Do I see something that makes me want to run immediately?
The U.S. economy has finally started to create jobs at a reasonable clip. Inflation is still low. Corporate profits are healthy, and surveys of business conditions suggest that the recovery is, as the Federal Reserve recently put it, “on a firmer footing.” So are happy days here again? Hardly.
Last month, consumer confidence plunged, and pundits are still talking about the possibility of a double-dip recession. Some of this can probably be put down to the general atmosphere of geopolitical turmoil—the threat of nuclear catastrophe in Japan, continued debt problems in Europe, political upheaval in the Middle East.
But, economically speaking, the source of the anxiety is something much more specific: high prices at the gas pump. The price of oil has risen thirty dollars a barrel since February and more than forty per cent since last summer, and the fear is that expensive oil may bring stagflation, as it did during the oil crises of 1973 and 1979, or even put the economy back into reverse. (…)
Last month’s drop in consumer confidence was attributed almost entirely to the spike in gas prices, in line with a 2007 study, by the economists Paul Edelstein and Lutz Kilian, showing that spikes in oil prices have often depressed public sentiment in the past.
image { Edward Ruscha, Lion in Oil, 2002 }
related { China’s energy use should flatten out sometime around 2030 }
