How significant has the rise in energy costs to households been over the past 5 years?
The answer might surprise you.
New data released by the commerce department shows that Energy costs have risen nearly 50% as a percentage of a household’s spending. That is significant — its up to more than 6% from 4.2% a few years ago — but its far below prior peaks.
Floyd Norris notes that while the increased fuel costs have a bite, they haven’t derailed the economy:
"The energy cost figures, while up, are far from unprecedented, which may help to explain why the economy has not been more severely affected by the rise in oil prices. Including both household utility costs for electricity and oil, and drivers’ fuel costs, the share for energy use climbed to 6.2 percent of personal consumption expenses.
That is the highest in 15 years, but it is far below the peak of 9.3 percent reached in the first quarter of 1981, during the second oil-price shock. In 1972, before the first oil supply cutoff caused lines at gasoline stations and sent prices soaring, energy costs were also 6.2 percent."
That’s consistent with my overall view — increasingly stretched househoild budget, but by no means exhausted, with short term swings in gasoline prices impacting consumer spending.
On an unrelated note, a Federal Reserve analyst has reviewed the jobless rate, and said it hasn’t been artificially depressed by a failure of many discouraged workers to be counted as unemployed. I’d like to look at this later today . . .
UPDATED March 31, 2006 11:13am
Here’s a chart I whipped up on household energy consumption.
4th-Quarter Growth Put at 1.7%
NYT, March 31, 2006