JPMorgan: US Economy Can Withstand $100 Oil Prices Due to Low Gas Costs

Surging oil prices have become less of a concern for the US economy as they once were, according to JPMorgan Private Bank. The bank's global investment strategist, Kriti Gupta, notes that Americans spend only about 2.5% of their income on gasoline, down from over 6% during the 1970s and 1980s oil price shocks. This has created a buffer against higher prices, as consumers have extra cash set aside and lower debt levels.

The bank estimates that an inflationary shock equivalent to gas prices rising above $10 per gallon today would be needed to cause significant pain for households. With the current average US gasoline price around $4.32 per gallon, this threshold has not been reached yet.

Markets have also become more resilient in the face of higher oil prices, with investors no longer pricing in worst-case disruption scenarios. The S&P 500 is only down about 3% from its all-time highs reached in late August.