Wolfe: Tax refunds may help mitigate the impact of oil price shocks on consumer spending

Investing.com – Wolfe Research notes that despite recent fluctuations in energy prices, tax refunds are expected to provide a buffer for consumer spending.

Over the past week, the average gasoline price has risen to $3.54 per gallon, raising concerns about a potential slowdown in growth. Wolfe’s analysis indicates that if the average gasoline price in 2026 increases by about $0.50 for the year, it could lead to approximately $70 billion in consumer spending shifting from goods and services to energy costs. This shift would exert about 0.2% of drag on nominal GDP.

However, Wolfe Research believes that fiscal stimulus from OBBB will help protect consumers from higher gasoline prices in the short term, easing financial pressures.

While stock markets are expected to continue reacting to headlines in the near term, Wolfe and most investors anticipate that the current conflict will significantly ease in the coming weeks, ultimately leading to a decline in gasoline prices.

Since the beginning of the year, the amount of tax refunds has increased by 11%, and Wolfe expects that supported by these refunds, along with wealth effects and the demographic structure of the Baby Boomer generation, consumer spending will remain strong.

This article was translated with the assistance of artificial intelligence. For more information, please see our terms of use.