For many in U.S., cash saved at gas pump is staying in pockets
FEBRUARY 19, 2015 LAST UPDATED: THURSDAY, FEBRUARY 19, 2015, 1:21 AM
BY CHRISTOPHER S. RUGABER
THE ASSOCIATED PRESS |
WIRE SERVICE
* Reduced spending may slow economy for quarter
WASHINGTON — In recent months, the stage seemed set for American consumers to do what they’ve traditionally done best: spend money — and drive the economy.
The lowest gas prices in five years had given people more spending money. Employers added more than 1 million jobs from November through January, the best three-month pace in 17 years. Businesses even raised pay in December. Economists had forecast that last week’s retail sales report for January would show a healthy rise.
And yet — to the surprise of analysts — consumers have held their wallets closely.
Even though Americans spent $6.7 billion less at gas stations in January than they had two months earlier, the extra cash didn’t get spent anywhere else: Retail sales, excluding gas, fell slightly from November to January.
The unexpected pullback provided evidence that drivers had used their extra money to further rebuild their savings and reduce their debts — a trend that began after the financial crisis and recession.
In the long run, deeper savings and shrunken debts benefit individual households — and, eventually, even the economy as a whole, because they supply fuel for a sustained flow of future spending.
For now, though, the slowdown in consumer spending likely means the economy will grow more slowly in the first quarter of the year than economists had previously envisioned. Their forecast now is for annualized growth of 2.5 percent from January through March, down from an earlier estimate of about 3 percent.
https://www.northjersey.com/news/business/consumers-aren-t-buying-it-1.1274319
