Boost to spending from lower gasoline prices will be small

The recent decline in gasoline prices has prompted speculation that it could provide a very timely boost to real income and spending. Gasoline prices normally decline at this time of year, however, so the impact on the seasonally adjusted price and spending data is likely to be muted. It will add no more than 0.2% to annualised real consumption. Elsewhere, in the third quarter household debt registered its first meaningful increase since the financial crisis, as the recovery in housing prompted a rebound in mortgage debt. Auto loans is the sector that is growing fastest, which we presume the Fed would see as a vindication of its quantitative easing.