“The following is an excerpt from Tim Snyder’s “Weekly Quick Facts” newsletter. Tim is an accomplished economist with a deep understanding of applied economics in energy. We encourage you to visit Matador Economics and learn more about Tim. While there, you can sign up for his completely free Daily Energy Briefs and Weekly Quick Facts newsletters.”
What is it about the truth that scares people?
Gasoline prices this week took a bit of a respite after several weeks of steep climbs. The relief at the pump is palatable and very much appreciated by those on fixed budgets. But the fall from record highs, may not continue if inflation continues to run unchecked.
Diesel prices fell as word of another variant of Covid-19 seems to be making the rounds. The Chinese Government shut in 26 million people this week, sending a signal that demand for the products may falter over the next couple of weeks.
Are we at the end of the pandemic or the beginning of a recession?
On Tuesday of this week, I had the honor of meeting with a class of extremely talented Ag-Economists at Texas Tech University. We had an in-depth discussion. This was Dr. Darren Hudson’s class on Risk Management.
We began the discussion exploring different types of “risk” and the direct and indirect effects from the influences of a pandemic on a fully functioning economy. It took me back to when we first heard about Covid-19.
It was early January 2020, and I heard a brief mention on one of the cable news outlets about an out-of-control virus in China. There was something in the voice of the host, and I made a note of it.
A couple of days later, I wrote, “There are conflicting signals across the markets this morning, and it appears we are beginning to build momentum to the downside.”
I then wrote, “We can’t have a miss here, or a BLACK SWAN EVENT, that shakes market support.” Little did I know...
Fast forward two and a quarter years, and we find ourselves in a different predicament. With Tuesday’s CPI numbers showing a year-over-year 8.5% inflation rate, economists are now concerned that the economy is cooling to the point of a recession.
The Federal Reserve must now tow a very thin line here. By not addressing the precarious issues of a recovering economy in 2021, the FED and the Biden Administration, may have put our economic strength in harm’s way.
It has been widely postulated that Jerome Powell, Chairman of the Federal Reserve, should have begun to unwind the stimulus back in 2021. But, as you all know, nothing was done until last month.
One can only hope we don’t kill the momentum that we are creating in demand for US commodities like crude oil and natural gas and push the US economy over the edge and into the abyss.
Timothy S. Snyder, Economist
Matador Economics
US petrol $4+ !!! Here in the UK it is $11.52 !!!!!! our wages, food and housing rent/ mortgage costs are probably worse than that enjoyed in the USA!