Perhaps the longest-running pipe dream among confused economists and other talking heads over the past year has been that thanks to plunging oil and gas prices, American consumers' capacity for discretionary spending will surge as a result of these so-called "gas savings".
What all these incorrect forecasts ignored was two main things: i) reality, as all such forecasts completely ignore the far greater and disproportional spikes in healthcare and education costs, and of course, rents, which more than offset the discretionary dry powder available to most Americans; ii) empirical evidence on what Americans had actually spent their "gas savings" on.
While we had shown countless examples of the first point, over the weekend Gallup conveniently provided [5]much needed facts on the second.
Gallup's finding: Americans' reported changes in spending have remained stable in most categories of goods and services over the past year - except for gasoline, with 35% reporting they spent more on gasoline in the August-September period.
More from Gallup:
At the end of this summer, 35% of Americans said they were spending more on gasoline, which is up from 21% earlier this spring but still nowhere near the levels measured last summer (58%). Americans in the third quarter were nearly as likely to be spending less (31%) as they were to be spending more (35%) on gas and fuel. Just 12% said they were spending less one year ago. The net change in spending (percentage spending more minus percentage spending less) has swung wildly from +46 last year, to -34 this spring, to +4 today.
Gallup's punchline which will male all macrotourist economist shiver in their underwear as they debate the recovery from their parents' basements:
These trends continue to illustrate that Americans are still primarily spending more on things they need -- but not on things they want. They still say they are spending less, rather than more, than they did in the past year on discretionary purchases such as retirement investments, leisure activities, clothing, consumer electronics, dining out and travel.
There is a silver lining: "Net spending on travel and dining out has become significantly less negative." So not all hope is lost.
Finally, the implication:
After more than a year of following Americans' self-reported spending patterns, several conclusions seem worth reinforcing. First, net changes in spending -- the percentage of Americans reporting that they are spending more within a category minus the percentage saying they are spending less -- have been fairly stable for all categories, except gas or fuel. It's possible that people's reports of spending may be less sensitive to modest cost increases or spending fluctuations than to more dramatic shifts, such as the variations in gas prices over the past year. People may simply be inclined to overlook smaller spending changes in what they report. Conversely, people may interpret stable prices following a big slide as a sort of increase, and adjust their reports to reflect this.
Or, as Gallup also observes, courtesy of perennially rising prices for staples, what little discretionary spending power US consumers have left is spent on, simply enough, more gas.
