In this short New Yorker article, James Surowiecki explains why rising oil prices have not thrown the U.S. into recession, and more generally, why oil prices do not necessarily have as big an impact on the economy as people tend to think.
I can follow his reasoning, and on a macroeconomic level, I buy it. But then I look at the effect that rising oil prices has on an average family. In our two-car family, our monthly expenditure on gasoline has gone up by at least $50 in the recently, probably closer to $100. Our income hasn’t risen, so that’s $50-100 that we do not have to save or spend on other things. Considering that every family in the nation is experiencing the same thing, I can’t help but think that this must have some sort of effect on the overall economy.
If it truly isn’t having much of an effect, then it reveals what a load of bull is spewed about tax cuts. I remember when the federal government sent $400/child pre-emptive tax refund checks to families a couple of years ago. This mail-out was heralded as a big stimulant to the economy. If significantly increased gasoline prices doesn’t have much of a negative effect on the economy, then this one-time payout can’t have had much of a positive effect either.