Holiday Spending Surplus

Spending less money at the pump may mean more gifts under the Christmas tree this year.

Retailers are hoping that lower gas prices prompt consumers to spend this holiday season.

With only a few weeks left until the official start of the holiday season, the outlook is looking brighter for retailers.

Until a recent drop, high gas prices had people spending money at the pump rather than at the mall.

The national average for regular unleaded is now $2.37, which is down from the $2.80 mark it hovered at a year ago.

That extra cash in consumers' pockets is good news for retailers.

The National Retail Federation predicts holiday spending will increase 5-percent this year, which translates into about $457 million dollars in sales.

"Over the last 10 years, the average increase in holiday sales has been about 4.6%. So, overall, we're looking at a slightly above average holiday season," explains Scott Krugman with the National Retail Federation.

However, gas prices are only one part of the equation. The housing market, where consumers tend to build equity, is cooling off, which may make consumers more cautious this year.

"Well, now we have higher interest rates and refinancing seems to be going down, which means consumers in 2007 are probably going to have to find a new source of their spending power," says Krugman.

That power, economists predict, may very well come from lower prices at the pump, and as long as gas prices stay low, consumers and retailers can both expect a happy holiday.


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