“Despite the buffer of excess savings, higher gas prices appear to be affecting real consumption,” JPMorgan US economist Peter McCrory wrote in the report.
The bank found that the impact of higher gas prices on consumer spending takes time to build up, with clouds not apparent until two to three months after the gas price hike.
“This means that real consumer spending growth may be volatile in the coming months,” JPMorgan said.
Consumer spending is the main driver of the US economy.
The problem is that gasoline is an essential purchase for many Americans.
JPMorgan said demand for the pump does not tend to fall, at least not initially, when prices are rising. But this means that some families are forced to step back from other spending to make ends meet and avoid indulging in savings or taking on debt.
Each dollar of additional spending on gasoline after the price hike cuts non-gasoline consumption by $1.60, according to JPMorgan estimates.
Pump prices were already high as February approached when the Russian invasion of Ukraine pushed them even higher. The war and sanctions have put pressure on energy supplies from Russia, the world’s largest oil exporter.
Pain at the pump was not felt equally across the country.
JP Morgan said higher gas prices were putting “more hardship” on households less able to adjust their consumption.
Chase card data shows that consumers in Arkansas and Missouri have increased their gas station spending the most since February, while spending in Connecticut, Massachusetts and New York has increased the least.
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