BUSINESSWEEK ONLINE : JANUARY 15, 2001 ISSUE
ECONOMIC TRENDS Natural Gas Will Deflate Wallets Beware of an ice-and-price shock Economy watchers counting on the recent decline in oil prices to bolster consumer spending in coming months had better think twice, advises Jan Hatzius of Goldman, Sachs & Co. About half of U.S. homes are heated by natural gas, and the runup in natural gas prices in recent months, together with colder winter weather, suggests that the average household heating bill could more than double, to more than $1,000, he says. Electricity bills should rise sharply as well. The Goldman economists think the impact of the gas price hike by itself will add one-half of a percentage point to the consumer price index in the first quarter and will cut the economy's growth by about a percentage point. That's more than enough to offset the beneficial impacts of recent lower oil prices, and if oil prices were to go back up again, all bets would be off. With consumer spending already slowing and industrial production flagging, the risks of a sharp economic slowdown are growing, says Hatzius. By GENE KORETZ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _					RELATED ITEMS Natural Gas Will Deflate Wallets CHART: The Explosion in Gas Prices INTERACT E-Mail to Business Week Online

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