As this week is a holiday travel week for many, I thought that a look at gas prices would be worthwhile. Currently the nationwide average is right around $2.25 / gallon up 25ç from this time last year. However, it was the summer of 2014 where you saw gas prices up in the mid $3 dollar range. This is a significant drop with the US Government predicting that the average American will save $700 a year at the pump, but that savings is the average and varies greatly across income levels, geography and age. In a report (found here) JP Morgan chase analyzed credit and debit card holder data and came to several finding:
- The greatest impact of falling gas prices can be found in the South and Midwest where drive times and the type of work performed influence total spending.
- The increase in purchasing power is at the highest at the lowest quintile of income and decreases fairly uniformly as income rises.
- The most important finding for the overall health of the economy is that approximately 80% of the savings from lower gas prices is spent on other goods.
So, if you are setting out with the kids to grandma's house this week enjoy the lower prices and buy an extra present with the extra cash. The consumer discretionary sector will thank you.