Wall Street Is Hoping $100 Oil Ain’t What It Used to Be
A string of inflationary shocks has challenged the Federal Reserve’s effort to control price increases. Investors are worried the latest could be $100-a-barrel oil. Crude’s march closer to that mark has made Americans’ commutes more expensive.
Truckers who haul food cross-country are charging grocery stores more for diesel. Jet-fuel-reliant airlines are demanding higher fares. And manufacturers of everything from plastic toys to asphalt could face costlier ingredients.
Oil’s rise has inspired fresh fears from Washington to Wall Street that energy, which the Fed largely excludes in its policy calculus, could throw off central bankers’ attempted soft landing of the fuel-hungry American economy. Some investors and economists have compared the moment to previous periods in which booming oil prices have helped tip the country into recession. “It makes things harder," said Rob Kaplan, former president of the Dallas Fed.
“Just because the agencies or analysts or economists will ‘x’ out oil, the middle-class family doesn’t get to ‘x’ it out." A gallon of regular gasoline averaged $3.88 across the U.S. last week, according to federal record-keepers, up more than 25% since the start of the year. An August surge propelled consumer prices higher at their fastest pace in more than a year.
Economists fear rising costs will push Americans to slash spending on restaurants, travel and other areas, stalling growth in a condition often known as stagflation. Elevated energy costs could also tighten labor markets by pushing those with low pay or multiple jobs to think twice about long commutes to work. But the extent of such consequences is far from clear, creating fresh uncertainties for investors who are trying to game out the impact of
. Read more on livemint.com
