[Vision2020] Economists Predicted $90/Barrel Oil Induces US Recession: Now Over $100/Barrel

Ted Moffett starbliss at gmail.com
Sat Mar 1 13:30:48 PST 2008


While credit tightening and mortgage defaults are cited often as main causes
for the pending US recession, consider this survey of economists from just a
year ago, claiming that $90 a barrel oil would cause a recession.  Oil last
week hit $102 a barrel, gas and diesel costs have increased, increasing the
costs of shipping product, and shifting consumer spending from shopping to
gas tanks.  With $4 a gallon gas predicted, food prices increasing, etc.,
naturally consumers might tighten their spending, contributing to an
economic slowdown.  Perhaps part of the reason some cannot make their
mortgage payments is increases in energy costs:

http://www.reuters.com/article/bondsNews/idUSN1125529520070312

WASHINGTON, March 12 (Reuters) - U.S. oil prices would have to hit $90 a
barrel to drive the economy into a recession, according a survey of
economists released on Monday, lowering the threshold from a survey last
summer.

The National Association of Business Economists (NABE) also cited defense
and terrorism issues and excessive household and corporate debt as the
biggest short-term economic risks.

A panel of 320 members surveyed by the NABE said that the median forecast
for summer 2007 oil prices is now $60, compared to a median forecast for
almost $75 in the last survey conducted in August 2006.

"However, the potential effects of higher oil prices are thought to be
greater now, with the median respondent indicating that $90 oil would be
enough to cause a recession now versus the $100 threshold indicated by the
August 2006 survey," the group said.

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Visiion2020 Post: Ted Moffett
 On 2/29/08, Paul Rumelhart <godshatter at yahoo.com> wrote:

> Ted Moffett wrote:
> >
> http://www.marketwatch.com/news/story/economists-say-2008-year-forget/story.aspx?guid=%7BF1BD8B30-B628-4AA3-853E-1FDD8D54A33E%7D
> >
> >
> > "The recession is likely to be a serious one," said Dean Baker,
> > co-director of the Center for Economic and Policy Research.
> >
> > He estimated losses in prime mortgages will be two to three times the
> > $160-$200 billion hit seen in the subprime sector. This, he said, will
> > lead to large losses at banks and difficulty for Fannie Mae and
> > Freddie Mac.
> >
> > University of Chicago professor of finance and former chief economist
> > at the International Monetary Fund, Raghuram Rajan, said questions in
> > the media over whether the U.S. economy will fall into recession are
> > really only about semantics.
> >
> > "We are going to have very low growth in the first two quarters of the
> > year. Whether it is negative or zero, it is going to feel like the
> > same thing," Rajan said.
>
> The big question is: are we going to learn from this?  Will the average
> American stop racking up tons of credit card debt, and stop taking out
> questionable loans that should have sounded too good to be true?
>
> Some statistics I found on the net (from
> http://www.fool.com/ccc/secrets/secrets.htm):
>
>    * Total consumer credit: $1.7 trillion.
>    * Credit card debt carried by the average American: $8,562.
>    * Total finance charges Americans paid in 2001: $50 billion.
>    * Percent of U.S. households deemed credit worthy by the lending
>      industry: 78%.
>    * Number of credit card holders who declared bankruptcy last year:
>      1.3 million.
>
>
> Also, 75% of credit card company revenues come from finance charges.
> They are also talking about starting to penalize those who pay off their
> credit card bills every month.
>
> Until we fix this problem, we'll be bouncing in and out of recessions
> forever.  The only answer I see to this is education and discipline.
> For example, don't buy that 60" plasma screen TV if you really can't
> afford it.  This isn't rocket science.
>
> Paul
>
>
>
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