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Energy expenditures as a percentage of PCE

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by Calculated Risk on 5/29/2022 02:14:00 PM

During the early stages of the pandemic, energy expenditures as a percentage of PCE hit an all-time low of 3.3% of PCE. Then energy expenditures increased to 2018 levels by the end of last year.

With the invasion of Ukraine, energy expenditures as a percentage of PCE increased further over the last few months.

Here is an update through the April 2022 PCE report.

This graph shows expenditures on energy goods and services as a percent of total personal consumption expenditures. This is one of the measures that Professor Hamilton at Econbrowser looks at to evaluate any drag on GDP from energy prices.

Click on graph for larger image.

Data source: BEA.

In general, energy expenditures as a percent of PCE has been trending down for decades. The huge spikes in energy prices during the oil crisis of 1973 and 1979 are obvious. As is the increase in energy prices during the 2001 through 2008 period.

In April 2022, energy expenditures as a percentage of PCE were at 4.6% of PCE, down slightly from the March level.
This is above the pre-pandemic level, but excluding March, this was the highest level since 2014.
Note: Professor Hamilton discusses the recent increase in energy prices here, and here is his slide deck: Sanctions, Oil Prices, and Recession. Hamilton’s conclusion “oil price increase so far not enough to cause a recession”

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