You Got a Raise: at the Pump

American workers have been waiting years for a big raise. That bump is finally coming—at the gas pump.

If prices were stay at their current levels under $3 a gallon, the American consumer could save an average of $380 during the coming year, up from $83 since prices first declined this past summer, according to research firm ClearView Energy Partners. A separate estimate from IHS Global Insight says the average family could save $750 during the next year. By comparison, the median U.S. income grew by just $181 last year from a year earlier after adjusting for inflation.

The drop in gas prices has raised retailers’ hopes for a stronger shopping season, since less spending at the pump gives consumers more to spend on everything from restaurant meals to clothing and haircuts. The Commerce Department on Thursday is to release the first look at retail sales for November. In turn, lower gas prices combined with nascent signs of an increase in wages could provide fuel for a broader upturn in economic growth.

Rebecca Wagner, a radio sales executive in Utah, has been 
paying nearly $25 less per fill-up in recent weeks. 
Jud Burkett for The WSJ

It wasn’t long ago that Rebecca Wagner was paying $80 to fill up her Dodge Grand Caravan minivan. Last week, it cost $57. In an economy that’s offering few breaks, lower gas prices “have been a big benefit,” said Ms. Wagner, who has nine children at home.

Ms. Wagner, 31 years old, works as a sales executive for a radio station in St. George, Utah, and has to drive around town for daily sales calls. “If I’m paying more for gas, then I have to pay more to work,” she said.

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Regular gasoline fell to $2.64 a gallon in the U.S. on Wednesday, according to auto club AAA, near a five-year low. Gas prices have fallen more than $1 a gallon from their high in June and are down 60 cents from a year ago, the greatest year-over-year savings since 2009. AAA estimates that gasoline prices could fall to $2.50 a gallon by Christmas.

Across the economy, the drop in gas prices could generate a $125 billion windfall for consumers, according to Goldman Sachs economists in a recent research note. Americans spent $370 billion on gasoline in 2013.

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