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US economy risks recession from 100-dollar oil: poll
AFP
WASHINGTON
Petroleumworld.com 08 28 06
Oil prices at 100 dollars a barrel would push the US economy into recession, according to a survey of 195 economists released Monday.
Terrorism is seen as the biggest threat to the world's largest economy, followed by high energy prices and inflation, said the twice-yearly survey by the National Association for Business Economics (NABE).
Most of the respondents also said that Federal Reserve policy is about right, after the US central bank this month called off a long-running campaign of interest rate hikes.
"NABE members believe that oil prices above 100 dollars per barrel would probably cause a recession, but don't believe they will go that high," said NABE president Stuart Hoffman, the chief economist at PNC Financial Services.
But he added: "They see little prospect of significant substitution of other technologies for oil in the next decade."
Some energy analysts have speculated that UN sanctions against major crude producer Iran could drive oil prices up over 100 dollars a barrel, from the mid-70 level now.
Iran says it is developing peaceful nuclear energy, but is suspected by the United States and European countries of pursuing a secret drive to build atomic weapons.
France and Germany said Friday that Iran's response to an international package of incentives designed to end its uranium enrichment by an August 31 deadline was "ambiguous".
The NABE survey found that terrorism was seen as the biggest short-term problem facing the US economy, identified by 34 percent of respondents, up from 26 percent in the last poll in March.
Energy was the biggest fear of 29 percent of respondents, up from 23 percent. Inflation fears moved into third place, ahead of the mammoth US trade deficit.
Some 71 percent of respondents said current monetary policy is about right, but the economists split on where the Fed should go next.
A total of 29 percent wanted further rate hikes, 17 percent wanted cuts, and 53 percent preferred to leave rates at their current level.
At an August 8 meeting, the Fed kept the benchmark US interest rate steady at 5.25 percent. It was the first time since mid-2004 that the central bank had not hiked borrowing costs.
Only 57 percent of NABE respondents expect the Fed to tighten, down from 89 percent six months ago.
The long-booming US housing market has now hit the brakes, with worrying implications for consumer spending and overall growth.
And recent inflation numbers have been weaker than expected, leading many economists to predict that the Fed will continue to stand pat at its next meeting on September 20.
AFP 28 0401 GMT 08 06
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