Gas Prices on the Rise Could Signal an Economy About to Tap on the Brakes

CNS News | 5/21/2018 | Staff
blacky (Posted by) Level 3
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In all the world’s economic uncertainty—one thing is for sure. We haven’t seen manufacturing activity like this in America for a very long time. We continue to see manufacturing increase, and it would appear that there is a consistency to the rise. Apparently, manufacturers are not quite ready, at least yet, to start putting on the brakes due to potential “trade wars.” On top of that, we are actually seeing good retail sales numbers coming through again for the second month in a row, and that is good news.

Headwinds that the economy faces include consumer spending and consumer confidence, which will be followed by business sentiment and manufacturing productivity beginning to fall off. This is possibly being caused by a tax of sorts that all Americans will face—not really a tax, but it usually acts like a tax, robbing the economy of discretionary income needed in a consumer-driven America. This, of course, is an increase in gasoline prices.

Average - Gasoline - Gallon - Gallon - Memorial

The national average for gasoline is now $2.91 per gallon. It’s possible we could see $3 a gallon before Memorial Day weekend, and based on the trajectory of crude oil, some are indicating that $3 a gallon is a psychological benchmark and a level we should be concerned about. I have been saying that the real psychological impact on consumer spending is not $3, but rather somewhere around $3.38 a gallon. When that price begins to be reached, we will see industries and consumers start to tap on the brakes, becoming a little more concerned about the direction of the economy.

As we head into the summer and gas prices continue to increase, don’t be fooled by the markets. They may continue to rise based on the financial and energy sectors continuing to see stock prices rise, but we may begin to see a...
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