Gas tax collections declined 3.6% in July. This followed increases in May and June but collections have mostly been trending lower as gas prices have risen. This is consistent with the EIA data on gasoline demand, which shows a trend of weaker demand (chart below).
The US EIA reports gasoline demand weekly with a lag of less than a week. This is another source of near real-time data, which the media ignores, that is useful as an indicator of how the economy is doing right now.
Here we see the weakness of most US consumers. Despite the tax cut and tales of job growth and a growing economy, demand was barely higher in the July peak driving season than July 2017. That followed a stronger June spurred by lower prices. May had been very weak and demand slowed again in July.
On an unsmoothed basis, the growth rate had peaked at 9% in January. But then gas prices began rising and the growth rate turned negative in March, and have turned even more negative here in August as the nationwide average price for regular gas hovered around $2.75 per gallon.
This behavior shows that demand is elastic and price constrained. With prices holding near the high, consumption is clearly trending down. It is another signal that the gains in top line economic data are attributable to gains at the top of the economic pyramid. The base is getting weaker. As the base is hollowed out over time, eventually the pyramid will implode.
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