The Consumer Response to a Year of Low Gas Prices : Evidence from 1 Million People

In this report the JPMorgan Chase Institute examines administrative data on the everyday spending behavior of a random, de-identified sample of one million core Chase customers across 23 states to quantify the impact of an entire year of lower gas prices in 2015. First, we show that middle-income households spent about $480 less on gas in 2015 than in 2014, the equivalent of more than a one percent increase in annual income for 60 percent of households. Second, seventy-two percent of households spent less on gas in 2015 than in 2014. The drop in gas spending between 2014 and 2015 varied across the country, with lower impacts felt in the West and urban areas of the Northeast. Households had the potential to save $630 at the pump, of which they spent the majority — 58 percent. Third, this spending provided more than a $200 boost to spending on non-gas goods and services, primarily restaurants and retailers. Finally, the lower gas prices also caused significant changes in household transportation choices, leading people to spend $150 more at gas stations and spend less on transit. These findings can help policymakers and other decision-makers at all levels better understand the effects of gas price declines across regions, income levels, and sectors of the economy