NY Fed Says Rising Gas Prices Highlight America’s “K-Shaped” Economy

Gasoline prices in the U.S. have surged to $4.53 per gallon amid tensions involving Iran, affecting households differently depending on income levels.

Researchers from the New York Fed’s Liberty Street Economics blog said the divergence in gasoline spending patterns was already evident in March 2026.

Economists at the Federal Reserve Bank of New York said the impact reflects the “K-shaped” divide in the U.S. economy, Jake Conley reported for Yahoo Finance.

“Households had very different experiences with gasoline spending,” the economists wrote. Lower-income households are generally more vulnerable to energy price increases because spending on gasoline, electricity, and other essentials consumes a larger share of their income, according to analysts at Bank of America.

Researchers from the New York Fed’s Liberty Street Economics blog said the divergence in gasoline spending patterns was already evident in March 2026.

The findings challenged comments by National Economic Council Director Kevin Hassett, who previously claimed consumers were “firing on all cylinders” and that credit card spending was “through the roof.”

Personal Consumption Expenditures (PCE) data released on April 30 showed headline inflation rose 0.7% in March from February, while core PCE — which excludes food and energy prices — increased 0.3%.

On an annual basis, headline and core PCE inflation reached 3.5% and 3.2%, respectively.