Crude oil prices in global markets and gasoline prices at U.S. pumps have risen sharply to record highs in recent days. Persistent upward pressures in recent months have reflected fundamental imbalances between strong global demand and shortfalls in supply, and sharp day-to-day movements generally have reflected shifting speculation about political instability in oil-producing regions of the world.

Surging energy costs endanger the U.S. economy in two ways. First, higher costs act like taxes on households and businesses, sapping purchasing power and cutting into discretionary outlays. Second, rising energy costs boost headline inflation measures and can feed through to measures of core consumer price inflation — to the displeasure of central banks in the U.S. and other industrialized economies.

The current negative “tax” effects of record-high energy costs on real economic activity, particularly on real consumer spending, are occurring in the same time frame as the rebates of personal income taxes that began in May and will extend into the summer months.

The tax rebates, about $110 billion, should more than cancel out the negative effects of the increase in energy costs, protecting the economy from that potential recessionary impulse — at least in the short term.

On the inflation front, the surge in energy costs is occurring at the same time that the labor market is weakening for other reasons, limiting the potential impacts on unit labor costs and core inflation.

A sustained inflation problem will not develop without the participation of the labor market, and we’re actually looking for more slack in labor markets during the next few quarters.

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