As Gas Prices Decline, American Consumer Confidence Goes Up

Nielsen shows how low gas prices are impacting consumer spending.

With gas prices down 31% since June, 2014 and oil prices around $85 a barrel, tumbling rapidly to its lowest levels in several years, American Consumer Confidence has improved dramatically, going up 12% points year over year, Nielsen reported.

For Q4, while overall consumer confidence declined 2% points, Americans are feeling good again about their personal finances (+6% points) and immediate spending intentions (+8% points). The percentage of Americans who felt it was a good time to spend also increased, by 9% points. U.S. shopping trips/consumer rebounded in November and December, increasing from 13 trips/month in June to 15 trips/month in December. Americans also have more money to spend on each of these shopping trips, as a result of cheaper fuel—spending at least a $1 more a trip. Some 39% of respondents said they have more money to spend due to declining gas prices and are putting this money towards paying their bills (50%), everyday essentials like food (36%) and discretionary items like home entertainment (30%) and clothing (30%).

However, serious economic pressure is being felt by the world’s oil producers and this is evident in the Q4 Nielsen Consumer Confidence Index – Saudi Arabia (-3% points), Venezuela (0% points), Russia (-8%), China (-4% points) , Japan (-4%) and Canada (-1% points).

Key Findings:

The U.S. has seen significant year over year improvements. “Consumers appear more upbeat than other regions going into 2015. Declining unemployment, falling oil prices and continued low interest rates place consumers in the world’s largest economy in a better position to spend than in recent years,” said Louise Keely, senior vice president of Nielsen.

overall consumer confidence increased 12 percentage points

personal finances up 6 percentage points

immediate spending intentions up 8 percentage points

good time to spend up 9 percentage points

job prospects up 13 percentage points

planning on saving for retirement down 6 percentage points

planning on putting money in a savings account down 2 percentage points (reflective of consumers moving out of the deleveraging /saving more phase, increased willingness to spend again)