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It looks like gasoline prices, which have fallen under $3 per gallon for the first time in a little over a month and a half, are easing just in time for many Americans to finish up their holiday shopping. Hopefully this price decline will help ease the shock of next month’s credit card bills.
According to GasBuddy.com, the national average price for a gallon of regular unleaded gasoline now stands at $2.98 per gallon, down about three cents from the prior week and 11 cents from one month ago. Currently, Missouri has the lowest state-wide average price at $2.78 per gallon, while Hawaii is reporting the highest state-wide average price at $3.54 per gallon.
Unfortunately, it appears as if $3 gas is the breaking point for most Americans in terms of having their finances affected. According to a recent article on CNN Money, a large percentage of Americans say that when gas is at or above $3 per gallon, the amount of money they spend on discretionary items drops dramatically.
Of course, this isn’t good for the economy as consumer spending makes up nearly two-thirds of the American GDP. Even if consumer spending contracted by just a couple of percentage points, the ripple effects throughout the economy (both domestically and abroad) would be pretty big.
Higher fuel costs aren’t just hurting just consumers as companies such as FedEx are reporting lower corporate profits thanks to unexpectedly high fuel costs. With corporate profits one of the best indicators of the health of the economy, if we see more corporations reporting slower growth or declines in profits (something that I think is very likely) then we should really begin to worry about entering into a prolonged recession.
Once corporate profits begin to slip, I believe it’s inevitable that we’ll begin to see a softening of the labor figures. As long as people have jobs (and most importantly, money to spend) we should see a slowing of economic growth, not a steep decline. However, if more corporations and small businesses have to reduce their payrolls, then the economy should be in for a very bumpy ride for the foreseeable future.
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Pretty much right on Brian. We’ve been over 3.00 per gallon here for so long I can’t remember when we were under. I paid 3.08 yesterday to fill my Toyota Tac and that was the first time in recent memory she didn’t take a 50 spot. I actually read somewhere (can’t remember where now) that for the first time in decades North American Gas consumption actually fell for a reporting period (I think it was a week, but may have been a month) just recently and lots seem to think although the American Motorist may be slow to catch on, this last prolonged hike is starting to have a more holistic effect. Peace to you…and Happy Holidays!!
T
It what alternate universe is gas going down? In my town of Morgan Hill CA it’s still $3.23/gallon.
How cheap! 1 gallon = 3.7854 liter. For one liter gasoline here in germany you pay around €1.40 => 3.7854 liters cost $5.30 which is $7,79 U.S. dollars per gallon!
People here in Germany know the price will increase even further… Be prepared to pay around $8 in a few years…