Economy Watch: A Look at the Increase in Consumer Spending
- Feb 04, 2015
Dees Stribling, Contributing Editor
Some good news, especially for retailers: U.S. consumers’ daily spending, according to Gallup, fell to an average of $81 in January, down from $98 in December. That doesn’t sound like good news, but spending always drops after the holiday season. Despite this year’s drop, $81 is one of the highest averages in any January since 2008, Gallup said–since the beginning of the recession, that is. It’s one thing for economic metrics to show the end of a recession, and quite another for people to actually feel the end of that slump. It’s been a long time in coming, but maybe consumers are feeling the recovery now.
The January 2015 average is based on Gallup interviews with more than 14,700 U.S. adults. Gallup asks them to estimate how much they spent “yesterday” in restaurants, gas stations, other kinds of stores or online–but not to include buying a house or car, if they happened to do so the day before, or normal monthly bills, if they sat down and paid those. The idea behind this particular poll is to provide a gauge of Americans’ discretionary spending—and it’s sweet news to retailers (and their landlords) when the average goes up.
Interestingly, the spending patterns of upper-income Americans were more volatile than lower-income Americans in the last year. For the purposes of the survey, “upper” is annual household income of more than $90,000; “lower” is less than that. During the summer, upper-income household spending was as high as $190 a day, Gallup said. In January 2015 spending was down to $137 a day, the same as in January 2014. Among lower-income households–the much larger group–the variation last year was from a low of $69 in January 2014 to a high of $85 in December. It’s no surprise that wealthier households spend more than everyone else, but the volatility is a little harder to explain.
Are low gas prices affecting the average amount of spending? Maybe, but it’s also true that low gas prices will mean that consumers have more money to spend in other places. In any case, Americans ended 2014 on a strong note, with the Commerce Department reporting that strong consumers spending as a main driver in the 2.6 percent increase in U.S. GDP in the fourth quarter.