|by Paul Davidson, USA TODAY|
Americans aren't exactly rushing to the mall with their savings from low gasoline prices, raising questions about forecasts for a surge in consumer spending this year.
Retail sales unexpectedly fell 0.8% in January, mostly because of low pump prices and weaker auto sales, the
More significant is that a measure of "core" sales — excluding gas, autos, building materials and food services – ticked up just 0.1% after dropping 0.3% in December. Economists expected a 0.4% rise.
"It is difficult to understand why individuals are not bumping up their consumption," says
Average regular unleaded gas prices have tumbled to
What's more, last year was the strongest for job growth since 1999 and consumer confidence has soared back to pre-recession levels.
Some retailers are benefiting. Last month, sales rose 0.8% at restaurants and bars, 0.3% at electronics and appliance stores, and 0.6% at building material suppliers.
But they fell 0.8% at clothing shops, 0.7% at department stores and 0.7% at furniture outlets.
Merchants selling small-ticket items, such as groceries, clothing and meals, are benefiting most from the gas bonanza because the savings are modest, according to a mid-January survey of 4,500 consumers by Visa.
Many consumers are banking the extra cash. About 45% of motorists said cheap gasoline has had no impact on their financial decisions and nearly a third said they were saving the windfall or using it to reduce debt, according to Conference Board survey conducted
Why aren't consumers splurging?
Nearly three quarters of those surveyed by the Conference Board said they expect gas prices to increase by summer.
"People are still not feeling fully confident that this is the real," Aleman says.
He adds that wage growth, which has a more enduring impact on consumer buying habits, has barely kept pace with inflation
Also, many consumers are still working off debt they amassed during the housing and credit boom that triggered the 2007-09 recession. Recent government reports have shown that consumers continue to use their credit cards sparingly even while student and auto loans have risen sharply.
Another factor: many Americans are socking away cash because they expect their medical costs to rise, Aleman says. The new health care law requires all individuals to have coverage or pay a penalty. And employer-provided insurance health have imposed higher deductibles in recent years.
Instead, "We're kind of wanting to build up that rainy day fund," Palubinski says. The information technology analyst noted that he hadn't gotten a raise since the recession until just recently receiving a small cost-of-living increase.
Yet many economists are sanguine.
And Aleman expects consumers to step up their purchases this year as wage gains pick up and consumers become more convinced that gas prices will stay low throughout 2015