[subiesailor]

I have noticed something similar. It free wheels for a few seconds then re-engages the transmission to provide engine braking. I guess it's a tradeoff between efficiency & safety.

Nope you guys are off the mark

Fuel cut off feature now with many makes not just subaru causes much of this behavior.

When your under a specific speed the engine is running - when your at higher speeds and you coast ie no throttle input for a given period of time the fuel system cuts back to near zero these changes in fuel and engine behavior are generally felt given the transmission is connected to the engine all the time regardless.

Also the fuel systems in todays cars control just how fast fuel is fed and removed from the engine to avoid spiking emissions output - ie the electronic Nanny is tempering your throttle inputs to keep emission output on an even keel persay.

 

[subiesailor]

Then why does the immediate mpg reading stay at 99.9 until this happens at around 10mph and then it drops drastically as if you put your foot on the gas?

99.9 mpg is related to how fast your moving vs the fuel cut off feature the engine is still spinning and being driven by the transmission. When you get to 10mph fuel system comes back on and your speed is low resulting in a large drop in mileage fuel used vs speed your moving.