Consumers just saying no to spending gas savings

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The first-quarter gross domestic product report put several dents in popular Wall Street economic narratives, none of which bode well for growth ahead.

Worst among current economic fallacies was the notion that consumers, buoyed by big savings at the gas pump, would propel U.S. GDP to higher levels. Rather than spend the savings at the pump, which saw the average price for a gallon of unleaded gas sink below $2 in several states as 2014 drew to a close, consumers saved that money and actually pulled back on their spending pace.

As a percentage of the economy, the consumer actually grew in 2015's first three months. Personal consumption expenditures now account for 72 percent of GDP, a mathematical phenomenon attributable at least in part to a retreat on business investment at the corporate level.

But actual spending increased just 1.9 percent in the quarter, a steep drop-off from the 4.4 percent gain in 2014's fourth quarter and the worst rate by a fairly wide margin since the same period a year ago. The end result was an anemic 0.2 percent gain overall for GDP. At one time, economists had been predicting 3 percent growth.

The spending slide was "particularly disappointing given that the decline in energy prices generated a massive 6.2 percent annualized jump in real disposable income," said Paul Ashworth, chief U.S. economist at Capital Economics, in a report for clients.