National University System Institute for Policy Research

(858) 642-8498 Get Started

EconoMeter: As gas prices go up, will economy go down?

U-T EconoMeter


Friday, March 2, 2012

View Article

Kelly Cunningham, National University System
Answer: Yes

The fragile economic recovery can clearly be derailed by rising gas prices. Current increases are eerily reminiscent of last year when anticipated recovery at the time was derailed partly by gas prices spiking from Arab Spring uprisings. The impact usually takes a few months to set into the economy and prices are already higher than a year ago before normal spring and summer hikes. With spending on oil currently accounting for 6.2 percent of consumer expenditures, a tipping point for recession may already be reached. Spending $40 more per week on gasoline leaves that much less available for other spending.