Consumer spending had its biggest decline since 2009 in December, as households appear to save the extra cash from cheaper gas. Bobbi Rebell reports.
Saving at the pump has not meant spending more for many Americans. In fact, U.S. consumer spending recorded its biggest decline since late 2009 in December falling three-tenths of a percent. Spending had gone up half a percent in November. Moody's Capital Market's John Lonski: SOUNDBITE: JOHN LONSKI, CHIEF ECONOMIST, MOODY'S CAPITAL MARKETS (ENGLISH) SAYING: "We're not seeing the upward mobility that we had in the past on the labor front, and, thus, consumers will look at this unexpected boost to discretionary income as being something that they should spend cautiously. That they should wait and see before they go ahead and buy that item that they were looking at, simply because they suddenly find themselves with more income owing to lower energy prices." The saving rate rose to 4.9 percent from 4.3 percent in the prior month. Households have so far used much of the extra income from cheap gasoline to pay down debt and boost savings, according to economists. Gasoline prices have plunged 43 percent since June, according to U.S. government data. But surprise, Lonski says one thing we may see more spending on a huge ticket item, housing. SOUNDBITE: JOHN LONSKI, CHIEF ECONOMIST, MOODY'S CAPITAL MARKETS (ENGLISH) SAYING: "Oddly enough, this drop in energy prices may be of the greatest indirect benefit to home sales to the degree that cheaper energy has lowered inflation expectations and, as a result, we are now looking at the return of the sub four percent 30 year mortgage yield." And a boost in the housing market could in turn lead to more spending on housing related goods.