Global Economy Sails into a New Era

Oil is an input used in all aspects of the economy, from transporting goods to illuminating factories. So when oil prices increase, great economic repercussions can follow. According to James Hamilton, a professor of economics at the University of California at San Diego, oil shortages trailing the Suez crisis of 1956, the oil embargo of 1973, the Iranian revolution in 1979, the Iraq-Iran war of 1980 and the Gulf War in 1991 all led to a recession in the US. This time around, however, the United States is still experiencing some growth, despite crude prices that closed at over $41 per barrel last week. One possibility for this continued improvement, suggests this article in the Chicago Tribune, is that the increased oil prices have been predictable, allowing consumers to properly adjust consumption and perhaps leading to a permanent change in the global economy. – YaleGlobal