– by New Deal democrat
At the beginning of the year, I identified 5 trends that bore particular watching, primarily as potentially setting the stage for a recession next year. Now that we are halfway through the year, let’s take another look at each of them.
#5 Gas Prices
One potential pressure point on the economy was gas prices, which appear to have made a long- bottom in January of 2016. As they began to rise, consumer inflation has increased from non-existent to almost 3%. So the issue was, will they rise even further and drive inflation even higher?
And the answer so far this yeear has been a resounding “No!” Typically it has taken a 40% YoY increase in gas prices to shock the consumer. Gas price increases did briefly approach that point early in the year, but since then they have retreated all the way to being negative YoY:
#4 The US$
Another potential pressure point on the economy was a big increase in the relative value of the US$, which was part of the shallow industrial recession of 2015. The $ started to rise again after the November election. Here too after an initial spike, the data has calmed down again: