NEW YORK -- Increasingly lower gasoline prices are getting a lot of credit for boosting consumer attitudes this Christmas season. But a new report from RBC Capital Markets says fuel prices are actually just the latest in a 2014 trend of economic recovery that's keeping the United States ahead of much of the rest of the world.
"While economic conditions globally have been challenging, the U.S. has been an anomaly as it has seen improving trends over 2014 and is poised to outperform once again in 2015," analyst Nik Modi wrote in a report titled "Economic Guide for Consumer Staples Investors." "While the U.S. economy accelerates, virtually every other major economy across the globe has seen decelerating trends."
Among the major events driving these economic improvements are:
- The shale oil boom.
- An improving housing market.
- Hiring at its strongest pace in the past 10 years.
- The unemployment rate at its lowest level since the early days of the 2008/2009 recession.
- And now, lower oil prices, which have "pushed retail sales growth to its strongest pace in over 8 months."
Together, these factors have pushed the U.S. economic recovery in ways not seen since the Great Recession.
"While the U.S. recovery has been taking place for years, for the first time we are seeing the low-income consumer participate in the recovery as they benefit from a sharp drop in gas prices (gas prices make up a significantly larger portion of the household budget for the low income consumer)," the report states.
As to how this recovery has affected retailing so far, Modi offered these recent commentaries from companies:
Casey's General Store
Casey's General Stores said it has started to see slight shifts in consumer behavior with falling gas prices. In Casey's region, prices have fallen from an average of $3.19 in the August-October period (-11% year over year) to $2.35-$2.40 currently (-25%). The chain reports seeing the following behavior with lower gas prices: 1) slight shift in mix in cigarette sales toward premium brands; 2) increase in gallons/transaction; 3) slight increase in average transaction size inside the store; 4) slight increase in customer count as people seem to be driving a bit more; 5) slight decrease in credit-card utilization.
Anheuser-Busch
Anheuser-Busch said Europe and Asian-Pacific countries were its weakest performing regions in the third quarter, but the company continues to see full year growth in the United States, China and Brazil.
Costco
Costco's fuel sales were up 8% globally and 9% in the U.S. vs. a 12-week trend of 7%. Traffic was up 5%, with the Midwest, Southeast and San Diego the strongest regions in the U.S.
National Retail Federation
NRF said its Thanksgiving Weekend Spending Survey showed total spending is expected to reach $50.9 billion, down 11% from last year's estimated $57.4 billion. According to the survey, the average person who shopped spent $380, down 6.4% from $407 last year.
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