What gas prices do — and don’t — tell us about the economy

Gasoline is the only product in modern-day America whose price is listed on giant signs almost everywhere you go. Most people, even if they don’t drive, probably have a pretty good sense of what gas costs — currently averaging $5 a gallon nationwide.

The ubiquity and visibility of gas prices make them an easy shorthand for the rest of the economy, especially when they’re going up. And they often drive how people are generally feeling about the state of the economy and politics.

But gas prices aren’t really the best metric for understanding the broader economy. They’re very good for understanding the state of oil and refining but reveal less than you might think about the real-world impact on people’s lives.

There is a better, less alarmist measurement for understanding what’s happening to gas prices — one that shows that, even as gas prices near record highs, most households are still better off than they were in 2008.