Scott Kinne First Heritage Mortgage

Scott Kinne's Mortgage information Blog

  • About Scott
  • Testimonials
  • Resources
    • First Time Home Buyer Tips
    • First Time Home Seller Tips
    • Closing Costs
    • Home Appraisal
    • Home Inspection
    • Affordable Credit Repair
    • Interest Rates
    • Loan Programs
    • Loan Process
    • Loan Checklist
    • Mortgage Glossary
    • Mortgage FAQ
  • Main Website
  • Contact
  • Apply

$100 Oil Could Mean More Than High Gas Prices For Americans

January 3, 2008 by Scott Kinne

Oil briefly touched 100 dollars per barrel in trading January 2, 2008

The price of oil briefly touched $100 per barrel yesterday, just short of the all-time inflation-adjusted high of $102.81 in April 1980.

According to economic forecasting firm Global Insight, each $10-per-barrel increase in oil prices:

  1. Increases gas prices by 19 per gallon
  2. Cuts consumer spending by one-third of a percent
  3. Reduces employment by 100,000
  4. Adds one-half percent to consumer prices

And, because oil prices have nearly doubled from the $51/barrel levels of January 2007, the above figures calculate out to:

  1. $0.95 more per gallon in 2007 because of oil prices
  2. 1.67% cut to consumer spending in 2007 because of oil prices
  3. 500,000 lost jobs in 2007 because of oil prices
  4. 2.50% increase in consumer costs in 2007 because of oil prices

In addition, oil’s run-up has ignited fears of inflation and of recession, with the possibility that both would exist at the same time. This rare economic condition is commonly referred to as “stagflation”

Stagflation is a particularly difficult situation for the Federal Reserve because increasing the Fed Funds Rate would increase the likelihood of recession whereas lowering the Fed Funds Rate would increase the risk of inflation.

For now, mortgage rates are benefiting because less evidence of inflation could attract foreign investment in mortgage bonds. As demand for bonds increases, mortgage rates fall.

Source
Weakened U.S. Economy May Be Facing New Test
Sudeep Reddy
The Wall Street Journal Online, January 3, 2008
http://online.wsj.com/article/SB119930367405362875.html

Filed Under: Uncategorized

Scott Kinne

Contact Scott

Vice President, Senior Loan Officer
NMLS ID #182351
Office: 703.293.6146
Mobile: 571.237.6241
Fax: 571.317.2478
skinne@fhmtg.com

Licensed In Maryland, Virginia, Washington D.C., West Virginia
  LOAN APPLICATION
  FREE RATE QUOTE

Connect with Me!

Sign Up For My Free Newsletter

Categories

Recent Posts

  • S&P Case-Shiller Home Price Indices: Home Prices Fall In November
  • Is It Worth It to Put More Than 20 Percent Down?
  • What You Need To Know About A Closed-End Second Mortgage
  • What’s Ahead For Mortgage Rates This Week – January 30, 2023
Equal Housing Lender
nmlsconsumeraccess.org
First Heritage Mortgage, LLC, Company NMLS ID #86548

Our Location

3201 Jermantown Road
Suite 800
Fairfax, VA 22030
Business: 703-293-6146
Cellphone: 571-237-6241

Copyright © 2023 · Powered by MySMARTblog