Can Consumers Bear Higher Oil Prices?

Getty Images

Oil is hovering right around that $60 a barrel mark today – right where its been for the past few months. Now, some analysts are raising concerns that we're getting too used to this price level. On today’s "Morning Call" Liz Claman took a closer look at the cost of oil and what would happen if there were to be a spike in energy prices?

Her guests were Jan Hatzius, Chief U.S. Economist at Goldman Sachs and, Stephen Stanley, Chief Economist at RBS Greenwich Capital

Jan Hatzius said spike would make the Fed’s life a little more difficult. "It would be a negative on both GDP and inflation. It’s not clear that higher oil prices would shift the Fed one way or the other– because GDP and consumption usually offset one another."

Stephen Stanley had a slightly different take. "A spike in oil prices depends a great deal on whether the spike lasts or not. Most of the spikes over the years have been temporary." He believes if oil went higher - initially the Fed would take a watch and wait position.

Claman asked about lower oil prices earlier this year and why they didn't fuel consumer spending. Hatzius said, "Continued weakness in the housing markets off set the boost from lower oil prices earlier in the year." Stanley added, "Consumer spending is picking up – real spending will probably be a 3.5% in 4Q." He considers that a result of those lower gas prices.