Affordable gas is emitting positive economic vibes

Three sights that’ll captivate you forever: fire burning, water flowing, and gas prices dropping. The last one is now easy to spot countrywide, with a gallon of regular going for $3.14 on average this week—the lowest it's been all year and down from $3.87 in August.

Since driving a gas-guzzler is as American as apple pie, smaller receipts at the pump go a long way toward keeping Americans’ cost of living at bay.

Consumers feel more at ease

The Bureau of Labor Statistics said yesterday that, largely thanks to cheaper gas…

• The Consumer Price Index rose only 3.1% year over year in November, and just 0.1% from the previous month.
• The monthly price growth is on par with the no-increase reading in October, and lower than it was in preceding months.

After months of sagging consumer confidence, waning inflation might be making the public more optimistic about what the future holds. A recent University of Michigan survey showed that Americans have a more upbeat outlook about the economy and their own finances compared with last month and this time last year.

Why is gas cheaper now?

Cheaper oil is the short answer: Prices have been falling on lower demand from China and the US, coupled with more supply from increased stateside production. Enhanced extraction methods are helping the US pump a near record number of barrels. Plus, the Biden Administration has expanded drilling permits, which could further boost American oil.

But while Biden is eager to show voters that he’s the ultimate inflation tamer worthy of re-election, he’s kept mostly mum on why gas is cheaper. More oil drilling on US soil is at odds with the wishes of many of his eco-conscious supporters.

Inflation wasn’t so rosy under the hood…Prices for all goods and services excluding volatile food and fuel grew at a faster pace in the fall than during the summer months. Rent prices also jumped, and while fueling a car might’ve become cheaper, buying a used one became a little more expensive in November. This complicates the Fed’s inflation fight, and might make it less inclined to lower interest rates soon.