The economy has not absorbed the benefits of low oil prices just yet, and stocks therefore have more room to run, Tobias Levkovich, Citigroup's chief U.S. equity strategist, said on Monday.
Counter to the popular perception, it takes 12 to 18 months for the benefits of lower prices at the pump to show up in GDP and consumption activity.
"People perceive it as being immediate instant gratification. History suggests there's a longer time for people to believe it's permanent," he told CNBC's "Squawk on the Street."
Levkovich was responding to comments from Elevation Partners co-founder Roger McNamee, who acknowledged that consumers seem to be stashing away gas savings and suggested expectations around oil price tailwinds might be overblown.
"In my mind that's actually probably a positive, because that simply suggests we're going to spread the benefit out a little bit," he told "Squawk on the Street." "But the notion of U.S. families getting deleveraged because of a $500 dividend from oil prices, that's a warm, cozy feeling for me."
However, oil prices are not the only positive indicator for stocks, Levkovich said. "We've got job growth. We've got every indication that wage growth is coming now, and even capital spending has been far better than people perceive, and they all just think it's about energy," he said.
Capital spending as a percentage of GDP has grown from 10.5 percent in 2009 to about 13 percent today, he noted. Energy's share of that spending went from 0.5 percent to 1 percent over the same period, so only about 0.5 percent of the increase in capital spending came from the sector, he added.
As for whether a looming rise in interest rates could stoke a sharp correction in the stock market, Levkovich said markets are far more driven by earnings. If earnings accelerate in the second quarter, very modest increases in interest rates will not disrupt the market.
The Federal Reserve is widely expected to begin raising its benchmark interest rate in 25 basis-point increments later this year.
"The Fed keeps telling you they're going to be very measured. I believe them. I'm not trying to think they're trying to deceive me and lie to me," he said.