Changing Relationships?

The fall season is likely to bring some headwinds for the consumer. Several estimates suggest "excess household savings" from Covid stimulus appears to be exhausted. And the lifting of the moratorium on student loan payments could add additional pressure on consumer budgets.

The latest pressure may be coming from rising oil prices. And people notice when gas prices go up. High price sensitivity is likely to affect their consumption behavior.

But for the moment, the rising oil price doesn't appear to be translating into higher gas prices. The correlation between the two has dropped significantly, at least for the moment.

The question is whether or not this will continue? Oil is obviously the biggest factor in determining gas prices, so I doubt such a disconnect can continue.

And the pressure comes at a delicate time. With the previously mentioned headwinds likely to be influential on their own, adding another sensitive pressure point like high gas prices is not going to help.

I've felt the various imbalances/anomalies in the broad data have created a house of cards, but the foundation has proven rather resilient to table wobbles.

Summer travel should be abating soon and the time to buy Christmas presents is approaching. So maybe those things will help balance oil supply cuts and support consumption. There are certainly cross-currents to navigate in the coming months.