ONE of the great non-events in the global economy in the past 18 months has been the failure of consumers in the developed world to spend enough of the windfall from a falling oil price to generate a powerful boost to growth.

In the US and Japan households have saved much of the increase in income stemming from cheaper oil. The potency of the windfall in the eurozone has not been enough to obviate the need for extreme monetary easing, including negative interest rates.

Explanations are not hard to find. With a large energy sector, the US has sustained a significant hit to investment. At the same time, deleveraging in the aftermath of the financial crisis and worries about an uncertain future have blunted Americans’ urge to spend.

The incentive to spend the windfall is reduced because consumers do not fear prices are about to rise

In Japan, the increase in the consumption tax in 2014 took away more from consumers than the oil windfall delivered.

As for the eurozone, austerity still reigns and animal spirits are at a low ebb.

Economists at the International Monetary Fund, meanwhile, argue that what brought about past windfalls was not just the falling oil price but its combination with falling interest rates. The trouble today is that rates had already declined to extremely low levels before oil caved in.

With interest rates low, the incentive to spend the windfall is reduced because consumers do not fear prices are about to rise. They may also seize the opportunity to save more because, in a low interest world, a bigger pot of savings is needed to achieve a given target return on investment.

Is it possible that the windfall effect has simply been delayed and that the dynamics of the transfer of resources from oil producers to consumers is about to change?

Maybe, but it is hard to see much happening in Japan, where massive quantitative easing has failed to break the deflationary psychology and not managed to prevent an appreciation of the yen in recent weeks.

The eurozone would be a more natural place for oil-induced buoyancy because, unlike the US, it is not struggling with the burden of a big energy sector. By the same token, if it was going to happen in Europe it would surely have happened by now.

The US is where the case might be arguable. Recent labour market data offer some hope of more buoyant consumption. Note, too, that while households’ savings continued to rise as oil prices fell further in January and February, consumers did not pull in their horns as they had done previously. Spending growth picked up.

The fall in retail sales in March, driven by a decline in auto sales, does not help the thesis, but it could be rationalised by reference to tightening financial conditions and the prevailing fear of recession that has since waned.

Also helpful is the weakening of the dollar against the yen and the euro, which enhances earnings prospects in the corporate sector. Until recently, capital flows danced to the tune of currency manipulation by central banks.

But as I have noted here before, markets have recently taken to neutralising competitive devaluations. And as Benn Steil and Emma Smith of the Council on Foreign Relations point out, the markets now seem to be reacting rationally to movements in interest rate differentials.

Though the policy rates of the Bank of Japan and the European Central Bank have fallen well below the federal funds rate, US inflation readings have been on an upward trend. This has pushed real inflation-adjusted US policy rates below those in Japan and the eurozone.

Though the ECB has been ploughing deeper into negative rate territory, falling eurozone inflation means that real eurozone rates have risen this year. So the yen and the euro are not just havens in a storm. Rate differentials make Europe and Japan attractive destinations for savings and are a cause of dollar weakness.

Given that inflation in the US looks set to rise faster than in Japan or the eurozone, dollar weakness may be with us for some time — though that assertion has to be accompanied by the standard health warning that attaches to all currency forecasts.

Does this add up to a case for a bigger windfall effect to come? Not, I’m afraid, a wholly convincing one — the headwinds are just too powerful at present.

john.plender@ft.com

Published in Dawn, Business & Finance weekly, April 25th, 2016