However, a decline in energy prices provides, in effect, only a one-shot boost to consumption, albeit one that is likely to take place over time. To have a more persistent effect on the ongoing growth of total personal consumption expenditures, energy prices would need to continue to decline.
Futures prices do not suggest that such a decline is in the immediate offing, but the forecast record of these markets is less than sterling. Although the quantitative magnitude and precise timing of the wealth effect remain uncertain, the steep decline in stock prices since March 2000 has, no doubt, curbed the growth of household spending.