Posted on 02/12/2015 8:48:26 AM PST by Olog-hai
U.S. retail sales fell sharply last month as gas prices plummeted and auto sales slowed. But excluding those volatile categories, Americans stepped up their spending a bit.
Retail sales dropped 0.8 percent in January, the Commerce Department said Thursday, following a 0.9 percent decline in December. The dollar value of gas station sales plunged 9.3 percent, the largest drop in six years. Auto dealer sales also fell for the second straight month.
Outside those categories, sales ticked up 0.2 percent after a flat reading in December.
The modest gain suggests Americans are still cautious about spending their windfall from lower gas prices, which economists expect will save the typical family $750 this year. Cheaper gas and strong hiring have sent consumer confidence to seven-year highs, a sign spending should pick up soon.
Economists were disappointed by the weak showing, but most expect spending to pick up soon. …
(Excerpt) Read more at bigstory.ap.org ...
My head is spinning. The correlations being made in this article don’t make any sense.
So I’m saving $750 dollars a year? How is that going to impact the economy as I, as an individual, can’t buy much of a durable good with that tiny amount. It’s barely a car payment and to most people around here, it’s a month’s rent or 2-3 month’s electric service.
This reminds me of the falsity of large numbers. When I was a kid a teacher told us that all of the water in the world flowed down the Mississippi river each year.
Exactly. We’re spending less because we have more money we did not spend on gas? Does not sound like any America I recognize.
Any gains by the consumer via cheaper gas will be soaked up by health insurance.
Obviously, Christopher S. Rugaber is much smarter than any of us. I am sure Milton Friedman calls him for advise on economic matters all the time.
Meanwhile, back in the real world, I was just speaking to a customer out in Boise. He stated that the RV business has gone gangbusters with the drop in diesel fuel. They can not keep up with the orders for new RV’s.
Yes, cheaper fuel does stimulate the economy Mr. Rugaber.
“He stated that the RV business has gone gangbusters with the drop in diesel fuel. They can not keep up with the orders for new RV’s.”
I agree on cheap fuel stimulating the economy. But the type of stimulation on the individual level isn’t enough to change most people’s buying habits. People who make long term purchases based on a transient drop in fuel costs are not being realistic. I might drive my gas car more as the price to do so has dropped, but I’ll do most of my driving with my 40 mpg suppository-shaped pill box. I certainly wouldn’t go out and invest in something that would, under “normal” circumstances cost $100 to fill up. This drop is due to the Saudi’s assaulting Russia and Iran over their support of Assad. A single strike by either might result in knocking the Saudi’s out of the market and prices would again skyrocket.
Rugaber gets calls from an economist who is eight years dead? Sounds legit.
Technicality
People are coming out of the “bunker” because they “feel” the economy is better. This will lead to housing starts slowly returning to 1.5 million over the next 5 years. A lot of this feeling has to do with job security. Also, interest rates remain very close to historic lows. If you can qualify for the loan, money is cheap.
We can argue whether the job figures are real or not, but there is finally job growth. Unemployment is down to a manageable level. As far as Russia, SA, etc. most energy analysts think that oil will stay cheap for the next several years. You are leaving out the fact that what really kept it over $100/barrel was increased demand from China and India.
China is done building ghost cities to stimulate their economy. If oil goes up again we will Hydrolic fracking reemerge to put a cap on the price of oil. Lastly, whether the Keyston pipeline gets built, or one of two pipelines to the Pacific coast, the Alberta tar sand oil is going to get to world refineries cheaper than it is now. There is enough oil in Alberta to keep us driving F150s for the next 200 years.
The answer is simple, bring on $5 a gallon gas. At $10 a gallon gas, I will be burning piles of money in the living room just for fun.
You beat me. They consider $750 a windfall? Doubt it covers the increase in our grocery prices.
Yep. Our health insurance went up over $3k this year. Even with the $750 ‘windfall’ we are still in the hole.
“”My head is spinning. The correlations being made in this article don’t make any sense.””
Boy! I’m relieved to know that I’m not the only one who is left shaking their head. Do you suppose the author will go back and say, “Oh! I forgot to include such and such. I should have sobered up before I finished it.”
I have had several local restaurants tell me business is up significantly vs last couple years. I think that is due to $2 gas.
60% plus of all US RVs are manufactured here in Indiana.
We’re cautiously optimistic.
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