With Energy Prices Soaring, U.S. Recession Fears Grow

May 17, 2022--Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Against a backdrop of a higher-for-longer outlook for commodity prices and the additional geopolitical risk premium emanating from the war in Ukraine, the former head of Goldman Sachs Group, Incorporated (New York, New York) said there's a real possibility of economic recession in the United States.

U.S. real gross domestic product declined at an annual rate of 1.4% during the first quarter of the year, following an increase of 6.9% in the previous quarter. The federal government attributed the decline to steady pressures from the COVID-19 pandemic as well as the tapering of the federal assistance that supported households during the worst of the global health crisis.

Simply put, households are having a harder time making ends meet. In the most recent reading of inflation, the federal government noted that consumer prices increased 8.3% over the 12-month period ending in May. Most of that increase is in the form of energy. The price for all energy commodities surged 30% during the period. For gasoline, prices are up nearly 44% and a staggering 80% for fuel oil.