In another blow to the embattled US economy, prices at the pump climbed to new record highs. The national average price for regular gasoline soared more than four cents on Tuesday to $4.37 a gallon, beating the prior record of $4.33 set in early March. The increase will ratchet up inflationary pressures that have raised recession fears and darkened analysts’ views of prospects for the economy.
Pump prices are up about 25% since Russia's invasion of Ukraine disrupted global energy markets. The latest increase in gas prices will only exacerbate inflationary problems in the US. It is expected that the Fed will have no choice but to accelerate its interest rate hiking process.
Some analysts fear even higher prices are coming. In addition to concerns about China's lockdowns, oil prices are set to creep up as the oil market braces for bad news and takes up supply issues, driving prices higher.
What does this mean for me?
The latest developments are bad news for the global economy, not only the US. The war in Ukraine shows no prospects of ceasing, causing untold volatility in energy markets.
As events in the US are showing, high energy prices contribute to elevated consumer prices, which, when added to otherwise heightened inflation, is an unsustainable cocktail.
For the diversified investor, it would not be unreasonable to plan for central banks around the world to increase interest rates to a level that sparks a recession, which will negatively affect your portfolio.
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