EconPapers    
Economics at your fingertips  
 

The Evolving Link between Oil Prices and U.S. Consumer Spending

Nida Cakir Melek () and Robert Vigfusson ()

Economic Review, 2021, vol. v.106, issue no.1, 55 pages

Abstract: Oil prices have fluctuated widely since the 1970s. Historically, consumers have tended to increase spending on non-oil goods and services when oil prices decline and cut back on such spending when oil prices rise. However, this relationship may have changed more recently. The U.S. oil sector has increased in importance in the last decade, and consequently the United States has become less reliant on oil imports. Moreover, gasoline expenditures have fallen as a share of households’ budgets. As a result, price swings may no longer have the same effect on U.S. consumption. Nida Çakır Melek and Robert J. Vigfusson look at two channels through which oil price changes affect consumption—the discretionary income channel and the oil producer channel—and provide evidence that the effect of oil price changes on consumption has become more muted. Their analysis suggests changes in oil prices are less likely to yield major changes in consumption, even among lower-income households.

Keywords: Oil; prices (search for similar items in EconPapers)
JEL-codes: P22 Q41 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://www.kansascityfed.org/documents/7910/1q21ercakirmelekvigfusson.pdf Full text (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden
https://kansascityfed.org/research/economic-review ... s-consumer-spending/ (text/html)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedker:91862

Ordering information: This journal article can be ordered from

DOI: 10.18651/ER/v106n1CakirMelekVigfusson

Access Statistics for this article

More articles in Economic Review from Federal Reserve Bank of Kansas City Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2021-10-19
Handle: RePEc:fip:fedker:91862