Same Shock, Different Roads? A K‑Shaped Pattern at the Pump

Rajashri Chakrabarti, Thu Pham, Beck Pierce, and Maxim Pinkovskiy

In March 2026, energy prices surged to a four-year high, driven by the Iranian closure of the Strait of Hormuz amid the ongoing conflict in the Middle East. In this Liberty Street Economics post, we use the new consumer spending module of the Economic Heterogeneity Indicators to analyze recent changes in nominal and real gas consumption across different income groups. We find that households had very different experiences with gasoline spending: in March, high-income households increased nominal spending the most and kept real consumption essentially unchanged, while low-income households decreased real consumption of gasoline but still saw sharply increased nominal spending because of the rise in gas prices. Therefore, with the sharp increases in gasoline prices in March, a K-shaped pattern in gasoline consumption emerged—showing faster consumption growth for high-income households relative to low-income households. These gasoline consumption patterns qualitatively match those following the increase in energy prices at the beginning of the Russia-Ukraine war in spring 2022, even though the gap in consumption trends during the current episode is quantitatively larger.

Spending on Gas

To understand how different income groups responded to the increase in energy prices in March 2026, we use a panel of 200,000 respondents from the analytics firm Numerator. We focus on spending at gas stations, which we take as a close proxy for spending on gasoline. As the chart below shows, the cumulative growth in gasoline station spending since January 2023 in Numerator closely tracks cumulative growth in aggregate gasoline station spending in Monthly Retail Sales from the Advance Monthly Retail Trade Survey (MARTS) data. We are therefore reasonably confident that the Numerator data provide reliable information on gasoline spending by income group.

The left panel of the chart below shows nominal gasoline spending rose by over 15 percent in Numerator in March 2026, going from being 10 percent below the 2023 level to being 5.5 percent above. This increase was driven by the rising price of gasoline as real gasoline consumption fell 3 percent (right panel). MARTS recorded a similar increase in gasoline station spending for March 2026 (14.5 percent).

We now consider how these aggregate moves were distributed across three income categories. We divide all households into low-income (earning less than $40,000 a year) households, middle-income (earning between $40,000 and $125,000) households, and high-income (earning over $125,000) households, as we have done in previous blogs on the divergence in retail spending growth by income level and potential explanations. The high-income households represent approximately a third of all households. In the panel chart below, we present how the rises and falls in spending and consumption varied for the three income types. We deflate gas station spending for each income group using a demographic-specific gasoline price deflator.

We see that the three income categories had very different experiences during the March 2026 energy price shock. Low-income households increased their nominal gas spending by the least (12 percent). However, this was accomplished because they cut their real gas consumption the most (7 percent). On the other hand, high-income households increased their nominal gas spending by the most (19 percent) in a large part because they reduced their real gas consumption the least (1 percent). Middle-income households had intermediate increases in nominal spending and decreases in real consumption at gas stations. Thus, the K-shaped consumption pattern in both nominal and real gasoline spending was strongly evident in March 2026.

A Similar Episode

These divergences in the response to an energy price shock are not unique to the month. Four years ago, energy prices rose and remained elevated during the spring and summer of 2022 when the Russia-Ukraine war disrupted energy markets. The magnitude of the initial Russia-Ukraine gasoline price shock was broadly similar to the current one, but it lasted longer to date and ramped up over time. As we see from the panel chart below, between January and July 2022, nominal gas spending rose more for high- and middle-income households than it did for low-income households, while real gas consumption declined less for high-income households than it did for middle-income and low-income households. Notably though, while directionally similar, the magnitudes of the gaps (both for nominal and real spending) were noticeably smaller than the corresponding gaps we see in March 2026. Nominal and real spending rebounded to their pre-shock levels after energy prices declined in late 2022.

With the current energy price shock, a K-shaped pattern in gasoline consumption has opened up much more than before. Higher-income households have reduced real gas consumption only modestly and increased gasoline spending considerably compared with 2023. In contrast, lower-income households increased spending by much less and decreased real consumption by much more, potentially by carpooling or substituting to public transit where available. In subsequent releases of the EHIs, we will continue monitoring the consequences of the current energy price shock on different segments of our society.

Rajashri Chakrabarti is an economic research advisor in the Federal Reserve Bank of New York’s Research and Statistics Group.  

Thu Pham is a research analyst in the Federal Reserve Bank of New York’s Research and Statistics Group.

Beck Pierce is a research analyst in the Federal Reserve Bank of New York’s Research and Statistics Group.

Maxim L. Pinkovskiy is an economic research advisor in the Federal Reserve Bank of New York’s Research and Statistics Group.

 
@article{RajashriChakrabarti,ThuPham,BeckPierce,andMaximPinkovskiy2026,
    author={Rajashri Chakrabarti, Thu Pham, Beck Pierce, and Maxim Pinkovskiy},
    title={Same Shock, Different Roads? A K‑Shaped Pattern at the Pump},
    journal={Liberty Street Economics},
    note={Liberty Street Economics Blog},
    number={May 6},
    year={2026},
    url={https://doi.org/10.59576/lse.20260506}
}

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