A report released this week by the Federal Reserve Bank of New York indicates that soaring fuel costs triggered by the Middle East wars are placing increasing pressure on American households, but the situation varies drastically across different income groups. The report found that wealthier households are able to cope with rising oil prices by increasing spending, thus maintaining their real consumption levels; while lower-income households are experiencing a surge in nominal spending, but their actual gasoline consumption is decreasing.



Diverging consumer behavior: Wealthy families increase spending to maintain demand, while low-income families reduce spending and face pressure.

A report released Wednesday by analysts at the Federal Reserve Bank of New York stated that households experienced vastly different experiences with gasoline spending following the outbreak of the Middle East wars. The wars disrupted global supply chains, causing gasoline prices to soar. The report specifically noted that in March of this year, high-income households were able to offset price increases by increasing nominal spending, maintaining stable real consumption; in contrast, low-income households not only experienced a significant increase in nominal spending, but their actual gasoline consumption actually declined.

Diverging Strategies: Low-income families are forced to switch to more economical modes of transportation

The report analyzes that, faced with soaring energy prices, low-income families may be forced to switch to more economical modes of transportation, such as carpooling, or take public transportation when conditions permit. This phenomenon is strikingly similar to the previous energy price shock triggered by the Russia-Ukraine conflict four years ago, but the degree of consumption disparity between different income groups has significantly deepened in this round.

Risk sources are diversifying: the prosperity of financial assets benefits the wealthy, but it also sows the seeds of hidden dangers.

This study on energy costs is part of a broader series of reports from the Federal Reserve Bank of New York, which explores the diverging fortunes of the two ends of the U.S. income distribution. Another analysis released last Friday noted that, thanks to the booming financial markets, the wealth of high-income Americans has grown faster than other groups, while low-income households face increasing inflationary pressures. However, analysts also warn that the significant role of financial assets in this process has raised new concerns—retail consumption, which relies on them, could be vulnerable if asset prices correct.

Dual pressures test the resilience of the US economy

The New York Fed's report reveals a reality of dual pressures: on the one hand, soaring energy costs are eroding the real purchasing power of low-income households; on the other hand, wealth inequality driven by financial markets may sow the seeds of new risks. Against the backdrop of already high inflation, American households are facing immense pressure from soaring gasoline prices, and the differences in the coping abilities of different income groups are becoming a key window into the resilience and vulnerability of the US economy.