Consumers have been saving at the gas pump, but the extra cash isn't going into discretionary spending as expected. It is going into necessities and savings, especially for Millennials. Bobbi Rebell reports.
Consumers may be saving money at the pump, but they aren't pumping that money back into the economy in the way many economists expected. Retail has been rocky at best, and consumer sentiment has fallen to its lowest level since the fall. The great consumer comeback just has not happened. What is happening is that a lot of the money is being spent on things Americans actually need. Forty percent used their gas savings on necessities like groceries or rent according to Bankrate.com. Chief Financial Analyst Greg McBride: SOUNDBITE: GREG MCBRIDE, CHIEF FINANCIAL ANALYST, BANKRATE.COM (ENGLISH) SAYING: "The lower gasoline prices are something that American consumers by and large are seeing as fleeting. It's not permanent. They sort of have this skepticism that prices could eventually go back up, so they are not permanently building that savings into their budgets." In fact 23 percent put the extra cash into savings or investments, and Millennials were more likely to have saved than any other group. As for the much hoped for discretionary spending? Just 14 percent put that extra cash towards things like dining out or vacations. Again, Millennials were the most likely, and, in this case, senior citizens the least likely. That reluctance to spend says a lot about why economic growth has been so anemic. SOUNDBITE: GREG MCBRIDE, CHIEF FINANCIAL ANALYST, BANKRATE.COM (ENGLISH) SAYING: "Money is tight for people they haven't had pay raises and, until we see a substantive growth in household income, I have a difficult time seeing how this economy is going to permanently catch a higher gear. " But the new data also shows growing financial confidence. Just 16 percent of Americans says their financial situation has gotten worse in the past year, a huge improvement from the peak of 35 percent in 2011.