How Much Will the Rise in Commodity Prices Reduce Discretionary Income?

Jonathan McCarthy

No 20110323, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: Commodity prices have risen considerably since August 2010, raising concerns that higher commodity prices could reduce households’ discretionary income and slow the recovery. For example, as former Federal Reserve Board Vice Chairman Donald Kohn said in the Wall Street Journal last fall: “… the surge in international commodity prices. If that persists it could hurt Americans’ disposable income, especially as it is reflected in higher gas and energy prices.” Is that concern warranted?

Keywords: discretionary income; Commodity prices; personal consumption expenditures (PCE) (search for similar items in EconPapers)
JEL-codes: E2 (search for similar items in EconPapers)
Date: 2011-03-23
New Economics Papers: this item is included in nep-agr and nep-mac
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