Looks like retail sales are still coming in strong despite the high gas prices. Hmm it seems that $3.00 gas may not as much of a killer for retail as some people think. For example I was thinking that most SUV gas tanks hold 20 gallons so that is $60 for a fillup with gas at $3.00.
But when these robust retail figures came out gas was averaging about $2.65 a gallon or so. So a fillup already cost $53. So if a person needs to fillup 3 times per week then they will need to pay $180 a week for gas. They are already paying $159 a week and were able to continue their robust spending. That $21 difference is like one less collar shirt at American Eagle, a meal at a sit down restaurant for one person, a DVD, or a a trip to a fast food place for the family.
However all bets are off when gas goes to $3.50 a gallon ($70 a fillup.) If they are filling up 3 times a week like above then they will be paying $210 a week for gas. That would be a $51 bite taken out of their paycheck every week. That means they will be going to one less family movie night, one less video game for the kids, 2-3 less trips to a fast food place (no fast food for the week maybe?), or one less credit card bill. In other words people may seriously cut back on purchases.
I hope the Fed has a certain number in their head when they feel gas prices will cut spending. That number for me would be $3.50 a gallon. I only fill up once a week and only half a tank (7.1 gallons usually) so I currenty pay $13 for gas. If gas prices went up to $3.50 I would pay $24.50 to fill up the same tank. For me that is an entire week of fast food lunches, three weeks worth of comics, or a hard backed book. I guess its ramen noodle time if we do see $3.50 gas.
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