$100 Oil Won't Break the Back of the American Consumer

The recent surge in oil prices to $100 per barrel has raised concerns about its impact on the US consumer. However, according to Jamie McGeever, a columnist for Reuters, these fears may be overblown.

US households are the richest they've ever been, with household net worth rising to 794% of disposable personal income in the fourth quarter last year. This is the highest level since early 2022 and only surpassed by three quarters in the pandemic-distorted period of 2021-22.

Additionally, gas and energy account for a historically small share of consumption, representing only 2% of total consumer spending in the fourth quarter last year. While this number may rise if oil prices remain high, most Americans should be able to handle it.