Aug. 4 (Bloomberg) -- Higher oil prices are unlikely to propel the U.S. economy into recession as they have done in the past, according to James Hamilton, an economics professor at the University of California, San Diego.
“I don’t think we’re vulnerable to quite the same type of disruption,” Hamilton, who has studied the effect of oil-price surges on economies, said yesterday in an interview. Consumers haven’t been buying sport-utility vehicles as they did before crude soared to records in 2008, he said.
The CHART OF THE DAY shows the relationship between the producer-price index for crude oil, as compiled since 1973 by the Labor Department, and U.S. recessions. Dates for the latter are set by the National Bureau of Economic Research, which has yet to call an end to the slump that started in December 2007 even though the economy has grown for four straight quarters.
Crude for September delivery settled yesterday in New York trading at $82.55 a barrel, an increase of 29 percent from this year’s low, set on May 20.
Oil prices jumped before 10 of the 11 recessions since World War II, Hamilton wrote in a paper published in December and revised in June. The exception was a contraction between April 1960 and February 1961.
“We’re looking at slower growth” this time around, he said during the interview. Economic indicators are showing enough strength overall that more costly crude won’t “tip us into falling output again, at least not in the next six months.”
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