In recent years, oil prices have been plummeting down, leading Americans to claim that they've saved a lot of money from the downward curve of oil price. Unfortunately, a new study proves this claim otherwise. Americans, according to a new study, are spending more than saving from buying low-cost oil.
It's true that Americans save money from lower oil prices, considering that there'll be less value of expenses on their budget list. However, a new study found that instead of setting aside the saved money from gas, Americans use it on other expenditures making them save less than expected.
According to U.S. News and World Report, a new study by JPMorgan Chase Institute lists the anonymous 2015 debit and credit transactions of 1 million of its American clients. The findings show that 58 percent of potential gas savings were spent instead of saving it in their bank accounts.
Personal consumption expenditure climbed from 2.7 percent in 2014 to 3.1 percent in 2015. U.S. News and World Report notes the small difference, concluding that the dropping down of oil prices did not lead to an overall better economy. Nonetheless, the extra cash Americans spent than save benefitted restaurants and retailers.
The study also found that because of the lower oil prices, more Americans brought gas by volume. Because gas prices fell by 25 percent and only 19 percent of spending went down, the 6 percent-point difference was attributed to the possibility that more oil is being bought by consumers these days than before when the oil was priced higher (via U.S. News and World Report).
Last October, JPMorgan Chase Institute has already released a report with almost the same findings that Financial Times covered. The study found that 80 percent of what Americans save from gas are spent on dining outside, entertainment and buying electronics and appliances. The results are contrary to pronouncements of households that they use the saved money to pay debts.
Ultimately, the studies show that the plummeting down of oil prices are changing the spending patterns of Americans. It is expected as according to The New York Times, the price of a barrel of oil dropped more than 70 percent at one point than June 2014 price levels. The current price of oil is now at $45 a barrel compared to the $90 to $100 a barrel a decade ago.
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