With gas prices holding steady at the lowest we’ve seen in years, recent data has revealed that consumers aren’t putting it where their mouth is when it comes to these costs savings. Despite earlier reports of consumers’ intentions to pay down debt or save for a rainy day, analysts at JPMorgan Chase Institute discovered just the opposite: consumers are spending 80% of their gas savings. So, where is this money being spent and what does it mean?
We already know the continuously low gas prices this year have seriously impacted the oil and gas industry, job market and economy. But what about the impact on the consumer? It is the behavior of this last stakeholder, the consumer, that we find very interesting.
In a Visa study earlier this year, two-thirds of consumers said they used that extra cash to pay down debt or put toward savings. Not surprisingly though, data from 25 million credit and debit card users at JP Morgan Chase revealed differently. Consumers are spending 80% of that extra cash like discretionary income and we think that’s probably a low average. With restaurants as the most popular choice, overall they are spending more on entertainment, groceries, clothes, electronics and appliances.
However, this nation-wide contradiction between spending intentions and actions is a good thing. It truly demonstrates the value in knowing what our customers may want or need, even if they may not be willing to admit it. Although certain circumstances may be out of our control, we can be on the receiving end of the “extra spend” if we provide products and services that meet them (or in our case, help them to) where they want to be.