Will Rising Gas Prices Derail Retail Recovery?
By Al McClain
With retail sales for the just concluding holiday season expected
to be well above those of last year, it would be nice for retailers to be able
to take a breather and enjoy the feeling of a job well done.
remains high, the housing crisis has not abated and the average price of a
gallon of regular, unleaded gasoline has now topped $3 per gallon for the first
time in two years. Gas prices, according to a McClatchy
published on The Seattle Times website, have risen 42 cents over
the past year.
At least one expert, former Shell Oil president John Hofmeister,
is predicting $5 gas within two years, which would drive up the cost of many
goods. Services could rise as well.
Others, such as James Williams, an analyst
at WTRG Economics, do not expect to see prices go too much higher in the next
year. Mr. Williams said the Saudis have a vested interest in not derailing
Meanwhile, the University of Michigan’s Consumer Sentiment Index
for December reached its highest level in six months and U.S. consumer spending
has increased for five straight months, according to a Reuters article
appearing on ABC
News/Money. The Reuters analysis notes that with unemployment
still high, consumers are focused on paying down debt, at least between
shopping seasons, and that successful retailers are engaging shoppers with
frequent promotions and mobile apps.
Discussion Questions: Is the economic recovery strong enough to handle further
rises in the price of gasoline and oil? What strategies/tactics should retailers
employ to keep shoppers spending as gas prices rise?
- As gas prices top $3, worry rises over effect on recovery – McClatchy
Newspapers/The Seattle Times
- Analysis: Consumer Spending Back to Normal? Not So Fast – Reuters/ABC
oil prices poses another problem to recovery – Connecticut Post
- In 2011, $5 Gas, Tea Party Power And E-Book Boom? – NPR