November 11, 2014
Will lower gas prices pump up holiday sales?
You may have noticed that some people are almost giddy over the cost to gas up their cars. The prices Americans have been paying at the pump have been dropping for months. According to data from GasBuddy.com, the average price for a gallon of unleaded regular gasoline dropped 5.1 cents last week to $2.916.
Gas prices have reached their lowest levels since 2010 and, while steep declines may not continue ahead, expectations are that prices will remain low through the holidays. Lower prices are a financial boon to consumers, particularly those who spend a higher percentage of their incomes putting gas in their vehicles.
According to a MarketWatch report, an American family with two cars that uses 90 gallons of gas a month is saving about $60 from what they were paying in June when the average price at the pump was $3.70.
Economists expect that much of what consumers save at gas stations will be spent elsewhere. Chris Christopher of IHS Global Insight partly based his projection for increased holiday spending — from 3.1 percent in 2013 to 4.2 percent this year — on lower gas prices, which he told USA Today are "very supportive of increased consumer spending."
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Recent Discussions
Discussion Questions
Will lower prices paid for fuel have an effect on retail sales this holiday season? Do you think lower gas prices have a psychological effect on consumers that goes beyond what they are actually saving at the pump?
Poll
When we pay less for fuel we just feel better, which is what retailers need this holiday season. When consumers feel good they tend to spend more.
Yes, I do think that the low cost of gas this year combined with the rise in consumer confidence will have a positive effect on holiday shopping. When the price at the pump is less than you expect, there is a little more buoyancy in the “holiday spirit.”
Gas is one of the few things that we tend to buy on its own. We are far more aware of gas prices than we are of milk or bread because there are so many prices to pay attention to in the supermarket. That makes lower gas prices feel even more like “found money” than most other kinds of savings. That paired with the frequency with which people will have to refill their tanks on their way to a Christmas shopping trip makes me confident that retailers will see an increase in holiday spending this year.
I agree with Max on this one. Consumers just need to feel better about some things in order to feel more positive, and be willing to spend a little more on holiday giving.
On the flip side, declining gas prices have been more than offset by rapidly escalating food prices. The projected average savings of $60/month on gas could be quickly offset by the cost of putting holiday food and trimmings on the table.
It will be a very interesting question of whether consumers actually see any savings from lower gas prices—or whether they will just “eat about it.”
I am not sure that I am typical but I think I am in some ways. Every time I fill up one of my cars I am doing the mental math on how much I am saving and am starting to figure out where I can spend the money. I think most consumers are doing the same thing and looking at possibly going out to dinner or spending money on something like Christmas gifts. This reduction in gas price could not have come at a better time for the economy.
No add, just thanks to all the veterans that helped keep America and our friends free and thus SAVED RETAIL!
Happy Veterans Day, gang!
Yes and yes. Gas prices affect everyone and when they go down it’s a bonus to everyone. Looking at your bank balance and seeing more each week is good for the wallet and the psyche.
There is no question in my mind that lower gas prices are stimulating the economy. I am seeing lines at the pumps that I have never seen before here in Los Angeles. Are people actually driving more now? Further, I am seeing overflow crowds at major malls, and I am watching them carry multiple large bags of purchases. Malls have been crowded before, however I think the purchase rate is growing in my admittedly unscientific study.
Money saved on gasoline purchases will go to other retail purchases only if the economy continues to improve (especially unemployment) and confidence in the economy is maintained via GDP growth and in the media, stock market, etc. If not, then money saved will go unspent.
I felt the savings at the gas pump yesterday. Paid $2.84. Two months ago I was paying over $3.50. I love the savings. But it does not make me want to go out and overdose on holiday spending.
In a word, yes!
And that’s worth all of my two cents!
Gas prices have an almost magical effect on consumers. It’s not even the prices, it’s the ups and downs that affect consumer behavior it seems. I am sure this will impact retail in a positive way. Most likely a higher impact on the outlet stores than malls.
Also lower gas price means lower cost of shipping and hopefully that will translate to more free shipping promotions. It will probably help online retail as well.
The lowered gas prices are indeed welcome, but for most of us does not balance out the recent increases in meat, poultry, and milk prices that we’re seeing and paying. I don’t think the gas price impact to retailers with respect to holiday spending will be noticeable.
Lower gas prices coupled with lower unemployment equals a boost in holiday sales. The price at the pump has a huge psychological effect…just listen to how many times someone wants to know “did you see the price of gas?”
Yes low gas prices will affect holiday retail sales. These fuel price reductions don’t affect many long term savings decisions, so the extra cash winds up as disposable income. And no better time to dispose of income than the holidays. Go holiday spending!
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When we pay less for fuel we just feel better, which is what retailers need this holiday season. When consumers feel good they tend to spend more.
Yes, I do think that the low cost of gas this year combined with the rise in consumer confidence will have a positive effect on holiday shopping. When the price at the pump is less than you expect, there is a little more buoyancy in the “holiday spirit.”
Gas is one of the few things that we tend to buy on its own. We are far more aware of gas prices than we are of milk or bread because there are so many prices to pay attention to in the supermarket. That makes lower gas prices feel even more like “found money” than most other kinds of savings. That paired with the frequency with which people will have to refill their tanks on their way to a Christmas shopping trip makes me confident that retailers will see an increase in holiday spending this year.
I agree with Max on this one. Consumers just need to feel better about some things in order to feel more positive, and be willing to spend a little more on holiday giving.
On the flip side, declining gas prices have been more than offset by rapidly escalating food prices. The projected average savings of $60/month on gas could be quickly offset by the cost of putting holiday food and trimmings on the table.
It will be a very interesting question of whether consumers actually see any savings from lower gas prices—or whether they will just “eat about it.”
I am not sure that I am typical but I think I am in some ways. Every time I fill up one of my cars I am doing the mental math on how much I am saving and am starting to figure out where I can spend the money. I think most consumers are doing the same thing and looking at possibly going out to dinner or spending money on something like Christmas gifts. This reduction in gas price could not have come at a better time for the economy.
No add, just thanks to all the veterans that helped keep America and our friends free and thus SAVED RETAIL!
Happy Veterans Day, gang!
Yes and yes. Gas prices affect everyone and when they go down it’s a bonus to everyone. Looking at your bank balance and seeing more each week is good for the wallet and the psyche.
There is no question in my mind that lower gas prices are stimulating the economy. I am seeing lines at the pumps that I have never seen before here in Los Angeles. Are people actually driving more now? Further, I am seeing overflow crowds at major malls, and I am watching them carry multiple large bags of purchases. Malls have been crowded before, however I think the purchase rate is growing in my admittedly unscientific study.
Money saved on gasoline purchases will go to other retail purchases only if the economy continues to improve (especially unemployment) and confidence in the economy is maintained via GDP growth and in the media, stock market, etc. If not, then money saved will go unspent.
I felt the savings at the gas pump yesterday. Paid $2.84. Two months ago I was paying over $3.50. I love the savings. But it does not make me want to go out and overdose on holiday spending.
In a word, yes!
And that’s worth all of my two cents!
Gas prices have an almost magical effect on consumers. It’s not even the prices, it’s the ups and downs that affect consumer behavior it seems. I am sure this will impact retail in a positive way. Most likely a higher impact on the outlet stores than malls.
Also lower gas price means lower cost of shipping and hopefully that will translate to more free shipping promotions. It will probably help online retail as well.
The lowered gas prices are indeed welcome, but for most of us does not balance out the recent increases in meat, poultry, and milk prices that we’re seeing and paying. I don’t think the gas price impact to retailers with respect to holiday spending will be noticeable.
Lower gas prices coupled with lower unemployment equals a boost in holiday sales. The price at the pump has a huge psychological effect…just listen to how many times someone wants to know “did you see the price of gas?”
Yes low gas prices will affect holiday retail sales. These fuel price reductions don’t affect many long term savings decisions, so the extra cash winds up as disposable income. And no better time to dispose of income than the holidays. Go holiday spending!