Economy Watch: Gas Prices Still in Freefall
- Dec 09, 2014
World oil markets are on track to give U.S. consumers an even better price for gasoline in the very near future, according to a report released by AAA on Monday—a holiday bonus of sorts. The national average price for regular unleaded gasoline could test $2.50 by Christmas, the organization said, and likely will fall to their lowest level since 2009 in a matter of days (on Monday, the average per gallon was $2.668).
After exceeding $4 a gallon during the expensive summer of 2008, prices crashed with the sharp drop off in demand ushered in by the recession, falling below $2 a gallon. AAA isn’t predicting a drop that far this time, but considering that the U.S. economy is healthier than it’s been since the 2008, the domestic economy isn’t the driving factor behind lower prices—instead, it can be chalked up to lessening demand in places such as China, along with higher production worldwide in recent years.
The price at the U.S. pump has already tumbled by more than one dollar ($1.03) since the 2014 peak of $3.70 per gallon in April. The national average has dropped a dime from one week ago; 27 cents from one month ago; and 60 cents per gallon from the same date last year, according to AAA. For its part, crude oil dropped about 4 percent on Monday, to a new five-year low.
Consumer credit growth slows down
The Federal Reserve reported late last week that the annualized growth rate of consumer credit dropped unexpectedly—it’s been generally moving up recently—from 5.7 percent in September to 4.9 percent in October. Both revolving and non-revolving credit saw their growth rate dip, with revolving off 0.6 percentage points and non-revolving off 0.9 percentage points (to 1.3 percent and 6.2 percent, respectively, for October).
Total outstanding student loans, which have been growing prodigiously since before the recession, are still growing, though not quite as quickly. At the end of 2009, the total was $831.6 billion; by the end of 2013, the total was $1.223 trillion. As of October, the outstanding student loans totaled $1.307 trillion.
As a lending vehicle, pools of securitized assets have yet to recover from the recession. According to the Fed, the pools held $441.9 billion at the end of 2009. As of October 2014, the pools held $28.1 billion, a level that’s been more-or-less steady for some years.
Wall Street took a dip as well on Monday, with the Dow Jones Industrial Average off 106.31 points, or 0.59 percent. The S&P 500 was down 0.73 percent and the Nasdaq declined 0.84 percent.