Plummeting Gas Prices Offer Slight Relief to Consumers
The Commerce Department reported today that U.S. consumer spending declined by 0.6% in November, compared to a 1.0% drop in October. When adjusted for inflation the November figure actually translates into a 0.6% increase - a better-than-expected figure.
With gas prices tumbling, consumers found themselves with a little more cash to spend this holiday season. Since their peak in July, gas prices have fallen about 60% due to a slowdown in demand, saving on average about $35 per 15-gallon tank.
Despite the slight increase in spending, U.S. retailers are struggling to hit sales targets this holiday season; offering deep discounts hasn't helped much and many will have to lower their earnings estimates.
Other discouraging figures include unemployment at 6.7%, a 26-year high, and a decrease in personal income by 0.2% last month.
Unfortunately, while consumers may be feeling a little less pain at the pump, it's not enough to suggest a quick recovery and most experts expect the recession to continue through '09.