[R-G] Oil and Food Spendings as Shares of Americans' Disposable Income

[Yoshie Furuhashi]

<http://online.wsj.com/article/SB120958193519357059.html?mod=googlenews_wsj>
Big profits for oil, food firms
test public-relations skills
By GEORGE ANDERS
May 1, 2008

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Energy and food companies may spend less time in the spotlight today
because their output commands a smaller share of people's pocketbooks
than in decades past. Gasoline, for example, currently accounts for
about 5.4% of household budgets, down from 7% to 8% in the early
1980s.

For the first half of the 20th century, food spending accounted for at
least 20% of Americans' disposable income, according to the
Agriculture Department. That percentage dropped to 13.6% in 1974 and
has been slightly below 10% this decade. Indeed, as the U.S. becomes
more prosperous, extra household earnings are more likely to be spent
on flat-panel televisions, casino junkets or college tuition than on
food.

And while bulk commodities such as wheat and corn have soared in price
lately, it is harder to trace their impact on the cost of a basket of
groceries. In the year ended March 31, U.S. food-price inflation
totaled just 4.4%. The price of baked goods was up 8.1%, an annoying
-- but hardly catastrophic -- rise.

Outside the U.S., it is a different story. Rising food prices have
touched off riots in Africa, rice-buying stampedes in Vietnam and
political upheaval in Haiti. But U.S. multinationals haven't been cast
as villains in any of these incidents.

Adam Sieminski, chief energy economist at Deutsche Bank, has been
trying to calculate how much oil prices would need to rise for
consumers world-wide to feel as alarmed as they did in 1980, when
crude soared to a then-unheard-of price of $40 a barrel.

If one adjusts for constant dollars, as measured by the consumer price
index, oil at $100 a barrel today would be comparable, he says. But if
one also adjusts for the somewhat smaller bite oil takes out of
personal income -- as people have become more energy efficient -- it
would take a price of $135 to $150 a barrel to produce the
dislocations caused by the 1980s price spike.

-- 
Yoshie
<http://montages.blogspot.com/>