We (economics instructors) told you so. Jeffrey Sparshott
What was the American response to cheap gasoline? Buy more gasoline.
That’s at least part of a fairly nuanced picture the J.P. Morgan Institute found after analyzing (anonymized) transaction records from 1 million of the bank’s credit and debit cards.
When crude oil prices plunged in 2014, many economists and analysts expected households would splurge, offering a boost to consumer spending numbers and helping support the economy. Instead, the results were mixed and evidence of a cheap-oil dividend often elusive.
Federal Reserve Chairwoman Janet Yellen last month estimated the sharp fall in gasoline prices worked out to an average $780 in savings per household last year and another $420 through May of this year.
J.P. Morgan’s think tank found more modest, but still significant savings among its cardholders in 2015.
“Households had the potential to save $630 at the pump, of which they spent the majority—58%. This spending provided more than a $200 boost to spending on non-gas goods and services, primarily restaurants and retailers. The lower gas prices also caused significant changes in household transportation choices, leading people to spend $150 more at gas stations and spend less on transit.”
via blogs.wsj.com
The article goes on to say that the macroeconomy didn't get a big injection from lower gas prices since gas is a small fraction of consumer spending. Flip that around and you might argue that a higher gas tax won't be a "job killer."
