Friday, May 29, 2009

Higher Oil Prices and Bond Yields Could Slow U.S. Economic Recovery

Analysis: Rising oil prices jeopardize recovery beginnings
With the U.S. looking to consumers to spend and help drive the economy back to growth, five weeks of rising oil prices threaten the strategy. Since April 21, oil has risen 48%, peaking at slightly more than $65 a barrel this week. If the increase continues much longer, it might "postpone some of the recovery we'd been hoping for," said James Hamilton, an economics professor at the University of California, San Diego. Reuters (28 May.)

Recovery called into question by exploding U.S. debt
Worries about the U.S. government's skyrocketing debt are prompting doubt about a turnaround for the economy. Government bonds have come under heavy selling pressure, driving up yields. A recovery could be derailed by increased borrowing costs for consumers and businesses, economists said. Financial Post (Canada)/Reuters (28 May.)

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