The nationwide average price for a gallon of regular rose seven cents over the past two weeks, according to the Lundberg Survey. That puts the price at $3.76. In the previous two weeks, the price rose 19 cents. Some economists believe that gas prices are high enough to undermine consumer spending, particularly among lower and middle-class households in which driving to work and school is a major expense.
Gas prices were just as high, if not higher, last spring, but gross domestic product was up then. Growth may be under 1% in the second half. The Congressional Budget Office recently reported that the "fiscal cliff" could cause GDP contraction in the first half of 2013. Add in gas prices that remain high, and consumer activity could contract sharply during the Christmas shopping season and then into the start of next year.
Douglas A. McIntyre
Filed under: 24/7 Wall St. Wire, Economy, Oil & Gas