AddThis

Study sees danger in gas prices

A new study of the impact of rising gasoline prices on consumer spending shows that gasoline prices of $4.25 per gallon could cut estimated 2012 retail sales growth from its current 5.7% pace to an anemic 2.3%. 

The report, from the New Canaan, Conn.-based consulting firm Customer Growth Partners (CGP) was based on an analysis of energy prices and economic activity dating back 40 years. The retail consultancy found that five of the last six U.S. recessions over that period have been correlated with, if not caused by, rising energy prices -- particularly gasoline prices.   

CGP president Craig Johnson said: “Although recessions are normally caused by a complex combination, every recession of the past four decades -- with the exception of the 9-11 year of 2001—has been marked by energy prices that exceed a ‘tipping point’ of 6% of the consumer dollar, when we send so much money to the oil countries that it takes the wind out of consumer spending."

According to the CGP study, whenever rising prices cause energy to exceed 6% of the consumer dollar for more than a few months, the economy can tip into recession.

The American Automobile Association's tally for the average price of a gallon of regular gas stood at $3.65 on Friday, up from $3.23 a year ago. 

© 2014 Home Channel News. All Rights Reserved.