In an ideal situation, Americans should be able to save more money if the oil prices are low. But the new study reveals that the instead of saving the money they saved from buying low cost oil, Americans are using it to spend more and save less.
A new study by JPMorgan Chase Institute examined debit/credit card transactions of more than one million of its clients. According to the study findings, 58% of possible gas savings were spent and not saved in their bank accounts. In fact, personal expenditure went up by 2.7% in 2014 to 3.1% in 2015.
According to U.S. News and World Report, lower oil prices did not propel US economy in the right direction. However, the extra money that the Americans spent rather than saving was a definite advantage for the retailers and eating places. The study also noted that lower prices meant that the consumers bought gas in higher volumes.
25% decline in gas prices and only 19% fall in spending meant that 6% difference can be credited to the possibility of buying more oil, as compared to when the oil cost more.
Last year, a new report had already been published by JPMorgan Chase in October, highlighting similar kind of findings. The study also found that 80% of the savings done on gas money were spent in eating out, buying electronics or for entertainment. The results are different from the statements made by households that they are using their saved money to clear the debts. Bottom line is that falling oil prices is changing the way Americans spend their money.
