The Gulf Time Newspaper One of the finest business newspapers in the UAE brought to you by our professional writers and editors.
Bloomberg
The average American household will have $440 less to spend this year due to rising pump prices, putting at risk one-third of the windfall they got from tax cuts. Strong oil prices drove the cost of US gasoline to the highest level in more than three years last month, according to AAA, and pump prices are now 27 percent higher than they were a year ago.
That could disproportionately constrain low- to middle-income Americans’ spending, even if it doesn’t slow down a healthy and more energy-independent economy, according to S&P Global economists Beth Bovino and Satyam Panday.
“This would be tantamount to a tax increase for American households,†Bovino and Panday said in a report. Higher-income earners who saw a larger tax break would be less affected, both because fuel comprises a smaller portion of their discretionary spending and because the recent tax cuts were skewed in their favor, they said. “The income tax cut is virtually compensating those who were hurt least from the oil-price change, which may result in even larger inequality,†the analysts wrote.