• by Thom Forbes , December 12, 2014

Shopkeepers are rejoicing as gas prices continue to tumble, job figures improve and most other economic data point to a more robust economic picture than we’ve seen since the crash of ’08. We can add to that the breaking news that the House has approved a $1.1 trillion spending bill that will likely keep the government open through next September.

“Improving economy, low gas prices: Let the good times roll!” reads the hed over Bob Collins’ post on the Minnesota Public Radio blog. “When it comes to human behavior and the economy, everything old is new again,” he writes.

Collins points to new Freddie Mac and Fannie Mae mortgage programs that “are encouraging people to buy homes with almost no down payment” (with safeguards that weren’t there during the housing bubble) as well as the surge in sales in SUVs and pickups compared to cars like the Ford Fusion that are stingier on gas.

“Consumers are fairly optimistic,” Jay Stein, CEO of Stein Mart, a Florida-based chain of 275 discount-clothing stores, tells the Wall Street Journal’s Josh Mitchell and Suzanne Kapner. But, they write, “the outlook is by no means ebullient, and the choppy performance of consumers in recent years underscores the challenge.”

“Splurge is a word we haven’t heard in a while,” Stein tells them.

In fact, the plummeting price of gasoline seems to be good news in just about every neighborhood in the Republic except Wall Street, where plunging prices on Wednesday “took the stock market down with them,” the AP’s Steve Rothwell reported, and the three main market indices dropped 1.5% or more.

Yesterday, crude oil slipped below $60 a barrel for the first time in five years, MarketWatch’s Victor Reklaitis and Barbara Kollmeyer report, after Saudi Oil Minister Ali al-Naimi indicated that his country was not about to cut production.

His “comments again underscored Saudi Arabia’s intent to target market share, and not defend prices ‘in any way,’” Schneider Electric analyst Matt Smith tells Reklaitis and Kollmeyer.

Those comments “weighed on U.S. stocks” again yesterday, providing a countervailing wind to the Dow, which had been up “as much as 225 points on strong economic data,” the Wall Street Journal’s Nicole Hong and Josie Cox report. It still managed to gain 63.19 points on the day.

And this morning, the International Energy Agency lowered its forecast for global oil demand next year,” the AP reports, so look for more of the same reaction from investors if the pattern Minnesota Public Radio’s Collins perceives hold true.

“I don’t want to say this is Wall Street versus Main Street, but Main Street will see the positive effects in their pocketbooks while Wall Street’s more focused on the clouds rather than the silver lining,” UBS economist Drew Matus tells the WSJ’s Hong and Cox. 

Indeed, the economy appears to be “firing on all cylinders” Neil Irwin writes in the New York Times’ “The Upshot” after reviewing a 0.7% increase in retail sales in November “that came despite a sharp tumble in gasoline prices that reduced the dollar value of sales at gas stations by 0.8%.” 

The rosy numbers “could well be a fluke,” Irwin allows, but he doesn’t think so after looking at additional data. The only disappointing numbers he sees reflect factory orders — “a volatile series of data.”

Irwin cautiously concludes by offering a “resounding ‘No’” to the question of whether “bad tidings from the oil and bond markets was operating as an early warning system for some simmering weakness.”

The Los Angeles Times’ David Lazarus, however, sees a downside to the falling oil prices even though no consumer he found — including himself — is complaining about the trend.

Jonathan Rubin, an energy economist at the University of Maine, tells Lazarus that the public is “incredibly shortsighted” in that “there can be serious long-term consequences” to low prices. Other economists agree.

“Low gas prices can undo progress we've made in green technology," Chris Knittel, a professor of energy economics at the Massachusetts Institute of Technology, tells Lazarus. “People are less likely to adopt more fuel-efficient vehicles, and companies have less incentive to invest in new technologies.”

Asks Lazarus: “Look at it like this: Would crack addicts be able to kick the habit if the price of crack kept dropping?”