America’s growing income divide has become more visible after a sharp rise in fuel prices linked to the Iran war forced low-income families to cut back on driving, even as their spending on gasoline increased, according to a new study from the Federal Reserve Bank of New York cited by the AP.The report showed that while wealthier Americans largely absorbed higher fuel costs with minimal lifestyle changes, poorer households sharply reduced gasoline consumption to cope with rising prices.“We found that households had very different experiences with gasoline spending,” the New York Fed researchers wrote.“With gasoline prices rising sharply in March, a K-shaped pattern in gasoline consumption emerged—reflecting faster consumption growth for higher-income households than for lower-income households,” the report said.Crude oil and fuel prices rose sharply after the disruption in the Strait of Hormuz caused by the Iran war that started on February 28 disrupted global energy supplies. U.S. gasoline prices had risen nearly 25 percent by the end of March and are now nearly 50 percent higher than pre-war levels.Households earning less than $40,000 a year reduced gasoline consumption by 7 percent in March, but still had to spend 12 percent more on fuel, according to the study.High-income households earning more than $125,000 increased fuel spending by 19 percent, while cutting gasoline consumption by only 1 percent.The report suggested that low-income Americans responded by reducing trips, using public transportation, carpooling or combining errands, while wealthier households faced little disruption.The researchers said the disparity was more acute than the fuel price shock following Russia’s invasion of Ukraine in 2022.The findings have raised concerns about what economists describe as a “K-shaped economy,” where higher-income households continue to gain wealth while lower-income groups struggle with inflation and rising living costs.The New York Fed estimates that total spending at gas stations rose 15 percent in March compared with the previous month, potentially dampening discretionary spending and slowing macroeconomic activity.A separate report from the Bank of America Institute found that among the poorest third of America’s households, one in ten now spends about 10 percent of their income on gasoline. High-income households spend about 2.7 percent of their income on fuel.The institute also noted that discretionary spending growth among low-income households slowed in March, while middle- and upper-income consumers continued to increase spending.