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Rising gas prices, mortgage rates stall economic recovery
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Rising gas prices, mortgage rates stall economic recovery.jpg)
Gas prices continued to jump this week as the national average for a gallon rose to $2.66, while many parts of the country are paying over $3. We have watched crude oil prices creep up steadily since reaching a low of about $34 last winter. The rise has had an emotional impact on consumer spending, with people scouring the streets looking for the cheapest gas prices.
Gas has risen and fallen ever since my grandpa pumped it during the depression for 12 1/2 cents a gallon. The problem is that rising gas prices are coming at a time when our economy needs a jump. People are feeling pain at the pump and it is affecting consumer spending. Money that should be going into jump starting the economy is going into the pockets of overseas oil companies.
People don't realize the impact that oil prices have on the economy. Oil fuels our economy from manufacturing to transporting goods to transporting ourselves. Oil prices are a very emotional industry. Everything from travel to retail is influenced by it. When gas prices go up, shipping prices go up and so does the bottom line on products we buy everyday. The economy has also encouraged electric cars like the Chevy Volt.
Barack Obama's stimulus package is focused on stimulating the economy and paving new industries like alternative energy. When oil was at $148 a barrel, everyone was all about energy independence. But when gas prices dropped below $2 a gallon, enthusiasm towards energy independence dropped, but the economy started to grow. Many economic analysts are predicting a stall in the moderate growth we've seen.
The slow down is being compounded by another big faltering sector, mortgages. With the mortgage crisis still looming, interest rates have gone up quite substantially in the past 6 months. People living paycheck to paycheck can't even think about buying a home until rates drop to at least 5%. Interest rates have risen because of an increase in consumer confidence, and a national mindset that the recession might be ending soon. The increase might be too soon though, and we might see a backslide into a deeper recession in the coming months.
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