Americans are pumping their savings from lower gas prices right back into the economy, fueling a surge in retail spending that has experts increasingly optimistic about the economic outlook for 2019.
Overall retail spending rose by 0.2 percent in November, but falling gas prices obscured much of what was actually a significant boost in consumption. Nationwide, the price of gas decreased by nearly 30 cents per gallon last month, leaving consumers with more money to spend on other purchases. And spend it they did, driving a 2.3 percent increase in online sales for the month.
Core retail sales — a measure of consumer spending that excludes automobiles, gasoline, building materials, and food services — increased by 0.9 percent, following a 0.7 percent increase in October.
Since lower fuel prices produce reverberating benefits throughout the economy, such as reduced transportation and manufacturing costs, it’s likely that the positive effects will continue to stack up in the coming months.
That’s an encouraging sign for the U.S. economy, which some analysts had been expecting to experience a slowdown, partly due to expectations that the counter-tariffs President Trump has imposed on China would lead to reduced consumer spending.
Although GDP grew at a brisk annualized rate of 3.5 percent in the third quarter, putting us on pace to exceed 3 percent growth for a full year for the first time since before the Great Recession, economists at JP Morgan Chase had predicted that growth would slow to just 2.5 percent in the fourth quarter, and 2.2 percent in the first quarter of 2019.
The higher-than-anticipated surge in retail spending suggests that such fears have been exaggerated, however, and the actual numbers could end up being even stronger than the initial report indicates. The original estimate for October showed core retail sales growing by 0.3 percent, but upward revisions have since pushed that figure to 0.7 percent.
Meanwhile, there are strong indications that the U.S. economy is proving much more resilient to President Trump’s temporary, targeted tariffs than is China’s. Even as America’s consumer spending was exceeding expert forecasts, retail spending and industrial production in China took a major hit — the latest economic data released by the Chinese government suggests that China is experiencing its worst economic slowdown in at least a decade.
China’s troubles bode well for the future health of the U.S. economy. Whereas the Chinese were initially eager to retaliate against President Trump’s tariffs, they’ve noticeably toned down their rhetoric in recent weeks, and the President is increasingly optimistic that a major breakthrough in trade negotiations is on the horizon.
As America’s booming economy continues to outperform expectations, it appears increasingly likely that 2019 will be another glorious year of gangbuster growth, robust job creation, and rising wages for Americans luxuriating in Donald Trump’s economy.
Steve Cortes is a CNN political commentator and a member of President Donald Trump’s Hispanic Advisory Council.