Surging gas prices are hitting lower-income households harder, New York Fed study shows

Lower-income consumers are compensating for higher gas prices by buying less while those in higher-income brackets haven't changed their behavior much at all despite soaring costs, according to research released Wednesday by the Federal Reserve of New York.

In fact, during the March energy price spike, households earning less than $40,000 a year increased gas spending by the least of all income groups. The group accelerated nominal gas spending by just 12%, the product of cutting consumption by 7%, according to a blog post by New York Fed researchers.

By comparison, high-income households, defined as those earning more than $125,000 a year, raised their spending by 19%, as they only cut real gas consumption by 1%.

“Thus, the K-shaped consumption pattern in both nominal and real gasoline spending was strongly evident in March 2026,” researchers Rajashri Chakrabarti, Thu Pham, Beck Pierce and Maxim Pinkovskiy said in the post.

The so-called K-shaped economy has been a byproduct of the post-Covid period. Economists say those at the lower end of the spectrum have seen significantly less growth than their wealthier peers, who have benefited from a surge in asset values, such as stocks and real estate.

Inflation also has been a major contributor to the disparity in growth rates.