[mattduke]

$this->bbcode_second_pass_quote('', 'E')conomic growth braked sharply in the first quarter as higher food and gasoline prices dampened consumer spending and sent inflation rising at its fastest pace in 2-1/2 years.

Another report on Thursday showed a surprise jump in the number of Americans claiming unemployment benefits last week, which could cast a shadow on expectations for a significant pick-up in output in the second quarter.

[Daniel_Plainview]

Yesterday, WTI crude surpassed $113/bbl, while Brent touched $125/bbl ... These price increases are happening despite the fact that the US economy is clearly teetering on the brink of a double-dip recession, with weekly jobless claims back around 430K, and GDP growth decelerating by over 50% year-on-year, plunging from 3.7% (Q1 2010) to 1.8% (Q1 2011). Meanwhile, the national average for gas prices rose 2 cents on Friday to about $3.91/gal.

The higher input costs occasioned by soaring oil and commodity prices will invariably lead to lower GDP and higher unemployment: as companies' profit margins are slashed amid higher input costs, companies must preserve capital by hiring less and laying off more. This compels Helicopter Ben to print more money, which causes commodity prices to increase, which worsens the problem.

We are entering a period of stagflation (high prices & low growth). This will not end well.