Americans Saving, Not Spending, Extra Money from Low Gas Prices
The unexpectedly low gas prices in America have not resulted in increased consumer spending. Instead, Americans seem to be putting their money away for a rainy day or paying down existing debts with the money they’ve saved.
A study from Visa of approximately 4,500 consumers revealed Americans are saving about 50% of their extra money from the drop in gas prices. 25% of the money is being used to pay down debts, and the remaining 25% is going to food, clothing and other household purchases.
At the end of January, the average gas price in America was $2.05 per gallon, a 45% decline from the $3.68 per gallon last June. This equates to an average savings of $60 per month.
“Since the recession, you have a much more cautious consumer,” Wayne Best, chief economist at Visa, told The Wall Street Journal.
Ajay Banga, chief executive of MasterCard Inc., said, “We haven’t seen the extra savings from lower gas prices translate into additional discretionary consumer spending.”
While some Americans are spending money like they just got a stimulus check, many are treating their newfound savings as an opportunity to get out of debt.