* Gasoline prices have risen 30 cents so far this year
* Higher pump prices seen crimping consumer spending
* Adds to pressure already evident from higher taxes
By Lucia Mutikani
WASHINGTON, Feb 12 Rising gasoline prices are
putting a squeeze on Americans already under pressure from
higher taxes and are likely to restrain economic growth in the
Prices at the pump have increased 30 cents since the start
of this year, hitting an average of $3.68 a gallon in the week
through Monday, according to the Energy Information Agency.
The increase comes at a time when households are adjusting
to smaller paychecks after a 2 percent payroll tax cut expired
on Jan. 1 and taxes rose for wealthy Americans.
Low gasoline prices helped to boost consumer spending in the
fourth quarter but are now a challenge to growth.
"The rule of thumb is that every penny increase at the pump
shaves about $1.2 billion from non-energy consumer spending,"
said Jacob Oubina, a senior U.S. economist at RBC Capital
Markets in New York.
That means the 30-cent increase in gasoline prices is
roughly equivalent to $35 billion, or about 0.4 percentage of
overall consumer spending on an annualized basis, he said.
Oubina said that taken together with higher taxes and delays
in receiving tax refunds, consumer spending, which accounts for
about 70 percent of U.S. economic activity, would likely drop by
about 1.5 percentage points in the first quarter.
U.S. gasoline prices are usually on the low side at this
time of the year, but global oil costs have risen on
stronger-than-expected demand in China and output cuts in Saudi
EIA estimates that gasoline prices will peak at $3.73 a
gallon in May.
CAUSE FOR CONCERN
"It's a cause for concern, particularly given the expiration
of the payroll tax holiday," said Ryan Sweet, a senior economist
at Moody's Analytics in West Chester, Pennsylvania.
"We will start to see gasoline prices eating into
discretionary spending this month and into March."
A government report on retail sales in January due on
Wednesday could offer an early read of the impact of higher
gasoline prices. Sales are expected to have edged up 0.1 percent
after rising 0.5 percent in December, according to a Reuters
survey of economists.
"The gasoline station number will be up because of the
price-related gains," said Sam Bullard, a senior economist at
Wells Fargo Securities in Charlotte, North Carolina. "Elsewhere,
you are going to see lower numbers because consumers don't have
enough income to spend on what they want."
Consumer spending increased at a 2.2 percent annual rate in
the fourth quarter, up from the previous quarter's 1.6 percent
clip. First-quarter estimates for spending growth range from 0.7
percent to 1.8 percent, with economists divided on the degree to
which Americans might tap savings for purchases.
Apart from higher taxes and expensive gasoline, delays in
tax refunds are also seen crimping spending.
"We are running about $30 billion below last year in tax
refunds," said RBC Capital Markets' Oubina. "People tend to rely
on tax refunds to drive large household purchases."
Economists said consumers could also be affected by high
food prices following last year's drought, slowing spending even
"We have got a slower rate of growth in consumer spending as
the year goes forward," said Well Fargo Securities' Bullard.
(Reporting by Lucia Mutikani; Editing by Steve Orlofsky)