In the summer of 2008 and the fall of 2012, US consumers were spending over $400 billion on gasoline (and other motor fuels) on a seasonally adjusted annualized rate (SAAR) according to Bureau of Economic Analysis (BEA). As of the end of last year spending on gasoline is down to $251 billion, which outside of January 2015, is the lowest amount of spending since the summer of 2009, And since the average gasoline price (average between Los Angeles, NY Harbor, and the Golf Coast) has now fallen to its lowest level since December 2008, we can expect future spending on gasoline to continue to fall further.  The overall cost of energy for households has fallen from 6.05% of disposable income in 2008 to just 3.70%. The current percentage of disposable income spent on energy goods is as low as it has been at anytime since Spring 2002.

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The financial crisis seems to have shifted spending and savings patterns for US consumers to a certain degree. Instead of spending this $100-$150 billion energy savings, it looks as though households have been putting at least some of this savings away. The savings rate has increased from 4.30% in 2013 to 5.5%. The current level of the savings rate is below the average level since the financial crisis, however, it is higher than the savings rate was for most of the 1998-2007 period.

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If we step back and take a longer term view we can see the shift in spending and savings habits a little clearer. In the first chart below, we plot the 10-year annualized change in both personal consumption expenditures (PCE) and personal income. The latest data point shows that personal income has been growing at a 3.64% growth rate annually for the past ten years while PCE has been growing at a 3.27% annually for the past ten years. Two things really stand out from this chart. First, from 1977-2011 growth in spending outpaced growth in income nearly the entire time. However, since 2012, this relationship has switched. Second, income and spending growth are both basically growing as slowly as they ever have for any 10-year period since 1968.

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Lastly, if we calculate an alternative measure of the savings rate using data from the Flow of Funds we can see that the savings rate is about 8% points higher than it was right before the financial crisis. Consumers are back to saving about as much of their disposable income as they were in the early 1990s.


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