History Suggests Oil Shock Raises Probability of U.S. Recession
- When oil rises 50% above trend, a recession follows: Pictet
- Investors question how long strength in energy stocks may last
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Historically, a surge in crude-oil prices of this magnitude have ended U.S. economic expansions and tipped the U.S. economy into recession, according to Pictet Asset Management.
In the past 50 years, every time oil prices, adjusted for inflation, rose 50% above trend, a recession followed, data from Luca Paolini, chief strategist at Pictet, show. Brent, the international gauge for prices, climbed well above $110 a barrel this week, crossing that threshold on worries about disruption to Russia’s exports after the country invaded Ukraine.