Freddie Mac: Fuel Price Spike Unlikely to Stall Recovery

While Americans may be feeling pain at the pumps, Freddie Mac doesn't believe the recent increase in gas prices will have a huge impact on the economy.

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In the GSE's most recent ""U.S. Economic and Housing Market Outlook"":http://www.freddiemac.com/news/finance/docs/Sept_2012_public_outlook.pdf, Freddie Mac VP and chief economist Frank Nothaft looked at energy costs and their potential effects on the economic recovery.

The U.S. Department of Energy reported that gas prices averaged $3.84 per gallon on September 3, up about $0.50 over the past two months.

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While rising energy costs can divert spending away from consumer goods, Nothaft said he isn't worried.

""A fuel-price spike doesn't pack the same punch it once used to in part because of more efficient use of energy,"" Nothaft said.

Nothaft pointed to the country's increased energy efficiency efforts in the last 50 years, which have led to fuel efficiency in passenger cars nearly doubling. In addition, homes built in the last decade are proven to have fuel costs about 30 percent lower than homes built before 1960.

Furthermore, Nothaft said he believes the fuel-price spike is unlikely to have an effect on monetary policy, allowing for an extended period of low interest rates, which should in turn help energize the housing market.

""Low mortgage rates and a high degree of affordability have helped to energize the housing market recovery,"" Nothaft said. ""Through the first seven months of 2012 compared with the same period in 2011, home sales are up 8 percent, housing starts have rebounded by 19 percent, and national house-price indexes have recorded a gain on a year-over-year basis. We anticipate this favorable interest-rate environment will remain at least through the end of this year.""