The Plight of the Consumer
I was recently asked if falling gas prices mean consumers will spend more in other areas. I said no. Why? Because falling gas and commodity prices can help, but gasoline purchases account for only about 6% of a typical household's purchases. It will take a big swing in gas prices to move that needle to where it affects consumers' overall spending habits. Even then, the funds might be saved or be offset by incomes that aren't keeping pace with the rest of consumers' shopping-cart prices.
Another potential positive that could come from falling gas prices in normal times is an increase in consumer confidence, but that's not the case now. Consumers are worried about a host of things besides gas prices. Consumer Confidence, as measured by The Conference Board, has fallen in each of the past four months, which the organization says means that consumer spending will be restrained. The drop in confidence suggests "there will be little change in the pace of economic activity in the near-term," the organization says....491 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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