In just a three month span consumers are shifting their attitudes due to the cheaper gas prices. In December 61% of the respondents said they were doing nothing with the saving compared to the 42% in March. A consistent three months of low gas prices, consumers are noticing the extra savings in their pockets and spending it quicker. The recent survey by CNBC All-America Economic conducted March 26-29 showed 56% surveyed were aware of the savings and using them to pay off debt or spending on other things. Economists referring to the consumer shift as the "gasoline bonus" say it should continue through the end of the year. Analyst and founder at Oil Price Information Service, Tom Kloza, commented on the issue and stated, "I do think we'll trend a little bit higher, but personally I think the range of prices for the rest of the year is probably $2.70 on the high side and $1.90 on the lower side, and we're right ton the average." He also mentioned that this "translates to about $140 billion in more disposable income for this year, versus last year."
http://www.cnbc.com/id/102566097
7 comments:
The fact that a majority of people are now aware of their savings and extra money will increase consumer confidence going forward. People have more money available for spending or can use it to pay off previous debt in order to put themselves in a better financial situation. As a result, overall consumption should increase and we should see growth in the GDP. Lets hope the prices stay closer to the $1.90 side than at $2.70.
Although gasoline prices have been low for some time now, consumers are finally realizing they have extra money in their pockets. I think this is because they were waiting to make sure the low gasoline prices were not a fluke. It looks like most consumers have decided to pay off debts or save. Money is not going back into the economy as one my think.
I think it is good that consumers have been shifting their attitudes due to the cheaper gas prices. These cheaper gas prices allow for consumers to pay off loans and debts, as well as purchasing other things they might want or need.
Consumer confidence has been rising, so this leads them to spend more money on goods and services. Cheaper gas prices allows consumers to spend their money on other goods, maybe even luxury goods. It may be that they could be paying of loans and debts, but this is still an encouraging sign for the economy.
I think it will be interesting to see if this trend continues, especially with recent news that prices for crude oil are expected to be at an all-time low in upcoming months.
While the increase in consumer confidence is a good thing, people should also be/be made aware of the adjustment needed in the other direction when oil prices go back up. If not, the reverse effect could end up even worse.
It's a good news to know people spend their gasoline bonus instead of savings because this would lead to economic growth. However as Calvin mentioned they should also need to be aware that the price would go back up anything and be prepare for the adjustment
Post a Comment