US is on ‘cusp of recession’ if not already there, oil analyst warns

Schork Group Director Stephen Schork warned on Tuesday that the United States was at “the point of recession” if it hadn’t already started.

Schork made the argument as inflation sits at its highest level in 40 years, with the price of food and gasoline remaining at high levels.

Speaking on ‘Mornings with Maria’, he pointed out that gas prices are at “unprecedented” levels that Americans “just can’t afford”.

The national average for a gallon of gasoline was $4.96 on Tuesday, slightly lower than the previous day and the previous week, but 37 cents higher than the previous month and $1.89 higher than the previous year, according to AAA.

GASOLINE PRICES REACH $5 NATIONWIDE FOR FIRST TIME IN OVER 2 DECADES

Gasoline prices have hit record highs recently, with the national average topping $5 a gallon last week, according to the association.

In fact, the average price of a gallon of gasoline stayed below $5 for a fourth straight day on Tuesday, according to AAA.

Teleprinter Security Last To change To change %
USO US OIL FUND LP 84.05 +0.71 +0.85%
BNO UNITED STS BRENT OIL FD LP UNIT 33.45 +0.33 +1.00%

Oil prices rose on Tuesday, recouping more of last week’s losses as investors focused on tight supplies of crude and petroleum products rather than fears of a recession that could dampen future demand .

Brent crude futures rose more than 1% to $115.34 a barrel on Tuesday morning, adding to a 0.9% gain the day before. The international benchmark contract fell 7.3% last week in its first weekly decline in five.

U.S. West Texas Intermediate crude futures hit around $109 on Tuesday morning, up about 1.7% from Friday’s close. There was no settlement on Monday, which was a US holiday.

Oil analyst Stephen Schork questions the potential for a recession in the United States and the impact of inflation on the consumer as prices remain at “unprecedented levels”. (istock / iStock)

Asked if he thinks gas prices will continue to fall in the long term, Schork said “absolutely not” given that prices were still near $5 a gallon.

“We are still at unprecedented levels at this point,” he stressed.

Schork pointed to the “current rate of inflation”, noting that “real disposable income, what we really need to spend in this high price environment, is now growing at the fastest rate in a decade”.

“Our savings rates are at their lowest in 14 years and credit card debt is growing at the fastest rate in a decade,” he continued.

“So it’s clear that we’re running out of money and running up debt.”

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Schork explained his fears as summer approaches, noting that people have been turned away due to COVID and are prone to splash the cash despite inflated prices.

He went on to say that Americans are “fed up with COVID” and will continue to go on vacation.

“The demand for gasoline, despite these prices, is very strong – so they will continue to spend somehow because they want to get out,” Schork explained. “They’ve got this cabin fever and they’re going to pay the bills when they come due in the fall.”

Schork went on to argue that “we’ve never had an environment like this with these high prices, not just at the pump but also, more importantly, at the grocery counter, and we’ve never avoided recession”.

He pointed out that while the United States isn’t already in an economic recession, America is “definitely headed there.”

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Earlier this month it was revealed that inflation remained painfully high in May, with consumer prices hitting a new four-decade high, exacerbating financial stress for millions of Americans.

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