Urche,
Rosenberg provides a pretty useful analysis of how higher energy prices affect household spending and GDP. (This is an area that the bulls on the economy are overlooking, IMO.)
"Energy prices ? if oil breaks above $100 and gasoline prices approach $3.50/gallon then expect the consumer to sputter. Every penny at the pumps drains $1.5 billion out of household cash flow. At the moment, U.S. gas prices at the pumps are at $3.15/gallon, but consider that back in September, it was closer to $2.70/gallon. This increase in energy prices is hardly the result of booming consumer demand, which we know from the monthly personal consumption expenditure data is down more than 2% from a year ago. This is nothing more than an exogenous negative shock, which, at current levels, is approximately a $50-60 billion annualized drag from the U.S. household cash-flow (basically absorbing half of the payroll tax relief). If, as many experts predict, gas prices ultimately go to $4/gallon, then this would siphon another $100 billion into the gas tank. As for oil, the rule of thumb is that a 10% increase in prices shaves off 25 percentage points off GDP. This means that oil could be a near-one percentage point hit to GDP growth."
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