United States consumers already spent nearly all of the extra dough they saved from lower gas prices. It seems motorists took on the Keynesian, statist economic lesson: spend, spend, spend.
According to the JPMorgan Chase Institution, 80 percent of the savings from lower gas prices has been spent. As gas prices hit a low of $2.03 a gallon earlier this week, and hitting $2.25 this week, Americans decided to use that money at the store instead of setting it aside in a savings account or putting it in investments.
The think-tank organization of the financial institution reported that the savings rate started a four-month increase at the end of 2014. This led many economists and financial experts to conclude that consumers were taking advantage of lower gas prices by putting into piggy banks and emergency funds. Unfortunately, it was spent elsewhere.
Just what did consumers spend their money on? Using data of 25 million debit or credit card accounts, it came up with this brief list:
– 20 percent at restaurants
– 10 percent at grocery stores
– Seven percent at entertainment outlets
– Six percent at department stores.
“Depending on who you’re talking to, there are two angles to it: One is this is great news, people are consuming and therefore GDP is sustained and we should be happy about the consumer confidence,” said Diane Farrell, the institute’s founding president and chief executive officer. “To the extent that people were expecting that the savings would lead, after a long period of gas prices staying low, to people sort of turning to consumption — that we had additional wind in the sails coming, so to speak — we would say it’s already built into GDP.”
The personal savings rate currently stands at 4.6 percent. The last time it was this law, Ronald Reagan was sitting in the White House. The bright side is that at least it’s around two percent like it was prior to the financial collapse.
It’s been relatively common knowledge in wiser economic minds that in fact those who save or invest instead of directly spending impair economic growth. Spending consumer is what the business community wants and needs. No economic activity to speak of occurs apart from this. It appears Mr. Moran can no longer determine what is good or bad for business. Rather would just mindlessly frame all liberals or even the profiles who must have voted for Obummer as a collective image that doesn’t really exist.
Got Brain? And we all just about to find out who does really, and who only managed to make it seem that way for awhile. Aren’t we? Lol…
This one’s almost too ez to pin. Studies have already shown that some 90% or more of consumers just buy $20 in gas, period. They don’t mentally adjust and say, “I’m only going to put in $18 instead”, or anything of the sort. So where was the savings really spent? On more gas! Because the nature of the price cut doesn’t equate to less money being spent on more gas. Lol. Almost none of ya’ really stops to think about economics beyond what you’re told and believe mindlessly.