How Much Are We Spending On Energy?
- Posted by TheArmoTrader
- on December 15th, 2012
How much does the typical American spend on energy? Looking at hard nominal numbers tells us nothing. To say that you were spending $20 for gas in the 1960s vs $70 now is not analysis. What is important is to look at how much is spent relative to something (income, expenditures, etc).
Luckily, we have the Personal Consumption Expenditures (PCE) report. Using the quarterly data provided, I created the chart below. It shows Energy Goods & Services as a percent of the PCE. As you see, despite rising nominal costs in energy, the average American is not really devoting more & more to energy costs (as a percent of all costs).
For what it’s worth, given the collapse in Gasoline prices (down 14% Quarter To Date) over the past few months, I expect this chart to be lower in Q4 of this year. Although, the rising price of natural gas (up 12% QTD) might effect the drop in expenditures somewhat.
Energy Expenditures as a Percent of PCE
(Note: 6.00% threshold is the level Professor Jim Hamilton has determined in which Spending habits start to change.)
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Jerry Khachoyan is currently an undergraduate student at UCLA pursuing a degree in Political Science. He started trading in September of 2008. He concentrates on using technical analysis and reading the tape to enter the best risk/reward trades. The stock market to him is one of the greatest inventions by man.
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