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Is the complex interaction between crude oil and unemployment rates a cause for concern?


Quick Take

Current economic conditions require a close look at the intricate relationship between crude prices and unemployment. Oil prices have been on an upward trend, and are currently at around $80 per barrel, which is a significant increase over the $66 per barrel seen in March.

This can lead to a cascading price increase, especially for food and energy. This can lead to inflationary forces, which is a concern for Federal Reserve in its attempt to maintain price stability.

The interplay between unemployment and oil prices usually follows an interesting trend. A rise in oil prices is often followed by an increase in unemployment. This has, except for the COVID-19 Pandemic, led to recessions three times out of four. This correlation usually takes six months to become apparent.

The oil market is currently experiencing a year-overyear decline, which bodes very well for the Consumer Price Index.

This situation requires careful monitoring, however, due to the current trend in oil prices. These shifts must be closely monitored by economic players to reduce the negative impact on unemployment.

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