General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsIf gas is so cheap, why do retail sales stink?
from Fortune:
Some analysts argue that we shouldnt be so thrilled about cheap oil.
Stocks are up modestly Thursday, following a four-day slump capped by a more than 1% decline in the Dow Jones Index on Wednesday. The market dip came on the heels of a Census report on retail sales that showed a big drop in spending by Americans in December.
So, where is the bounce the economy was supposed to get from cheap gas at the pump?
Some analysts argue that consumers have simply been pocketing the extra money they have been saving on gas, using it to pay down debt or bolster their savings. Others have a far gloomier story to tell. ..................(more)
The complete piece is at: http://fortune.com/2015/01/15/gas-prices-retail-sales/
CentralMass
(15,265 posts)We have had no substantial raises in a decade or more. The Deficit Increasing fiscal policies policies that pay corporate welfare at our expense are driving up costs while diminishing the quality of services.
IMO, the savings at the pump are being spent on basics.
dembotoz
(16,864 posts)dawg
(10,624 posts)We will see.
(It's possible all the savings on gasoline went to pay for iPhone 6's. At least I hope so. )
KG
(28,753 posts)Response to marmar (Original post)
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Yo_Mama
(8,303 posts)Actually, cheaper gas saved the holiday season.
Because Thanksgiving was later and because retailers pushed holiday sales earlier, some of the holiday sales were shifted into November from December, and with the seasonal adjustment that produced an apparent drop.
If you look at the YoY, it shows that retail sales were solid this year:
http://www.census.gov/retail/marts/www/marts_current.pdf
Nominal 12 month retail was up 4% over 2013.
If you want to look at just November and December YoY (second page), it is true that December looks worse (+3.2%, +2.6%), but then look at November also (+4.7%, +4.5%). For the quarter (Oct-Dec), sales were up (4.1%, 3.7%). The first number in the brackets is total retail & food, the second is just retail.
It was a solid, healthy holiday season and anybody claiming otherwise is rock-dumb, economically speaking.
Before the gas price drop, things were looking rough because frankly consumers were pretty tapped out by last spring, and high medicine, food and fuel prices did not allow them to rebuild their position over the summer. But that little extra cash gave the season the oomph it needed to be okay.
Yo_Mama
(8,303 posts)The answer is that Wall Street does not want the Fed to raise nominal interest rates, even though current rates have been dropping throughout the year and a small nominal rate increase is no threat to the Main Street. It is a threat to speculators.
PS: And if you don't believe me that this is a lie, here is the Real Retail series graphed:
http://research.stlouisfed.org/fred2/graph/?id=RRSFS,
Go to that link. There is nothing wrong with retail.
ND-Dem
(4,571 posts)today.
Retail barely came back to baseline in summer 2013 and is only about 5% up since; doesn't even keep up with population growth.
Yo_Mama
(8,303 posts)This is more sustainable. Far more. Back then it was a poison party. Retail sales up 4% YoY in the last quarter with under 2% inflation is something that the economy can live with. And the economy can also live with this:
http://research.stlouisfed.org/fred2/series/TLBSHNO
Now student debt has me worried. It is an unsustainable trend. But in many ways, it's less dire than the prior trend of debt. If you have to go into debt, spending for education is on net going to have future benefits, whereas buying discretionary nondurables on credit rarely does, especially when you are often rolling CC balances over to a mortgage, then running out and running the CCs up again. That contained the seeds of its own destruction.
ND-Dem
(4,571 posts)the foreseeable future.
Student debt is unsustainable if you can't get a job that will allow you to pay it off.
Response to marmar (Original post)
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xchrom
(108,903 posts)jwirr
(39,215 posts)Warpy
(111,383 posts)I hear about people paying down more credit card debt, making extra mortgage payments, and paying down more student loan debt. They're not buying consumer junk because they don't trust these gas prices, nor should they. My own prediction is that they'll have to go up by summer, countries like Mexico can't afford the loss of oil revenue. Whether they bounce back up to the $4.00 range is anyone's guess. My best guess says that oil prices will be below the inflated >$100/bbl in order to keep ISIS funding low.
moondust
(20,016 posts)The stock market bounce?
Gee, maybe all that money saved on gas is being "deployed" somewhere other than corporations that are traded on Wall Street.
Apparently some degree of prosperity is still possible on Main Street without record gains on Wall Street.