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Can Commodity Prices Cause A Recession?



Can Commodity Prices Cause A Recession
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The answer is, yes they can. But not in the manner the market thinks. Low oil prices do NOT cause recessions, at least here in the United States. Reference the below chart, which tracks the price of West Texas Intermediate and U.S. recessions since 1970. The price axis is logarithmic. Every recession except one was pre-empted by a spike in oil prices. On average, by the time recession hit, oil had increased 17.6% over the prior twelve months. Notable increases were registered prior to the 2008 (up 41.3%) 1990 (up 31.8%) and 1980 (up 57.2%) recessions.


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