Cheaper gasoline prices saved low and middle-income households $480 last year, boosting their annual income by more than 1 percent, a new study says.
Those savings should be particularly welcome to American workers, who have seen wages increase at a glacial pace in recent years. That boost in disposable income from lower gas prices is nearly half the 2.5 percent increase in worker’s wages over the past year, according to the Labor Department.
Consumers put nearly 60 percent of the money they saved on gasoline purchases, back into the economy, according to the JPMorgan Chase Institute, a research arm of the New York bank.
“This savings at the pump benefited restaurants and retailers and contributed to changes in consumers’ transportation choices that we haven’t seen in five years,” said Diana Farrell, chief executive of the JPMorgan Chase Institute, in a statement. “People are driving more than using transit less.”
For each dollar saved by cheap gasoline, consumers spent 14 cents less on transit. They spent more than $200 of the $480 savings on other goods and services. And they actually increased spending on their trips to the corner gasoline station, by $155 – so without that increase, households could have saved a potential $630.
That’s less than the $700 the U.S. Energy Information Administration had estimated low gas prices would save households. The research group said it collected its data from 1 million people who bank with JPMorgan Chase & Co.