High gas prices could derail economic growth - KWWL - Eastern Iowa Breaking News, Weather, Closings

High gas prices could derail economic growth


The price of gas has jumped 45 cents since the first of the year and is the highest on record for this time of year -- an average of $3.73 a gallon.  So will higher gas prices derail the economic recovery?

Economists say not yet.  They argue that the United States is in much better shape than early last year, when a similar surge in fuel prices weighed on economic growth by squeezing household budgets.  Americans spent less on clothes, food and everything else.

Rising gas prices hurt less when an economy is improving than when it's slowing down.  So economists expect other spending won't be badly hurt, at least for now.  If gas breaks its record of $4.11 a gallon, however, all bets are off.

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