Limited hit from energy price rise on US consumption so far

Friday 13 October 2023

Cross Asset


Limited hit from energy price rise on US consumption so far

October 2023 | The significance of energy trends for the US economy has declined over the last three decades; the consumption of energy for each real dollar of gross domestic product has fallen by 3% every year and this will likely continue with the energy transition. While the importance of energy has gradually declined, the issue has returned to the fore following a series of energy shocks that have boosted price volatility. Oil prices pass through to the economy via various channels, including inflation, consumption, corporate margins and investment, productivity, the balance of payment and global savings (through petrodollars), and in the long run may accentuate social stress.

01 |  The impact of energy on the US economy has declined over the last three decades, but a series of shocks since the pandemic and a +30% price surge since July has brought the topic back to light.

02 | Higher oil prices – which are up about 30% over the last two months – could add a significant hurdle to the disinflation process and keep policy rates higher for longer.

03 | The ECB increased its key rates by 25bp in its last meeting, but at the same time it delivered a dovish message, suggesting that the terminal rate has probably been reached.

Limited hit from energy price rise on US consumption so far

Important Information

Unless otherwise stated, all information contained in this document is from Amundi Asset Management as of October 9, 2023 . Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the [author] and not necessarily Amundi Asset Management and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product or service. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not indicative of future results. Amundi US is the US business of Amundi Asset Management.

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