Wal-Mart Stores Inc., the world’s largest retailer, will report earnings Thursday, setting the tone for the retail sector's health during the holiday shopping season. U.S. retail spending fell more than anticipated at the end of 2014 despite a steep drop in gasoline prices across the country. Economists view retail sales as a key economic indicator since consumer spending accounts for nearly two-thirds of U.S. economic activity. 

The dramatic decline in oil prices since June sent U.S. crude oil prices plummeting to a five-year low, under $55 per barrel in December. The decline helped send U.S. gasoline prices down to an average $2.27 per gallon at the end of 2014, according to Gasbuddy.com. But contrary to expectations, shoppers didn’t take as much advantage of the boost to spending power from lower gasoline prices at the end of the holiday shopping season.

“Retail sales haven’t been quite as strong as we had been expecting,” said Gus Faucher, senior macro economist at PNC Financial Services Group.

Although critics have pointed to Wal-Mart’s declining foot-traffic as a sign of weakness, analysts say the company has compensated with sales increases in its booming e-commerce business. Investors cheered Walmart’s previous earnings report after the company posted a 21 percent increase in online sales in the third quarter and recorded a 2.9 percent increase in quarterly revenue.

“They’ve really revamped their e-commerce business and pulled back a little bit from brick-and-mortar. That’s certainly paid off,” said Christine Short, senior vice president at research firm Estimize.

One overriding theme this earnings season is likely to remain unchanged, however--even for Wal-Mart. U.S. multinationals are facing currency issues due to a strong dollar. Analysts forecast currency fluctuations could limit Wal-Mart's earnings growth because a stronger U.S. dollar isn't exactly good news when it comes to bottom lines for U.S. companies that derive a good portion of sales overseas. “I would expect Wal-Mart to report the same theme that we’ve seen with other retailers, and that’s currency headwinds,” Short said. 

Economists expect Wal-Mart to report adjusted fiscal fourth-quarter net income of $4.98 billion, or earnings per share of $1.53, on revenue of $132.36 billion, according to consensus estimates from analysts polled by Thomson Reuters. That compares with a profit of $4.4 billion, or earnings per share of $1.60, on revenue of $129.77 billion during the same period a year ago.

Estimize is forecasting the retailer to issue fully reported fourth-quarter earnings per share of $1.56 on revenue of $132.6 billion. 

The area where economists have seen stronger growth recently is the restaurant industry. Consumers are using some of the money they’ve saved from cheap gasoline prices and started using it to go out to eat more often, Faucher said. But economists do expect U.S. consumers to spend more in 2015, which is a positive for retailers, particularly for those retailers like Wal-Mart who cater to the middle to lower income consumer.

“Those are the people who are most stretched because they’re living pay check to pay check. If it cost them $10 less to fill up their car, then they’re going to spend some of that pretty quickly,” Faucher said.

Wal-Mart also expanded its selection of organic foods last year by using Wild Oats, an operator of natural foods stores and farmers markets, as its supplier. The company said in November it plans to sell organic food at the same prices it sells nonorganic food. "Wal-Mart has tried to cater to the organic and health food space so that lower income consumers can reap the benefits of something similar to a Whole Foods, which they wouldn’t otherwise have access to," Short said. 

Wal-Mart is scheduled to report fourth quarter earnings ahead of the opening bell Thursday. Shares of the retailer are currently trading around $85 per share ahead of the company’s earnings report. The stock has gained more than 13 percent in the last 12 months to $78.76, according to Reuters data.