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As gas prices marched to $3.30/gallon in Chicago (and $3.00 around the rest of the country) starting last Winter, market players feared how consumer spending would be impacted.

• Would retail sales be harmed?
• Would inflation overtake the markets?
• Would ethanol replace gasoline?
• Would hybrids outsell SUVs?
• Would gas hit $4.00/gallon and shut down consumer spending entirely?

And yet, consumers remained resilient and the spending continued. 

This confounded the experts, but on a common sense level, I don't think many people were surprised.  After all, since when did the new Consumer Culture bow down to anything?

Now that gas prices are coming down and consumers are no longer feeling as "tight", they seem to be taking a "newfound wealth" approach to their good gas price fortunes.  I'm not saying it's smart, but we can't deny that it's happening. 

For example, the August Retail Sales report was expected to show a decline because of the high gas prices.  Instead, it showed an increase.  Not so strange when you think about how Americans love to buy stuff. 

This report reminds us that Americans buy what they want, when they want them. 

It didn't matter that wallets were pinched by rising gas prices -- Americans still went out and bought the things they wanted to have.

And now that gas prices are falling, consumers will likely take the money they're saving on the gas "sale" and pump it right back into the economy.  We won't have data to back up the assertion until mid-October, but the prediction should be right on track.

As a mortgage shopper (or homeowner), this behavior is not your friend. 

More consumer spending propels the economy forward, and places pressure on the Fed to stop inflation by raising the Fed Funds Rate.  The FFR is not related to mortgage rates, but if the Fed says that it's concerned with inflation, mortgage rates run higher in response.

Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.