“Despite the buffer of excess savings, high gas prices nonetheless appear to be weighing on real consumption,” JPMorgan US economist Peter McCrory wrote in the report.
The bank found that the impact of high gasoline prices on consumer spending takes time to build up, with the slowdown not clearly evident until two to three months after gasoline prices spike.
“This means real consumer spending growth could be volatile in the months ahead,” JPMorgan said.
Consumer spending is the main driver of the US economy.
The problem is that gasoline is an essential purchase for many Americans.
Demand at the pump doesn’t tend to fall, at least not initially when prices rise, JPMorgan said. But it means some families are forced to cut other expenses to make ends meet and avoid dipping into their savings or going into debt.
Every dollar of additional gasoline spending following a price spike reduces non-gas consumption by $1.60, according to JPMorgan estimates.
Pump prices were already high in February when Russia’s invasion of Ukraine pushed them even higher. The war and sanctions have put pressure on the energy supply of Russia, the world’s largest oil exporter.
Pump pain is not felt the same across the country.
JPMorgan said high gasoline prices are imposing a “greater hardship” on families who are less able to adjust their consumption.
Data from the Chase Map shows consumers in Arkansas and Missouri have increased their gas station spending the most since February, while spending in Connecticut, Massachusetts and New York has increased the least.