After a wild ride up to $130 a barrel, the price of oil has come back down to its level from before Russia invaded Ukraine. Russian oil may be finding buyers despite the sanctions, and U.S. production continues to recover. But the situation remains very uncertain, and a big disruption in the quantity of Russian oil that reaches world refineries is a very significant possibility. In my previous post, I examined the causes of the run-up in the price of oil that had already occurred before the invasion and discussed the implications for U.S. inflation. Today I comment on the possible implications of further supply disruptions for U.S. real GDP.
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Oil prices and inflation
The price of oil has doubled from its value a year ago and could increase much more if there are significant reductions in the quantity of Russian oil that reaches world refineries. This is the first in a series of two posts on what these events could mean for the U.S. economy. Today I focus on the implications for inflation, and in a follow-up post I will discuss implications for real GDP.
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Wisconsin Employment and GDP: Actual and Outlook
The Wisconsin Department of Revenue released its February Economic Outlook on Monday.
Benchmarked January Employment in Wisconsin
DWD released benchmarked employment in Wisconsin yesterday. Overall employment was higher in 2021 than earlier estimated, but the slowdown in now more pronounced.
“Though wages are rising, inflation is winning the race”
That’s the title of a NPR report.
Oil Price Forecasts: DoE EIA vs. Futures
Forecast as of 3 March, and confidence intervals implied by options.
Inflation in February
Oil prices were on the rise before the invasion, so gasoline prices were up. Headline m/m ticked up, core down. We are below peaks for month-on-month, even if you hear about 40 year highs (on year-on-year).
The Gasoline Intensity of US GDP
Gasoline prices hit new (nominal) highs. But the usage of gasoline per unit GDP (and in absolute terms) has declined since 2008.
The Ruble: Convertible No Longer
From Anders Aslund at Project Syndicate:
And on March 8, the central bank decided to stop exchanging rubles for foreign currencies, which means that the ruble is no longer convertible.