Dive Brief:
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With gasoline falling to below $3 per gallon and looking to stay that low, U.S. shoppers feel like they’ll have more money to spend at the holidays, according to a survey from the National Association of Convenience Stores.
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Consumer confidence is linked to gas prices, and whether gas is above or below $3 a gallon has a large psychological impact. Some economists maintain that for every 1 cent decrease per gallon, Americans save some $3.7 million, though others say consumers may just hold on to the difference.
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Some 14% of American consumers said they’d spend more this season because of lower gas prices, and 25% say they expect the price to stay lower. Indeed, the U.S. Department of Energy said Wednesday that the average price of gasoline in the U.S. will fall below $2.94 a gallon in 2015, an average $.45 cents less per gallon.
Dive Insight:
It’s hard to say whether falling gas prices could substantially dent the pervasive “retail funk” that is consistently being experienced by retailers. Still, as Americans’ wages have stagnated and their costs have risen, they’ve remained careful about spending.
Fueling their cars is a major and mostly unavoidable expense, and if gas prices remain lower, consumers will obviously have more freedom to spend. The question may be how confident they are that prices will stay low, or how much lower they have to go before spending feels easier.
