As American retailers headed into the holiday season, they had one last thing to look forward to – lower gas prices across the country.
With a sharp drop in gasoline prices throughout the U.S., consumers had a lot more to spend than expected on holiday gifts and splurge items. In November, according to a new economic report, several retailers reported an increase in pre-holiday spending. This is welcome news after several quarters of struggle including weak wage growth and lower consumer sales.
A rosy outlook. Oil prices have fallen below $60 per barrel, which translates into per gallon prices at less than $2.50 in many areas. In addition to the lower gas prices, there’s also an increase in job growth across the country. Combined, these two factors paint a very rosy outlook for consumer spending, and the brightest predictions since 1999.
During November 2014, U.S. retail sales rose 0.7%, which was the biggest jump in the past eight months. According to a statement from the Commerce Department, Americans have spent more on cars, gardening supplies, electronics, clothing and dining out in November than in previous months.
More money to spend in retail. The dropping gas prices freed up billions of dollars in the economy, and consumers likely spent it on November and December holiday shopping. On average, American families had $42 more to spend in October 2014, compared to June of the same year, according to some estimates.
This isn’t the first time that gas prices have plummeted just before the holidays. In 2008, fuel prices dropped from $4 per gallon to $1.60 in December of that year. However, because the overall economy was bad at the time, retail sales also went down. This year’s fuel prices are coming at the end of the recession and are a result of increases in supply. As a result, Americans were able to spend more in December than they thought they could previously.