When savings aren’t enough to cover your small business expenses, sometimes you have to reach out and obtain a working capital loan. Despite a plunge in oil prices providing U.S. consumers with a $150 billion windfall in savings, Americans have stuffed most of this money under their mattresses for a rainy day, Bloomberg Business reported. Experts anticipated lower fuel costs to act a sort of consumer tax cut, but the money didn’t end up going anywhere.
While retailers have experienced a 10 percent increase in sales so far this year, it doesn’t translate specifically into what the boost should have been based on the savings. Sixty-six of the 84 companies on the Standard & Poor’s 500 Index experienced sales growth of just 0.5 percent, which missed analysts’ estimates by 1.7 percent. Which can only mean instead of spending this savings, American instead chose to save it.
Much of this lack of spending can be attributed to Americans paying off their substantial household debts.
“We’re still dealing with a cautious consumer, it’s safe to say, and it’s volatile,” said Simon Property Group Inc’s David Simon. “The patterns of the consumer are tougher to predict right now. Confidence is getting better, but there is still a lot of debt being reduced.”
However, according to a different Bloomberg Business article, May experienced the highest gain in household spending in almost six years. As the U.S. economy is based heavily on consumer spending, both the stock market and economists see this as a positive sign. Despite the unexpected fuel cost bonus, housing savings rate has been in a tailspin, falling from a two-year high of 5.7 percent in February, and currently sits at 5.1 percent. Many economists are expecting it to slip below 4.5 percent.
With U.S. consumer spending and savings in a state of volatile flux, having an extra financial cushion by way of a small business loan can help keep your business in good standing.