the pump represented 1% of monthly income for low income individuals and disproportionately impacted them as well as younger Americans.
Perhaps, the best benefit from the drop is the feeling of most consumers that there is a little extra cash in their pockets for an emergency, a dinner out or a video game. Maybe this contributed to the increase in the purchases of new vehicles as the year draws to a close.
At the same time, more than 200,000 oil industry workers have lost their jobs and the stock market had some tough days in mid-December as the oil producing companies took a hit in profits. So, it is not all good news.
Yet, as we all know, the whole world benefits.when the American consumer feels more confident and spends a little more money.
So, I say this is good news. Give yourself a little treat and enjoy the last few days of 2015.
May 2016 be a safe, healthy and prosperous year for you, your family and your organization. Let’s keep working to make our communities, our economy and our world a better place for our children and our grandchildren.
*How Falling Gas Prices Fuel the Consumer by JP Morgan Chase & Co Institute -Oct 2015
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