Analysts at Deutsche Bank say the rule of thumb is that every 1-cent decline in US retail gasoline prices is worth about $1 billion in annual household spending.
Prices are down about 40-cents so that will give a $40 billion boost to the US consumer. That’s not much in an economy that spends $11 trillion a year but every bit helps.
It’s also notable that the Fed is lamenting the impact of the strong dollar but not talking about lower oil prices. Both are negative for inflation but it’s probably just a matter of oil holding near these levels before the Fed feels comfortable staying they will last.
