Thus far, the U.S. economy has proven relatively resilient to the rising oil prices...Our economy has become more fuel-efficient, and as our output shifts from goods to services, it has become less energy-intensive. These trends render the economy better equipped to handle rising oil prices. Thus, while oil price increases have robbed the U.S. economy of some momentum, growth has remained quite healthy.

A further rise [in energy prices] could cut materially into private spending and thus damp the rate of economic expansion.

We do estimate a three-quarters of a percentage point loss in real growth this year as a consequence of these [gasoline] prices.

The U.S. economy is embarked upon a period of sustained expansion. Looking forward, I expect real GDP to grow at a rate of 3-1/2 to 4 percent through 2005. Earlier this year I would have favored the upper end of this range, but recent events have dampened that forecast somewhat toward the lower end of this band. Of course, the price of oil is one factor that will play a role in determining the exact magnitude of this number.

Based on econometric estimates done by the Board staff, the increase in oil prices since the end of 2003 probably has shaved roughly 1/2 percentage point off of real GDP growth [in 2004] and they look to restrain growth [in 2005] by approximately 3/4 percentage point.  Aside from these "headwinds," the US economy seems to be coping pretty well with the run-up in crude oil prices.

I am inclined to attribute at least some of the recent softness in growth to general skittishness about the springtime run-up of energy prices.

Consumer spending also has continued to expand, although higher energy prices may be crimping household purchases recently.

With gasoline prices rising to substantially over two dollars a gallon, consumers may find that growth in their discretionary spending must slow in order to accommodate the increased cost of filling their gas tanks. Similarly, rising energy costs could curtail businesses’ capacity to increase their investment spending. The bottom line is that oil prices persistently in the $50 per barrel plus range could slow the pace of domestic demand growth this year, though they should not jeopardize the expansion itself.

At this broad trading range, the economy seems to be able to continue its expansion without any significant trouble...[but] if oil prices spike, it will have an implication both on production costs and on consumer spending.

It's always possible and maybe likely that we haven't gotten the impact [of higher oil prices] precisely correct...[But] economic growth was respectable last year despite higher oil prices.

Since the beginning of the year, the cost of oil imported into the United States has increased by about $75 billion (at an annual rate), or about 3/4 percent of the gross domestic product (GDP). Add to this the effects of the rise in natural gas prices, and the total increase in imported energy costs over a full year--the increase in the "tax" being paid to foreign energy producers--comes to almost $85 billion. The impact of this decline in net income on the U.S. GDP depends in large part on how the increase in the energy "tax" affects the spending of households and firms...A reasonable estimate is that the increased cost of imported energy has reduced the growth in U.S. aggregate spending and real output this year by something between half and three-quarters of a percentage point.