Significance
One of the conundrums of the US economy that will influence the Federal Reserve's timing of an interest rate rise (currently projected for September) is where the savings from low energy prices have gone. Oil prices have dropped sharply since September 2014, from 97 dollars per barrel for West Texas Intermediate in June 2014 to 60 dollars per barrel today. Yet US personal consumption expenditures (PCE) only grew by 2.7%, well below the rate of growth of personal income, 4.1%.
Impacts
Greater spending on petrol will help the Highway Trust Fund slightly, but not before a new funding package is due by July 31.
Low oil prices will outweigh consumer savings in such producing states as Texas and North Dakota.
Greater consumer spending will adversely affect the US trade balance, as imports will rise due to the strong dollar.