#$rds

Summary: We’ve found where Americans are spending their gas savings this year: they are buying more gas because they are driving more.  Miles driven – a monthly metric calculated by the Federal Highway Administration – are up 3.9% year over year for March 2015 (latest data available).  The six month rolling average is now 3.4% higher than last year, the best comp since June 2004 (3.6%), March 1997 (3.8%) and – gulp – June 2000 (4.3%).  Hitting the road means hitting the gas pump first, and gasoline consumption also up, to the tune of 2.8% year over year in March, and 2.6% on average for the last 6 months.  Again, that growth is more consistent with boom times like the 1990s and early 2000s.  So where are we all going?  The easy answer is “To work”, as 86% of Americans commute by car. The long run correlations between job growth and miles driven support that assumption.  The obvious bump in that road is that job growth has been slowing, so we are left with two possibilities. One, the survey-based employment data on which the Federal Reserve makes policy is undercounting actual employment growth.  And that means the Fed is way behind the curve.  And the other – Americans have rediscovered the joy of just cruising.  With no particular place to go. Call it “The Mystery of the Missing American Consumer”.  At the tail end of last year, most economists were dead sure that lower gasoline prices would spark a wave of incremental spending, as most periods of declining energy prices had in the past. Makes sense – less money at the pump means more money to spend elsewhere.  Except this mystery turned into something more akin to the Hound of the Baskervilles, where the central clue was the absence of a barking dog.  As is now painfully obvious, the American consumer took their gas savings, bypassed the mall, and just went home.