The U.S. economy is “gradually building immunity” from the kind of surge in gasoline prices seen this year, according to Steven Wieting, Citigroup Inc.’s managing director of economic and market analysis.
Spending on gasoline and other motor fuels fell 10 percent from a peak in 2005 through the end of last year. The drop is based on a 12-month moving average of data compiled by the Commerce Department.
The average monthly retail price nationwide for gasoline, as compiled by the Labor Department, climbed 7.5 percent this year through Feb. 21, according to data from the American Automobile Association.
Crude oil rose 7.3 percent for the year through Wednesday in New York futures trading, and gasoline advanced 15 percent. Consumers will have to spend another $25 billion to fuel their cars and trucks this year if higher prices stick, Wieting wrote in a report Tuesday. When the year started, he was looking for a decline of $15 billion.
Increased capital spending on energy-related products will lessen the economic effect of the reversal, the New York-based economist wrote. Industry outlays rose $34 billion last year and may climb even more this year, the report said.
“This combination suggests only very modest changes to the U.S. growth and inflation outlook” from the energy-price swings, Wieting wrote. He added that crude and the Standard & Poor’s 500 Index track each other closely enough to indicate higher oil prices may add to stock investors’ wealth.
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