The Most Important Number of the Week Is $80
Consumers and the economy are better equipped to weather the rising prices of oil and other fuels than they were in the 1970s.
No doubt surging energy prices will sting.
Photographer: Kyle Grillot/Bloomberg
A buzzword has returned to Wall Street: “stagflation.” This is the rare combination of high inflation and low economic growth. The last time the nation experienced stagflation was during the mid-1970s, when OPEC decided to embargo the sale of oil to the U.S., causing prices to quadruple to almost $12 a barrel. It was a shock that consumers couldn’t handle, thrusting the economy into recession.
Although there is no embargo now, disruptions because of the global pandemic have caused supplies to tighten, sending prices higher in a hurry as economies open up again. West Texas Intermediate crude reached $80 a barrel on Friday for the first time since 2014. What’s concerning is that oil prices have now doubled over the past 12 months, something that DataTrek Research says has preceded every U.S. economic downturn since 1970.