The Oil and the Recession

America: Ten business cycles fluctuations and the oil.

What is a recession? A popular definition of a recession is at least two quarters of declining Gross Domestic Product (GDP),but another definition is: "a significant decline in economic activity spread across the economy, lasting more than a few months"

The longet expansion in U.S history ocurred in the 1990s and lasted exactly ten years;the second longest was in the 1960 and lasted almost nine years,said Robert J. Samuelson Newsweek and Washington Post columnist.

Each duration of the then recession was of 10,4 months with average of decrease in real GDP of -1,8 and average unemployment rate of 7,6 percent.

July 1981 trough nov.1982 the duration of the recession was 16 months with decline in industrial oroduction del -14,8 percent and unemployment rate 9,0 percent and inflation rate of 4,9 percent,said National Bureau of Economic Research.

Stable prices provide a sense of segurity and social and political orden.Their importance is noticed only when they go missing.

People watching a large price of the oil.Remember the US$ 145-a-barrel oil that ocurred in 2008. Energy is a pivotal commodity. If it's scarce, other activities will suffer.

Today week to week,pleople watching one day 2,10 galon but another day de price is 2,40 galon (14 percent up). High inflation's oil stunted the increase of living standars through lower productivity growth and high inflation's oil caussed the stock market to stagnate. People began to believe that prices of home could one rise, leading to "bubbles" that burst in 2007 for homes.

Home loans were extended to buyers with weak credit and with little or no requirement for down payment. The presumption that homes would always be worth move tomorrow than today provide a false sense of segurity to the lenders and rationalized credit standards that,with hindsight,seemed self-evidently doomed.When these "subprime" mortgages began to default in large numbers, the homebuilding boom ended,housing price fell,financial institutions suffered large losses on securities backed by mortgages, and the economy tipped into another recession.

The connections to oil inflation are there,but we simply refuse to seen them.

Oil inflation is an examnple of how economic affects almost everything else. But some academic said that the oil were not the source of inflation and other problems,because the energy wasn't a major part of highen inflation.

The full impact of the first "oil shock" the overall CPI rose 8,7 percent,up from 3,3percent in 1971. It's also true that oil aggravated inflation, but the real reason for oil's outsized role in the inflation story is that is scarred to American psyche.

The midst of the Yom Kippur War of october 1973,arab oil suppliers embargoed oil shipments to United States; putting suppliers in a position of raise prices.

The official price of Saudi Arabian oil went from US$ 2,59 to US$ 11,65 barrel, this was 40 percent increase.In 1978-before the leap in oil prices-percent,almost the CPI increased a double the 4,9 percent gain of 1976, and then "disturbances in the oil market...matter much less than has commonly been thought", said economists Robert Barsky of the University of Michigan.