In theory, saving $5 to $10 every time you fill up your gas tank shouldn’t make that big a difference in your holiday spending.
After all, an extra $40 in your pocket at the end of the month is a drop in the bucket if a $700 iPad is on your wish list.
But some economists and retailers think the recent slide in prices at the pump — fuel costs have plunged 26 cents or more in the last month alone according to gasbuddy.com — will nonetheless boost holiday spending this year.
A drop in gas prices has a psychological effect that gives consumers a license to spend because the extra cash feels like a small windfall, the experts say. This is especially true for consumers living paycheck-to-paycheck and gas station customers who pay for fuel with cash because they don’t have credit or debit cards — about 25 percent of all gas-buyers.
“When gas prices go up, they deepen despair, and when they go down, they elevate optimism,” said Jeff Lenard, a spokesman for the National Association of Convenience Stores.
There are reasons to temper that enthusiasm in Georgia. The state has had the highest unemployment rate in the country over the last couple of months, meaning thousands are still looking for work.
And while the cost of gas is down, metro Atlantans still buy an inordinate amount because of long commutes and congested highways.
Many Georgians, like Americans overall, are still recovering from the recession and are socking more money away or paying down debt faster than before the downturn.
Additionally, the spending boost from falling gas prices won’t be spread evenly, experts said. Because the savings for each individual isn’t very large, grocery stores and discount chains such as Walmart may benefit more quickly than big box retailers such as Macy’s or Best Buy.
But Chris Christopher, an economist with the IHS Global Insight, said retailers are making themselves more attractive this year with heavy discounts. Coupled with the gas savings that should make shopping trips to brick-and-mortar stores more attractive, he said.
Cheaper gas also will boost revenue for online retailers, whose sales are expected to grow 9.4 percent compared to last year. Online holiday sales will constitute about $1 of every $7 spent, Christopher said.
“Holiday clicks are outpacing the holiday bricks,” he said.
Retail sales were up 0.3 percent in October (after falling in September), largely on cheaper gas costs and more hiring, the U.S. Department of Commerce said on Tuesday.
The National Retail Federation forecasts holiday sales to reach $616.9 billion, a 4.1 percent increase over last year. Georgia retail sales also will be up 4.1 percent, said Rick McAllister, president and chief executive officer of the Georgia Retail Association.
The convenience store trade group released a study earlier in the month that found one in seven respondents said they plan to spend more because of the gas price drop, including 27 percent of millennials (ages 18-34) and 18 percent of men.
“The timing is really good leading into the holidays,” Lenard said.
Even without the gas savings, metro Atlanta is poised to see an uptick in shopping, McAllister predicts. Curiosity about new additions to the area’s shopping offerings such as Buckhead Atlanta and Avalon in Alpharetta will give consumers a reason to check out what’s new.
He said the extra money from lower gas prices allows consumers to buy a little for themselves while they shop for others on their list. And the more shoppers can treat themselves, the more they tend to spend.
“During the recession, people weren’t buying for themselves,” McAllister said. “Now we are feeling more confident about everything — our 401K, our home values, our ability to find another job if we lose the one we have, as well as gas prices. Consumer confidence is absolutely psychological, but it’s based on facts.”
