Tags: gas prices | low | saving | not spending | Americans | recession | wary

Americans Love Lower Gas Prices, but They're Pocketing Savings

By    |   Friday, 30 January 2015 10:26 PM

Americans are saving about $60 a month from lower gas prices — but they're not spending much of it.

The Wall Street Journal reports the fiscal restraint proves skittish consumers are still haunted by the recession even as the economy is picking up.

"We haven’t seen the extra savings from lower gas prices translate into additional discretionary consumer spending," said Ajay Banga, chief executive of MasterCard, the Journal reports.

Average gas prices nationwide on Friday reached $2.05 a gallon, down nearly 45 percent since June, when the average price was $3.68 a gallon, according to AAA auto club, the Journal reports — translating to an average savings of about $60 a month for a consumer.

"It’s a party at the pump," Leo Divinsky of Los Angeles told the Journal, noting his wife is using some of the family’s $75-a-week gas savings to pay down credit card debt.

A Visa survey finds consumers are hanging onto roughly half their gas savings, the Journal says. Another 25 percent is being used to reduce debt, while the rest is being spent on groceries, clothing, and fast food, the newspaper notes.

"Since the recession, you have a much more cautious consumer," Wayne Best, chief economist at Visa, told the Journal.

Economists say it's not so unusual for people to stash initial savings, according to the Journal. But if crude oil prices were to stay at $50 a barrel this year, that would translate to savings of roughly $1,325 per household on gas over the coming year, the Journal reports.

And as consumers feel more confident the lower prices "are permanent, they’re more likely to spend it," Lewis Alexander, chief U.S. economist with Nomura Securities, tells the Journal, though so far, "the initial reaction has been to save it."

Banga says it may take two or three more months of low prices at the pumps before consumers loosen the purse strings.

"Honestly, I should just try to make extra car payments," Kathryn Grayson, a 23-year-old graphic artist in Asheville, N.C., told the Journal. "Every little bit helps."

© 2020 Newsmax. All rights reserved.


   
1Like our page
2Share
US
Americans are saving about $60 a month from lower gas prices - but they're not spending much of it. The Wall Street Journal reports the fiscal restraint proves skittish consumers are still haunted by the recession even as the economy is picking up.
gas prices, low, saving, not spending, Americans, recession, wary
340
2015-26-30
Friday, 30 January 2015 10:26 PM
Newsmax Media, Inc.
 
Newsmax TV Live

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved