Oil Price Surge Is Top Threat To U.S. Economy: Moody’s

The US jobs market is on fire. Consumer spending is strong. And the economy is growing at a brisk pace. But there is a growing threat to that sunny economic backdrop: Surging oil prices.

US oil prices are rapidly approaching $90 a barrel. Global oil prices are flirting with $92 a barrel amid worries about a wider war in the Middle East.

US oil prices are rapidly approaching $90 a barrel. Global oil prices are flirting with $92 a barrel amid worries about a wider war in the Middle East. And this has lifted gasoline prices to their highest levels in five months, Matt Egan reported for CNN.

The risk is oil prices keep climbing, hurting consumer spending and undoing the meaningful progress on inflation.

That could cause the Federal Reserve to delay interest rate cuts and spook investors on Wall Street. “It’s the most serious threat to the economy,” Moody’s chief economist Mark Zandi told CNN in a phone interview.

“Nothing does more damage to the economy more quickly than higher oil prices.” Not only that, but enormous political consequences could follow if gasoline prices spike above $4 a gallon and stay there.

Patrick De Haan, head of petroleum analysis at GasBuddy, told CNN that he is still expecting gas prices to average in the upper-$3 range unless a major hurricane damages US refineries. “I still don’t think a $4 a gallon national average is imminent,” De Haan said.

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