Shelly Banjo is a Bloomberg Gadfly columnist covering industrial companies and conglomerates. She previously was a reporter at Quartz and the Wall Street Journal.

If you're counting on lower gas prices to help get shoppers in the holiday spirit and rev up retail spending in the home stretch of 2015, don't.

Priming The Pump
Daily National Average Gasoline Prices (Dollars/Gallon)
Source: Bloomberg

It's perfectly logical to think a big drop in prices at the pump -- gas costs an average $2.04 a gallon, versus $2.76 on December 1 last year -- will manifest in higher spending at the mall. With more money in their pockets, consumers should be buying more -- especially during the holidays, when some retailers ring up a third of their annual sales.

If only.

Much to the chagrin of retailers, the $44 billion that Bloomberg Intelligence analysts estimate consumers saved on gas in the first half of this year doesn't seem to be making its way into retail cash registers. Some chains, like Nordstrom and Macy's, which both lowered their year-end financial outlooks recently, are bracing for fewer shoppers

What gives? Let's look beyond the headline numbers. First off, gas savings affect consumers differently depending on their income levels. Energy costs represent 8 percent of nominal after-tax income for families making more than $50,000 a year (about half of all U.S. households), but make up a whopping 20 percent of after-tax income for the other half of families with less than $50,000 in yearly income, according to an analysis prepared for the American Coalition for Clean Coal Electricity, an energy industry group. This group obviously has an agenda, but these numbers are consistent with past studies from a range of other groups.

Energy as Percentage of After-Tax Income
Source: American Coalition for Clean Coal Electricity

That means moves in gas prices have a bigger impact on lower-income households, and those consumers make a smaller dent in overall retail spending compared with higher-income households, even if they are buying more Christmas presents this year. 

Bank of America Merrill Lynch economist Michael Hanson makes a further distinction between consumers who live "paycheck to paycheck" and those who manage to save money every month. By Hanson's account, more than a quarter of Americans live paycheck to paycheck and are therefore more likely to spend gas savings right away at retailers -- or, increasingly, restaurants, healthcare, and other services. But the other three-quarters of Americans? Well, much of the savings from the pump bypasses the mall and goes directly into the bank. Just look at the U.S. personal savings rate, which jumped to 5.6 percent in October, the highest level since December 2012.

Rainy Day Fund
U.S. Personal Saving As a Percentage of Disposable Personal Income
Source: Bloomberg

Hanson says this saving behavior has a lot to do with expectations. Because energy prices have been so volatile in recent memory, higher-income, savings-prone consumers don’t really trust that lower gas prices are here to stay. Americans are buying a greater number of gas-guzzling trucks and SUV's -- seemingly a bet on gas prices staying low. But according to the University of Michigan consumer sentiment index, many Americans expect gas prices to rise during the next year, not fall. With that mindset, it's unlikely we'll see a persistent shift in spending any time soon. 

Skeptical Consumers
Despite Falling Gas Prices, Consumers Expect Prices To Rise
Source: Bloomberg, University of Michigan

It's possible that gas savings will eventually, gradually support higher consumer spending. For retailers needing help this holiday season, that spending might come too late. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Shelly Banjo in New York at

To contact the editor responsible for this story:
Mark Gongloff at