Federal Reserve Economic Data

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Changes in gasoline and automobile prices since the pandemic

Gasoline and gas-powered vehicles are complementary goods: They’re expected to be bought together. When all else is held constant, a change in the price of gasoline should have a predictable impact on the demand for cars and trucks—which, by extension, would change their price.

For example, when gasoline prices fall, it’s relatively cheaper to drive gas-powered vehicles. So, we’d expect their demand and price to rise. Today’s post looks into recent consumer price index data to see if that is in fact the story behind the numbers.

The FRED graph above shows the year-over-year percent growth rate in the monthly price of gasoline (blue bars), used cars and trucks (red bars), and new vehicles (green bars). We limited the time range to the past 54 months to observe how the COVID-19 pandemic impacted the relationship among these three sets of prices.

Here’s what we found:

So, although gasoline and gas-powered vehicles are complements, changes in their prices do not always follow a strictly inverse relationship. Other factors impacting the demand and supply of gasoline and vehicles can play bigger roles in the stories told by their numbers alone.

How this graph was created: Search FRED for and select “Consumer Price Index for All Urban Consumers: Gasoline (All Types) in U.S. City Average.” From the “Edit Graph” panel, use the “Add Line” tab to search for and select “Consumer Price Index for All Urban Consumers: New Vehicles in U.S. City Average” and “Consumer Price Index for All Urban Consumers: Used Cars and Trucks in U.S. City Average.” Next, use the “Edit Lines” tab to customize the data by selecting “Percent Change from Year Ago” and copy to all. Lastly, use the “Format” tab to change the graph type to “Bar.”

Suggested by Maxwell Bassin and Diego Mendez-Carbajo.



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