$100 oil hurts, just like a recession

NEW YORK (CNNMoney.com) — All of those people that believe high oil prices will hurt the economy may be onto something.

Back in October, when oil prices were near $90 a barrel and the economy was still humming along economists said high oil prices shouldn’t cut into economic growth – despite widespread public opinion to the contrary. The economy used oil more efficiently than it did in the 1970s, and spending on gas was just a small percent of people’s budget, the experts said.


Fast forward to March and you’ve got a sputtering economy, and economists saying $105 oil deserves a big part of the blame.

Even the White House is beginning to sound more pessimistic about the economy, predicting Friday that the the economy could contract.

“You have a very significant restraint on consumer spending,” said Chris Lafakis, an associate economist at Moody’s Economy.com, an economic consultancy. “It acts as a tax would.”

CNN