Unleaded gasoline futures have fallen close to 20% since the end of June, leading to a rise in consumer spending and sentiment over that period.
The Commerce Department said Friday retail sales increased 0.6% in August, while July sales were revised higher 0.3% as Americans bought automobiles and a range of other goods.
On the same note, U.S. consumer sentiment rose in September to its highest level in over a year on a better outlook regarding the domestic economy.
The Thomson Reuters/University of Michigan's preliminary September reading on consumer sentiment came in at 84.6, the highest since July 2013, up from 82.5 in the final August reading.
Although economists fear that real wage growth may be holding back consumers, the significant decline in the price of oil creates the perception that more disposable income can be spent on items other than fueling one's car.
The chart below conveys how drastic a fall unleaded gas prices have experienced over the last two months.
As geopolitical conflict between Russia and Ukraine has calmed, dire predictions of violent intervention by western powers in the region have similarly diminished. This led to a strong decline in the price of oil, which has translated into falling U.S. gas prices. The price of gas now trades at its lowest level in 2014.
Consumer spending accounts for close to two-thirds of economic growth, which could lead to a stronger than expected growth reading in the third quarter based on Friday's consumer data.