---
title: "Reassessing the U.S. Economy's Vulnerability to Oil Shocks"
authors: "Federal Reserve Bank of Boston (Current Policy Perspectives)"
source: "Federal Reserve Bank of Boston"
source_url: "https://www.bostonfed.org/publications/current-policy-perspectives/2026/reassessing-us-economys-vulnerability-oil-shocks.aspx"
paper_id: "Boston Fed Current Policy Perspectives (2026)"
harvested: 2026-09-01
year: 2026
keywords: [oil shocks, vulnerability, expenditure share, energy intensity, regional effects, staples]
pdf_url: "https://www.bostonfed.org/publications/current-policy-perspectives/2026/reassessing-us-economys-vulnerability-oil-shocks.aspx"
---
## Abstract

Updates the Hamilton (2003) framework for the current economy. Uses a Hamilton oil shock measure in state-level regressions to show that while aggregate US oil *expenditure share* has declined sharply since the 1970s (oil is "less central to the U.S. economy"), regional exposure remains highly heterogeneous: states at the 90th percentile of oil extraction share experience ~1.9pp higher private nonfarm employment growth and ~2pp higher house-price growth 12 months after a 33% Hamilton oil shock, versus 10th-percentile states. The declining national share dampens aggregate effects, but local oil-dependence still transmits shocks.

## Why it's in the StratMac library

- The most recent (2026) evidence that **expenditure share, not nominal price, is the right vulnerability metric** — the empirical anchor for the middle-choice rescale.
- Provides the regional-dispersion caveat: national-average staple/GDP ratios mask wide local variation, relevant to any state-level SM card.