Fuel prices’ toll on U.S. economy

A $10 increase in the price of a barrel of oil can lower GDP by about 0.2 percent.

New York – Obviously, the sharp rise in the price of oil

Economists are divided, however, over whether the price of oil has skyrocketed enough to push the economy into a recession. The optimists see Americans making adjustments, scrimping when they can to make up for the extra cost of gasoline.

“The economy is still growing,” says Richard DeKaser, chief economist of National City Corp. in Cleveland. “There is nothing magical about $130 [a barrel] oil. It’s just more of a drag, more intense.”

The pessimists say that the rise in energy prices is coming too fast and that the US economy is now in an “oil shock” downturn.

Christian Science Monitor