The big economic boost that everyone expected from lower prices at the pump has been hard to spot.
The fact that cheap gas hasn’t provided more of a boost to the U.S. economy has been one of the big mysteries of the past year.
Less money spent at the pump is supposed to boost consumer spending elsewhere. And yet, a little more than a year after gas prices started to fall, the economy and spending seem no stronger than when gas prices were near $4 a gallon. Retailers, which were expected to see the biggest benefit, have had a lackluster year. Both the Gap and J.Crew have announced layoffs and store closures. Sales of big ticket items like appliances and even new cars are up only slightly or down. (Gas guzzling truck sales, though, were up by a strong 15%.)
Overall, though, consumer spending has increased 3.5% in the past year. And spending on gas is down by nearly 20%. So, where have the extra dollars gone? Not in the parts of the economy that are easy to notice. Rent, for instance, is up nearly 4%. Healthcare is up, too. U.S. consumers have spent a lot of their extra dollars in industries associated with domestic travel (foreign travel and airline transportation has not seen a boost). The biggest winners are restaurants, hotels, amusement parks, and movie theaters.