Views of the fate of the U.S. economy and gasoline prices seem to have become inexorably linked, so these recent declines will hopefully correspond with more optimistic views of the direction of the economy.
The graph shows it all: rising gas prices are often accompanied by worsening views of the economy. According to Gallup polling seen in the graph above, early in the year, the country was roughly divided between those saying the economy was getting better and those saying it was getting worse. Yet when gas prices started skyrocketing in the wake of the tumult in Libya, the percentage of Americans saying the economy was getting better plummeted by 10 percentage points, and it has continued to worsen when gas prices once again began rising in April.
Of course, when dealing with this most recent Gallup polling, we must take to heart the nostrum that correlation does not imply causation. We cannot absolutely guarantee that gas prices are at the heart of all of the changing perceptions of the economy, even if the timing between gas price increases and Americans’ views of the economy are uncanny mirror images of each other. Broader indications of the economy’s performance are surely troubling: the GDP for the first quarter of the year only grew at an estimated annual rate of 1.8%, and weekly unemployment insurance claims also rose last week.