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Blog with Rob: QE Easing + Lower Gas Prices = Increased Consumer Spending? Not so fast.

4
Nov 2014
Posted in Blog with Rob

If you’ve made a trip to the pump recently you’ve seen them—significantly lower gas prices.  The national average has now dipped below $3.00/gallon for the first time in years.  Here in the NY-Metro area that translates to the low 3’s, but hey, we’ll take it.  Will the savings at the pump, which have coincided with the Federal Reserve recently announcing an end to Quantitative Easing (and hopefully inflation); translate to spending at the mall this holiday season?

The short answer? Probably not.  For every article you can find online trumpeting the triumphant return of low gas prices (“pre-recession levels!”), there is another about the consumer’s skepticism that prices will remain low in the long run.  The average consumer will be more inclined to put the savings directly into the bank rather than go on a blowout Christmas shopping spree.  Based on media sentiment and anecdotal evidence myself and other professionals are seeing, the effects of the Great Recession are long lasting and not just about dollars and cents.  It seems that the recession has caused a potentially permanent shift in the way people approach managing and spending their money.

So while some predictions have current prices saving consumers $50.00 a month—the real question is, can it last long enough to help revive our economy for good?

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