Lower Fuel Prices Could Spark Consumer Spending

We all are happy to see fuel prices drop, even if it is only a few cents on the dollar. The best thing about saving money on gas, more money in our pockets. Many economists suggest that saving on gas has, historically, been followed by a positive impact on the economy.  But can saving just a few cents per gallon really impact the economy?

Consumer Confidence and Spending

Although a scientific link between an increase in consumer confidence and consumer spending is difficult to prove, in practice it is clearly observable. Think about it, we all tend to spend a little  more when we have a little more. Most of us don’t skip the restaurant or movie theater for dinner and a movie at home unless we can’t afford it. It is pretty clear that as we begin to have a little more money in our pockets  we feel better about the economy, which leads us to justifying spending that extra money on luxury items. Increased consumer spending is a big part of economic stability.

With a nation suffering a debt crisis, many government officials have been working day and night to find a solution. Job creation and tax breaks for business owners are at the forefront of ideas. However, it is unlikely that many businesses will be hiring or giving salary raises unless demand for services goes up. Consumer spending has the potential for boosting demand. Boosting demand  could very well influence job creation, resulting in a much needed economic boost.