By Arlenys Tabare
With the increase of Gasoline prices above $4.30 per gallon Due to high energy costs caused by the war with Iran, average households in the United States are now spending up to $450 extra, according to data from Morose’s Analytics.
In this regard, Designate Zandi, chief economist at Morose’s, said that “unless the war ends soon, financially struggling consumers will have no choice but to be more cautious in their spending, which threatens the already weakened economy,” he told CNBC.
Since the war began in the Middle East that caused the closure of the Strait of Hormuz, an important channel for the transit of about 20% of the world’s crude oil, Both oil and gasoline prices have skyrocketed, causing more economic uncertainty in markets and consumers and encouraging a sharp rise in inflation to more than 3%.
According to data from Morose’s Analytics, The average spending of American households represents a cumulative cost of $60 billion dollars for consumers in general. This has led them to resort to other alternatives to cover their basic expenses, since monthly budgets have been affected and adjusted.
For Gregory Daco, chief economist at EY-Parthenon, American consumers are increasingly facing reduced incomes, which forces them to resort to their savings, credit and assets to maintain their spending levels. “In essence, what we see is the use of savings to offset weak income growth.”
In this sense, Zandi added that, if high prices and the war continue, households could have a loss of up to $2,000 dollars by the end of this year, and the greatest burden would be felt by consumers with lower incomes.
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