Consumer Spending on Energy
Today’s release of personal income and expenditure data was about as expected and the January-February data suggest that first quarter real personal expenditures component of the real GDP account will show about 2% real growth.
But the energy expenditures within the data has been little noticed. Normally rising energy prices dampen the economy. But this time around the warm winter, falling natural gas prices and conservation appear to be offsetting the negative impact of higher oil prices. Nominal expenditures on energy peaked at $676.8 billion in September, 2011 and fell to $610.5 billion in January,2012 before rebounding to some $636.4 billion in February, 2012. The drop from September to January was about 10% and even after the February rebound nominal consumer spending on energy was still some 6% below it’s September peak. So, contrary to the standard assumption it does not appear that rising oil prices is doing that much damage to economic growth.
As the chart shows, energy as a share of consumer spending was 5.78% in February as compared to the recent September peak of 6.24% and 7% at the July, 2008 peak.
Yes, we got lucky this year. This year! Let’s see what happens next year.
With that, the flower shop indicator corrolates with the Jan/Feb data. However, March has been a very bad month. Last October was our worst month in the 12 years of owning the shop. March is worse than October. My friend and key board player deli and catering found the same for March as did my friend and drummer auto repair.
Interesting post. Sort of a big personal consumption day here at AB.
Does the energy component in your graph include transportation gasoline purchases, as well as electricity, nat gas, and home heating oil?
The down-sloping trend line has piqued my curiosity.
Certainly, vehicles have become more fuel-efficient over the decades, and appliances have become more energy efficient, home better insulated, etc.
So, contrary to the standard assumption it does not appear that rising oil prices is doing that much damage to economic growth.
I think you need a longer view. Energy expenses have gone from 4 – 5% to 6-7% of the total over the last decade, and economic growth for the decade was the worst in the post WW II era.