NEW YORK — The U.S. government projects that American households will save on average $700 this year on gasoline, as the price of a gallon of gas has fallen by nearly $1.50 from its peak of $3.70 in April 2014 and is projected to remain low through 2015. But who feels the biggest increase in spending power? How much of that extra money do consumers spend, and what do they spend it on?

Until now, the answers have come from surveys or estimates based on aggregate data and has indicated that less than half of the money saved at the pump was spent; however, the JPMorgan Chase & Co. Institute, New York, has issued a report, How Falling Gas Prices Fuel the Consumer, which shows that individuals are spending approximately 80% of that extra money. With lower gas prices expected to last through the year, this extra disposable income is fueling consumer spending on categories other than gas, said the report.

The institute’s data, drawn from 57 million Chase regular debit-card and credit-card customers, illuminated the effects declining gas prices had across the United States.

Findings

1. Gas spending and the savings associated with gas price declines varied dramatically among U.S. individuals.

Median Americans spent on average $101 per month on gas between December 2013 and February 2014 when gas prices were high. High-gas spenders (the top 20% of gas spenders) spent $359 per month on gas using their credit and debit cards, more than triple the typical American, and low-gas spenders (the bottom 20% of gas spenders) spent only $2 per month, less than 2% of the typical American.

A year later, when gas prices hit their low point, the average American saved $22 per month on gas, but there was significant variation among individuals; 23% of the population decreased their gas spending by 50% or more, and 16% increased their gas spending by 50% or more.

2. People in the South and Midwest spent more on gas and saw larger increases in disposable income when gas prices declined relative to those on the East and West coasts.

People in the South and Midwest spent more on gas and saw larger increases in disposable income when gas prices declined relative to those on the East and West coasts. In the Midwest and South, “higher-impact states,” people saw the largest percentage declines in gas prices and gas spending as a fraction of income. In the East and West, “lower-impact states,” people saw smaller drops in gas prices and gas spending as a fraction of income. Initially, people in higher-impact states typically paid lower gas prices and consumed more gas than people in lower-impact states.

3. Savings at the gas pump represented more than 1% of monthly income for low-income individuals and disproportionately impacted younger Americans.

Although gas spending was highest among men, 30 to 49 year olds, and high-income earners, spending on gas represented a larger share of income for men, 18 to 29 year olds and low-income earners than for other individuals as a whole.

Notably, the recent low point in gas prices in January 2015 yielded gas savings that represented 1.1% of monthly income for low-income individuals, equivalent to 1.6% of monthly income when projecting total gas spending and not just credit-card and debit-card transactions.

4. Individuals spent approximately 80% of their savings from lower gas prices. For every dollar less spent at the gas pump, individuals spent about 80 cents (72 to 89 cents) on other things. Almost 20% of the gas savings were spent at restaurants, but department stores, entertainment and electronics and appliances also saw significant gains, the report said.

Conclusions

JPMorgan Chase concluded that people are spending their savings from the pump to a greater extent than previously thought, and that the recent gas price declines are fueling growth in personal consumption in non-gas categories.

The institute found evidence that the gains in discretionary spending from lower gas prices disproportionately accrue to low-income individuals, young people and the Midwest and South, where people tend to spend more on gas.

Drawing from a universe of more than 57 million anonymized customers, the institute created samples of 25 million regular debit-card and credit-card holders and one million core Chase customers to shed new light on the effects of gas price decreases on consumer spending. It examined spending behavior as prices dropped 45% to their recent trough in January 2015 to determine who experienced the biggest increase in spending power, how much money they spent, and what they bought.

Click here to view the full report.