U.S. Consumers Not Out of Gas

It amazes me how resilient the consumer is in the face of nearly $4 a gallon gas.  I understand that fuel economy has improved and that Americans are driving less but vehicle manufactures are still selling more trucks than cars.  So where are people finding the ability to spend in the wake of these headwinds in addition to lower income growth?  


I feel as though I keep referring back to the extra boost the economy is getting with people not paying their mortgages.  You may hear the term "shadow inventory" which are those houses that should be in foreclosure but aren't due to the current banking system. But what about the "shadow economy" where people are able to live in there houses mortgage and rent free while they support consumer spending?


Via the WSJ

• Retail sales rose 0.8% in March from a month earlier, the Commerce Department reported Monday, just the latest in a string of reports that have prompted economists to boost their views of U.S. consumers' strength. The data now in hand suggest that real consumer spending grew at a 2.5% annual rate in the first quarter, according to Macroeconomic Advisers' tracking model. At the start of March, spending was on pace to grow by just 1.3%.
• Expectations that consumer spending would be anemic in the first quarter were to an extent based on a misconception of how much gasoline would matter on the one hand and some revised data on the saving rate on the other.
• But not as much as in the past. Improvements in fuel economy—the average vehicle sold in March got 24.1 miles to the gallon, according to the University of Michigan Transportation Research Institute, versus 20.8 four years earlier—are helping alleviate some of the pain at the pump. It also helps that people are outright driving less than they did before the recession struck and that low natural-gas prices have substantially reduced household-energy bills.