Continuing our discussion of the U.S. retail economic outlook, gasoline prices have been a double-edged sword for the retail economy. While higher gas prices boosted retail sales numbers last month, the higher prices have also begun to weigh on consumer spending other areas such as dining and discretionary purchases.
Lower pump prices are needed to keep the forward momentum in overall consumer spending intact. The recent pullback in the gasoline futures price is a start, but a decisive break below the technically significant 60-day moving average (see chart below) could pave the way for an even bigger (and economically constructive) decline. A violation of the 60-day MA would tell us that the interim forward momentum for gas prices has reversed.