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Greg Ip argues that the current oil shock is not expected to result in stagflation or a recession.
He notes the U.S. is less energy intensive than during prior oil price spikes, with gasoline consumption lower now compared to 2007. Additionally, the U.S. has become a net petroleum exporter, which he describes as mildly positive for terms of trade.
Ip's perspective on energy's diminished macroeconomic threat aligns with his observations on the Federal Reserve's reliance on the PCE inflation gauge over CPI to assess underlying pressures. Furthermore, the continued strength of the U.S. economy in the face of commodity volatility mirrors his recent analysis of a resilient labor market despite shifting employment trends.