Monday May 7, 1:48 pm Eastern Time
Economic impact of energy costs unclear-Fed's Jordan
ATHENS, Ohio, May 7 (Reuters) - The impact of higher energy costs varies across the United
States and it is largely unclear how recent price rises will affect the U.S. economy, Federal Reserve
Bank of Cleveland President Jerry Jordan said on Monday.
Jordan, speaking to reporters after addressing
the local Rotary Club, said that since consumers
can react to price changes in different ways, it is
impossible to predict how the economy will be
affected.
For instance, he said, some consumers might cut down on their driving, or they
could switch from a sports utility vehicle to a smaller car.
``They can spend less on something else, they can invest less if they have
discretionary income,'' he added.
But he noted that energy costs are something that has a broad impact on
consumers.
``Any relative price change has a differential impact,'' he said. ``Energy is the one that tends to affect most people.''
Jordan also noted that people in different regions seem to have different reactions, adding: ``It's really very hard to generalize.''
Earlier on Monday, the government said that despite a slowing economy and higher fuel prices, Americans would buy more gasoline at
the pump than expected in the period through to September.
In its monthly energy outlook, the Energy Information Administration -- the Energy Department's statistical agency -- revised up
gasoline demand in the current quarter by 100,000 barrels per day (bpd) to 8.61 million bpd, and also by 100,000 bpd in the third
quarter to 8.78 million bpd.
Demand is expected to grow even though the EIA believes the national average gasoline price could hit a record $1.75 a gallon this
summer, breaking the previous record of $1.68 reached last June.
The White House said on Monday that President George W. Bush is ``very concerned'' about rising gasoline prices but will resist
short-term solutions. |
