One of the concerns economists have is that rising oil prices could derail a recovery from the recession, particularly if crude moves back above $70 and stays there.
Gasoline prices have kept dropping, for the time being, even though oil has moved up some. Refiners have not passed the rising price of oil on to gas stations, although that could change quickly.
According to the widely followed Lundberg survey, gas prices have dropped a little over seven cents in the last two weeks. The average price of regular nationwide is $2.49.
Analysts believe that second quarter GDP will only fall 1.5% and the number for the third quarter could be positive. The economy will still need several catalysts to keep moving in the right direction. Employment will not be one of these as it works it way toward 10%. That leaves the effects of the stimulus package and energy prices as two critical factors to keeping a recovery on track.
Gas prices were close to $4 a year ago and the depth of the recession may have, in part, been due to the damage that the remarkably high cost of fuel did to consumers and large industries including travel and automotive.
For the time being, gas prices are not a drag on the economic recovery and if that remains the case for several more months fuel costs could actually aid GDP improvement and productivity.
Douglas A. McIntyre
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