Gas Prices Are Falling. Is That a Good Thing? Only If You Still Have a Job

Inflation peaked in June 2022 at a 9.1% year-over-year rate. It has come down significantly since then, but it still remains at a 3.2% rate, which is uncomfortably high and still far from the Federal Reserve’s goal of 2% inflation.

The rate at which oil and gasoline prices have come down has been faster than the overall inflation rate, which means that consumers are paying slightly less for gas at the pump than they were last year, as described here.

Is that a good thing? It certainly is if you’re at the pump filling your car with gas. But you have to ask, why is inflation coming down and why are gas prices lower than they have been recently?

The answer is not good news. Declining gas prices are a sign of weak consumer demand. In turn, that weak demand is a sign that consumers are driving less and are tapped out on personal savings and credit card lines of credit.

Those are both early signs of a recession and higher unemployment in the months ahead. So, it’s definitely a good news – bad news situation.

The good news is that prices are coming down and buying gas is cheaper than it was recently. The bad news is that a recession may be coming. People will definitely be using less gas when they’re unemployed.

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