Recessions: a First Order Approximation

As I read this post by Manhattan Contrarian Francis Merton comparing and contrasting the German and U. S. economic situations, a thought occurred to me. Can oil prices be used as a very much simplified predictor of U. S. recessions? The kind of thing I’m thinking of is “as long as the price of oil stays below X per barrel, the U. S. economic will continue to expand”.

3 comments… add one
  • Grey Shambler Link

    “I’d love to make sure we can’t use any oil or gas, period,”

    Hadn’t heard that, Jeesh! That’s primary politics, but I can only imagine people are very poorly informed. Oil and gas are in the price of everything, even electricity and windmills. So, roughly, yes, high fuel prices have to drag down the economy, which is bad unless you actually believe the planet’s on it’s last leg and draconian measures are warranted. And if you believe that then a lot of other nasty things might be in order as well, such as population control by fiat.

  • bob sykes Link

    OK, I will repeat. Globalization forces all wages and prices to the global mean. In the advanced countries, this means deflation. Hence the move to negative interest rates. Why is this so hard to understand?

  • Guarneri Link


    So how do we explain Venezuela’s inflation?

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