It's like a big 'middle class tax cut'

Dec. 11, 2014, 4:27 PM UTC

By Steve Benen, Steve Benen

When I wrote about gas prices early last week, the average price for a gallon of gas in the United States was $2.77. As of this morning, it's $2.62, and plenty of industry analysts believe the price isn't done sliding yet.

It's against this backdrop that Goldman Sachs said something interesting yesterday.

Tumbling gas prices will translate to a "consumer windfall" of up to $125 billion, expanding economic growth, according to new analysis from Goldman Sachs Global Investment Research. [...] The drop for gas prices can be considered a "middle class tax cut," as these households devote a greater share of their total spending to gasoline than other families, according to Goldman. Still, American families across the income spectrum should see fatter wallets. "Households at all income levels devote a sizable share of their budget to gasoline each year," Goldman Sachs analysts wrote.

Even in an economy as big as ours, $125 billion is a serious chunk of change. Of course, this is arguably superior to many tax-cut proposals, since the benefits will be felt more broadly and with greater speed (and it won't add to the deficit).

Meanwhile, the Associated Press this morning notes another consumer benefit: slightly more affordable airline prices.

Flying could get cheaper next year as airlines say they will finally start passing on some of the savings made on plummeting oil prices. Carriers are forecasting record profits for 2015 thanks to cheaper fuel and rising demand. As a result, they expect to cut the average ticket price by 5 percent in 2015, excluding surcharges and taxes.

As for all of the Republicans who spent years insisting that President Obama created higher gas prices on purpose, they seem to have far less to say on the subject now. Imagine that.