Where do Americans spend their savings on gas?
It seems like that the whole America is enjoying their savings on gas and takes advantage of the situation while it still favors them.
According to the analysis by JPMorgan Chase Institute, about 25 million credit and debit card users were discovered to have spent an entire 80% of their gas savings. These extra expenditures went to restaurants, where a portion also goes to entertainment, groceries, clothes, electronics and appliances.
Consumers spending their gas savings disagree with the earlier research. For example, in May, Visa has found out that more than two-thirds of consumers reported using their gas benefit to increasing their savings account or pay their debts, as reported by Forbes.
The notion that consumers maybe aren't sure that lower gas prices will just stay around the corner is one possible reason. "What drives consumer spending are expectations of future gas prices, not prices today," said Visa's chief economist Wayne Best.
There are predictions that as gas prices lingered, consumers would become more assured that the savings they get from gasoline would persist, allowing them to spend more. In a research note at the beginning of this year, Goldman Sachs wrote," "companies expect to see further pickup in discretionary spending in the latter half of 2015, when the savings created from lower oil become increasingly visible to consumers."
With JPMorgan Chase Institute's analysis, people that live in the Midwest and South tend to spend the most on gas. It only means that they drive more or have bigger cars. Another discovery is Millennials and the poor are benefiting the most from cheap fuel, since spending on fuel is a basis for their monthly budget, as reported by Fox6now.com.
According to JPMorgan data, the good news is that many people are picking up their non-gas spending. America's economy still depends merely on people purchasing goods and services where 70% of the economy is driven by consumption.
The bad news is this coming holiday season will no longer be a big spending. If the JPMorgan data is not mistaken, people are already spending their gas savings all year long and not putting it in a piggy bank and just wait for the holiday rush.
"They may decide to spend a little more," says Diana Farrell, president of the JPMorgan Chase Institute, but it's unlikely there will be a spending surge unless gas prices really fall a lot more. Right now, experts are not predicting that.