Are High Oil Prices Keeping My Bush Boom at Bay?

From Holden:

Are high oil prices hurting the US economy? Depends on who you ask. Sara K. Clarke of the Newhouse News Service says, Go Team! [scroll past the ad for a car dealership]

A year ago, the doomsayers predicted an economic catastrophe if oil remained above $50 a barrel. Inflation would soar. Corporate profits would nose-dive. Investors would get burned.

Sure enough, oil hit $67 a barrel for the first time last week. Nationally, the average price of regular unleaded reached a record $2.413.

But instead of a disaster, the economy is healthy. Just this month, the government reported more than 200,000 jobs were created in July — the most in three months. The inflation rate rose just 0.1 percent in June, and estimates put the annual rate of increase for the Gross Domestic Product at 3.4 percent for the second quarter of 2005.

But Jad Mouawad and David Leonhart take to the pages of the NYTimes to say, Oh Crap!

Inflation surged last month, the government reported yesterday, as the long rise in energy prices finally seemed to be pinching the American economy. After absorbing the burden of oil at $40 a barrel, then at $50 and beyond, consumers have started to react as prices have risen above $60 in recent weeks.

Wal-Mart blamed high oil prices yesterday as it reported that in the recent quarter its profits rose at their slowest rate in four years. The chief executive, H. Lee Scott Jr., told investors that expensive oil was worrying him because it seemed to be erasing recent income gains for many customers.

Airlines have already felt the sting of increasing jet fuel costs. Last week, Delta, United and Continental raised domestic fares in their latest attempt to stem losses; Delta is struggling to avoid bankruptcy. United Parcel Service recently reminded its drivers not to leave truck engines running while they deliver packages

Nearly all of the jump in inflation last month came from energy. Overall prices rose 0.5 percent in July – and 3.2 percent over the last year – after having been flat in June.

Across the country, families are trying to figure out where to cut corners so they can afford gas that now averages $2.55 a gallon nationwide after posting the biggest weekly jump in at least 15 years, according to the latest government statistics.