Falling Gas Prices Don't Lead to Rising Retail Sales

Analysts say that the warmer temps in February and March led to earlier purchasing decisions by consumers. As a result, excluding gasoline station sales, retail sales rose just 0.2% last month.

May 17, 2012

WASHINGTON - Lower gas prices in April did not lead to a commensurate rise in U.S. consumer spending, the Associated Press reports.

According to Commerce Department data, retail sales rose a modest 0.1% last month. After excluding gasoline station sales, spending on retail goods increased just 0.2%.

April??s weak growth followed stronger sales in February and March, gains that economists attributed to a mild winter that led consumer to make purchases earlier than normal.

Despite the slow sales month, economists said several signs point to an upturn in economic activity. Consumers spent more on cars, furniture and electronics, major purchases that help drive growth. Additionally, spending was up at restaurants and bars, a sign of economic confidence.

The national average price of gasoline stood at $3.73 earlier this week, roughly 17 cents less than a month ago, according to AAA. The fall led to a 0.3% sales drop at gas stations.

Dan Greenhaus, an analyst at BTIG, predicted a continued drop in gas prices will lift consumer confidence, with consumer spending through June likely to grow at an annual rate of roughly 2.6%.

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