Gas Prices and the Economy

June 9, 2008 12:00:00 AM PDT
The national average price of gas hit $4 dollars per gallon for the first time over the weekend. The main worry among economists now is that the more money consumers must spend on energy, the less they'll spend elsewhere; and that is renewing fears of the recession that, so far, hasn't quite materialized.With gas prices jumping to a record high, a sharp rise in unemployment and a 400-point drop in the DOW on Friday; umbrellas simply aren't large enough to shield Americans from the perfect economic storm that's moved in across the country.

Over the weekend, the average cost of a gallon of gas topped $4 dollars for the first time.

Many Americans are putting their money where their fuel tank is; spending an estimated 4% percent of after-tax income on gas.

Fueling concerns further, 861,000 more people joined the unemployment line from April to May. "A lot of Americans are concerned about our economy. I can understand why. Gasoline prices are high; energy prices are high. I do remind them that we have put a stimulus package forward that is expected to help boost the economy," said President Bush.

Rising gas prices aren't the only reason analysts are throwing the "R" word around again.

President Bush left for Europe Monday. He's expected to address concerned European lawmakers about the weak dollar.