Ben Bernanke and a number of prominent economists say that the US is in better financial shape to endure high gas and oil prices now than it was in 2008 when gas prices moved higher than $4 a gallon.
These experts are the only people who feel that way. Consequently, the price of gas and oil could derail the small gains that the economy has recently made.
A new Reuters/Ipsos poll shows that 64% of Americans believe that the country is “off track.” There could be a number of reasons for this which vary from unemployment to deficit worries. But, that is not the case, according to Ipsos pollster Cliff Young. ”We are moving into a scenario in the near-term that is much more uncertain given the issue of gas prices,” he said. “Gas prices specifically are things that affect people’s pocketbooks and have an immediate impact.” The poll of 1040 adults, including 776 registered voters, was taken Thursday through Sunday.
Gallup did a poll, based on a completely different methodology than the Reuters one, which found that many Americans expect gas prices to rise above $4 soon. “Americans, on average, expect gas prices to surge to $4.36 a gallon where they live this year. More than one in four predict gas prices in their area will reach or exceed $5 a gallon this year.” The Gallup poll was based on telephone interviews conducted March 3-6, 2011, with a random sample of 1,021 adults, aged 18 and older, living in the continental U.S., selected using random-digit-dial sampling.
Different polls and techniques. Relatively similar results.
The median forecast among economists for US GDP growth this year is about 3.5%. The figure is as high as 5% in some cases. Most of these experts believe that strong gains in the business sector will offset the duel anchors of unemployment and low consumer spending. The February unemployment numbers have given the most optimistic forecasters a reason to believe that strong job creation will help GDP improvement in the last three quarters of the year.
Consumers may be worried about gas prices and in some cases their financial prospects may already be hurt by them. But the immediate negative effects have already been felt by many businesses which means the foundation of the recovery has begun to crack. Any company that relies on transportation of goods has been hit by fuel prices. Those prices are married with inflation in the metals and agricultural goods commodities . Margins for firms across the country have begun to collapse. The hope that prices can be passed on to consumers dims each time the price of gas moves up.
Economists are whistling past the graveyard now. Higher gas prices are not just part of the fear and psychology of consumers and businesses. The problem has moved beyond that to the place where gas and oil prices are already too high to sustain an expansion.
Douglas A. McIntyre