Oil Prices Starting to Affect the World Economy
Higher oil prices were cited as the reason that last month showed some inflation (0.6% core, 0.3% consumer). American consumers who had gained that average 3 cent increase in pay last month spent a lot more at the gas tank. Yet, the real problem is the way the weak dollar is affecting OPEC and the US economy. According to this New Zealand article, OPEC are increasing their prices for crude and cutting back on production because everything they sell has to be in US dollars when the dollar is failing in comparason to other currencies. This positive feedback: higher oil prices for the world and a weakening dollar will cause some more pain in the US. Watch for the prices at the pump to go up some more. As Reuters reports, this will certainly be a drag on the struggling US economy.