Sunday, February 27, 2011

Will The Rise In Oil Prices Lead The US Into Another Recession?

From "Oil Prices and Recessions, 40 Years’ Worth" by John Keefe:
Higher oil prices have in the past led the developed economies into recessions...

There’s been an oil spike before every recession. The wiggly line [in the above chart] is the two-year percent change in oil prices. [The shaded blue areas are recessions.]
...note that the doubling [of oil prices] in 2005 didn’t get an immediate recessionary response — but higher gasoline prices will reduce the income people have to spend, and dent whatever recovery is going on in the consumer sector.

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