The impact of gasoline prices is pretty easy to see in our economy. If you think of your own life, you know that if you spend $10 more on gasoline for your car, you have $10 less to spend elsewhere. Not only is there the direct impact, but the indirect impact which effects the costs of all goods that are delivered by ship, airplane or truck….which is pretty much everything aside from our digital world.
If you look at the last few years, gasoline spiked in July 2008 and May 2009:
If we look at an overlay with the S&P 500, we can see pretty strong peaks before the crash of ’08 or the strong correction of 2011:
By no means is this a forecast, but it definitely seems like a headwind that we should keep an eye on. It seems that the media is selling the idea that, “$4 gasoline will not derail the economy”. At the same time, they are not saying that $4 gasoline will make the economy more fragile for other economic blows. It is usually not one factor that starts a slowdown, but a group of factors.