The Recession is Dead! Long Live the Recession!
I don’t really know if we are emerging from the recession, but hiring does seem to be up. Most of the people I know who are looking for jobs are starting to get a lot more interest. But I don’t expect the end of the recession – when it does occur – will be like the end of previous recessions. Why? As I have argued before, I believe that as the economy strengthens, it will inevitably put pressure on oil prices. And we are already starting to see oil prices creep back up:
NEW YORK — Oil prices rose above $85 on Friday helped by strong sales of new homes that surged last month from a record low in February.
The article also said that gasoline prices are down (recall when I said I expected gasoline prices to ease because inventories were flush) but that many analysts expect gasoline prices to average $3/gallon over the summer. That is one caveat I offered at the time. Rising oil prices will trump high inventories when it comes to gasoline prices, so if oil prices remain strong, gasoline prices will follow.
All of this leads me back to the question I keep asking myself: How do you recover from recession when oil prices are at recession-inducing levels? I still think my Long Recession scenario holds true. This recovery won’t be like previous recoveries.