Nine out of the ten recessions in the United States since World War II were preceded by a spike in oil prices. Nevertheless, for the past year, I’ve been telling people that this time it’s going to be different– the economy could weather the rising price of oil without a downturn. Developments of the last couple of weeks make me a little more concerned.
Category Archives: recession
When should we worry about the yield curve?
The slope of the yield curve is likely to become an increasingly bearish indicator as this year progresses, and recent changes in the calculation of the index of leading economic indicators should not be interpreted as in any way denying that fact.
Further thoughts about the latest economic statistics
I’ve had a little more time to ponder the meaning of some of the economic data released last
week, and here’s what I’ve come up with.
New GDP data and recession probabilities
The Bureau of Economic Analysis today
released its advance estimates for the second quarter, reporting real GDP growth of 3.4%, implying
a very slight increase in the recession probability index to 4.7%.
How high will the Fed push interest rates?
Here’s one way you can figure out if you’ve pulled the car far enough into your garage– if
you run into the wall, you went too far. Hopefully the Fed has another plan for how to decide
when to stop raising the fed funds rate.
GM auto sales strong in June
One feature of past oil shocks that contributed to an economic downturn was a sudden change in consumers’ car purchases. But the latest indications are that U.S. automakers so far at least are not experiencing the same kind of problem this time around.
Worries about the yield curve
The yield curve has inverted eight times in the last half century, and in six of those
episodes, the U.S. ended up in recession. Some analysts are concerned that we may see a ninth
inversion before the end of this year.
Economic consequences of the high price of oil
All but one of the U.S. recessions since World War II have been preceded by a dramatic increase
in crude petroleum prices. Recent turbulence in energy markets has some analysts speculating that,
in the immortal words of Yogi Berra, it could be deja vu all over again. But this oil price shock
differs significantly from earlier episodes, leading me to believe that the economy will be able to
adapt to the new pricing environment without a major economic slowdown.
No sign yet of recession
The probability that the U.S. economy is experiencing a new economic recession remains below 5%, according to the latest value of the quarterly real-time GDP-based recession probability index.