Economist are predicting slower than hoped-for growth in the economy during the second quarter of 2012 despite lower gas prices during this period. The cheaper gas did not stimulate spending in other sectors by consumers, leading analysts to believe that the economy is still slumping.
Not all of Wednesday’s government data was disappointing, however. Consumers did spend more of their money on cars, appliances and furniture which are all large purchases that do help to fuel the economy. Businesses are also restocking their wares at a healthy pace during the spring quarter.
Other good news is the fact that wholesale prices, aside from gasoline, remained steady, signaling to consumers that inflation is under control.
As long as gas prices remain low it becomes ever more likely that consumers will go back to the stores this summer; buying cars, furniture, electronics and vacations; all things that give the economy a boost.
“The continued fall in gasoline prices should support consumption by freeing up cash to be spent on other items,” said Paul Dales, senior U.S. economist at Capital Economics.
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