Economic NewsEconomic News
Economic News is all around us – gas prices are rising and the possibility of interest rate hikes are looming. This article explains some of the latest news in the economic world. You can read it at your leisure by clicking the link below. The following are the latest headlines: Inflation has caught up to Americans – gasoline prices are now $3.90 per gallon, natural gas prices are expected to be 28% higher than last winter, and a possible interest rate hike.
Gas prices are now $3.90 a gallon
The average price of gas in the U.S. has dropped more than a cent per gallon in recent days, according to the AAA survey. Those prices are down more than 10% from their highs of June 14. The decline in prices is due to several factors, including the rising cost of oil, lower demand and the release of oil from the strategic petroleum reserve by the Biden Administration.
Gas prices are continuing to fall as the end of the summer travel season approaches. AAA’s weekly report shows that the national average price of a gallon of unleaded gas is now $3.90 – a five-cent drop from last week and four cents lower than a month ago. While gas prices continue to decline, they are still considerably higher than they were a year ago.
Natural gas prices could see prices 28% higher than last winter
Natural gas prices are expected to increase this winter, and the majority of the increase will come from higher wholesale prices. The rest will come from state-approved delivery price increases and other surcharges. National Grid officials have said that they based their forecast on the latest data, including relatively “normal” temperatures after a relatively mild storm season in 2022. However, if weather conditions turn out to be harsher than forecast, natural gas prices could spike even higher. The Northeast and Midwest could be particularly hard-hit by a spike in prices.
The price of natural gas in the Northeast will be higher this winter than in the rest of the country. The region has less gas infrastructure than the rest of the country, which is contributing to higher prices. Additionally, natural gas prices from National Grid have been trending higher throughout this year and have already reached five-year highs.
Possible interest rate hike
The Federal Reserve has a tough decision ahead of it. Although the economy is doing well, it remains overheated. However, it is beginning to show signs of slowing down. While inflation is still high, household spending and job growth are improving. Fed policymakers are divided about whether to raise rates or not. One governor, Michelle Bowman, said that she will look for signs that inflation is going down. Another, Minneapolis Fed President Neel Kashkari, said that if inflation has stopped rising, the Fed will be comfortable raising rates.
The Fed’s key interest rate, known as the federal funds rate, is currently near zero. This level has held since the financial crisis in 2008. A three-quarter point hike would take the rate up to three percent and place it into more restrictive territory. Generally, investors expect the Fed to remain in this range until inflation has declined. However, there is also some uncertainty about the timeline of interest rate hikes.
Global economy trapped in relative stagnation
The global economy has been in a relative stagnation since the 2008 financial crisis. Its cause is unclear but some scholars argue that the malaise dates back to the 1970s. In either case, the economic recovery has been weak. The global economy is still suffering from a number of shocks. Some even believe that the world economy is trapped in a form of secular stagnation.
There are two main reasons for this. First, global demand is weakening. This weakening demand abroad is causing higher real interest rates at home. This puts pressure on the central bank to cut interest rates. Second, secular stagnation is caused by capital flows.