When you can expect gas prices to be under $3

Transcript:

Conway Gittens: I’m Conway Gittens reporting from the New York Stock Exchange. Here’s what we’re watching on TheStreet today.

Wall Street is taking a disappointing jobs report in stride. The U.S. economy only added 142,000 jobs in August, that was less than the 160,000 jobs expected but higher than the downwardly revised 89,000 for July. Investors are taking comfort, however, in the first drop in the unemployment rate in five months to 4.2 percent. All together the report leaves the door open for a modest interest rate cut by the Federal Reserve when it meets in September

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In other top news…inflation is still a problem but there are fresh signs that it is loosening its grip. The average price to fill up at the pump hit $3.31 during the first week of August, according to AAA. That’s down 50 cents from a year ago and the lowest price we’ve seen in six months.

The good news doesn’t stop there. Americans could see average gasoline prices drop below $3 by Thanksgiving, according to Patrick DeHaan of GasBuddy. “As long as we don’t see a major hurricane head into the Gulf and the situation improves in the Middle East, the national average could fall below $3 in the next two months - GasBuddy is already tracking eight states at that level or lower.”

So why are gas prices falling? Number one: It’s seasonal. Gas prices typically drop this time of year as Labor Day marks the end of the peak summer driving season. Number two: It’s global. Right now the global market is oversupplied and oil demand is weak around the world. The law of supply and demand dictates that when supply is high and demand is low, then prices fall.

The drop in gasoline prices has wider implications for your wallet. Elevated energy costs originally fed into the inflation spike that prompted the Fed to hike rates to a 25-year high. Now that the reverse is happening, the Fed has room to lower interest rates, which means cheaper borrowing costs for mortgages, car loans, and credit cards.

That’ll do it for your Daily Briefing. From the New York Stock Exchange, I’m Conway Gittens with TheStreet.

Related: You may be filling up your car with the wrong gas