KNOXVILLE — With a little more jingle in their pockets — thanks to cheaper gasoline and home heating costs — consumers might be spending a bit more this holiday season.
“It’s the short-lived reduction in gas prices at the pump and natural gas prices that will boost the spending capacity of the average consumer,” said Matthew Murray, a research professor with the University of Tennessee’s Center for Business and Economic Research (CBER).
The average price of gas peaked at around $3 in Tennessee in early September. In Knoxville, prices fell below the $2 mark in late October, and prices statewide are now averaging about $2.20, according to the American Automobile Association.
“Relief is attributable to a number of factors, including slower domestic demand and the absence of serious supply interruptions,” Murray wrote in CBER’s mid-year update to the Economic Report to the Governor.
Likewise, in July, American Petroleum Institute reported, “Our figures show that consumers, facing higher gasoline prices, apparently found ways to drive less and to use fuel more efficiently.”
Although gasoline prices are still high, knowing they’re cheaper than they have been in recent months is a psychological boost, Murray said.
Heating oil prices are also down 3.9 percent from this time last year, according to the Energy Information Administration. That, coupled with moderate fall temperatures, has translated into lower heating bills for homeowners.
“Consumers have felt considerable relief,” Murray said.
Job growth and personal income growth also are likely to boost holiday spending.
“The economy at large has been moving forward, and that provides a pretty good foundation for a decent holiday,” Murray said.
“Still, I’m not sure the average retailer will see huge gains because people are becoming increasing comfortable and savvy about internet buying,” Murray said. “It’s just darn easy to click and order.
“I think a good chunk of this year’s holiday purchases will be in mail order and Internet sales — which do not directly benefit retailers in our area or state,” he said.
In addition, many internet purchases don’t include sales tax. Although individuals and businesses are required to remit these taxes to the state through voluntary reporting, most do not and there is no practical way to enforce it, Murray said.
—
Contacts:
Amy Blakely, (865) 974-5034, amy.blakely@tennessee.edu
Matthew Murray, (865) 974-6084, mmurray1@utk.edu
—