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Power Play: Signs of a breakout in consumer spending

A shopper exits a Marshalls store in San Francisco, March 3, 2015.
David Paul Morris | Bloomberg | Getty Images

Oil prices have fallen about 50 percent over the past year and gasoline is down 36 percent, but this drop has not translated into a surge in consumer spending.

Michael Farr, president of Farr, Miller & Washington, believes a breakout in spending may be on the horizon.

"It usually takes about nine months to take effect. We should start to see it soon," Farr told CNBC's "Power Lunch" on Thursday.

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Watch Wal-Mart, Target and the dollar stores. "We'll see it in those stocks. Those companies will tell us first if the consumer is still cautious," Farr said.

He says consumers will have a lot more cash on hand, expecting the average U.S. household to see savings of between $750 and $1,500 due to the lower gas and energy prices.

WTI down more than one percent, while Brent is off half a percent during trading.