Record-high gas prices are hurting Americans’ spending, says JPMorgan

Record-high gas prices are hurting Americans’ spending, says JPMorgan

In a report first shared with CNN, JPMorgan analyzed spending data from Chase cards and estimated that the 20% increase in gas prices since the start of the war in Ukraine reduced non-gas consumption by about $9.6 billion per month lowers.

“Despite the buffer of excess savings, elevated gas prices still appear to weigh on real consumption,” US economist Peter McCrory of JPMorgan wrote in the report.

The bank noted that it takes time for the impact of high gas prices on consumer spending to accumulate, with the drag only becoming apparent two to three months after gas prices rise.

“This means real consumer spending growth could be choppy 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.

Gas prices soar to new record highs

Demand at the pump isn’t falling, at least not initially when prices rise, JPMorgan said. But that means some families are being forced to pull back on other expenses to make ends meet and avoid diving into savings or incurring debt.

JPMorgan estimates that every $1 of additional gas spending after a price increase reduces non-gas consumption by $1.60.

After three straight days of all-time highs, the national average for regular gasoline fell a penny to $4.43 a gallon on Friday, according to the AAA. That remains 15 cents higher than a week ago and $1.40 higher than a year ago.

Pump prices were already elevated in February when Russia’s invasion of Ukraine pushed them even higher. The war and sanctions have strained energy supplies from Russia, the world’s largest oil exporter.

Pain at the pump is not felt equally across the country.

JPMorgan said high gas prices impose “greater hardship” on families who are less able to adjust their consumption.

Chase map data shows 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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