Pumping Savings into the Economy
There are very few products or services that impact, in one way or another, nearly every consumer in the United States. One product that does is gasoline. Since the end of 2014, the consumers in the U.S. have experienced a steady decline in the price of gasoline, down from $3.52 in July 2014, to the current national average of $1.72. The drop in gasoline prices has sparked debate among economists as to whether or not lower energy costs are an overall positive or negative for the economy. While both sides have staked their claims and can produce evidence to support some of their arguments, one fact remains true: the drop in gasoline prices has led to fairly significant savings for U.S. consumers, and those savings are flowing back into the economy.
It is estimated that individual consumers saved between $540 and $700 in gasoline-related expenses in 2015. This savings had a significant effect on the spending power of individuals. A study of more than 25 million debit and credit card users found that individuals were spending nearly 80% of the “extra” money they had due to the savings incurred from lower gasoline prices. Instead of being spent at the pump, this “extra” money was able to flow into other sectors of the economy, to the tune of an estimated $5.86 billion in Florida in 2015 alone, generating an additional $350 million in sales tax revenue.
In particular, the study shows that nearly 20% of gasoline savings were spent at restaurants alone. This helped fuel a record year for restaurants as Americans spent more money eating out than at the grocery store for the first time in history. Consumers also spent some of their gasoline savings shopping, as industries such as entertainment, electronics, appliances and department stores all saw added revenue due to the increase in expendable income. The overall benefits to individuals in the U.S. is upwards of $140 billion as a result of the drop in gasoline prices.