Joe Petrowski, former CEO of Cumberland Farms Gulf Oil Group, argues that a recession is accompanied by “every energy crisis.”
Joe Petrowski, former CEO of Cumberland Farms Gulf Oil Grouphe said on Monday that he is “absolutely certain” that the United States will enter a recession.
Speaking in “Mornings with Mariahe noted that a recession usually comes along with “every energy crisis,” especially since energy accounts for 7% of gross domestic product (GDP), the broadest measure of goods and services produced in the entire economy.
He made the argument four days after it was revealed that the The US economy shrank in the spring for the second straight quarter, meeting the criteria for a recession as record inflation and higher interest rates forced consumers and businesses to cut spending.
GDP contracted 0.9% on an annualized basis in the three-month period from April to June, the Commerce Department said in its first reading of the data on Thursday. Refinitiv economists had expected the report to show the economy had expanded 0.5%.
IS THE UNITED STATES ENTERING A RECESSION?
Former Atlanta Fed Chairman and CEO Dennis Lockhart argues that the US economy is not making “what we need” progress.
Recessions typically refer to two consecutive quarters of negative economic growth and Thursday’s GDP report revealed consecutive declines in growth, bringing the economy to the technical criterion of one.
Economic output has already fallen for the first three months of the year, with GDP falling 1.6%, the worst performance since spring 2020, when the economy was still mired in the COVID-induced recession.
THE UNITED STATES ECONOMY ENTERS A TECHNICAL RECESSION AFTER GROWTH FALLS 0.9% IN THE SECOND QUARTER
The Department of Labor revealed last month that Inflation accelerated more than expected to a new four-decade high in June as the price of daily necessities remains painfully high.
The department said the consumer price index, a broad measure of the price of everyday goods including gasoline, groceries and rent, rose 9.1% in June from a year earlier. Prices rose 1.3% in the one-month period since May. Those numbers were much higher than the 8.8% headline figure and Refinitiv economists’ 1% monthly gain forecast.
The data marked the faster rate of inflation since December 1981.
Price increases spread across the board: energy prices it rose 7.5% in June from the previous month and 41.6% more than last year. Gasoline, on average, costs 59.9% more than a year ago and 11.2% more than in May. Meanwhile, the food index rose 1% in June as consumers paid more for items such as cereal, chicken, milk and fresh vegetables.
Gasoline prices have been falling since peaking above $5 on June 14. (AP Photo/Lynne Sladky, File/AP Newsroom)
On Monday, the average price of a gallon of gasoline fell to $4.21, according to AAA, falling steadily since peaking at $5.01 on June 14.
On Monday, oil prices fell as weak manufacturing data from China and Japan for July weighed on demand prospects and investors braced for an upcoming meeting of OPEC officials on possible supply adjustments.
| Heart | Security | Latest | Change | Change % |
|---|---|---|---|---|
| USE | UNITED STATES PETROLEUM FUND LP | 78.05 | +0.92 | +1.19% |
| NOB | UNITED STS BRENT OIL FD LP UNIT | 32.38 | +0.42 | +1.31% |
Brent crude futures were down 4.5% at $99.30 a barrel on Monday morning. US West Texas Intermediate crude was trading at $92.63 a barrel, down 6%.
Brent and WTI ended July with their second consecutive monthly loss for the first time since 2020, as rising inflation and higher interest rates raise concerns about a recession hitting fuel demand.
Petrowski argued that the oil market has fallen from its highs because “there are a significant number of people who believe that there is going to be a recession or that we are in one now.”
He noted that he is not sure whether the US is in a recession now, but said he is confident the country will be in a recession in the near future.
Fox Business host Charles Payne joined ‘Kennedy’ to weigh the US economy’s entry into a technical recession after GDP fell for the second quarter in a row.
“I just don’t know how you’re not going to have a recession with food prices where they are. [and with waning] consumer spending,” he added.
“I know that everyone keeps going back into the labor market. That’s a lagging indicator, not a leading indicator.”
Last month it was revealed that the US labor market remained strong in June as hiring exceeded expectations.
american employers added 372,000 jobs during the month compared to 390,000 in the prior month, indicating that inflation had a limited impact on hiring thus far. The unemployment rate remained stable at 3.6% for the third consecutive month.
July employment data will be released on Friday.
CLICK HERE TO READ MORE ABOUT FOX BUSINESS
“I really think as we go into the summer we will see crude go back to $150 a barrel and oil before Labor Day will be at that level and retail gas prices will go above $5 again.” Petrowski warned.
Megan Henney of FOX Business contributed to this report.