Savings At The Pump Not Enough To Loosen Consumers' Purse Strings

U.S. retail sales figures out on Thursday showed that lower gas prices weren’t enough to prompt U.S. shoppers to spend more.

Sales fell 0.8 percent in January, a near repeat of December’s 0.9 percent decline.

While gas prices accounted for much of the 0.8 percent loss, spending was still down by 0.2 percent when fuel was excluded from the calculations.

Gas Prices Give Consumers A Break

Fuel costs are expected to make up only a minimal portion of average household spending this year; the U.S. Energy Information Administration said it sees the average American family spending around $550 less on gas this year compared to last year.

Analysts were surprised to find that the increased disposable income did not translate into better retail sales figures, as consumers have historically splurged when fuel prices dropped.

What Happened?

Many are blaming the disappointing figure on consumers’ worries about the uncertain global economy and a shift toward cost-conscious spending patterns left over from the financial crisis.

Analysts say that although it appears that the public is choosing to hold on to their savings at the pump, the rise in disposable income will eventually make its way to the marketplace.

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How Did Markets Respond?

Share markets mostly took the news in stride, with the majority of investors believing that the fundamentals of the U.S. economy support the view that the nation is on track for a robust recovery.

Still, some analysts trimmed their expectations for U.S. first quarter GDP. JPMorgan revised its GDP estimate for the three months from January to March, down to 2.5 percent from an original estimate of 3 percent.