Americans pocketing gas savings instead of bolstering economy


ASSOCIATED PRESS: Five-year-low gas prices have not pumped up the economy the way some analysts predicted.

Share this article!

ASSOCIATED PRESS: Five-year-low gas prices have not pumped up the economy the way some analysts predicted.

Even though Americans spent $6.7 billion less at gas stations in January than they had two months earlier, the extra cash didn’t get spent anywhere else: Retail sales, excluding gas, fell slightly from November to January. The unexpected pullback provided evidence that drivers had used their extra money to further rebuild their savings and reduce their debts — a trend that began after the financial crisis and recession.

In the long run, deeper savings and shrunken debts benefit individual households — and, eventually, even the economy as a whole, because they supply fuel for a sustained flow of future spending. For now, though, the slowdown in consumer spending likely means the economy will grow more slowly in the first quarter of the year than economists had previously envisioned. Their forecast now is for annualized growth of 2.5 percent from January through March, down from an earlier estimate of about 3 percent.

Read more here.