Gasoline Spending In America Hasn't Been This Low In 11 Years

Expenditure Forecast

The expenditure forecast is not surprising given the drop in oil prices. 

West Texas Crude 

I commented on oil factors in What's Behind the Plunge in Oil? Winners and Losers? Boon to Spending or Recessionary?

Short and Longterm Factors

1. Slowing global economy, especially China and Europe
2. US production expansion
3. OPEC pumping above quotas - they all cheat
4. Iran embargo failing
5. Increased fuel economy
6. Attitudes of millennials towards cars and driving

I give heaviest weight to number one, but they all cascade. Points 5 and 6 play out slowly over time. 

At some juncture, point 6 will reverse from being a drag on consumption to an expansion of consumption, but that could take a long time. Demographic attitudes take a long time to peak. 

Boon to Spending or Recessionary? 

Credit Suisse Group economists think cheaper oil will make "Fed tightening in the first half more likely." 

Is it that simple? I think not, siding with Early Slowdown Signs Emerge for U.S. Oil States After Crude Slide.

View on 2015

The energy shakedown, currency volatility in numerous countries, a slowdown in China, numerous Eurozone problems, and bubbles in bonds and equities do not bode well for 2015.

Mike "Mish" Shedlock