Can Gas Prices Alone Cause a Recession?
The effects of the hurting middle and lower class.
Good morning everybody,
We all know that prices at the pump have gone sky high recently. Leaving millions of Americans with less and less money to spend on everyday essentials.
This decrease in the budget surplus for the average American is not a good sign in determining if we are in a recession.
When people have to pay more for gas, they may spend less on groceries, clothes, etc. When this happens, the problem is those big companies who employ most of America are getting their profits whittled down. ( not that it is not bad for the middle-class Americans, this is just a macro perspective)Which can lead to a lot of bad things like a wage-price spiral and higher inflation, but can it cause a recession alone?
Oil prices have gained 100% year over year, and if we look back in history. This happened in 2008, during the financial crisis, and shortly after, a recession followed. History does repeat, but it often rhymes. There is no way to know if we are in a recession until we are already in one. But the current prices of oil can be a significant determining factor.
The next gross domestic product reading is scheduled to come out on June 29th. That’s when we will know for sure if we are currently in recession.
In my opinion, oil prices are a huge deal, hurting the middle and lower-class Americans the most. However, I also think that gas prices alone do not cause a recession, but when a combination of things like a real estate market crash or high inflation, gas prices hurt the most, which leads to many other things that can cause more pain, like a stock market crash and rising rents.
Have you heard the saying a butterfly flaps its wings in Brazil, and there’s a hurricane or tornado weeks later on the other side of the world? ( or something like that )
As I said before, a recession isn’t caused by one thing in particular but through combinations of events or circumstances. So it’s necessary to step back and look at the bigger picture outside of day-to-day life. For example, the steadily rising gas prices since the lows of the pandemic could have been an incoming signal.
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I know gas prices are hurting most right now, but if you bear through the storm, you will come out the other side better for it.
Have a great day, and remember to live in the moment.
