Chart of the Day: Energy and Recessions

For indispensable reporting on the coronavirus crisis, the election, and more, subscribe to the Mother Jones Daily newsletter.

What’s the effect of rising energy prices on the economy? Stuart Staniford looks at historical data and says that before 1970 the answer is: nothing. There’s no effect at all. But since 1970, the effect is profound: every single recession since then has been preceded by a runup in energy prices.

And what does that runup look like? Well, it looks an awful lot like the runup we’ve exprienced over the past 24 months. That’s the heavy black line in the chart on the right. Does that mean we’re inevitably headed for another recession? Nope. But since I was being economically optimistic yesterday, I’m going to revert to my true nature today and be economically pessimistic. “I doubt energy prices can go a whole lot higher without triggering another recession,” says Stuart, “so it depends on whether the world can scrape up a few more mbd of oil to keep growth going without prices rising too much more.” Or, alternatively, perhaps a mild slowdown will cool off energy prices without triggering anything more serious.

Still, this is worth watching carefully. There are half a dozen economic shocks that could tip a fragile recovery back into recession, and for my money, an oil shock is the most likely of them.

Dear Reader,

This feels like the most important fundraising drive since I've been CEO of Mother Jones, with staggeringly high stakes and so much uncertainty. In "News Is Just Like Waste Management," I try to unpack the reality we all face and how we can rise to the challenge. If you're able to, this is a critical moment to support Mother Jones’ nonprofit journalism: We need to raise $400,000 to help cover the vital reporting projects we have planned, and right now is no time to pull back.

Monika Bauerlein, CEO, Mother Jones

Dear Reader,

This feels like the most important fundraising drive since I've been CEO of Mother Jones, with staggeringly high stakes and so much uncertainty. In "News Is Just Like Waste Management," I try to unpack the reality we all face and how we can rise to the challenge. If you're able to, this is a critical moment to support Mother Jones’ nonprofit journalism: We need to raise $400,000 to help cover the vital reporting projects we have planned, and right now is no time to pull back.

Monika Bauerlein, CEO, Mother Jones

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate