Despite signs of declining U.S. inflation, a majority of Americans, particularly those living in rural areas, are experiencing higher grocery prices under President Biden's economic policy, known as Bidenomics. Concerns about inflation and reliance on partisan news contribute to the perception of economic challenges, despite reports of a strong U.S. economy.
A potential gas price shock poses a significant risk to the stock market and economy, as rising prices can curtail consumer spending and reaccelerate inflation, according to Carson Group's Sonu Varghese.
The Biden administration may artificially depress inflation by using taxpayer money to manipulate the global oil market and replenish the Strategic Petroleum Reserve, in an attempt to lower gas prices and improve the president's chances of re-election.
The Federal Reserve is unlikely to panic over the recent surge in consumer prices, driven by a rise in fuel costs, as it considers further interest rate hikes, but if the rate hikes weaken the job market it could have negative consequences for consumers and President Biden ahead of the 2024 election.
The US is facing a significant risk to its energy security as its oil reserves hit a 40-year low, leaving it more reliant on imports and vulnerable to supply disruptions and price volatility in the global oil market, according to markets guru Larry McDonald. The Biden administration has been draining the strategic petroleum reserves since the start of the Ukraine war to cap energy prices, but with oil prices surging, the situation could exacerbate inflationary pressures and prompt the Federal Reserve to maintain higher interest rates for longer.
Despite a 10.6% rise in gasoline prices causing concern, JPMorgan strategist David Kelly believes that the surge in oil prices in 2023 is not worth losing sleep over, as the US is less dependent on foreign oil and there is easing pressure on both the demand and supply side.
President Joe Biden has promised to lower U.S. gasoline prices, addressing voter frustration over the economy as consumer inflation rises.
Gasoline prices in the US have reached a record high for this time of year, posing a challenge to President Joe Biden's fight against inflation.
Gasoline prices are rising due to oil supply cuts in Saudi Arabia and Russia, as well as flooding in Libya, but some experts believe that increasing oil prices will not have a significant impact on the US economy and do not expect them to rise much higher in the next year or two due to factors such as increased US oil production, slow global economic growth, and the green energy transition. However, high oil prices can lead to higher inflation, potential recession, and could influence the Federal Reserve to raise interest rates, but the impact may not be as severe as in the past, and some experts recommend investing in the energy transition and adopting a more defensive investment strategy.
Rising oil prices pose a risk to the Federal Reserve's efforts to achieve a soft landing for the economy and return inflation to its 2% target without triggering a downturn.
The recent global supply concerns caused by Russia's fuel export ban are driving up oil prices, counteracting the demand fears driven by macroeconomic headwinds and high interest rates.
