Rising gas prices crimp Americans' spending
Higher gas prices are crimping consumer spending and slowing the already-weak U.S. economy. And they could get worse in the coming months.
The Federal Reserve this week took steps to boost economic growth. But those stimulus measures are also pushing oil prices up.
The impact of the Fed's actions "is likely to weigh on the value of the U.S. dollar and lift commodity prices," said Joseph Carson, U.S. economist at AllianceBernstein. "We would not be surprised if (it) fueled more inflation in coming months, squeezing the real income of U.S. workers."
Americans are already feeling pinched by high unemployment, slow wage growth and higher gas prices.
Consumers increased their spending at retail businesses by 0.9 percent in August, the Commerce Department reported Friday. But that was largely because they paid more for gas. Excluding the impact of gas prices and a sizeable increase in auto sales, retail sales rose just 0.1 percent.
Gas prices have risen more than 50 cents per gallon in the past two months.
"Consumers were not willing to spend much at the mall since they are feeling the pump price pinch," said Chris Christopher, an economist at IHS Global Insight.
Higher gas prices are eating up a bigger share of Americans' incomes than in previous years. Spending at the pump accounts for 8.2 percent of the typical family's household income, according to Fred Rozell of the Oil Price Information Service.
Those represent the biggest slice of household income spent on gas since 1981.
Average gas prices are higher this year than last year. But Americans are using less by driving more fuel-efficient cars and driving less.
Meanwhile, average wages, adjusted for inflation, have been flat for the past year, the Labor Department said Friday. That adds to the squeeze on consumers.
One silver lining is that weakness should eventually push prices back down, economists note. That's because people cut back on oil and gas consumption when prices rise.
"Unless the economic data rapidly improve, the gains in oil ... prices are unlikely to be sustained," Julian Jessop, an analyst Capital Economics, said.
The last two sentences are not true because the oil thug industry now exports most of the Gasoline produced at the U.S. Refineries to the rest of the world at extreme profit.
They couldn't give a sh!t about the U.S. market.
Gasoline is the number one export product from the United States.
Americans are subsidizing the rest of the world so they can have cheap gas.