When gas prices approach $3 a gallon they can be a threat to the economy, according to Wells Fargo’s Investment Institute, but when gasoline prices climb above $3 a gallon, the effects are measureable.
Gasoline prices have risen by 18% year over year in the U.S., and the national average price has reached $2.96 per gallon.
Historically, year-over-year gains of 18% in gas prices and prices of $3 per gallon average gas prices have resulted in slower GDP growth.
But, both the price of gas and how quickly it has risen has impacted the U.S. economy. As for 2018, it is too early to say if rising gas prices have had an impact on the GDP growth rate, but history says that eventually they will.
According to data from Wells Fargo, when gasoline prices have hovered below $2 per gallon, annualized GDP growth has been 3.17% a quarter of the time, and 47% of the time yearly GDP growth has been 3.05% when gas has hovered between $2-$3. Finally, 28% of the time GDP growth has been 1.79% when gasoline prices are above $3.