The U.S. economy has been on a bumpy ride this week, beset by debt-ceiling uncertainty, disappointing consumer spending numbers, a potential European debt crisis, and Thursday's 518-point plunge in Dow Jones Industrials. Amid widespread worries of a double-dip recession, crude prices also continued to fall, meaning that Americans may see a fringe benefit to the economic turmoil: lower gas prices.
Crude futures fell 5.8 percent Thursday, with prices declining $5.30 to $86.63 per barrel. Even today's better-than-expected jobs numbers couldn't break the market's pessimism, with prices at $87.04. The decline continues a four-month-long slump, with the price per barrel now nearly $28 lower than at its 52-week peak in May. Gas prices have largely followed suit. According to the American Automobile Association, the national average cost of a gallon of regular gasoline is currently at $3.70, down 5.3 percent from May's high of nearly $3.91, according to the Department of Energy. [Check out U.S. News Weekly, now available on iPad.]
All this indicates that the market believes the U.S. economic forecast to be gloomy enough that consumer spending—including gasoline purchases—will remain depressed. The Commerce Department reported on Tuesday that consumer spending fell by 0.2 percent in June, the first decrease in nearly two years. That reluctance may offset the benefits of sliding gas prices. The question now is whether that little bit of extra cash in their pockets will inspire American consumers to spend again, lending further fuel to the economic recovery.