American workers might not be getting much on the wage front, but they will see major benefits from falling gasoline prices, experts say.
Gas prices have plunged 29 percent since June 30 to a national average of $2.62 a gallon for regular Thursday, according to AAA.
If prices stay at that level, an average American consumer could save an average of $380 in the next year, compared with the $83 they would have saved at the price levels prevailing this summer, according to ClearView Energy Partners, The Wall Street Journal
IHS Global Insight also sees a big windfall for consumers — $750 on average per family. That dwarfs the $181 real increase in median income last year.
All this is good news given that average hourly wages rose only 2.1 percent in the 12 months through November, barely beating the 1.7 percent increase in consumer prices in the 12 months through October.
Goldman Sachs economists believe lower gas prices could create a $125 billion windfall for consumers, according to The Journal. In 2013, Americans spent $370 billion on gas.
The gasoline savings should boost consumer spending, which accounts for about 70 percent of GDP.
"It's a fair bet that most of the reduced energy costs are going to show up as added spending by consumers somewhere," James Hamilton, an economics professor at the University of California, San Diego, tells The Journal. Lower gas prices also tend to boost consumer sentiment in a way "that makes people more optimistic than the added cash in their wallet seems to suggest."
CNBC Senior Contributor Larry Kudlow certainly is enthusiastic. "This is a gigantic tax cut for the American economy," he told Newsmax TV
"It's not a marginal tax rate reduction, I'm just saying it has the same impact. People will have much more disposable income to spend on other goods and services, and the middle class needs that because they've not had big wage gains."
The oil price drop will be a boon for corporate America too, Kudlow said. "Businesses need this. . . . It is very pro-growth."
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