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used cars to avoid news

21.05.12

We all know how lousy it feels to pump $50 worth of gas into your car, when it used to cost $40 or even $30. It's an acute metaphor for falling behind, rather than getting ahead.

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That's obviously a big worry today, as average gas prices get close to the key threshold of $4 per gallon. With a long-awaited economic recovery finally starting to take root, some economists fear that rising gas prices could damage fragile consumer psyches and hamstring family budgets enough to stall growth for the third time in three years.

But rising gas prices affect the economy in a lot of ways that aren't immediately obvious. Some of them can even be positive in the long run. Economists have been studying gas-price shocks for decades, from the gas lines of the 1970s to the still-hard-to-explain surge in oil prices in 2008 that pushed U.S. pump prices over $4 for the first time ever. Here's what tends to happen every time gas prices rise, with some handicapping about how these forces might affect the economy in 2012:

Source: U.S. News & World Report (blog)