It's taken a while to get the economy back on track and many of us are still struggling with the sluggish recovery. Gas prices have been one of the biggest barriers to getting the economy back to its former glory. With gas prices reaching $8 per gallon on the east coast, consumers are tightening their belts and spending less.
Most of us rely on our cars to get to work or to get the kids to school on time, so any change in gas prices can affect our lives in big ways.
High Gas Prices Affect Spending
Unfortunately, gas prices have always been on a steady rise, so holding out for lower prices might not be the best idea. Factor in inflation and the decreasing value of the dollar and a good chunk of your paycheck will be eaten up at the pump. This is difficult in an era where many Americans are already feeling stressed by very little wage increases and high unemployment rates.
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In August 2012, we increased our spending by nearly one percent. However, this was mostly because we had to spend more for gas. The result of higher gas prices is that we decreased spending our money on general merchandise like clothing and electronics to offset the high price of gas. These actions are notable in that spending money on the aforementioned signifies confidence, or lack thereof, in the U.S. economy.
Gas Price Decrease?
Anyone filling up gas tanks might be interested to know that gas prices have decreased dramatically over the past year. As of September 2015, the average price for a gallon of gas was about $2.50. That average is down more than a dollar from the average in September 2014.
The dramatic decrease in gas prices was a trend that continued throughout the second half of 2014, before slightly bouncing back in early 2015. Despite this recent hike in prices, the average still stands significantly lower than prices one year prior.
With this slashing of gas prices, businesses are hoping their retail sales will soon bounce back as consumers get a little more spending power.
Without another major increase in gas prices, consumers wont be held back by their smaller bank accounts.