Reflection On The US Economy. A 1970s-Style Energy Crisis Still Looms.

Turbulent times. Some financial experts are warning that the US economy could plunge into a recession in the next year, despite the current strength of the job market and robust consumer demand. Economists are worried about rising costs to borrowers, which they fear could lead to a sudden decrease in spending. The increasing cost of gas and commodities from the war in Ukraine and supply chain issues related to the COVID-19 pandemic have increased anxieties over a potential downturn. [WaPo]

Prices climb higher. Key measures to tackle annual inflation remained worrisome. Core inflation—which policy makers consider an important barometer that helps to predict where inflation is headed—increased at a speedier pace in April than its increase in March. Services prices are also rising, as industries offer higher wages. [NYT]

From $0 to $120 in 2 years — and the price of oil could climb higher: Sky-high energy prices around the globe are causing inflation and affordability problems. Oil remains close to multi-year highs and any sign of weakness or a dip in value has been brief before a rebound in price. The oilpatch is now in a period of record revenue and awash in cash. “People that have survived and waited out the tougher times are getting rewarded now,” said Travis Sperling, industrial sales and operations manager with Winters Instruments, which specializes in manufacturing pressure and temperature gauges used in the oil and related industries. [CBC]

A 1970s-style energy crisis still looms: OPEC has agreed to pump a bit more crude oil over the next two months as Russian production begins to drop because of Western sanctions. But the market reaction to the announcement has been muted as the OPEC move was “more symbolic than fundamentally significant.” It’s unlikely to change the broader dynamics that have pushed up energy prices, exacerbating the worst cost-of-living crisis in decades. Current and former energy officials tell CNN they worry that Russia’s invasion of Ukraine will create problems that will rival the oil crises of the 1970s and early 1980s.”We have an oil crisis, a gas crisis and an electricity crisis at the same time,” Fatih Birol, head of the International Energy Agency, told Der Spiegel in an interview published this week. “This energy crisis is much bigger than the oil crises of the 1970s and 1980s. And it will probably last longer.” [CNN]

Mounting pessimism. Many Americans consider economic opportunity to be increasingly out of reach, despite rising wages, a sizable pick of jobs, and a low unemployment rate, according to McKinsey’s American Opportunity Survey. Across nearly every demographic group, Americans are more pessimistic than they were in two surveys from 2021. In March–April 2022, optimism dipped 5% lower when compared with a survey from six months ago and 3% lower than in a survey conducted a year ago. [McKinsey]

For many Americans, economic opportunity seems increasingly out of reach; Across almost every demographic, income level, and age group, more respondents believe the US is doing a poor job of providing opportunities for all people.

Dwindling opportunities. More Americans reported having fewer economic opportunities than they did a year ago and said they expect even fewer opportunities in a year and five years from now. However, there were also bright spots: younger people (aged 25 to 34) had the most positive outlook of all age groups. Among these respondents, optimism was higher across all racial and ethnic groups, and highest among college graduates, higher-income earners, and those living in urban areas. [McKinsey]