Joe Petrowski, former CEO of Cumberland Farms Gulf Oil Group, said on Monday he was “absolutely certain” that the United States will be in a recession.
Speaking to “Mattine con Maria”, he noted that a recession usually accompanies “every energy crisis”, especially since energy accounts for 7% of gross domestic product (GDP), the largest measure of goods and services produced in the economy.
He put forward the argument four days after it was revealed that the US economy shrank in the spring for the second consecutive quarter, meeting the criteria for a recession as record inflation and higher interest rates forced consumers and businesses. to collect the shopping.
GDP shrank 0.9% year-on-year over the three-month period from April to June, the Commerce Department said Thursday in its first reading of the data. Refinitiv economists expected the report to show that the economy had grown 0.5%.
IS THE UNITED STATES GOING INTO RECESSION?
Recessions typically refer to two consecutive quarters of negative economic growth, and Thursday’s GDP report revealed consecutive declines in growth, taking the economy to technical criteria for one.
Economic output has already declined in the first three months of the year, with GDP down 1.6%, the worst performance since spring 2020, when the economy was still grappling with the COVID-induced recession.
US ECONOMY ENTERS TECHNICAL RECESSION AFTER GROWTH LOSS 0.9% IN SECOND QUARTER
The Department of Labor revealed last month that inflation accelerated more than expected to reach a new four-decade high in June as the price of basic necessities remains painfully high.
The department said the consumer price index, a broad measure of the price of everyday goods, including gasoline, groceries and rents, rose 9.1 percent in June from a year ago. Prices have risen by 1.3% in the one-month period since May. These figures were both far higher than the main figure of 8.8% and the monthly gain of 1% predicted by Refinitiv economists.
The data marked the fastest inflation rate since December 1981.
Price increases extended across the board: Energy prices rose 7.5% in June from the previous month and rose 41.6% from last year. Gasoline, on average, costs 59.9% more than a year ago and 11.2% more than in May. The food index, meanwhile, rose 1% in June as consumers paid more for products like grains, chicken, milk and fresh vegetables.
On Monday, the average price of a gallon of gasoline dropped to $ 4.21, according to AAA, a steady decline since it hit a high of $ 5.01 on June 14.
Oil prices fell on Monday as weak China and Japan production data for July weighed on demand outlook and investors braced for upcoming OPEC officials meeting on potential supply adjustments .
|USE||UNITED STATES OIL BOTTOM LP||78.05||+0.92||+ 1.19%|
|BNO||UNITED STS BRENT OIL FD LP UNIT||32.38||+0.42||+ 1.31%|
Brent crude futures fell 4.5% to $ 99.30 a barrel on Monday morning. US West Texas Intermediate Crude Oil was at $ 92.63 a barrel, down about 6%.
Brent and WTI ended July with their second consecutive monthly losses for the first time since 2020, as rising inflation and higher interest rates raise fears of a recession that would impact fuel demand.
Petrowski said the oil market has dropped from its highs because “there is a significant amount of people who believe there will be a recession or that we are there now.”
He noted that he is not sure if the US is in a recession now, but said he is confident the country will be in a recession in the near future.
“I just don’t know how you’re not going to have a recession with food prices where they are [and with waning] consumer spending, “he added.
“I know everyone keeps coming back to the job market. This is a lagging indicator, not a leading indicator.”
Last month it was revealed that the US job market remained solid in June as hiring exceeded expectations.
US employers added 372,000 jobs during the month from 390,000 the previous month, signaling that inflation has had little impact on hiring so far. The unemployment rate remained stable at 3.6% for the third consecutive month.
Employment data for July will be released on Friday.
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“I truly believe that over the summer we will see crude oil return to $ 150 a barrel and oil before Labor Day reaches that level and gasoline retail prices will again exceed $ 5,” Petrowski warned.
FOX Business’ Megan Henney contributed to this report.