As U.S. gas prices begin to fall, the economy is expected to revive in the following months.
Lower gas prices means a job growth due to increased spending on big purchases. In April sales of furniture, electronics and autos rise, and Americans spent more at bars and restaurants, all translating in the revival of the economy. Sales also boosted in areas such as gardening supplies and building materials.
“All the categories that showed gains are positive signs for consumer spending going forward,” said Leslie Levesque, senior economist at IHS Global Insight. “The categories where there were declines were mainly a payback for the warmer weather.”
About 1 million jobs were added in the last five months, the recent job growth contributing to higher consumer confidence. The gas prices continue to fall from month to month, a gallon being 17 cents cheaper than a month ago.
“We had expected gas prices to be elevated until Memorial Day,” Levesque said. “The fact that they have already retreated so much is a very good sign. It alleviates the strain on consumers’ pockets.”
Cheaper gas kept inflation steady, which means consumers have more money to spend, boosting the economic growth. Business will soon step up its restocking if retail spending keeps rising.