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Gas-price slide to tangle economic data
By Steve Goldstein
Published: Jan 11, 2015 11:47 a.m. ET
The slide in gas prices will be reflected in a host of economic reports.
WASHINGTON (MarketWatch)—Aren’t declining gasoline prices supposed to be good news for the economy?
They certainly are to households not employed in the energy industry, but it might not seem so from the one of the biggest economic indicators due for release this week.
On Wednesday, the Commerce Department is set to report retail sales for December. It’s the most important month of the year for retailers, but economists polled by MarketWatch are expecting a flat reading, and quite a few say a monthly decline wouldn't be a surprise.
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That’s because of the tremendous drop in gasoline prices. Gasoline stations are a key component of the retail sales report, so their revenue quite naturally will fall as prices at the pump decline.
So rather than the headline, economists say to examine other elements of the report.
“Apart from gasoline, we anticipate solid sales in December, reflecting strong holiday shopping,” said Peter D’Antonio, an economist at Citi.
“The drop in sales at gas stations actually provides the cost savings for the expected gains in spending in coming months.”
That said, Morgan Stanley’s Ted Wieseman cautions that consumer spending may not have been as aggressive in December as in November. After department stores saw a 1% monthly gain in November, the segment may reverse some of that advance in the final month of the year.
Nonetheless, savings reaped by households on lower gasoline costs will likely show up in part of the consumer-inflation report released Friday by the Labor Department.