By Arlenys Tabare
This Thursday, the price of gasoline in the United States reached $4.55 per gallon, one of the highest levels since July 2022, according to data from the American Automobile Association (AAA).
since it started The war in Iran at the end of February, the average price of gasoline has skyrocketed by more than 50%mainly due to the closure of the Strait of Hormuz, through which about 20% of the world’s crude oil transits.
And due to economic pressure, many low-income American households have begun to drastically reduce fuel consumption, which has added to high household expenses due to inflation.
New data from the Federal Reserve Bank of New York indicates that currently it is middle class households that are somewhere in between, since, for some economists, the spike in prices only aggravates the trend of the so-called “Okay-shaped economy”.
The dizzying increase in American pumps is only worsening the economic gap between one class and another, the New York Fed report highlighted. “We found that households had very different experiences when it came to spending on gasoline,” the researchers wrote.
In the analysis, the economists pointed out that “given the drastic increases in gasoline prices in March, an OK-shaped pattern emerged in fuel consumption, which shows faster growth in consumption in high-income households compared to low-income households.”
According to the report, Households with incomes less than $40,000 spent 12% more on fuel and reduced their consumption by up to 7%, that is, many chose not to use their vehicles, share a car or used public transportation, while Households with higher incomes of up to $125,000 increased their gasoline expenses by 19%, but they reduced their consumption by 1%, making few changes in their daily dynamics.
According to Fed data, higher-income households cut their consumption more during the Ukraine-Russia war than now; and on that same date, many low-income households turned to state benefits to cover their expenses.
Keep reading:
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- The US is showing signs of an “Okay” economy: what does it mean?
- Nearly 3 in 10 US households live paycheck to paycheck: report
