With gas prices low, what are Americans spending on instead?

Gas prices tumbled to rarely seen lows in late 2014 and early 2015, leaving many Americans with a little more pocket money than usual – money that didn’t go to a new pair of designer shoes or paying down student debt. 

|
Don Ryan/AP/File
Attendant James Lewis pumps gas at a station in Portland, Ore. By and large, Americans are using savings from low gas prices to keep up with essential expenses, like groceries and rent.

Like 2014, 2015 has been a great year so far at the pump. Thanks to a plummeting oil market, consumers will save an average of $700 per year on gasoline, according to the US Energy Information Administration (EIA). It’s the perfect excuse to spring for an Apple Watch or knock out a few student loan payments, right?

Not exactly. More frequently, Americans are using their gas savings to meet their everyday expenses, according to a study released Monday by Bankrate.com, a personal finance site. Forget the long-awaited cruise or extra retirement contribution; four in 10 of Bankrate’s survey respondents had to spend their gas windfalls on essentials like rent and groceries.

Additionally, 23 percent of respondents saved or invested the extra money. Discretionary spending, on things like dining out and travel, was the least common, at about 14 percent.

Millennials were more likely to save or invest – or buy something nonessential – than any other age group. High-income respondents – people making $75,000 or more – were about twice as likely to have saved their extra gas money than their lower-income counterparts.

“The percentage of Americans earmarking this money for everyday necessities outpaced those using it for discretionary purchases by nearly 3-to-1,” Bankrate chief financial analyst Greg McBride said in the report.  “You see why the economy is growing at such an anemic pace.”

The findings offer further evidence that as broad measures of the country’s financial picture improve, most Americans aren’t feeling it. Even as the stock market hits new highs, the billionaires’ club grows by hundreds annually, and revenues at the world’s biggest companies balloon, the consumer economy has yet to kick into high gear. Retail sales have barely budged since the beginning of this year, despite the arrival of warmer weather that would generally lure people into shops and restaurants. On a larger scale, the housing market has an affordability problem. Heavy demand at the lower end of the market is pushing up prices, making it hard for first-time buyers to break into the market, and, as a side effect, causing sizable rent increases across much of the country.

All of this means even economic trends that trickle down to the average consumer, like savings from cheap gas, are used to catch up rather than get ahead. That could change, eventually, as things improve further and American’s confidence in their financials firms up. In the same Bankrate survey, respondents reported higher levels of job security than they had a year ago, as well as more confidence about their debt levels and savings rates. The drop in gas prices has combined with a pickup in wages in the first part of 2015 to give average Americans more of a break than they’ve had in several years.

Still, for most Americans, those new Apple Watches are still a long way off.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to With gas prices low, what are Americans spending on instead?
Read this article in
https://www.csmonitor.com/Business/new-economy/2015/0518/With-gas-prices-low-what-are-Americans-spending-on-instead
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe