Rick Pendergraft says you shouldn’t underestimate the lift that tumbling gas prices can give consumers in 2009. Compared to the $4 a gallon peak in July, drivers will save $162 billion a year at today’s prices. Add that to a boost in confidence from the Presidential changeover, and Rick says a slow recovery could be on the horizon.

This from Investor’s Daily Edge:

This past May I wrote an article for Unplugged entitled “81 Billion Reasons Why Gas Affects The Economy”. In that article I talked about how much rising gas prices were siphoning out of the economy each year. Well now the opposite reaction is happening.

Here is the meat of that article:

According to the Bureau of Transportation Statistics, there were 135,399,945 licensed automobiles in the United States as of 2003. The owners of these vehicles have less money to spend as the price of gas has soared in the last six months. What impact does this have on the economy – and on your investments? Let’s do the math and find out.

If the average driver drives 1,000 miles per month and gets 20 miles per gallon, they are using 50 gallons of gas per month. According to the Department of Energy, the national gas price has gone up $1.00 on average since October. That means the average driver has $50 less per month to spend on items other than gas. This may not seem like a huge difference, but let’s take the next step.

Multiply the number of cars nationally (135,399,945) by $50 per month. That’s an additional $6,769,997,250 going into our gas tanks each month and not getting used for other items. That is $81 billion on an annual basis.

Fast- forwarding to today, we see that the average gas price has fallen from over $4 a gallon to under $2 a gallon. So let’s take the same math from the article in May and carry it out to see how much American consumers are saving thanks to the fall in gas prices.

---

INTERNAL ENDORSEMENT Stock Market Shocker: How a Bunch of 5th Graders Made Fools of the Trading Elite…! Wall Street wants you to believe that you have to entrust your money with the professionals and all their skills, resources and systems, if you want to make money in the markets. It’s what these guys do for a living! How could you possibly beat them?! Nothing could be further from the truth. In fact, I have used an embarrassingly simple secret to make $15,048 in just 30 days… and boost my overall account balance 152% in less than a year. Keep reading to learn how you could join me each month…

---

If the average for gas was $4, and the average driver used 50 gallons of gas, this would mean $200 a month for gas. Now we see $2 gas, so the average driver is spending $100 per month for gas. Now take this times the number of cars nationally (135,399,945), and you can see that overall consumers have the ability to spend $13.5 billion per month on items other than gas.

Do you think this might stimulate the economy? You bet it can. Over $162 billion annually to be spent on something other than gas, combined with a little boost to consumer confidence with the leadership change in January, and I think you see the U.S. start the recovery process in mid-2009.

I have used round numbers in this example in order to keep it simple, but the amount of money that has been freed up thanks to oil and gas tanking is astounding. A few weeks ago during a CNN radio interview, the host asked me where consumers were going to get any money to spend this holiday season. I would say that a potential boost in spending of $13.5 billion would make this holiday season a little brighter for retailers.

Expectations are pretty dire for the retailers, and with good reason. But if the actual numbers come in at or above expectations, we could see the overall market rally and this in turn would provide another boost in consumer confidence.

The hill is steep, so the economic recovery isn’t going happen overnight, but the ball could be rolling up the hill now.

Source: 162 Billion Reasons The Economy Will Improve In 2009