Sorry about the title… but what can I say? Bathroom humor is funny! Besides, I really did fill up my gas tank today!
Thankfully, gas prices fell nationwide yesterday for the 78th consecutive day. Flowing down to roughly $1.81 per gallon, the average price at the pump is less than 50% what it was at its high point last July.
I know that gas prices vary by location, but the cost of filling up your tank is still a newsworthy story. Why, you ask? Because of a little something called the Wealth Effect — the tendency for folks to spend more money when they have the perception that they are worth more.
Think about how you felt and what was running through your head when you last filled up your tank at prices above $3.00 per gallon. I know my mind was on some rather worrisome things. However, when gas prices drop… we get become happier! I felt pretty darned good today after filling up the Civic. Call it a dose of petroleum Prozac, but it’s a fact that lower gas prices do increase the Wealth Effect, leading to higher nationwide consumer spending (read – consumer confidence) levels — the primary driver of the U.S. economy.
Perhaps the only thing that is more important than the Wealth Effect is the Reverse Wealth Effect. This occurs when consumers feel as if they are worth less (financially speaking – not as people) and their spending reflects it. While King Richard III mourned the “winter of our discontent,” this past June – August we lamented the “summer of our reverse wealth effect.”
Gas prices forced us to map out strategic routes like we were in the special forces, the troubles on Wall Street had us sweating bullets, and the constant barrage of negative campaign advertising kept all that was wrong with our economy at the time right in front of our faces. Consumer confidence during this time was, to put it lightly, low. Retail sales figures plunged in September and October, as soon as the elections were over, gas prices fell, and come November – a cool optimism returned.
This heightened sense of optimism matters to the mortgage and real estate industry because consumers who feel less stress about the state of their wallets… begin to feel more “wealthy…” tend to do things like make “move up” home purchases, buy new appliances, and take other actions to help this lurching beast of an economy inch itself slowly forward.
Oh, and mortgage rates trolling at 3-year lows certainly helps, too.
(Image courtesy: GasBuddy.com)
THE FLORIDA HOME LOANS SPECIALIST
I hope you enjoyed this article. As your Florida Home Loans Specialist, I’m here to answer any questions you might have about the mortgage industry. If I can help you locate financing for your Florida home purchase or assist you with a refinance, please do not hesitate to contact me at 863-604-3019.
I hope you found this post useful! As always, if you or anyone you know is in need of a local Florida mortgage loan originator, I’m your guy. Call me at 888-859-7418 or apply online for your Florida mortgage. We’ll keep you posted and let you know when it’s time to pull the trigger!
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