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August 28, 2005
Petroleum's Bite of Consumers' Pocketbooks Still Manageable
James K. Glassman reports, in just a couple of sentences in his recent commentary for Tech Central Station, why significantly elevated gas prices haven’t slowed down U.S. consumers:
The Bureau of Economic Analysis reports that in 1984, U.S. consumers spent about $95 billion on petroleum products; last year, we spent $203 billion. But in 1984, consumer income was $2.3 trillion; in 2004, it was $6.7 trillion. So, very simply, we're spending twice as much on oil, but our incomes are three times greater.
Even if you assume that U.S. consumers will spent twice as much on petroleum products in 2005 as in 2004, about $400 billion, a little less than 6% of aggregate consumer income will be consumed by petroleum That’s a dramatic jump from the 3% bite of 2004, but not, in aggregate, an unmanageable situation. So far.
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